INSURANCE LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2020

Claims Development [Line Items]

Schedule of reconciliation of activity in the liability for unpaid claims and claims adjustment expense

The following table presents the roll-forward of activity in Loss Reserves:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)		2020		2019		2020		2019
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	77,853	$	81,057	$	78,328	$	83,639
Reinsurance recoverable		(35,458)		(31,333)		(31,069)		(31,690)
Initial allowance upon CECL adoption		-		-		164		-
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		42,395		49,724		47,423		51,949
Losses and loss adjustment expenses incurred:
Current year		4,324		4,612		12,683		13,181
Prior years, excluding discount and amortization of deferred gain		20		(74)		(6)		(221)
Prior years, discount charge (benefit)		25		276		135		1,017
Prior years, amortization of deferred gain on retroactive reinsurance(a)		(36)		13		(187)		(129)
Total losses and loss adjustment expenses incurred		4,333		4,827		12,625		13,848
Losses and loss adjustment expenses paid:
Current year		(1,316)		(1,572)		(2,568)		(2,949)
Prior years		(3,115)		(4,244)		(11,256)		(14,010)
Total losses and loss adjustment expenses paid		(4,431)		(5,816)		(13,824)		(16,959)
Other changes:
Foreign exchange effect		925		(172)		656		(165)
Allowance for credit losses		-		-		-		-
Retroactive reinsurance adjustment (net of discount)(b)		80		96		240		(14)
Fortitude sale and reinsurance adjustment(c)		-		-		(3,818)		-
Total other changes		1,005		(76)		(2,922)		(179)
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		43,302		48,659		43,302		48,659
Reinsurance recoverable		35,282		31,224		35,282		31,224
Total	$	78,584	$	79,883	$	78,584	$	79,883

(a)Includes $6 million and $6 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three-month periods ended September 30, 2020 and 2019, respectively, and $26 million and $21 million for the nine-month periods ended September 30, 2020 and 2019, respectively.(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $20 million and $43 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $78 million and $475 million for the nine-month periods ended September 30, 2020 and 2019, respectively.(c)On June 2, 2020, AIG completed the Majority Interest Fortitude Sale. Concurrent with the Majority Interest Fortitude Sale, AIG established a reinsurance recoverable. Refer to Note 1 for additional information.

Schedule of components of the loss reserve discount

	September 30, 2020						December 31, 2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio(b)		Total	Insurance			Portfolio		Total
U.S. workers' compensation	$	2,111	$	-	$	2,111	$	2,134	$	666	$	2,800
Retroactive reinsurance		(1,173)		-		(1,173)		(1,251)		-		(1,251)
Total reserve discount(a)	$	938	$	-	$	938	$	883	$	666	$	1,549

(a)Excludes $151 million and $172 million of discount related to certain long tail liabilities in the UK at September 30, 2020 and December 31, 2019, respectively.(b)On June 2, 2020, we completed the Majority Interest Fortitude Sale. Refer to Note 1 for additional information.

Schedule of loss reserve discount and loss reserve discount benefit (charge)

Three Months Ended September 30,	2020						2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio(c)		Total	Insurance			Portfolio		Total
Current accident year	$	56	$	-	$	56	$	41	$	-	$	41
Accretion and other adjustments to prior year discount		(25)		-		(25)		(26)		(56)		(82)
Effect of interest rate changes		-		-		-		(136)		(58)		(194)
Net reserve discount benefit (charge)		31		-		31		(121)		(114)		(235)
Change in discount on loss reserves ceded under retroactive
reinsurance		20		-		20		43		-		43
Net change in total reserve discount(a)	$	51	$	-	$	51	$	(78)	$	(114)	$	(192)
Nine Months Ended September 30,	2020						2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio(c)		Total	Insurance			Portfolio		Total
Current accident year	$	94	$	-	$	94	$	97	$	-	$	97
Accretion and other adjustments to prior year discount		(117)		(18)		(135)		(269)		(80)		(349)
Effect of interest rate changes		-		-		-		(473)		(195)		(668)
Net reserve discount benefit (charge)		(23)		(18)		(41)		(645)		(275)		(920)
Change in discount on loss reserves ceded under retroactive
reinsurance		78		-		78		475		-		475
Net change in total reserve discount(b)	$	55	$	(18)	$	37	$	(170)	$	(275)	$	(445)

(a) Excludes $(12) million and $(27) million discount related to certain long tail liabilities in the UK for the three-month periods ended September 30, 2020 and 2019, respectively.

(b) Excludes $(20) million and $(1) million discount related to certain long tail liabilities in the UK for the nine-month periods ended September 30, 2020 and 2019, respectively.

(c) On June 2, 2020, we completed the Majority Interest Fortitude Sale. Refer to Note 1 for additional information.