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VARIABLE INTEREST ENTITIES

3 Months Ended

Mar. 31, 2022

8. Variable Interest Entities

We enter into various arrangements with variable interest entities (VIEs) in the normal course of business and consolidate the VIEs when we determine we are the primary beneficiary. This analysis includes a review of the VIE’s capital structure, related contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and our involvement with the entity. When assessing the need to consolidate a VIE, we evaluate the design of the VIE as well as the related risks to which the entity was designed to expose the variable interest holders.

The primary beneficiary is the entity that has both (i) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of our decision-making ability and our ability to influence activities that significantly affect the economic performance of the VIE.

Balance Sheet Classification and Exposure to Loss

Creditors or beneficial interest holders of VIEs for which AIG is the primary beneficiary generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to AIG, except in limited circumstances when AIG has provided a guarantee to the VIE’s interest holders. The following table presents the total assets and total liabilities associated with our variable interests in consolidated VIEs, as classified in the Condensed Consolidated Balance Sheets:

		Real Estate and
		Investment		Securitization
(in millions)		Entities^(d)		Vehicles		Total
March 31, 2022
Assets:
Bonds available for sale	$	-	$	5,581	$	5,581
Other bond securities		-		1,648		1,648
Equity securities		69		-		69
Mortgage and other loans receivable		-		2,352		2,352
Other invested assets
Alternative investments^(a)		3,247		-		3,247
Investment real estate		2,191		-		2,191
Short-term investments		243		130		373
Cash		82		-		82
Accrued investment income		-		17		17
Other assets		173		59		232
Total^(b)	$	6,005	$	9,787	$	15,792
Liabilities:
Debt of consolidated investment entities	$	1,694	$	4,498	$	6,192
Other^(c)		112		117		229
Total	$	1,806	$	4,615	$	6,421

December 31, 2021
Assets:
Bonds available for sale	$	-	$	5,543	$	5,543
Other bond securities		-		1,852		1,852
Equity securities		223		-		223
Mortgage and other loans receivable		-		2,523		2,523
Other invested assets
Alternative investments^(a)		3,017		-		3,017
Investment real estate		2,257		-		2,257
Short-term investments		487		151		638
Cash		96		-		96
Accrued investment income		-		17		17
Other assets		190		558		748
Total^(b)	$	6,270	$	10,644	$	16,914
Liabilities:
Debt of consolidated investment entities	$	1,743	$	4,504	$	6,247
Other^(c)		122		722		844
Total	$	1,865	$	5,226	$	7,091

(a)Comprised primarily of investments in real estate joint ventures at March 31, 2022 and December 31, 2021.

(b) The assets of each VIE can be used only to settle specific obligations of that VIE.

(c) Comprised primarily of Other liabilities at March 31, 2022 and December 31, 2021.

(d) At March 31, 2022 and December 31, 2021, off-balance sheet exposure primarily consisting of our insurance companies’ commitments to real estate and investment entities were $2.0 billion and $2.2 billion, respectively, of which commitments to external parties were $0.5 billion and $0.6 billion, respectively.

We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where we have also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE.

The following table presents total assets of unconsolidated VIEs in which we hold a variable interest, as well as our maximum exposure to loss associated with these VIEs:

			Maximum Exposure to Loss
		Total VIE		On-Balance			Off-Balance
(in millions)		Assets		Sheet	^(b)		Sheet			Total
March 31, 2022
Real estate and investment entities^(a)	$	461,827	$	8,021		$	3,617	^(c)	$	11,638
Other		1,745		248			749	^(d)		997
Total	$	463,572	$	8,269		$	4,366		$	12,635
December 31, 2021
Real estate and investment entities^(a)	$	457,335	$	7,650		$	3,448	^(c)	$	11,098
Other		1,738		237			528	^(d)		765
Total	$	459,073	$	7,887		$	3,976		$	11,863

(a)Comprised primarily of hedge funds and private equity funds.

(b) At March 31, 2022 and December 31, 2021, $8.2 billion and $7.8 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.

(c) These amounts represent our unfunded commitments to invest in private equity funds and hedge funds.

(d) These amounts represent our estimate of the maximum exposure to loss under certain insurance policies issued to VIEs if a hypothetical loss occurred to the extent of the full amount of the insured value. Our insurance policies cover defined risks and our estimate of liability is included in our insurance reserves on the balance sheet.

For additional information on VIEs see Note 9 to the Consolidated Financial Statements in the 2021 Annual Report.