INTERNATIONAL AMERICAN GROUP, INC. – 10-Q – | Management report and analysis of the financial position and operating results

Glossary and acronyms of certain insurance terms and references

Throughout this Management's Discussion and Analysis of Financial Condition and
Results of Operations (MD&A), we use certain terms and abbreviations, which are
summarized in the Glossary and Acronyms.

American International Group, Inc. (AIG) has incorporated into this discussion a
number of cross-references to additional information included throughout this
Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year
ended December 31, 2020 (the 2020 Annual Report) to assist readers seeking
additional information related to a particular subject.

In this Quarterly Report on Form 10-Q, unless otherwise mentioned or unless the
context indicates otherwise, we use the terms "AIG," "we," "us" and "our" to
refer to American International Group, Inc., a Delaware corporation, and its
consolidated subsidiaries. We use the term "AIG Parent" to refer solely to
American International Group, Inc., and not to any of its consolidated
subsidiaries.

Caution regarding forward-looking information

This Quarterly Report on Form 10-Q and other publicly available documents may
include, and officers and representatives of AIG may from time to time make and
discuss, projections, goals, assumptions and statements that may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These projections, goals, assumptions and
statements are not historical facts but instead represent only a belief
regarding future events, many of which, by their nature, are inherently
uncertain and outside AIG's control. These projections, goals, assumptions and
statements are often preceded by, followed by or include words such as "will,"
"believe," "anticipate," "expect," "intend," "plan," "focused on achieving,"
"view," "target," "goal" or "estimate." These projections, goals, assumptions
and statements may relate to future actions, prospective services or products,
future performance or results of current and anticipated services or products,
sales efforts, expense reduction efforts, the outcome of contingencies such as
legal proceedings, anticipated organizational, business or regulatory changes,
the effect of catastrophes, such as the COVID-19 crisis, and macroeconomic
events, anticipated dispositions, monetization and/or acquisitions of businesses
or assets, or successful integration of acquired businesses, management
succession and retention plans, exposure to risk, trends in operations and
financial results.

                                           AIG | Third Quarter 2021 Form 10-Q 75


————————————————– ——————————

                                                             TABLE OF CONTENTS



It is possible that AIG's actual results and financial condition will differ,
possibly materially, from the results and financial condition indicated in these
projections, goals, assumptions and statements. Factors that could cause AIG's
actual results to differ, possibly materially, from those in the specific
projections, goals, assumptions and statements include:

?AIG's ability to successfully separate  ?the effectiveness of AIG's enterprise
the Life and Retirement business and the risk management policies and procedures,
impact any separation may have on AIG,   including with respect to business
its businesses, employees, contracts and continuity and disaster recovery plans;
customers;                               ?changes in judgments concerning 

the

? AIG’s ability to complete the sale of its recognition of deferred tax assets and
Affordable housing portfolio to goodwill impairment;
affiliate black stone;

                 ?AIG's ability to successfully 

dispose

?the occurrence of catastrophic events,  of, monetize and/or acquire businesses
both natural and man-made, including     or assets or successfully integrate
COVID-19, other pandemics, civil unrest  acquired businesses;
and the effects of climate change;       ?nonperformance or defaults by
?changes in market and industry          counterparties, including Fortitude
conditions, including a prolonged global Reinsurance Company Ltd. (Fortitude Re);
economic recovery, volatility in         ?the effectiveness of strategies to
financial and capital markets,           recruit and retain key personnel and to
fluctuations in interest rates,          implement effective succession plans;
inflationary pressures and disruptions   ?changes in judgments concerning
to AIG's operations driven by COVID-19   potential cost-saving opportunities;
and responses thereto, including new or  ?concentrations in AIG's investment
changed governmental policy and          portfolios;
regulatory actions;                      ?changes to our sources of or access to
?AIG's ability to effectively execute on liquidity;
the AIG 200 operational programs         ?changes in judgments or assumptions
designed to modernize AIG's operating    concerning insurance underwriting and
infrastructure and enhance user and      insurance liabilities;
customer experiences, and AIG's ability  ?the requirements, which may change from
to achieve anticipated cost savings from time to time, of the global regulatory
AIG 200;                                 framework to which AIG is subject;

? the impact of potential? significant legal, regulatory or
technology, cybersecurity or government data procedures; and
security breaches, including as a result? other factors discussed in:
cyber attacks or security

             -Part I, Item 2. MD&A of this 

Quarterly

vulnerabilities, the likelihood of which Report on Form 10-Q;
may increase due to extended remote      -Part I, Item 2. MD&A of the Quarterly
business operations as a result of       Report on Form 10-Q for the quarterly
COVID-19;                                period ended June 30, 2021;

? availability and affordability of -Part I, Article 2. Quarterly management report
reinsurance;

                             Report on Form 10-Q for the 

quarterly

? disruptions in the availability of the period ended March 31, 2021; and
AIG’s electronic data systems or those -Part I, Article 1A. Risk factors and part
of third parties;

                        II, Item 7. MD&A of the 2020 

Annual

?the impact of COVID-19 generally,       Report.
including with respect to AIG's
business, financial condition and
results of operations;
?changes to the valuation of AIG's
investments;
?actions by rating agencies with respect
to AIG's credit and financial strength
ratings as well as those of its
businesses and subsidiaries;


We are not under any obligation (and expressly disclaim any obligation) to
update or alter any projections, goals, assumptions or other statements, whether
written or oral, that may be made from time to time, whether as a result of new
information, future events or otherwise.

76 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



INDEX TO ITEM 2
                                                                             Page
  Use of Non-GAAP Measures                                                   78
  Critical Accounting Estimates                                              80
  Executive Summary                                                          81
  Overview                                                                   81
  AIG's Operating Structure                                                  83
  Financial Performance Summary                                             

84

  AIG's Outlook - Industry and Economic Factors                             

89

  Consolidated Results of Operations                                        

93

  Business Segment Operations                                                99
  General Insurance                                                         100
  Life and Retirement                                                       112
  Other Operations                                                          132
  Investments                                                               134
  Overview                                                                  134
  Investment Highlights in the Nine Months Ended September 30,
2021                                                                        134
  Investment Strategies                                                     135
  Credit Ratings                                                            137
  Insurance Reserves                                                        145
  Loss Reserves                                                             145

Future life insurance and annuity benefits, insurance contract
Deposits and DACs

151

  Liquidity and Capital Resources                                           

160

  Overview                                                                  

160

  Analysis of Sources and Uses of Cash                                      

162

  Liquidity and Capital Resources of AIG Parent and Subsidiaries            163
  Credit Facilities                                                         165
  Contractual Obligations                                                   165
  Off-Balance Sheet Arrangements and Commercial Commitments                 165
  Debt                                                                      166
  Credit Ratings                                                            168
  Financial Strength Ratings                                                168
  Rating Agency Actions Related to the Announced Separation of Life
and Retirement                                                              169
  Regulation and Supervision                                                169
  Dividends                                                                 169
  Repurchases of AIG Common Stock                                           170
  Dividend Restrictions                                                     170
  Enterprise Risk Management                                                170
  Overview                                                                  170
  Regulatory Environment                                                    171
  Overview                                                                  171
  Glossary                                                                  172
  Acronyms                                                                  175




                                           AIG | Third Quarter 2021 Form 10-Q 77


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                               ITEM 2 | Use of Non-GAAP Measures





Use of Non-GAAP Measures

Throughout this MD&A, we present our financial condition and results of
operations in the way we believe will be most meaningful and representative of
our business results. Some of the measurements we use are "non-GAAP financial
measures" under Securities and Exchange Commission (SEC) rules and regulations.
GAAP is the acronym for "generally accepted accounting principles" in the United
States. The non-GAAP financial measures we present may not be comparable to
similarly-named measures reported by other companies.

Book value per common share, excluding accumulated other comprehensive income
(loss) (AOCI) adjusted for the cumulative unrealized gains and losses related to
Fortitude Re funds withheld assets and deferred tax assets (DTA) (Adjusted book
value per common share) is used to show the amount of our net worth on a
per-common share basis after eliminating items that can fluctuate significantly
from period to period including changes in fair value of AIG's available for
sale securities portfolio, foreign currency translation adjustments and U.S. tax
attribute deferred tax assets. This measure also eliminates the asymmetrical
impact resulting from changes in fair value of our available for sale securities
portfolio wherein there is largely no offsetting impact for certain related
insurance liabilities. In addition, we adjust for the cumulative unrealized
gains and losses related to Fortitude Re funds withheld assets held by AIG in
support of Fortitude Re's reinsurance obligations to AIG post deconsolidation of
Fortitude Re (Fortitude Re funds withheld assets) since these fair value
movements are economically transferred to Fortitude Re. We exclude deferred tax
assets representing U.S. tax attributes related to net operating loss
carryforwards and foreign tax credits as they have not yet been utilized.
Amounts for interim periods are estimates based on projections of full-year
attribute utilization. As net operating loss carryforwards and foreign tax
credits are utilized, the portion of the DTA utilized is included in these book
value per common share metrics. Adjusted book value per common share is derived
by dividing total AIG common shareholders' equity, excluding AOCI adjusted for
the cumulative unrealized gains and losses related to Fortitude Re funds
withheld assets, and DTA (Adjusted Common Shareholders' Equity), by total common
shares outstanding. The reconciliation to book value per common share, the most
comparable GAAP measure, is presented in the Executive Summary section of this
MD&A.

Return on common equity - Adjusted after-tax income excluding AOCI adjusted for
the cumulative unrealized gains and losses related to Fortitude Re funds
withheld assets and DTA (Adjusted return on common equity) is used to show the
rate of return on common shareholders' equity. We believe this measure is useful
to investors because it eliminates items that can fluctuate significantly from
period to period, including changes in fair value of our available for sale
securities portfolio, foreign currency translation adjustments and U.S. tax
attribute deferred tax assets. This measure also eliminates the asymmetrical
impact resulting from changes in fair value of our available for sale securities
portfolio wherein there is largely no offsetting impact for certain related
insurance liabilities. In addition, we adjust for the cumulative unrealized
gains and losses related to Fortitude Re funds withheld assets since these fair
value movements are economically transferred to Fortitude Re. We exclude
deferred tax assets representing U.S. tax attributes related to net operating
loss carryforwards and foreign tax credits as they have not yet been utilized.
Amounts for interim periods are estimates based on projections of full-year
attribute utilization. As net operating loss carryforwards and foreign tax
credits are utilized, the portion of the DTA utilized is included in Adjusted
return on common equity. Adjusted return on common equity is derived by dividing
actual or annualized adjusted after-tax income attributable to AIG common
shareholders by average Adjusted Common Shareholders' Equity. The reconciliation
to return on common equity, the most comparable GAAP measure, is presented in
the Executive Summary section of this MD&A.

Adjusted after-tax income attributable to AIG common shareholders is derived by
excluding the tax effected adjusted pre-tax income (APTI) adjustments described
below, dividends on preferred stock, and the following tax items from net income
attributable to AIG:

? reversals and charges for deferred tax valuation allowances;

changes in uncertain tax positions and other tax items related to inheritance
matters unrelated to our current business or operational performance;
and

? Net tax related to the enactment of the Tax Cuts and Jobs Act (the
Act);

and excluding the net realized gains (losses) and other expenses of
Non-majority interests.

We use the following operating performance measures because we believe they
enhance the understanding of the underlying profitability of continuing
operations and trends of our business segments. We believe they also allow for
more meaningful comparisons with our insurance competitors. When we use these
measures, reconciliations to the most comparable GAAP measure are provided on a
consolidated basis in the Consolidated Results of Operations section of this
MD&A.

78 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                               ITEM 2 | Use of Non-GAAP Measures



Adjusted revenues exclude Net realized gains (losses), income from non-operating
litigation settlements (included in Other income for GAAP purposes) and changes
in fair value of securities used to hedge guaranteed living benefits (included
in Net investment income for GAAP purposes). Adjusted revenues is a GAAP measure
for our segments.

Adjusted pre-tax income is derived by excluding the items set forth below from
income from continuing operations before income tax. This definition is
consistent across our segments. These items generally fall into one or more of
the following broad categories: legacy matters having no relevance to our
current businesses or operating performance; adjustments to enhance transparency
to the underlying economics of transactions; and measures that we believe to be
common to the industry. APTI is a GAAP measure for our segments. Excluded items
include the following:

? changes in the fair value of securities? income or losses of
used to cover life guarantee operations;
advantages;

                                ?net loss reserve discount benefit
?changes in benefit reserves and         (charge);
deferred policy acquisition costs (DAC), ?pension expense related to a one-time
value of business acquired (VOBA), and   lump sum payment to former employees;
sales inducement assets (SIA) related to ?income and loss from divestitures;
net realized gains and losses;           ?non-operating litigation reserves 

and

changes in the fair value of equity settlements;
securities;

                              ?restructuring and other costs 

Related

? net investment income on Fortitude Re to initiatives to reduce
funds held active;

                   operating expenses, improve 

Efficiency

?following deconsolidation of Fortitude  and simplify our organization;
Re, net realized gains and losses on     ?the portion of favorable or unfavorable
Fortitude Re funds withheld assets;      prior year reserve development for which
?loss (gain) on extinguishment of debt;  we have ceded the risk under retroactive
?all net realized gains and losses       reinsurance agreements and related
except earned income (periodic           changes in amortization of the 

deferred

settlements and changes in settlement    gain;
accruals) on derivative instruments used ?integration and transaction costs
for non-qualifying (economic) hedging or associated with acquiring or divesting
for asset replication. Earned income on  businesses;
such economic hedges is reclassified     ?losses from the impairment of goodwill;
from net realized gains and losses to    and
specific APTI line items based on the    ?non-recurring costs associated with the
economic risk being hedged (e.g. net     implementation of non-ordinary course
investment income and interest credited  legal or regulatory changes or changes
to policyholder account balances);       to accounting principles.


?General insurance

-Ratios: We, along with most property and casualty insurance companies, use the
loss ratio, the expense ratio and the combined ratio as measures of underwriting
performance. These ratios are relative measurements that describe, for every
$100 of net premiums earned, the amount of losses and loss adjustment expenses
(which for General Insurance excludes net loss reserve discount), and the amount
of other underwriting expenses that would be incurred. A combined ratio of less
than 100 indicates underwriting income and a combined ratio of over 100
indicates an underwriting loss. Our ratios are calculated using the relevant
segment information calculated under GAAP, and thus may not be comparable to
similar ratios calculated for regulatory reporting purposes. The underwriting
environment varies across countries and products, as does the degree of
litigation activity, all of which affect such ratios. In addition, investment
returns, local taxes, cost of capital, regulation, product type and competition
can have an effect on pricing and consequently on profitability as reflected in
underwriting income and associated ratios.

-Accident year loss and accident year combined ratios, as adjusted: both the
accident year loss and accident year combined ratios, as adjusted, exclude
catastrophe losses and related reinstatement premiums, prior year development,
net of premium adjustments, and the impact of reserve discounting. Natural
catastrophe losses are generally weather or seismic events having a net impact
on AIG in excess of $10 million each and man-made catastrophe losses, such as
terrorism and civil disorders that exceed the $10 million threshold. We believe
that as adjusted ratios are meaningful measures of our underwriting results on
an ongoing basis as they exclude catastrophes and the impact of reserve
discounting which are outside of management's control. We also exclude prior
year development to provide transparency related to current accident year
results.

? Life and retirement

-Premiums and deposits: includes direct and assumed amounts received and earned
on traditional life insurance policies, group benefit policies and
life-contingent payout annuities, as well as deposits received on universal
life, investment-type annuity contracts, Federal Home Loan Bank (FHLB) funding
agreements and mutual funds.

Results from discontinued operations are excluded from all of these measures.

                                           AIG | Third Quarter 2021 Form 10-Q 79


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                          ITEM 2 | Critical Accounting Estimates





Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires the
application of accounting policies that often involve a significant degree of
judgment.

The accounting policies that we believe are most dependent on the application of
estimates and assumptions, which are critical accounting estimates, are related
to the determination of:

?loss reserves;
?valuation of future policy benefit liabilities and timing and extent of loss
recognition;
?valuation of liabilities for guaranteed benefit features of variable annuity
products;
?valuation of embedded derivatives for fixed index annuity and life products;
?estimated gross profits to value deferred acquisition costs for
investment-oriented products, for example universal life, variable and fixed
annuities, and fixed indexed annuities;
?reinsurance assets, including the allowance for credit losses;
?goodwill impairment;
?allowances for credit losses primarily on loans and available for sale fixed
maturity securities;
?liability for legal contingencies;
?fair value measurements of certain financial assets and liabilities; and
?income tax assets and liabilities, including recoverability of our net deferred
tax asset and the predictability of future tax operating profitability of the
character necessary to realize the net deferred tax asset.


These accounting estimates require the use of assumptions on matters, some of which
which are very uncertain at the time of estimation. To the extent that real
experience differs from the assumptions used, our consolidated financial statements
the condition, results of operations and cash flows could be materially affected.

For a full discussion of our critical accounting estimates, see Part II,
Section 7. Management report – Critical accounting estimates in the 2020 annual report.

80 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary





Executive Summary

Overview

This overview of the MD&A highlights selected information and may not contain
all of the information that is important to current or potential investors in
our securities. You should read this Quarterly Report on Form 10-Q, together
with the 2020 Annual Report, in their entirety for a more detailed description
of events, trends, uncertainties, risks and critical accounting estimates
affecting us.

Life and Retirement Company Separation and Relationship with Blackstone Inc.

On October 26, 2020, AIG announced its intention to separate its Life and
Retirement business from AIG. On July 14, 2021, AIG and Blackstone Inc.
(Blackstone) announced that they have reached a definitive agreement for
Blackstone to acquire a 9.9 percent equity stake in SAFG Retirement Services,
Inc. (SAFG), which is the holding company for AIG's Life and Retirement
business, for $2.2 billion in an all cash transaction, subject to adjustment if
the final pro forma adjusted book value is greater or lesser than the target pro
forma adjusted book value. The transaction contemplates that most of AIG's
investment operations would be transferred to SAFG or its subsidiaries as part
of the separation. As part of this agreement, AIG also agreed to enter into a
long-term asset management relationship with Blackstone to manage an initial $50
billion of Life and Retirement's existing investment portfolio upon closing of
the equity investment, with that amount increasing by increments of $8.5 billion
per year for the next five years beginning in the fourth quarter of 2022, for an
aggregate of $92.5 billion. Following the closing of the transaction, Blackstone
will be entitled to designate one member of the board of directors of SAFG,
which will consist of 11 directors. Pursuant to the definitive agreement,
Blackstone will be required to hold its ownership interest in SAFG following the
completion of the separation of the Life and Retirement business, subject to
exceptions permitting Blackstone to sell 25%, 67% and 75% of its shares after
the first, second and third anniversaries, respectively, of the initial public
offering of SAFG (the IPO), with the transfer restrictions terminating in full
on the fifth anniversary of the IPO. In the event that the IPO of SAFG is not
completed prior to the second anniversary of the closing of the transaction,
Blackstone will have the right to require AIG to undertake the IPO, and in the
event that the IPO has not been completed prior to the third anniversary of the
closing, Blackstone will have the right to exchange all or a portion of its
ownership interest in SAFG for shares of AIG's common stock on the terms set
forth in the definitive agreement. These transactions closed on November 2,
2021. While we currently believe the IPO is the next step in the separation of
the Life and Retirement business from AIG, no assurance can be given regarding
the form that future separation transactions may take or the specific terms or
timing thereof, or that a separation will in fact occur. Any separation
transaction will be subject to the satisfaction of various conditions and
approvals, including approval by the AIG Board of Directors, receipt of
insurance and other required regulatory approvals, and satisfaction of any
applicable requirements of the SEC.

On July 14, 2021, AIG and Blackstone Real Estate Income Trust (BREIT), a
long-term, perpetual capital vehicle affiliated with Blackstone, announced that
they have reached a definitive agreement for BREIT to acquire AIG's interests in
a U.S. affordable housing portfolio for approximately $5.1 billion, subject to
certain adjustments, in an all cash transaction. As of September 30, 2021, the
assets, primarily Other invested assets (Investment real estate) and
liabilities, primarily Debt of consolidated investment entities, related to the
Affordable Housing portfolio, $4.3 billion and $2.7 billion, respectively, are
classified as held for sale and are reported in Other assets and Other
liabilities within our Condensed Consolidated Balance Sheets. This transaction
is subject to customary closing conditions and is expected to close in the
fourth quarter of 2021.

Debt cash purchase offers

In the nine months ended September 30, 2021, we repurchased, through cash tender
offers, and canceled approximately $262 million aggregate principal amount of
certain notes and debentures issued or guaranteed by AIG for an aggregate
purchase price of approximately $369 million and wrote off $4 million of
unamortized debt issuance costs, resulting in a total loss on extinguishment of
debt of approximately $111 million.

Sale of certain retail mutual fund operations of AIG Life & Retirement

On February 8, 2021, AIG announced the execution of a definitive agreement with
Touchstone Investments (Touchstone), an indirect wholly-owned subsidiary of
Western & Southern Financial Group, to sell certain assets of AIG Life and
Retirement's Retail Mutual Funds business. The transaction closed on July 16,
2021 at which time we received initial proceeds, and twelve retail mutual funds
managed by SunAmerica Asset Management, LLC (SAAMCo), a member of AIG Life and
Retirement, with $6.8 billion in assets, were reorganized into Touchstone funds.
Additional proceeds may be earned over a three-year period based on asset levels
in certain reorganized funds. Six retail mutual funds managed by SAAMCo and not
included in the transaction were liquidated. AIG Life and Retirement will retain
its fund management platform and capabilities dedicated to its variable annuity
insurance products.

                                           AIG | Third Quarter 2021 Form 10-Q 81


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



Sale of Fortitude Holdings

On June 2, 2020, we completed the sale of a majority of the interests in
Fortitude Group Holdings, LLC (Fortitude Holdings) to Carlyle FRL, L.P. (Carlyle
FRL), an investment fund advised by an affiliate of The Carlyle Group Inc.
(Carlyle), and T&D United Capital Co., Ltd. (T&D), a subsidiary of T&D Holdings,
Inc., under the terms of a membership interest purchase agreement entered into
on November 25, 2019 by and among AIG, Fortitude Holdings, Carlyle FRL, Carlyle,
T&D and T&D Holdings, Inc. (the Majority Interest Fortitude Sale). AIG
established Fortitude Re, a wholly owned subsidiary of Fortitude Holdings, in
2018 in a series of reinsurance transactions related to AIG's Run-Off portfolio.
As of September 30, 2021, approximately $29.9 billion of reserves from AIG's
Life and Retirement Run-Off Lines and approximately $3.8 billion of reserves
from AIG's General Insurance Run-Off Lines, related to business written by
multiple wholly-owned AIG subsidiaries, had been ceded to Fortitude Re under
these reinsurance transactions. As of closing of the Majority Interest Fortitude
Sale, these reinsurance transactions are no longer considered affiliated
transactions and Fortitude Re is the reinsurer of the majority of AIG's Run-Off
operations. As these reinsurance transactions are structured as modified
coinsurance and loss portfolio transfers with funds withheld, following the
closing of the Majority Interest Fortitude Sale, AIG continues to reflect the
invested assets, which consist mostly of available for sale securities,
supporting Fortitude Re's obligations, in AIG's financial statements.

AIG sold a 19.9 percent ownership interest in Fortitude Holdings to TC Group
Cayman Investments Holdings, L.P., an affiliate of Carlyle, in November 2018. As
a result of completion of the Majority Interest Fortitude Sale, Carlyle FRL
purchased from AIG a 51.6 percent ownership interest in Fortitude Holdings and
T&D purchased from AIG a 25 percent ownership interest in Fortitude Holdings;
AIG retained a 3.5 percent ownership interest in Fortitude Holdings and one seat
on its Board of Managers. The $2.2 billion of proceeds received by AIG at
closing included (i) the $1.8 billion under the Majority Interest Fortitude
Sale, subject to a post-closing purchase price adjustment pursuant to which AIG
would pay Fortitude Re for certain adverse development in property casualty
related reserves, based on an agreed methodology, that may occur through
December 31, 2023, up to a maximum payment of $500 million; and (ii) a $383
million purchase price adjustment from Carlyle FRL and T&D, corresponding to
their respective portions of a proposed $500 million non-pro rata distribution
from Fortitude Holdings that was not received by AIG prior to the closing.
Effective in the second quarter of 2021, AIG, Fortitude Holdings, Carlyle FRL,
T&D and Carlyle amended the purchase agreement to finalize the post-closing
purchase price adjustment for adverse reserve development. As a result of this
amendment, during the nine months ended September 30, 2021, AIG recorded a $21
million benefit through Policyholder benefits and losses incurred and eliminated
further net exposure to adverse development on the reserves ceded to Fortitude
Re.

For a more in-depth discussion of selling Fortitude Holdings see note 7 to
Condensed consolidated financial statements.

82 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



AIG'S OPERATING STRUCTURE

AIG reports the results of its businesses through three segments - General
Insurance, Life and Retirement and Other Operations. General Insurance consists
of two operating segments - North America and International. Life and Retirement
consists of four operating segments - Individual Retirement, Group Retirement,
Life Insurance and Institutional Markets. Other Operations is primarily
comprised of corporate, our institutional asset management business and
consolidation and eliminations. On October 26, 2020, AIG announced its intention
to separate its Life and Retirement business from AIG.

Consistent with how we manage our business, our General Insurance North America
operating segment primarily includes insurance businesses in the United States,
Canada and Bermuda, and our global reinsurance business, AIG Re. Our General
Insurance International operating segment includes regional insurance businesses
in Japan, the United Kingdom, Europe, Middle East and Africa (EMEA region), Asia
Pacific, Latin America and Caribbean, and China. International also includes the
results of Talbot Holdings, Ltd. as well as AIG's global specialty business.

For more details on our business segments, see note 3 of the summary
Consolidated financial statements, and for a more in-depth discussion of the separation
life and retirement see note 1 of the condensed consolidated financial statements
Statements.

Business Segments


  General Insurance                   Life and Retirement

General insurance is a leader in Life and Retirement is a unique franchise

supplier of insurance products and which brings together a large portfolio of

commercial and life insurance services, pension and

personal insurance customers. There institutional products offered through a

includes one of the most extensive multichannel distributions in the world

extensive damage insurance network. He holds a long-standing, leading

networks. General insurance offers market positions in many markets that it

a wide range of products to serve in the we With its strong capital

customers through a diverse, positioned, customer-focused, broad

multichannel distribution network. of deep product and distribution expertise

Customer value General insurances multi-channel relationships,

a strong capital position, a wide range of life and pension insurance is well positioned to

  risk management and claims          serve growing market needs.
  experience and its ability to be a
  market leader in critical lines of
  the insurance business.
       [[Image Removed: Picture                [[Image Removed: Picture
    1]][[Image Removed: Picture 2]]           3]][[Image Removed: Picture
                                              4]][[Image Removed: Picture
                                            5]][[Image Removed: Picture 6]]

General insurance includes life and retirement includes the following

  following major operating           major operating companies: American 

General

companies: Syndicat National Incendie Life insurance company (AGL); The variable

Insurance company of Pittsburgh, Annuity life insurance company (VALIC); The

Pa. (National union); American Home Life Insurance Company of the United States in the

Insurance company (american house); New York City (we Life); Laya

Lexington Insurance Company Limited health and AIG Life Limited.

  (Lexington); AIG General Insurance
  Company, Ltd. (AIG Sonpo); AIG Asia
  Pacific Insurance, Pte, Ltd.; AIG
  Europe S.A.; American International
  Group UK Ltd.; Validus Reinsurance,
  Ltd. (Validus Re); Talbot Holdings
  Ltd. (Talbot); Western World
  Insurance Group, Inc. and
  Glatfelter Insurance Group
  (Glatfelter).


  Other Operations

The other transactions mainly consist of income from assets held by the parent company AIG

and other subsidiaries of companies, deferred tax assets related to tax

attributes, business expenses and intercompany eliminations, our

asset management activity and the results of our consolidated investment entities,

General insurance portfolios in run-off as well as the historical results of

  our legacy insurance lines ceded to Fortitude Re.




                                           AIG | Third Quarter 2021 Form 10-Q 83



————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary


Summary of financial performance


Net Income (Loss) Attributable to AIG Common Shareholders
Three Months Ended September 30,
(in millions)
                                  2021 and 2020 Quarterly Comparison
[[Image Removed: Chart 3]]        Net income attributable to AIG common
                                  shareholders increased $1.4 billion due to the
                                  following, on a pre-tax basis:
                                  ?higher net realized gains excluding Fortitude
                                  Re funds withheld assets and embedded
                                  derivative of $1.2 billion, driven primarily
                                  by $943 million of gains on other derivative
                                  and hedge activity, gains on sales of real
                                  estate and other assets ($349 million) and
                                  lower derivative losses on variable annuity
                                  embedded derivatives, net of related hedges
                                  ($109 million), offset by adverse impact of
                                  foreign exchange ($377 million);
                                  ?lower net realized loss on Fortitude Re funds
                                  withheld embedded derivative ($447 million)
                                  and higher net realized gains on Fortitude Re
                                  funds withheld assets ($158 million); and
                                  ?higher underwriting income in General
                                  Insurance ($443 million) from higher net
                                  premium marked by strong rate improvement,
                                  higher renewal retentions and strong new
                                  business growth, with continued attritional
                                  loss ratio improvement as well as lower
                                  catastrophe losses, net of reinstatement
                                  premiums ($170 million) and favorable prior
                                  year development as compared to unfavorable
                                  development ($63 million).
                                  These pre-tax increases were partially offset
                                  by:
                                  ?Life and Retirement, which had higher DAC
                                  amortization ($495 million) principally due to
                                  the impact of the annual assumption review
                                  which was partially offset by the gain from
                                  the sale of our retail mutual fund business;
                                  and
                                  ?$365 million higher income tax expense
                                  attributable primarily to higher income from
                                  continuing operations.
                                  For further discussion see Consolidated
                                  Results of Operations.



84 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



Net Income (Loss) Attributable to AIG Common Shareholders
Nine Months Ended September 30,
(in millions)
                                  2021 and 2020 Year-to-Date Comparison
[[Image Removed: Chart 4]]        Net income attributable to AIG common
                                  shareholders increased $11.5 billion due to
                                  the following, on a pre-tax basis:
                                  ?the recognition of an $8.4 billion loss on
                                  the closing of the Majority Interest Fortitude
                                  Sale in 2020;
                                  ?net realized gain on Fortitude Re funds
                                  withheld embedded derivative as compared to a
                                  loss ($1.6 billion) and higher net realized
                                  gains on Fortitude Re funds withheld assets
                                  ($408 million);
                                  ?$1.4 billion higher net investment income, of
                                  which $459 million is excluding Fortitude Re
                                  funds withheld assets, with higher returns in
                                  our investment portfolio primarily due to
                                  alternative investments, an increase which was
                                  driven by positive returns achieved in equity
                                  markets, partially offset by declines in fair
                                  value option bonds;
                                  ?lower policyholder benefits ($1.6 billion)
                                  due in part to the cession to Fortitude Re and
                                  higher policy fees ($117 million) in Life and
                                  Retirement, partially offset by lower premiums
                                  ($490 million) and higher DAC amortization
                                  ($212 million) principally due to the impact
                                  of the annual assumption review; and
                                  ?higher underwriting income in General
                                  Insurance ($1.4 billion) from higher net
                                  premium marked by strong rate improvement,
                                  higher renewal retentions and strong new
                                  business growth, with continued attritional
                                  loss ratio improvement as well as lower
                                  catastrophe losses, net of reinstatement
                                  premiums ($712 million) and higher favorable
                                  prior year development ($36 million).
                                  These pre-tax increases were partially offset
                                  by:
                                  ?higher Corporate general operating expenses,
                                  driven largely by increases in
                                  performance-based employee costs ($93 million)
                                  and transaction costs ($48 million);
                                  ?prior period having included the results of
                                  Fortitude Re, a loss of $241 million, up
                                  through the Majority Interest Fortitude Sale
                                  on June 2, 2020;
                                  ?$2.2 billion higher income tax expense with
                                  $1.7 billion attributable to the tax benefit
                                  on the deconsolidation of Fortitude Holdings
                                  in 2020; and
                                  ?lower net realized gains excluding Fortitude
                                  Re funds withheld assets and embedded
                                  derivative of $99 million, where a $1.0
                                  billion decrease in gains on variable annuity
                                  embedded derivatives, net of hedging was
                                  largely offset by an increase in other
                                  realized gains primarily driven by higher
                                  gains on sales of real estate and other assets
                                  ($548 million) as well as favorable movement
                                  in the allowance for credit losses on fixed
                                  maturity securities ($363 million).
                                  For further discussion see Consolidated
                                  Results of Operations.


                                           AIG | Third Quarter 2021 Form 10-Q 85


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary





Adjusted Pre-Tax Income*
Three Months Ended September 30,
(in millions)
                                  2021 and 2020 Quarterly Comparison
[[Image Removed: Chart 4]]        Adjusted pre-tax income increased $210 million
                                  primarily due to:
                                  ?higher underwriting income in General Insurance
                                  ($443 million) from higher net premium marked by
                                  strong rate improvement, higher renewal
                                  retentions and strong new business growth, with
                                  continued attritional loss ratio improvement as
                                  well as lower catastrophe losses, net of
                                  reinstatement premiums ($170 million) and
                                  favorable prior year development as compared to
                                  unfavorable development ($63 million).
                                  These adjusted pre-tax increases were partially
                                  offset by:
                                  ?lower adjusted pre-tax income for Life and
                                  Retirement ($131 million) driven by unfavorable
                                  mortality as well as an unfavorable impact from
                                  the annual assumption review ($59 million).




Adjusted Pre-Tax Income*
Nine Months Ended September 30,
(in millions)
                                  2021 and 2020 Year-to-Date Comparison
[[Image Removed: Chart 4]]        Adjusted pre-tax income increased $2.2 billion
                                  primarily due to:
                                  ?returns in our investment portfolio were $554
                                  million higher due primarily to alternative
                                  investments, an increase which was driven by
                                  positive returns achieved in equity markets,
                                  partially offset by declines in available for
                                  sale securities and fair value option bonds;
                                  ?higher underwriting income in General Insurance
                                  ($1.4 billion) from higher net premium marked by
                                  strong rate improvement, higher renewal
                                  retentions and strong new business growth, with
                                  continued attritional loss ratio improvement as
                                  well as lower catastrophe losses, net of
                                  reinstatement premiums ($712 million) and higher
                                  favorable prior year development ($36 million);
                                  and
                                  ?investment portfolio returns at Life and
                                  Retirement that more than offset the impact of
                                  unfavorable mortality and unfavorable annual
                                  assumption review ($59 million).

* Non-GAAP measure – for reconciliation of non-GAAP and GAAP measures, see
Consolidated operating results.

86 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



General Operating and Other Expenses
Three Months Ended September 30,
(in millions)
                                         2021 and 2020 Quarterly Comparison
[[Image Removed: Chart 1]]               General operating and other expenses
                                         increased $249 million primarily due to
                                         increases in expenses related to
                                         business growth and professional fees.
                                         General operating and other expenses in
                                         the three-month periods ended September
                                         30, 2021 and 2020 included approximately
                                         $104 million and $100 million of pre-tax
                                         restructuring and other costs,
                                         respectively, which were primarily
                                         comprised of employee severance charges
                                         and other costs related to
                                         organizational simplification,
                                         operational efficiency, and business
                                         rationalization.





General Operating and Other Expenses
Nine Months Ended September 30,
(in millions)
                                         2021 and 2020 Year-to-Date Comparison
[[Image Removed: Chart 1]]               General operating and other expenses
                                         increased $315 million primarily due to
                                         increases in professional fees and
                                         transaction costs partially offset by
                                         decreases in restructuring and other
                                         costs.
                                         General operating and other expenses in
                                         the nine-month periods ended September
                                         30, 2021 and 2020 included approximately
                                         $304 million and $324 million of pre-tax
                                         restructuring and other costs,
                                         respectively, which were primarily
                                         comprised of employee severance charges
                                         and other costs related to
                                         organizational simplification,
                                         operational efficiency, and business
                                         rationalization.





                                           AIG | Third Quarter 2021 Form 10-Q 87


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



Return on Common Equity      Return on Common Equity
[[Image Removed: Chart 1]]   [[Image Removed: Chart 3]]



Adjusted return on equity * Adjusted return on equity *
[[Image Removed: Chart 1]] [[Image Removed: Chart 1]]

* Non-GAAP measure – for reconciliation of non-GAAP and GAAP measures, see
Consolidated operating results.

Book Value Per Common Share   Adjusted Book Value Per Common Share*
[[Image Removed: Chart 1]]    [[Image Removed: Chart 1]]

* Non-GAAP measure – for reconciliation of non-GAAP and GAAP measures, see
Consolidated operating results.

88 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary


AIG Perspectives – Industrial and Economic Factors

Our business is affected by industry and economic factors such as interest
rates, currency exchange rates, credit and equity market conditions,
catastrophic claims events, regulation, tax policy, competition, and general
economic, market and political conditions. We continued to operate under
challenging market conditions in the first nine months of 2021, characterized by
factors such as the impact of COVID-19 and the related governmental and societal
responses, interest rate volatility, inflationary pressures, an uneven global
economic recovery, global trade tensions and Brexit. Brexit has also affected
the U.S. dollar/British pound exchange rate and increased the volatility of
exchange rates among the Euro, British pound and the Japanese yen (the Major
Currencies), which may continue for some time.

On October 26, 2020, AIG announced its intention to separate its Life and
Retirement business from AIG. On July 14, 2021, AIG and Blackstone announced
that they have reached a definitive agreement for Blackstone to acquire a 9.9
percent equity stake in SAFG, which is the holding company for AIG's Life and
Retirement business, for $2.2 billion in an all cash transaction, subject to
adjustment if the final pro forma adjusted book value is greater or lesser than
the target pro forma adjusted book value. The transaction contemplates that most
of AIG's investment operations would be transferred to SAFG or its subsidiaries
as part of the separation. As part of this agreement, AIG also agreed to enter
into a long-term asset management relationship with Blackstone to manage an
initial $50 billion of Life and Retirement's existing investment portfolio upon
closing of the equity investment, with that amount increasing by increments of
$8.5 billion per year for the next five years beginning in the fourth quarter of
2022, for an aggregate of $92.5 billion. These transactions closed on November
2, 2021. While we currently believe an initial public offering is the next step
in the separation of the Life and Retirement business from AIG, no assurance can
be given regarding the form that a separation transaction may take or the
specific terms or timing thereof, or that a separation will in fact occur. Any
separation transaction will be subject to the satisfaction of various conditions
and approvals, including approval by the AIG Board of Directors, receipt of
insurance and other required regulatory approvals, and satisfaction of any
applicable requirements of the SEC.

On July 14, 2021, AIG and BREIT, a long-term, perpetual capital vehicle
affiliated with Blackstone, announced that they have reached a definitive
agreement for BREIT to acquire AIG's interests in a U.S. affordable housing
portfolio for approximately $5.1 billion, subject to certain adjustments, in an
all cash transaction. As of September 30, 2021, the assets, primarily Other
invested assets (Investment real estate) and liabilities, primarily Debt of
consolidated investment entities, related to the Affordable Housing portfolio,
$4.3 billion and $2.7 billion, respectively, are classified as held for sale and
are reported in Other assets and Other liabilities within our Condensed
Consolidated Balance Sheets. This transaction is subject to customary closing
conditions and is expected to close in the fourth quarter of 2021.

For additional information on the separation of AIG's Life and Retirement
business, please see the 2020 Annual Report, Part I, Item 1A. Risk Factors -
Business and Operations - No assurances can be given that the separation of our
Life and Retirement business will occur or as to the specific terms or timing
thereof. In addition, the separation could cause the emergence or exacerbate the
effects of other risks to which AIG is exposed and - Overview above.

Impact of COVID-19

We are continually assessing the impact on our business, operations and
investments of COVID-19 and the resulting ongoing economic and societal
disruption. These impacts initially included a global economic contraction,
disruptions in financial markets, increased market volatility and declines in
certain equity and other asset prices that had negative effects on our
investments, our access to liquidity, our ability to generate new sales and the
costs associated with claims. While many of the major global economies continue
to recover and global financial markets appear to have largely stabilized, there
remains a risk that the disruptions previously experienced could return and new
ones emerge as COVID-19 persists or new variants arise. In addition, in response
to the crisis, new governmental, legislative and regulatory actions have been
taken and continue to be developed that have resulted and could continue to
result in additional restrictions and requirements, or court decisions rendered,
relating to or otherwise affecting our policies that may have a negative impact
on our business, operations and capital.

General Insurance offers numerous products for which we are monitoring claims
activity and assessing adverse impact on future new and renewal business in
relation to the COVID-19 crisis. We are continually reassessing our exposures in
light of unfolding developments in the U.S. and globally and evaluating coverage
by our reinsurance arrangements.

In our Life and Retirement business, the most significant impacts relating to
COVID-19 have been the impact of interest rate and equity market levels on
spread and fee income, deferred acquisition cost amortization and adverse
mortality. We are actively monitoring the mortality rates and the potential
direct and indirect impacts that COVID-19 may have across our portfolio of Life
and Retirement businesses.

                                           AIG | Third Quarter 2021 Form 10-Q 89


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



We have a diverse investment portfolio with material exposures to various forms
of credit risk. The far-reaching economic impacts of COVID-19 have been largely
offset, to date, by intervention taken by governments and monetary authorities
and equity market rebound resulting in a minimal impact on the value of the
portfolio. At this point in time, uncertainty surrounding the duration and
severity of the COVID-19 crisis makes the long-term financial impact difficult
to quantify.

For additional information please see the 2020 Annual Report, Part I, Item 1A.
Risk Factors - Market Conditions - COVID-19 is adversely affecting, and is
expected to continue to adversely affect, our global business, financial
condition and results of operations, and its ultimate impact will depend on
future developments that are uncertain and cannot be predicted, including the
scope, severity and duration of the crisis, and the governmental, legislative
and regulatory actions taken and court decisions rendered in response thereto.

Impact of changes in the interest rate environment

Key U.S. benchmark rates have been volatile in 2021 as investors form opinions
over recent elevated inflation measures and whether they will be transitory or
not. While key rates have recently increased, they are still historically low.
The low interest rate environment negatively affects sales of interest rate
sensitive products in our industry and negatively impacts the profitability of
our existing business as we reinvest cash flows from investments, including
increased calls and prepayments of fixed maturity securities and mortgage loans,
at rates below the average yield of our existing portfolios. We actively manage
our exposure to the interest rate environment through portfolio selection and
asset-liability management, including spread management strategies for our
investment-oriented products and economic hedging of interest rate risk from
guarantee features in our variable and fixed index annuities. We may not be able
to fully mitigate our interest rate risk by matching exposure of our assets
relative to our liabilities. A low interest rate environment could also impair
our ability to earn the returns assumed in the pricing and the reserving of our
products at the time they were sold and issued.

In addition, low and sustained interest rates can lead to increased pension costs.
due to the impact on the discounting of forecast cash flows for services.

Annuity sales and redemptions

The interest rate environment has a significant impact on the annuity industry.
Low long-term interest rates put pressure on investment returns, which may
negatively affect sales of interest rate sensitive products and reduce future
profits on certain existing fixed rate products. However, our disciplined rate
setting has helped to mitigate some of the pressure on investment spreads.
Rapidly rising interest rates could create the potential for increased sales,
but may also drive higher surrenders. Fixed annuities have surrender charge
periods, generally in the three-to-five year range, which may help mitigate
increased early surrenders in a rising rate environment. In addition, older
contracts that have higher minimum interest rates and continue to be attractive
to the contract holders have driven better than expected persistency in fixed
annuities, although the reserves for such contracts have continued to decrease
over time in amount and as a percentage of the total annuity portfolio. We
closely monitor surrenders of fixed annuities as contracts with lower minimum
interest rates come out of the surrender charge period. Changes in interest
rates significantly impact the valuation of our liabilities for annuities with
guaranteed income features and the value of the related hedging portfolio.

Reinvestment and spread management

We actively monitor fixed income markets, including the level of interest rates,
credit spreads and the shape of the yield curve. We also frequently review our
interest rate assumptions and actively manage the crediting rates used for new
and in-force business. Business strategies continue to evolve to maintain
profitability of the overall business in light of the interest rate environment.
A low interest rate environment puts margin pressure on pricing of new business
and on existing products, due to the challenge of investing new money or
recurring premiums and deposits, and reinvesting investment portfolio cash
flows, in the low interest rate environment. In addition, there is investment
risk associated with future premium receipts from certain in-force business.
Specifically, the investment of these future premium receipts may be at a yield
below that required to meet future policy liabilities.

The contractual provisions for renewal of crediting rates and guaranteed minimum
crediting rates included in products may reduce spreads in a sustained low
interest rate environment and thus reduce future profitability. Although this
interest rate risk is partially mitigated through the asset-liability management
process, product design elements and crediting rate strategies, a sustained low
interest rate environment may negatively affect future profitability.

For more information on our investments and our asset-liability management
strategies see Investments.

90 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



For investment-oriented products, for example universal life, and variable,
fixed and fixed indexed annuities, in our Individual Retirement, Group
Retirement, Life Insurance and Institutional Markets businesses, our spread
management strategies include disciplined pricing and product design for new
business, modifying or limiting the sale of products that do not achieve
targeted spreads, using asset-liability management to match assets to
liabilities to the extent practicable, and actively managing crediting rates to
help mitigate some of the pressure on investment spreads. Renewal crediting rate
management is done under contractual provisions that were designed to allow
crediting rates to be reset at pre-established intervals in accordance with
state and federal laws and subject to minimum crediting rate guarantees. We will
continue to adjust crediting rates on in-force business to mitigate the pressure
on spreads from declining base yields, but our ability to lower crediting rates
may be limited by the competitive environment, contractual minimum crediting
rates, and provisions that allow rates to be reset only at pre-established
intervals. As interest rates begin to rise again, we may need to raise crediting
rates on in-force business for competitive and other reasons, potentially
offsetting a portion of the additional investment income resulting from
investing in a higher interest rate environment.

Of the aggregate fixed account values of our Individual Retirement and Group
Retirement annuity products, 68 percent were crediting at the contractual
minimum guaranteed interest rate as of September 30, 2021. The percentage of
fixed account values of our annuity products that are currently crediting at
rates above one percent were 58 percent and 59 percent as of September 30, 2021
and December 31, 2020, respectively. These businesses continue to focus on
pricing discipline and strategies to manage the minimum guaranteed interest
crediting rates offered on new sales in the context of regulatory requirements
and competitive positioning. In the universal life products in our Life
Insurance business, 67 percent of the account values were crediting at the
contractual minimum guaranteed interest rate as of September 30, 2021.

The following table presents fixed annuity and universal life account values of
our Individual Retirement, Group Retirement and Life Insurance operating
segments by contractual minimum guaranteed interest rate and current crediting
rates, excluding balances ceded to Fortitude Re:

                                               Current Crediting Rates
September 30, 2021                                1-50 Basis   More than 50
Contractual Minimum Guaranteed  At Contractual  Points Above   Basis Points
Interest Rate                          Minimum       Minimum  Above Minimum
(in millions)                        Guarantee     Guarantee      Guarantee     Total
Individual Retirement*
<=1%                            $        9,970   $     1,940  $      17,877 $  29,787
> 1% - 2%                                4,661            29          1,683     6,373
> 2% - 3%                               10,551             -             18    10,569
> 3% - 4%                                8,282            41              6     8,329
> 4% - 5%                                  485             -              5       490
> 5% - 5.5%                                 34             -              5        39
Total Individual Retirement     $       33,983   $     2,010  $      19,594 $  55,587
Group Retirement*
<=1%                            $        2,120   $     3,242  $       4,673 $  10,035
> 1% - 2%                                6,094           658            101     6,853
> 2% - 3%                               14,842             -              -    14,842
> 3% - 4%                                  733             -              -       733
> 4% - 5%                                7,053             -              -     7,053
> 5% - 5.5%                                165             -              -       165
Total Group Retirement          $       31,007   $     3,900  $       4,774 $  39,681
Universal life insurance
<=1%                            $            -   $         -  $           - $       -
> 1% - 2%                                  102            25            356       483
> 2% - 3%                                  258           539          1,206     2,003
> 3% - 4%                                1,424           179            209     1,812
> 4% - 5%                                3,108             2              -     3,110
> 5% - 5.5%                                239             -              -       239
Total universal life insurance  $        5,131   $       745  $       1,771 $   7,647
Total                           $       70,121   $     6,655  $      26,139 $ 102,915
Percentage of total                         68 %           7 %           25 %     100 %

* The amounts indicated for individual retirement and collective retirement include fixed options
in variable annuity products.

                                           AIG | Third Quarter 2021 Form 10-Q 91


————————————————– ——————————

                                                             TABLE OF CONTENTS



                                                      ITEM 2 | Executive Summary



General Insurance

The impact of low interest rates on our General Insurance segment is primarily
on our long-tail casualty line of business. We currently expect limited impacts
on our existing long-tail casualty business as the duration of our assets is
slightly longer than that of our liabilities. Sustained low interest rates would
potentially impact new and renewal business for the long-tail casualty line as
we may not be able to adjust our future pricing consistent with our
profitability objectives to fully offset the impact of investing at lower rates.
However, we will continue to be disciplined in pricing and risk selection.

In addition, for our General Insurance segment, sustained low interest rates may
unfavorably affect the net loss reserve discount for workers' compensation, and
to a lesser extent could favorably impact assumptions about future medical
costs, the combined net effect of which could result in higher net loss
reserves.

Changing standards of care

In our Life and Retirement business, we and our distributors are subject to laws
and regulations regarding the standard of care applicable to sales of our
products and the provision of advice to our customers. In recent years, many of
these laws and regulations have been revised or reexamined while others have
been newly adopted. We continue to closely follow these legislative and
regulatory activities. For additional information regarding these legislative
and regulatory activities, see Item 1. Business - Regulation - U.S. Regulation -
Standard of Care Developments in the 2020 Annual Report. Changes in standard of
care requirements or new standards issued by governmental authorities, such as
the Department of Labor, the SEC, the National Association of Insurance
Commissioners (NAIC) or state regulators and/or legislators, may affect our
businesses, results of operations and financial condition. While we cannot
predict the long-term impact of these legislative and regulatory developments on
our Life and Retirement businesses, we believe our diverse product offerings and
distribution relationships position us to compete effectively in this evolving
marketplace.

Impact of Currency Volatility

Currency volatility remains acute. Such volatility affected line item components
of income for those businesses with substantial international operations. In
particular, growth trends in net premiums written reported in U.S. dollars can
differ significantly from those measured in original currencies. The net effect
on underwriting results, however, is significantly mitigated, as both revenues
and expenses are similarly affected.

These currencies may continue to fluctuate, in either direction, especially as a
result of the UK's exit from the European Union (EU), and such fluctuations will
affect net premiums written growth trends reported in U.S. dollars, as well as
financial statement line item comparability.

General Insurance businesses are transacted in most major foreign currencies.
The following table presents the average of the quarterly weighted average
exchange rates of the Major Currencies, which have the most significant impact
on our businesses:

               Three Months Ended                    Nine Months Ended
                  September 30,      Percentage        September 30,      Percentage
Rate for 1 USD      2021      2020       Change          2021      2020       Change
Currency:
GBP                 0.72      0.78          (8) %        0.72      0.79          (9) %
EUR                 0.84      0.87          (3) %        0.83      0.90          (8) %
JPY               110.06    106.80            3 %      107.77    107.94            - %

Unless otherwise indicated, references to currency effects in the
General insurance discussion of operating results relate to
movements in the main currencies included in the previous table.

92 AIG | Form 10-Q for the third quarter of 2021

————————————————– ——————————

                                                             TABLE OF CONTENTS



                                     ITEM 2 | Consolidated Results of Operations




Consolidated operating results

The following section provides a comparative discussion of our consolidated
results of operations on a reported basis for the three- and nine-month periods
ended September 30, 2021 and 2020. Factors that relate primarily to a specific
business are discussed in more detail within the business segment operations
section.

For a discussion of the Critical Accounting Estimates that affect our results of
operations see Critical Accounting Estimates in this MD&A and Part II, Item 7.
MD&A - Critical Accounting Estimates in the 2020 Annual Report.

The following table presents our consolidated results of operations and other
key financial metrics:

                                  Three Months Ended                     Nine Months Ended
                                     September 30,       Percentage        September 30,       Percentage
(in millions)                           2021      2020       Change           2021      2020       Change
Revenues:
Premiums                          $    7,504 $   6,677           12 %    $  21,925 $  21,527            2 %
Policy fees                              714       648           10          2,269     2,152            5
Net investment income:
Net investment income -
excluding Fortitude Re funds
withheld assets                        3,220     3,342          (4)          9,559     9,100            5
Net investment income -
Fortitude Re funds withheld
assets                                   495       458            8          1,488       574          159
Total net investment income            3,715     3,800          (2)         11,047     9,674           14
Net realized gains (losses):
Net realized gains (losses) -
excluding Fortitude Re
funds withheld assets and
embedded derivative                      679     (498)           NM          1,331     1,430          (7)
Net realized gains on Fortitude
Re funds
withheld assets                          190        32          494            536       128          319
Net realized gains (losses) on
Fortitude Re funds
withheld embedded derivative           (209)     (656)           68            117   (1,493)           NM
Total net realized gains
(losses)                                 660   (1,122)           NM          1,984        65           NM
Other income                             242       218           11            745       642           16
Total revenues                        12,835    10,221           26         37,970    34,060           11
Benefits, losses and expenses:
Policyholder benefits and losses
incurred                               5,959     5,872            1         17,182    18,718          (8)
Interest credited to
policyholder account balances            923       882            5          2,663     2,757          (3)
Amortization of deferred policy
acquisition costs                      1,260       707           78          3,479     3,323            5
General operating and other
expenses                               2,240     1,991           13          6,546     6,231            5
Interest expense                         328       379         (13)          1,008     1,099          (8)
(Gain) loss on extinguishment of
debt                                      51       (2)           NM            149        15           NM
Net (gain) loss on divestitures        (102)        24           NM          (108)     8,652           NM
Total benefits, losses and
expenses                              10,659     9,853            8         30,919    40,795         (24)
Income (loss) from continuing
operations before
income tax expense (benefit)           2,176       368          491          7,051   (6,735)           NM
Income tax expense (benefit)             439        74          493          1,234     (918)           NM
Income (loss) from continuing
operations                             1,737       294          491          5,817   (5,817)           NM
Income from discontinued
operations, net of income
taxes                                      -         5           NM              -         4           NM
Net income (loss)                      1,737       299          481          5,817   (5,813)           NM
Less: Net income attributable to
noncontrolling interests                  70        11           NM            175        78          124
Net income (loss) attributable
to AIG                                 1,667       288          479          5,642   (5,891)           NM
Less: Dividends on preferred
stock                                      7         7            -             22        22            -
Net income (loss) attributable
to AIG common
shareholders                      $    1,660 $     281          491 %    $   5,620 $ (5,913)           NM %




                                           AIG | Third Quarter 2021 Form 10-Q 93


————————————————– ——————————

                                                             TABLE OF 

CONTENTS

Source link

About Michael S. Montanez

Check Also

Results of the Extraordinary Meeting of SIWA Group Limited held on November 29, 2021.

SIWA Group ACN Limited 619 195 283 Level 28, 1 market street Sydney NSW 2000 …

Leave a Reply

Your email address will not be published. Required fields are marked *