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AIG Reports Fourth Quarter and Full Year 2022 Results

  • General Insurance delivered the strongest underwriting profitability AIG has ever achieved as full year 2022 underwriting income nearly doubled to $2.0 billion from the prior year, led by Commercial Insurance that had a combined ratio of 89.6% and an adjusted accident year combined ratio* of 84.5% for full year 2022
  • General Insurance fourth quarter combined ratio improved 2.5 points from the prior year quarter to 89.9%; full year combined ratio improved 3.9 points to 91.9%
  • General Insurance fourth quarter adjusted accident year combined ratio* (AYCR) of 88.4% improved 1.4 points from the prior year quarter, marking the 18th consecutive quarter of improvement; full year AYCR improved 2.3 points to 88.7%
  • Life and Retirement delivered a solid quarter with premiums of $2.1 billion and premiums and deposits* of $8.8 billion benefiting from strong Fixed Annuity and Fixed Index Annuity sales along with continued improvement in base portfolio investment income
  • Net income per diluted common share was $0.35 and adjusted after-tax income* (AATI) per diluted common share was $1.36 compared to $1.58 in the prior year quarter, driven by lower alternative investment income
  • AIG repurchased $779 million of common stock and redeemed $1.8 billion of senior unsecured notes in the fourth quarter; for the full year, AIG returned over $6.1 billion to shareholders through $5.1 billion of common stock repurchases and $1.0 billion of dividends; outstanding common shares at year end 2022 were 10% lower than prior year

FOURTH QUARTER NOTEWORTHY ITEMS

  • General Insurance adjusted pre-tax income (APTI) of $1.2 billion decreased by $297 million from the prior year quarter as a result of a $489 million decrease of alternative investment income, partially offset by better underwriting results with 2.5 points of combined ratio improvement, benefiting from continued underwriting discipline and more favorable prior year reserve development (PYD).
  • Life and Retirement APTI of $781 million reflects lower net investment income (NII) due to lower alternative investment returns and call and tender income, partially offset by higher base portfolio income compared to the prior year quarter.
  • Net income attributable to AIG common shareholders was $264 million, or $0.35 per diluted common share for the fourth quarter, compared to $3.7 billion or $4.38 per diluted common share in the prior year quarter.
  • AATI attributable to AIG common shareholders was $1.0 billion, or $1.36 per diluted common share, compared to $1.3 billion, or $1.58 per diluted common share, in the prior year quarter, primarily due to lower alternative investment income.
  • Return on common equity (ROCE) and Adjusted ROCE* were 2.7% and 7.5%, respectively, on an annualized basis for the fourth quarter of 2022.
  • As of December 31, 2022, book value per common share was $53.83, compared to $79.97 at prior year end, driven by a reduction in accumulated other comprehensive income (AOCI) as a result of higher interest rates. Adjusted book value per common share* was $73.87, an increase of 7% from December 31, 2021.

* Refers to financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Comment on Regulation G and Non-GAAP Financial Measures.

American International Group, Inc. (NYSE: AIG) today reported financial results for the fourth quarter and full year ended December 31, 2022.

AIG Chairman & Chief Executive Officer Peter Zaffino said: “2022 was an extraordinary year of progress for AIG. We continued to improve the profitability of our General Insurance business, closing the year with the strongest underwriting results the business has ever achieved and with the second consecutive year of underwriting profitability improving by $1 billion. In addition, we made considerable progress on the separation of our Life and Retirement business and completed the initial public offering (IPO) of Corebridge Financial in September 2022. We reached significant milestones on AIG 200 that modernized our technology infrastructure and operational capabilities, while executing on our target run-rate savings of $1 billion six months ahead of schedule. We revamped AIG’s investment management strategy through strategic partnerships with Blackstone and BlackRock and have transferred approximately $50 billion and $150 billion of assets, respectively, to these partners.

“Improvement in General Insurance continued through portfolio optimization, prudent risk selection and limit reduction of over $1.2 trillion since 2018. The full-year 2022 combined ratio of 91.9% represents a 390-basis point year-over-year improvement. The accident year combined ratio, x-CAT of 88.7% improved 230 basis points from prior year, marking the fulfillment of our full-year sub-90 goal and was sub-90 in every quarter of 2022. Our strong momentum continued through the complex January 1 reinsurance renewal season, where the quality of our portfolio enabled us to secure treaties on favorable terms in a very challenging market.

“Life and Retirement delivered a solid year with strong sales, particularly in Individual Retirement where Fixed Annuity and Fixed Index Annuity sales continued their robust growth trends. The fixed income portfolio experienced meaningful lift in portfolio yield and widening spreads benefiting from the higher interest rate environment. The capital strength and free cash flow profile of the business remain healthy.

“2022 was also a significant year in terms of capital management. We returned over $6.1 billion to shareholders through $5.1 billion of AIG common stock repurchases and $1.0 billion of dividends and Corebridge paid two dividends totaling approximately $300 million in the fourth quarter of 2022 following its IPO in September. We established Corebridge’s capital structure and reduced AIG debt, setting a strong foundation for the future.

“In 2022 our colleagues across the globe aligned behind common goals and maintained a steadfast commitment to executing with the highest quality, and I am incredibly proud of the meaningful progress we made. As we look ahead to 2023, the world faces many uncertainties. AIG is better positioned than ever as a risk expert to continue executing on our strategy to deliver excellence as a top-performing company. I am confident we will continue to lead the market and create long-term value for our clients, distribution partners, colleagues, shareholders, and other stakeholders.”

For full year 2022, pre-tax income from continuing operations was $14.3 billion, up from $12.1 billion in the prior year. Full year 2022 net income attributable to AIG common shareholders was $10.2 billion, or $13.01 per diluted common share, compared to net income of $9.4 billion, or $10.82 per diluted common share, in the prior year. The increase was largely driven by net realized gains on Fortitude Re funds withheld embedded derivative, strong General Insurance underwriting results, which almost doubled year-over-year, and lower interest expense benefiting from liability management actions, partially offset by lower alternative investment income and call and tender income. The prior year results also included a $3.0 billion gain from the sale of a real estate portfolio. These pre-tax increases were partially offset by higher income tax expense as a result of higher income from operations as well as an increase in income attributable to the noncontrolling interest associated with Blackstone’s 9.9% ownership interest in Corebridge and the IPO of Corebridge in September 2022.

AATI was $3.6 billion, or $4.55 per diluted common share, for the full year of 2022 compared to $4.4 billion, or $5.12 per diluted common share, in the prior year. The decrease in AATI was primarily due to lower alternative investment income and call and tender income, partially offset by an increase in General Insurance underwriting income, yield improvement in the fixed maturity and loan portfolios and savings on interest expense.

For the fourth quarter of 2022, pre-tax income from continuing operations was $279 million, down from $5.0 billion in the prior year quarter. Fourth quarter 2022 net income attributable to AIG common shareholders was $264 million, or $0.35 per diluted common share, compared to $3.7 billion, or $4.38 per diluted common share, in the prior year quarter. Prior year result included a $3.0 billion gain from the sale of a real estate portfolio. The pre-tax income decline was otherwise primarily due to a decrease in net realized gains on derivative activities.

AATI was $1.0 billion, or $1.36 per diluted common share, for the fourth quarter of 2022 compared to $1.3 billion, or $1.58 per diluted common share, in the prior year quarter. The decrease in AATI was primarily due to lower alternative investment income and lower call and tender income, partially offset by improvement in General Insurance underwriting results and yield improvement in the fixed maturity and loan portfolios.

Total consolidated net investment income for the fourth quarter of 2022 was $3.3 billion, down 9% from $3.6 billion in the prior year quarter, primarily due to lower alternative investment income and reductions in call and tender income. Interest and dividends income improved $305 million from the prior year quarter with yield across the fixed maturity and loan portfolios up 29 basis points sequentially. Total net investment income on an APTI basis* was $3.0 billion, a decrease of $331 million compared to the prior year quarter.

Book value per common share was $53.83 as of December 31, 2022, an increase of 4% from September 30, 2022 and a decrease of 33% from December 31, 2021, driven by a reduction in AOCI as a result of higher interest rates. Adjusted book value per common share* was $73.87, an increase of 1% from September 30, 2022 and 7% from December 31, 2021, reflecting growth in retained earnings from net income in excess of dividends and share repurchases. Adjusted tangible book value per common share* was $67.43, an increase of 1% from September 30, 2022 and 7% from December 31, 2021.

For the fourth quarter of 2022, AIG repurchased $779 million of common stock or approximately 13 million shares, paid $243 million of common and preferred dividends, and redeemed $1.8 billion of aggregate principal amount of debt, ending the year with AIG Parent liquidity of $3.7 billion as of December 31, 2022. Corebridge liquidity is no longer reflected in AIG Parent's liquidity following the IPO. AIG’s ratio of total debt and preferred stock to total capital at December 31, 2022 was 34.1%, down from 36.5% at September 30, 2022, due to the redemption of $1.8 billion of debt in the fourth quarter and AOCI mark-to-market adjustments for certain investment portfolios.

The AIG Board of Directors declared a quarterly cash dividend of $0.32 per share on AIG common stock (NYSE: AIG). The dividend is payable on March 31, 2023 to stockholders of record at the close of business on March 17, 2023.

The AIG Board of Directors also declared a quarterly cash dividend of $365.625 per share on AIG Series A 5.85% Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25,000 per share, which is represented by depositary shares (NYSE: AIG PRA), each representing a 1/1,000th interest in a share of preferred stock. Holders of depositary shares will receive $0.365625 per depositary share. The dividend is payable on March 15, 2023 to holders of record at the close of business on February 28, 2023.

FINANCIAL SUMMARY

 

 

Three Months Ended

December 31, 2022

 

 

Twelve Months Ended

December 31, 2022

 

 

 

 

($ in millions, except per common share amounts)

 

2021

 

2022

 

 

2021

 

2022

 

Net income attributable to AIG common shareholders

$

3,739

$

264

 

$

9,359

$

10,247

 

Net income per diluted share attributable to AIG common shareholders

$

4.38

$

0.35

 

$

10.82

$

13.01

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income (loss)

$

1,830

$

1,542

 

$

5,920

$

5,140

 

General Insurance

 

1,509

 

1,212

 

 

4,359

 

4,430

 

Life and Retirement

 

969

 

781

 

 

3,911

 

2,657

 

Other Operations

 

(648)

 

(451)

 

 

(2,350)

 

(1,947)

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

3,565

$

3,258

 

$

14,612

$

11,767

 

Net investment income, APTI basis

 

3,291

 

2,960

 

 

12,940

 

10,997

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted after-tax income attributable to AIG common shareholders

$

1,339

$

1,024

 

$

4,430

$

3,586

 

Adjusted after-tax income per diluted share attributable to AIG common shareholders

$

1.58

$

1.36

 

$

5.12

$

4.55

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted (in millions)

 

872.0

 

754.9

 

 

864.9

 

787.9

 

 

 

 

 

 

 

 

 

 

 

 

Return on common equity

 

23.0

%

2.7

%

 

14.5

%

21.0

%

Adjusted return on common equity

 

9.9

%

7.5

%

 

8.6

%

6.5

%

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

$

79.97

$

53.83

 

$

79.97

$

53.83

 

Adjusted book value per common share

$

68.83

$

73.87

 

$

68.83

$

73.87

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (in millions)

 

818.7

 

734.1

 

 

818.7

 

734.1

 

GENERAL INSURANCE

 

 

Three Months Ended December 31,

 

 

($ in millions)

 

2021

 

 

2022

 

Change

 

Gross premiums written

$

8,013

 

$

7,594

 

(5)

%

 

 

 

 

 

 

 

 

 

Net premiums written

$

5,961

 

$

5,610

 

(6.0)

%

North America

 

2,642

 

 

2,674

 

1

 

North America Commercial Lines

 

2,208

 

 

2,272

 

3

 

North America Personal Insurance

 

434

 

 

402

 

(7)

 

International

 

3,319

 

 

2,936

 

(12)

 

International Commercial Lines

 

1,915

 

 

1,763

 

(8)

 

International Personal Insurance

 

1,404

 

 

1,173

 

(16)

 

 

 

 

 

 

 

 

 

 

Underwriting income (loss)

$

499

 

$

635

 

27

%

North America

 

152

 

 

425

 

180

 

North America Commercial Lines

 

135

 

 

435

 

222

 

North America Personal Insurance

 

17

 

 

(10)

 

NM

 

International

 

347

 

 

210

 

(39)

 

International Commercial Lines

 

239

 

 

196

 

(18)

 

International Personal Insurance

 

108

 

 

14

 

(87)

 

 

 

 

 

 

 

 

 

 

Net investment income, APTI basis

$

1,010

 

$

577

 

(43)

%

Adjusted pre-tax income

$

1,509

 

$

1,212

 

(20)

%

Return on adjusted segment common equity

 

16.1

%

 

10.8

%

(5.3)

pts

 

 

 

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

 

 

 

North America Combined Ratio (CR)

 

95.0

 

 

86.6

 

(8.4)

pts

North America Commercial Lines CR

 

94.8

 

 

84.4

 

(10.4)

 

North America Personal Insurance CR

 

96.0

 

 

102.5

 

6.5

 

International CR

 

90.1

 

 

93.2

 

3.1

 

International Commercial Lines CR

 

88.1

 

 

89.4

 

1.3

 

International Personal Insurance CR

 

93.0

 

 

98.9

 

5.9

 

General Insurance (GI) CR

 

92.4

 

 

89.9

 

(2.5)

 

 

 

 

 

 

 

 

 

 

GI Loss ratio

 

61.8

 

 

58.5

 

(3.3)

pts

Less: impact on loss ratio

 

 

 

 

 

 

 

 

Catastrophe losses and reinstatement premiums

 

(2.9)

 

 

(3.8)

 

(0.9)

 

Prior year development, net of reinsurance and prior year premiums

 

0.3

 

 

2.3

 

2.0

 

GI Accident year loss ratio, as adjusted

 

59.2

 

 

57.0

 

(2.2)

 

GI Expense ratio

 

30.6

 

 

31.4

 

0.8

 

GI Accident year combined ratio, as adjusted

 

89.8

 

 

88.4

 

(1.4)

 

 

 

 

 

 

 

 

 

 

Accident year combined ratio, as adjusted (AYCR):

 

 

 

 

 

 

 

 

North America AYCR

 

89.7

 

 

88.2

 

(1.5)

pts

North America Commercial Lines AYCR

 

88.9

 

 

85.9

 

(3.0)

 

North America Personal Insurance AYCR

 

94.9

 

 

105.3

 

10.4

 

International AYCR

 

89.9

 

 

88.6

 

(1.3)

 

International Commercial Lines AYCR

 

86.7

 

 

81.6

 

(5.1)

 

International Personal Insurance AYCR

 

94.1

 

 

98.9

 

4.8

 

General Insurance

  • Net premiums written (NPW) in the fourth quarter of 2022 decreased 6% from the prior year quarter and increased 1% on a constant dollar basis to $5.6 billion, driven by solid North America Commercial Lines growth of 3% attributed to strong new business and retention and International Commercial Lines growth of 2% on a constant dollar basis. Commercial NPW benefited from strong growth in Lexington, Specialty and Casualty, offset in part by a decline in Financial Lines due to decreased capital markets activities. Personal Insurance NPW decreased 14% or 2% on a constant dollar basis, primarily due to a decrease in Warranty and underwriting actions taken in Private Client Group as the repositioning of this business continues, partially offset by growth in International Accident & Health and Travel.
  • Fourth quarter 2022 APTI decreased by $297 million to $1.2 billion from the prior year quarter due to lower alternative investment income, partially offset by improvement in underwriting income. Underwriting income increased by $136 million to $635 million in the fourth quarter of 2022, which included $235 million of catastrophe losses (CATs), before reinstatement premiums, notably from Winter Storm Elliott, compared to $189 million of CATs in the prior year quarter. Fourth quarter 2022 also included favorable PYD, net of reinsurance, of $151 million compared to favorable PYD of $44 million in the prior year quarter.
  • General Insurance delivered another quarter of strong underwriting results with a combined ratio of 89.9%, a 2.5-point improvement from 92.4% in the prior year quarter, driven by an improvement of 3.3 points in the loss ratio that included higher favorable PYD. The General Insurance AYCR was 88.4%, an improvement of 1.4 points from the prior year quarter with a 2.2-point improvement in the accident year loss ratio, as adjusted* to 57.0%, offset by a 0.8 point increase in the expense ratio to 31.4%. The improvement in accident year loss ratio, as adjusted, reflected continued earn-in of rate in excess of loss cost trends, execution on portfolio management strategy and improvement in Commercial Lines business mix.
  • Commercial Lines underwriting results continued to show strong improvement as a result of continued focus on underwriting excellence and expense management. The combined ratio was 84.4% for North America Commercial Lines and 89.4% for International Commercial Lines. The AYCR for North America Commercial Lines improved 3.0 points to 85.9%, and for International Commercial Lines improved 5.1 points to 81.6% compared to the prior year quarter.
  • Personal Insurance underwriting results deteriorated, reflecting underwriting actions taken to shift business mix in order to reduce exposure and lower premiums in the quarter. The North America Personal Insurance combined ratio was 102.5%, and AYCR of 105.3% deteriorated 10.4 points compared to the prior year quarter, driven by a higher acquisition ratio due to a change in business mix and lower ceding commission. The International Personal Insurance combined ratio was 98.9%, and AYCR of 98.9% deteriorated 4.8 points from the prior year quarter, primarily driven by higher frequency of losses related to restrictions pertaining to COVID-19 deemed hospitalization.

LIFE AND RETIREMENT

 

 

Three Months Ended

 

 

 

 

 

December 31,

 

 

 

($ in millions, except as indicated)

 

2021

 

 

2022

 

Change

 

Adjusted pre-tax income (loss)

$

969

 

$

781

 

(19)

%

Individual Retirement

 

498

 

 

434

 

(13)

 

Group Retirement

 

314

 

 

177

 

(44)

 

Life Insurance

 

(8)

 

 

106

 

NM

 

Institutional Markets

 

165

 

 

64

 

(61)

 

 

 

 

 

 

 

 

 

 

Premiums and fees

$

3,524

 

$

2,879

 

(18)

%

Individual Retirement

 

312

 

 

261

 

(16)

 

Group Retirement

 

140

 

 

107

 

(24)

 

Life Insurance

 

875

 

 

1,087

 

24

 

Institutional Markets

 

2,197

 

 

1,424

 

(35)

 

 

 

 

 

 

 

 

 

 

Premiums and deposits

$

8,609

 

$

8,800

 

2

%

Individual Retirement

 

3,308

 

 

3,827

 

16

 

Group Retirement

 

1,862

 

 

2,243

 

20

 

Life Insurance

 

1,206

 

 

1,179

 

(2)

 

Institutional Markets

 

2,233

 

 

1,551

 

(31)

 

 

 

 

 

 

 

 

 

 

Net flows

$

(1,106)

 

$

(744)

 

33

%

Individual Retirement

 

(34)

 

 

212

 

NM

 

Group Retirement

 

(1,072)

 

 

(956)

 

11

 

 

 

 

 

 

 

 

 

 

Net investment income, APTI basis

$

2,357

 

$

2,225

 

(6)

%

Return on adjusted segment common equity

 

13.7

%

 

10.1

%

(3.6)

pts

Life and Retirement

  • Life and Retirement reported APTI of $781 million for the fourth quarter of 2022, down 19% from $969 million in the prior year quarter. The decline was primarily driven by lower NII as well as lower fee income and higher deferred policy acquisition costs (DAC) amortization in Individual and Group Retirement due to challenging capital market conditions, partially offset by improved mortality experience. Base portfolio yield improved by approximately 34 basis points sequentially or approximately 54 basis points year-over-year as a result of higher new money rates.
  • Life and Retirement delivered a solid quarter with premiums of $2.1 billion and premiums and deposits* increased 2% from the prior year quarter to $8.8 billion, benefiting from favorable sales activity in Individual and Group Retirement segments driven by strong Fixed Annuity and Fixed Index Annuity sales, as well as higher Group Retirement plan acquisitions. Excluding transactional businesses such as pension risk transfer, guaranteed investment contracts and Group Retirement plan acquisitions, premiums and deposits* were up 14% year-over-year.
  • COVID mortality in Life Insurance is in line with the previously disclosed estimates of exposure sensitivity of $65 million to $75 million per 100,000 population of U.S. deaths.
  • Life and Retirement return on adjusted segment common equity* for the fourth quarter was 10.1% on an annualized basis.

OTHER OPERATIONS

 

 

Three Months Ended

 

 

 

 

 

December 31,

 

 

 

($ in millions)

 

2021

 

 

2022

 

Change

 

Corporate and Other

$

(577)

 

$

(494)

 

14

%

Asset Management Group

 

399

 

 

38

 

(90)

 

Adjusted pre-tax loss before consolidation and eliminations

 

(178)

 

 

(456)

 

(156)

 

Consolidation and eliminations

 

(470)

 

 

5

 

NM

 

Adjusted pre-tax loss

$

(648)

 

$

(451)

 

30

%

Other Operations

  • Other Operations adjusted pre-tax loss of $451 million improved by $197 million or 30% from the prior year quarter as a result of improved results in Corporate and Other as well as reduced elimination activities.
  • Before consolidation and eliminations, the adjusted pre-tax loss increased by $278 million, reflecting lower investment income driven by lower alternative investment returns, an increase in corporate general operating expense for costs related to setting up Corebridge as a standalone public company, and higher vendor fees related to cloud migration.
  • The movements in the Asset Management Group as well as consolidation and eliminations were due to lower investment gains compared to the prior year quarter. Results in the fourth quarter of 2021 included a large gain on sale from investment funds, which was allocated to the operating companies and eliminated in Other Operations.

LIFE AND RETIREMENT SEPARATION

On September 19, 2022, AIG closed the IPO of 80 million shares of Corebridge common stock at a public offering price of $21.00 per share, representing 12.4 percent of Corebridge's common stock. Corebridge is the holding company for AIG’s Life and Retirement business. The aggregate gross proceeds of the offering to AIG, before deducting underwriting discounts and commissions and other expenses payable by AIG, were approximately $1.7 billion.

In November 2021, AIG and Blackstone Inc. completed the acquisition by Blackstone of a 9.9 percent equity stake in Corebridge. Blackstone is required to hold its ownership interest in Corebridge 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 Corebridge IPO (which will be September 19, 2023, 2024 and 2025, respectively), with the transfer restrictions terminating in full on the fifth anniversary of the IPO (September 19, 2027).

Following the IPO, AIG owns 77.7% of the outstanding common stock of Corebridge and continues to consolidate the assets, liabilities, and results of operations of Corebridge in AIG’s Consolidated Financial Statements. The portion of equity interest of Corebridge that AIG does not own is reflected as noncontrolling interest in AIG’s Consolidated Financial Statements.

On December 15, 2021, AIG and Blackstone Real Estate Income Trust (BREIT), a long-term, perpetual capital vehicle affiliated with Blackstone, completed the acquisition by BREIT of AIG’s interests in a U.S. Affordable Housing portfolio. The historical results of the U.S. Affordable Housing portfolio were reported in our Life and Retirement operating segments.

Since April 2022, AIG and Corebridge insurance company subsidiaries have entered into separate investment management agreements with BlackRock. Certain additional insurance company subsidiaries will also enter into such investment management agreements over the coming months. We have since transferred the management of approximately $162 billion of our investments in liquid fixed income and certain private placement assets, including $98 billion of the Corebridge investment portfolio, to BlackRock under such investment management agreements as of December 31, 2022. In addition, AIG and Corebridge are gaining access to BlackRock’s world-class investment management technology, Aladdin.

CONFERENCE CALL

AIG will host a conference call tomorrow, Thursday, February 16, 2023 at 8:30 a.m. ET to review these results. The call is open to the public and can be accessed via a live listen-only webcast in the Investors section of www.aig.com. A replay will be available after the call at the same location.

# # #

Additional supplementary financial data is available in the Investors section at www.aig.com.

Certain statements in this press release and other publicly available documents may include, and members of AIG management may from time to time make and discuss, statements which, to the extent they are not statements of historical or present fact, may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward‑looking statements are intended to provide management’s current expectations or plans for AIG’s future operating and financial performance, based on assumptions currently believed to be valid and accurate. Forward-looking statements are often preceded by, followed by or include words such as “will,” “believe,” “anticipate,” “expect,” “expectations,” “intend,” “plan,” “strategy,” “prospects,” “project,” “anticipate,” “should,” “guidance,” “outlook,” “confident,” “focused on achieving,” “view,” “target,” “goal,” “estimate,” and other words of similar meaning in connection with a discussion of future operating or financial performance. These statements may include, among other things, projections, goals and assumptions that 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, such as the separation of the Life and Retirement business from AIG, the effect of catastrophic events, both natural and man-made, and macroeconomic and/or geopolitical events, anticipated dispositions, monetization and/or acquisitions of businesses or assets, the successful integration of acquired businesses, management succession and retention plans, exposure to risk, trends in operations and financial results, and other statements that are not historical facts.

All forward-looking statements involve risks, uncertainties and other factors that may cause AIG’s actual results and financial condition to differ, possibly materially, from the results and financial condition expressed or implied in the forward-looking statements. Factors that could cause AIG’s actual results to differ, possibly materially, from those in specific projections, goals, assumptions and forward-looking statements include, without limitation:

  • the effects of economic conditions in the markets in which AIG and its businesses operate in the U.S. and globally and any changes therein, including financial market conditions, macroeconomic trends, fluctuations in interest rates and foreign currency exchange rates, inflationary pressures and an economic slowdown or recession, each of which may also be affected by geopolitical events or conflicts, including the conflict between Russia and Ukraine;
  • the occurrence of catastrophic events, both natural and man-made, including geopolitical events and conflicts, civil unrest and the effects of climate change;
  • availability of adequate reinsurance or access to reinsurance on acceptable terms;
  • disruptions in the availability of AIG's or a third party’s information technology infrastructure, including hardware and software, resulting from cyberattacks, data security breaches, or infrastructure vulnerabilities;
  • AIG's ability to realize expected strategic, financial, operational or other benefits from the separation of Corebridge as well as AIG’s equity market exposure to Corebridge;
  • concentrations of AIG’s insurance, reinsurance and other risk exposures;
  • concentrations in AIG’s investment portfolios;
  • AIG’s reliance on third-party investment managers;
  • changes in the valuation of AIG’s investments;
  • AIG’s reliance on third parties to provide certain business and administrative services;
  • nonperformance or defaults by counterparties, including Fortitude Reinsurance Company Ltd. (Fortitude Re);
  • changes in judgments concerning potential cost-saving opportunities;
  • AIG's ability to effectively implement changes under AIG 200, including the ability to realize cost savings;
  • AIG's ability to adequately assess risk and estimate related losses as well as the effectiveness of AIG’s enterprise risk management policies and procedures, including with respect to business continuity and disaster recovery plans;
  • difficulty in marketing and distributing products through current and future distribution channels;
  • the effectiveness of strategies to retain and recruit key personnel and to implement effective succession plans;
  • actions by rating agencies with respect to AIG’s credit and financial strength ratings as well as those of its businesses and subsidiaries;
  • changes to sources of or access to liquidity;
  • changes in judgments concerning the recognition of deferred tax assets and the impairment of goodwill;
  • changes in judgments or assumptions concerning insurance underwriting and insurance liabilities;
  • changes in accounting principles and financial reporting requirements;
  • AIG’s ability to successfully dispose of, monetize and/or acquire businesses or assets or successfully integrate acquired businesses;
  • the effects of sanctions, including those related to the conflict between Russia and Ukraine and the failure to comply with those sanctions;
  • the effects of changes in laws and regulations, including those relating to the regulation of insurance, in the U.S. and other countries in which AIG and its businesses operate;
  • changes to tax laws in the U.S. and other countries in which AIG and its businesses operate;
  • the outcome of significant legal, regulatory or governmental proceedings;
  • the impact of COVID-19 and its variants or other pandemics and responses thereto;
  • AIG’s ability to effectively execute on environmental, social and governance targets and standards; and
  • such other factors discussed in Part I, Item 1A. Risk Factors and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in AIG Annual Report on Form 10-K for the year ended December 31, 2022 (which will be filed with the Securities and Exchange Commission (SEC)), Part I, Item 2. MD&A in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, Part I, Item 2. MD&A of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, Part I, Item 2. MD&A of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, and Part I, Item 1A. Risk Factors and Part II, Item 7. MD&A in AIG’s Annual Report on Form 10-K for the year ended December 31, 2021.

Forward-looking statements speak only as of the date of this press release, or in the case of any document incorporated by reference, the date of that document. AIG is not under any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in any forward-looking statements is disclosed from time to time in our filings with the SEC.

# # #

COMMENT ON REGULATION G AND NON-GAAP FINANCIAL MEASURES

Throughout this press release, including the financial highlights, AIG presents its financial condition and results of operations in the way it believes will be most meaningful and representative of its business results. Some of the measurements AIG uses are “Non-GAAP financial measures” under SEC rules and regulations. GAAP is the acronym for generally accepted accounting principles in the United States. The non-GAAP financial measures AIG presents are listed below and may not be comparable to similarly-named measures reported by other companies. The reconciliations of such measures to the most comparable GAAP measures in accordance with Regulation G are included within the relevant tables attached to this news release or in the Fourth Quarter 2022 Financial Supplement available in the Investors section of AIG’s website, www.aig.com.

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.

AIG uses the following operating performance measures because AIG believes they enhance the understanding of the underlying profitability of continuing operations and trends of AIG’s business segments. AIG believes they also allow for more meaningful comparisons with AIG’s insurance competitors. When AIG uses these measures, reconciliations to the most comparable GAAP measure are provided on a consolidated basis.

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.

Book Value per Common Share, Excluding Goodwill, Value of Business Acquired (VOBA), Value of Distribution Channel Acquired (VODA), Other Intangible Assets, AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, and Deferred Tax Assets (DTA) (Adjusted Tangible Book Value per Common Share) is used to provide more accurate measure of the realizable value of shareholder on a per-common share basis. Adjusted Tangible Book Value per Common Share is derived by dividing Total AIG common shareholders’ equity, excluding intangible assets, AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, and DTA (Adjusted Tangible Common Shareholders’ Equity), by total common shares outstanding.

AIG Return on Common Equity (ROCE) – 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.

General Insurance and Life and Retirement Adjusted Segment Common Equity is based on segment equity adjusted for the attribution of debt and preferred stock (Segment Common Equity) and is consistent with AIG’s Adjusted Common Shareholders’ Equity definition.

General Insurance and Life and Retirement Return on Adjusted Segment Common Equity – Adjusted After-tax Income (Return on adjusted segment common equity) is used to show the rate of return on Adjusted Segment Common Equity. Return on Adjusted Segment Common Equity is derived by dividing actual or annualized Adjusted After-tax Income by Average Adjusted Segment Common Equity.

Adjusted After-tax Income Attributable to General Insurance and Life and Retirement is derived by subtracting attributed interest expense, income tax expense and attributed dividends on preferred stock from APTI. Attributed debt and the related interest expense and dividends on preferred stock are calculated based on our internal allocation model. Tax expense or benefit is calculated based on an internal attribution methodology that considers among other things the taxing jurisdiction in which the segments conduct business, as well as the deductibility of expenses in those jurisdictions.

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

Adjusted Pre-tax Income (APTI) 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 fair value of securities used to hedge guaranteed living benefits;
  • changes in benefit reserves and deferred policy acquisition costs (DAC), value of business acquired (VOBA), and deferred sales inducements (DSI) related to net realized gains and losses;
  • changes in the fair value of equity securities;
  • net investment income on Fortitude Re funds withheld assets;
  • following deconsolidation of Fortitude Re, net realized gains and losses on Fortitude Re funds withheld assets;
  • loss (gain) on extinguishment of debt;
  • all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non- qualifying (economic) hedging or for asset replication. Earned income on such economic hedges is reclassified from net realized gains and losses to specific APTI line items based on the economic risk being hedged (e.g. net investment income and interest credited to policyholder account balances);
  • income or loss from discontinued operations;
  • net loss reserve discount benefit (charge);
  • pension expense related to lump sum payments to former employees;
  • net gain or loss on divestitures and other;
  • non-operating litigation reserves and settlements;
  • restructuring and other costs related to initiatives designed to reduce operating expenses, improve efficiency and simplify our organization;
  • the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain;
  • integration and transaction costs associated with acquiring or divesting businesses;
  • losses from the impairment of goodwill;
  • non-recurring costs associated with the implementation of non-ordinary course legal or regulatory changes or changes to accounting principles; and
  • income from elimination of the international reporting lag.

Adjusted After-tax Income attributable to AIG common shareholders (AATI) is derived by excluding the tax effected APTI adjustments described above, dividends on preferred stock, noncontrolling interest on net realized gains (losses), other non-operating expenses and the following tax items from net income attributable to AIG:

  • deferred income tax valuation allowance releases and charges;
  • changes in uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or operating performance; and
  • net tax charge related to the enactment of the Tax Cuts and Jobs Act.

See page 16 for the reconciliation of Net income attributable to AIG to Adjusted After-tax Income Attributable to AIG.

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 (Accident year loss ratio, ex-CAT and Accident year combined ratio, ex-CAT): both the accident year loss and accident year combined ratios, as adjusted, exclude catastrophe losses (CATs) 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, in each case, having a net impact on AIG in excess of $10 million 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.

Underwriting ratios are computed as follows:

  1. Loss ratio = Loss and loss adjustment expenses incurred ÷ Net premiums earned (NPE)
  2. Acquisition ratio = Total acquisition expenses ÷ NPE
  3. General operating expense ratio = General operating expenses ÷ NPE
  4. Expense ratio = Acquisition ratio + General operating expense ratio
  5. Combined ratio = Loss ratio + Expense ratio
  6. CATs and reinstatement premiums = [Loss and loss adjustment expenses incurred – (CATs)] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes] – Loss ratio
  7. Accident year loss ratio, as adjusted (AYLR ex-CAT) = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes +/(-) Prior year premiums + Adjustment for ceded premium under reinsurance contracts related to prior accident years]
  8. Accident year combined ratio, as adjusted (AYCR ex-CAT) = AYLR ex-CAT + Expense ratio
  9. Prior year development net of reinsurance and prior year premiums = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes +/(-) Prior year premiums] – Loss ratio – CATs and reinstatement premiums ratio.

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 funding agreements and mutual funds. We believe the measure of premiums and deposits is useful in understanding customer demand for our products, evolving product trends and our sales performance period over period.

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

American International Group, Inc. (AIG) is a leading global insurance organization. AIG member companies provide a wide range of property casualty insurance, life insurance, retirement solutions, and other financial services to customers in approximately 70 countries and jurisdictions. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risks and provide for retirement security. AIG common stock is listed on the New York Stock Exchange.

Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig | Twitter: @AIGinsurance www.twitter.com/AIGinsurance | LinkedIn: www.linkedin.com/company/aig. These references with additional information about AIG have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release.

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc.. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc.. Products or services may not be available in all countries and jurisdictions, and coverage is subject to underwriting requirements and actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation

($ in millions, except per common share data)

 

Reconciliations of Adjusted Pre-tax and After-tax Income

 

Three Months Ended December 31,

 

2021

 

2022

 

 

 

 

Total Tax

 

Non-

 

 

 

 

 

 

Total Tax

Non-

 

 

 

 

 

 

(Benefit)

 

controlling

 

After

 

 

 

 

(Benefits)

 

controlling

 

After

 

 

Pre-tax

 

Charge

 

Interests(e)

 

Tax

 

 

Pre-tax

 

Charge

 

Interests(e)

 

Tax

Pre-tax income/net income, including noncontrolling interests

$

5,048

$

942

$

$

4,106

 

$

279

$

93

$

$

186

Noncontrolling interests

 

 

 

 

 

(360)

 

(360)

 

 

 

 

 

 

85

 

85

Pre-tax income/net income attributable to AIG

 

5,048

 

942

 

(360)

 

3,746

 

 

279

 

93

 

85

 

271

Dividends on preferred stock

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

7

Net income attributable to AIG common shareholders

 

 

 

 

 

 

 

3,739

 

 

 

 

 

 

 

 

264

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in uncertain tax positions and other tax adjustments(a)

 

 

 

97

 

 

(97)

 

 

 

 

(68)

 

 

68

Deferred income tax valuation allowance (releases) charges(b)

 

 

 

(12)

 

 

12

 

 

 

 

10

 

 

(10)

Changes in fair value of securities used to hedge guaranteed living benefits

 

 

(1)

 

 

1

 

 

(1)

 

 

 

(1)

Changes in benefit reserves and DAC, VOBA and DSI related to net realized gains (losses)

 

(22)

 

(4)

 

 

(18)

 

 

(121)

 

(25)

 

 

(96)

Changes in the fair value of equity securities

 

201

 

44

 

 

157

 

 

12

 

2

 

 

10

Loss on extinguishment of debt

 

240

 

51

 

 

189

 

 

4

 

1

 

 

3

Net investment income on Fortitude Re funds withheld assets

 

(483)

 

(102)

 

 

(381)

 

 

(309)

 

(65)

 

 

(244)

Net realized (gains) losses on Fortitude Re funds withheld assets

 

(467)

 

(98)

 

 

(369)

 

 

174

 

37

 

 

137

Net realized (gains) losses on Fortitude Re funds withheld embedded derivative

 

720

 

150

 

 

570

 

 

370

 

78

 

 

292

Net realized (gains) losses(c)

 

(403)

 

(81)

 

 

(322)

 

 

1,507

 

367

 

 

1,140

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (gain) loss on divestitures and other

 

(2,936)

 

(627)

 

 

(2,309)

 

 

127

 

26

 

 

101

Non-operating litigation reserves and settlements

 

 

1

 

 

(1)

 

 

 

 

 

Unfavorable prior year development and related amortization changes ceded under retroactive reinsurance agreements

 

13

 

2

 

 

11

 

 

46

 

9

 

 

37

Net loss reserve discount benefit

 

(255)

 

(53)

 

 

(202)

 

 

(707)

 

(149)

 

 

(558)

Pension expense related to a one-time lump sum payment to former employees

 

7

 

1

 

 

6

 

 

60

 

13

 

 

47

Integration and transaction costs associated with acquiring or divesting businesses

 

28

 

6

 

 

22

 

 

58

 

12

 

 

46

Restructuring and other costs

 

129

 

27

 

 

102

 

 

155

 

35

 

 

120

Non-recurring costs related to regulatory or accounting changes

 

10

 

3

 

 

7

 

 

15

 

3

 

 

12

Net impact from elimination of international reporting lag(d)

 

 

 

 

 

 

(127)

 

(27)

 

 

(100)

Noncontrolling interests(e)

 

 

 

 

 

222

 

222

 

 

 

 

 

 

(244)

 

(244)

Adjusted pre-tax income/Adjusted after-tax income attributable to AIG common shareholders

$

1,830

$

346

$

(138)

$

1,339

 

$

1,542

$

352

$

(159)

$

1,024

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation (continued)

($ in millions, except per common share data)

 

Reconciliations of Adjusted Pre-tax and After-tax Income (continued)

 

Twelve Months Ended December 31,

 

2021

 

2022

 

 

 

 

Total Tax

 

Non-

 

 

 

 

 

 

Total Tax

 

Non-

 

 

 

 

 

 

(Benefit)

 

controlling

 

After

 

 

 

 

(Benefit)

 

controlling

 

After

 

 

Pre-tax

 

Charge

 

Interests(e)

 

Tax

 

 

Pre-tax

 

Charge

 

Interests(e)

 

Tax

Pre-tax income/net income, including noncontrolling interests

$

12,099

$

2,176

$

$

9,923

 

$

14,282

$

3006

$

$

11,275

Noncontrolling interests

 

 

 

 

 

(535)

 

(535)

 

 

 

 

 

 

(999)

 

(999)

Pre-tax income/net income attributable to AIG

 

12,099

 

2,176

 

(535)

 

9,388

 

 

14,282

 

3,006

 

(999)

 

10,276

Dividends on preferred stock

 

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

29

Net income attributable to AIG common shareholders

 

 

 

 

 

 

 

9,359

 

 

 

 

 

 

 

 

10,247

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in uncertain tax positions and other tax adjustments(a)

 

 

 

998

 

 

(998)

 

 

 

 

22

 

 

(22)

Deferred income tax valuation allowance (releases) charges(b)

 

 

 

(718)

 

 

718

 

 

 

 

25

 

 

(25)

Changes in fair value of securities used to hedge guaranteed living benefits

 

(61)

 

(13)

 

 

(48)

 

 

(30)

 

(6)

 

 

(24)

Changes in benefit reserves and DAC, VOBA and DSI related to net realized gains (losses)

 

52

 

11

 

 

41

 

 

308

 

65

 

 

243

Changes in the fair value of equity securities

 

237

 

49

 

 

188

 

 

53

 

11

 

 

42

Loss on extinguishment of debt

 

389

 

82

 

 

307

 

 

303

 

64

 

 

239

Net investment income on Fortitude Re funds withheld assets

 

(1,971)

 

(414)

 

 

(1,557)

 

 

(943)

 

(198)

 

 

(745)

Net realized (gains) losses on Fortitude Re funds withheld assets

 

(1,003)

 

(211)

 

 

(792)

 

 

486

 

102

 

 

384

Net realized gains on Fortitude Re funds withheld embedded derivative

 

603

 

126

 

 

477

 

 

(7,481)

 

(1,571)

 

 

(5,910)

Net realized gains(c)

 

(1,623)

 

(341)

 

 

(1,282)

 

 

(1,750)

 

(367)

 

 

(1,383)

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Net (gain) loss on divestitures and other

 

(3,044)

 

(650)

 

 

(2,394)

 

 

82

 

17

 

 

65

Non-operating litigation reserves and settlements

 

3

 

1

 

 

2

 

 

(41)

 

(9)

 

 

(32)

Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements

 

(186)

 

(39)

 

 

(147)

 

 

(160)

 

(34)

 

 

(126)

Net loss reserve discount benefit

 

(193)

 

(40)

 

 

(153)

 

 

(703)

 

(148)

 

 

(555)

Pension expense related to a one-time lump sum payment to former employees

 

34

 

7

 

 

27

 

 

60

 

13

 

 

47

Integration and transaction costs associated with acquiring or divesting businesses

 

83

 

18

 

 

65

 

 

194

 

41

 

 

153

Restructuring and other costs

 

433

 

91

 

 

342

 

 

570

 

120

 

 

450

Non-recurring costs related to regulatory or accounting changes

 

68

 

15

 

 

53

 

 

37

 

8

 

 

29

Net impact from elimination of international reporting lag(d)

 

 

 

 

 

 

(127)

 

(27)

 

 

(100)

Noncontrolling interests(e)

 

 

 

 

 

222

 

222

 

 

 

 

 

 

608

 

608

Adjusted pre-tax income/Adjusted after-tax income attributable to AIG common shareholders

$

5,920

$

1,148

$

(313)

$

4,430

 

$

5,140

$

1,134

$

(391)

$

3,586

(a)

Twelve months ended December 31, 2021 includes the completion of audit activity by the Internal Revenue Service.

(b)

Twelve months ended December 31, 2021 includes an increase in the valuation allowance against a portion of certain tax attribute carryforwards of AIG's U.S. federal consolidated income tax group, as well as net valuation allowance release in certain foreign jurisdictions.

(c)

Includes all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-qualifying (economic) hedging or for asset replication and net realized gains and losses on Fortitude Re funds withheld assets.

(d)

Effective in the quarter ended December 31, 2022, the foreign property and casualty subsidiaries report on a calendar year ending December 31. We determined that the effect of not retroactively applying this change was immaterial to our Consolidated Financial Statements for the current and prior periods. Therefore, we reported the cumulative effect of the change in accounting principle within the Consolidated Statements of Income (Loss) for the year ended December 31, 2022 and did not retrospectively apply the effects of this change to prior periods.

(e)

Includes the portion of equity interest of non-operating income of Corebridge and consolidated investment entities that AIG does not own.

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation (continued)

($ in millions, except per common share data)

 

Summary of Key Financial Metrics

 

 

Three Months Ended December 31,

 

 

 

Twelve Months Ended December 31,

 

Earnings per common share:

 

2021

 

2022

% Inc. (Dec.)

 

 

 

2021

 

2022

% Inc. (Dec.)

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

4.48

$

0.35

(92.2)

%

 

$

10.95

$

13.16

20.2

%

Income from discontinued operations

 

 

NM

 

 

 

 

NM

 

Net income attributable to AIG common shareholders

$

4.48

$

0.35

(92.2)

 

 

$

10.95

$

13.16

20.2

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

4.38

$

0.35

(92.0)

 

 

 

10.82

$

13.01

20.2

 

Income from discontinued operations

 

 

NM

 

 

 

 

NM

 

Net income attributable to AIG common shareholders

$

4.38

$

0.35

(92.0)

 

 

$

10.82

$

13.01

20.2

 

Adjusted after-tax income attributable to AIG common shareholders per diluted share

$

1.58

$

1.36

(13.9)

%

 

$

5.12

$

4.55

(11.1)

%

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

833.9

 

745.2

 

 

 

 

854.3

 

778.6

 

 

Diluted

 

872.0

 

754.9

 

 

 

 

864.9

 

787.9

 

 

Reconciliation of Book Value per Common Share

As of period end:

 

December 31, 2021

 

 

September 30, 2022

 

 

December 31, 2022

Total AIG shareholders' equity

$

65,956

 

$

39,023

 

$

40,002

Less: Preferred equity

 

485

 

 

485

 

 

485

Total AIG common shareholders' equity (a)

 

65,471

 

 

38,538

 

 

39,517

Less: Deferred tax assets (DTA)*

 

5,221

 

 

4,556

 

 

4,518

Less: Accumulated other comprehensive income (AOCI)

 

6,687

 

 

(23,793)

 

 

(22,092)

Add: Cumulative unrealized gains and losses related to Fortitude Re Funds withheld assets

 

2,791

 

 

(3,021)

 

 

(2,862)

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

3,896

 

 

(20,772)

 

 

(19,230)

Total adjusted common shareholders' equity (b)

$

56,354

 

$

54,754

 

$

54,229

Less: Intangible assets:

 

 

 

 

 

 

 

 

Goodwill

 

4,056

 

 

3,860

 

 

3,927

Value of business acquired

 

111

 

 

91

 

 

94

Value of distribution channel acquired

 

458

 

 

428

 

 

418

Other intangibles

 

300

 

 

286

 

 

286

Total intangible assets

 

4,925

 

 

4,665

 

 

4,725

Total adjusted tangible common shareholders' equity (c)

$

51,429

 

$

50,089

 

$

49,504

Total common shares outstanding (d)

 

818.7

 

 

747.2

 

 

734.1

As of period end:

December 31, 2021

% Inc.

(Dec.)

 

 

September 30, 2022

% Inc.

(Dec.)

 

December 31, 2022

Book value per common share (a÷d)

$

79.97

(32.7)

%

$

51.58

4.4

%

$

53.83

Adjusted book value per common share (b÷d)

 

68.83

7.3

 

 

73.28

0.8

 

 

73.87

Adjusted tangible book value per common share (c÷d)

 

62.82

7.3

 

 

67.04

0.6

 

 

67.43

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation (continued)

($ in millions, except per common share data)

 

Reconciliation of Return On Common Equity

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2021

 

 

2022

 

 

2021

 

 

2022

 

Actual or annualized net income (loss) attributable to AIG common shareholders (a)

$

14,956

 

$

1,056

 

$

9,359

 

$

10,247

 

Actual or annualized adjusted after-tax income attributable to AIG common shareholders (b)

$

5,356

 

$

4,096

 

$

4,430

 

$

3,586

 

Average AIG Common Shareholders' equity (c)

$

64,925

 

$

39,028

 

$

64,704

 

$

48,769

 

Less: Average DTA*

 

6,152

 

 

4,537

 

 

7,025

 

 

4,739

 

Less: Average AOCI

 

7,647

 

 

(22,943)

 

 

9,096

 

 

(12,551)

 

Add: Average cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

2,879

 

 

(2,942)

 

 

3,200

 

 

(1,053)

 

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

4,768

 

 

(20,001)

 

$

5,896

 

$

(11,498)

 

Average adjusted common shareholders' equity (d)

$

54,005

 

$

54,492

 

$

51,783

 

$

55,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROCE (a÷c)

 

23.0

%

 

2.7

%

 

14.5

%

 

21.0

%

Adjusted return on common equity (b÷d)

 

9.9

%

 

7.5

%

 

8.6

%

 

6.5

%

* Represents deferred tax assets only related to U.S. net operating loss and foreign tax credit carryforwards on a U.S. GAAP basis and excludes other balance sheet deferred tax assets and liabilities.

Reconciliation of Net Investment Income

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

December 31,

 

 

December 31,

 

 

2021

 

 

2022

 

 

2021

 

 

2022

Net Investment Income per Consolidated Statements of Operations

$

3,565

 

$

3,258

 

$

14,612

 

$

11,767

Changes in fair value of securities used to hedge guaranteed living benefits

 

(14)

 

 

(14)

 

 

(60)

 

 

(55)

Changes in the fair value of equity securities

 

201

 

 

12

 

 

237

 

 

53

Net investment income on Fortitude Re funds withheld assets

 

(483)

 

 

(309)

 

 

(1,971)

 

 

(943)

Net realized gains (losses) related to economic hedges and other

 

22

 

 

54

 

 

122

 

 

216

Net impact from elimination of International reporting lag

 

 

 

(41)

 

 

 

 

(41)

Total Net Investment Income - APTI Basis

$

3,291

 

$

2,960

 

$

12,940

 

$

10,997

Net Premiums Written - Change in Constant Dollar

 

Three Months Ended December 31, 2022

 

 

Global -

Global -

 

International -

 

General

Commercial

Personal

 

Commercial

Personal

General Insurance

Insurance

Lines

Insurance

 

Lines

Insurance

Foreign exchange effect on worldwide premiums:

 

 

 

 

 

 

Change in net premiums written

 

 

 

 

 

 

Increase (decrease) in original currency

1

%

3

%

(2

)%

 

2

%

1

%

Foreign exchange effect

(7

)

(5

)

(12

)

 

(10

)

(17

)

Increase (decrease) as reported in U.S. dollars

(6

)%

(2

)%

(14

)%

 

(8

)%

(16

)%

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation (continued)

($ in millions, except per common share data)

 

Reconciliations of Accident Year Loss and Accident Year Combined Ratios, as Adjusted

 

 

 

 

 

 

Three Months Ended

 

December 31, 2022

 

 

2021

 

2022

Total General Insurance

 

 

 

 

Combined ratio

 

92.4

 

89.9

Catastrophe losses and reinstatement premiums

 

(2.9)

 

(3.8)

Prior year development, net of reinsurance and prior year premiums

 

0.3

 

2.3

Accident year combined ratio, as adjusted

 

89.8

 

88.4

 

 

 

 

 

North America

 

 

 

 

Combined ratio

 

95.0

 

86.6

Catastrophe losses and reinstatement premiums

 

(5.6)

 

(4.2)

Prior year development, net of reinsurance and prior year premiums

 

0.3

 

5.8

Accident year combined ratio, as adjusted

 

89.7

 

88.2

 

 

 

 

 

North America - Commercial Lines

 

 

 

 

Combined ratio

 

94.8

 

84.4

Catastrophe losses and reinstatement premiums

 

(5.8)

 

(4.4)

Prior year development, net of reinsurance and prior year premiums

 

(0.1)

 

5.9

Accident year combined ratio, as adjusted

 

88.9

 

85.9

 

 

 

 

 

North America - Personal Insurance

 

 

 

 

Combined ratio

 

96.0

 

102.5

Catastrophe losses and reinstatement premiums

 

(4.0)

 

(2.8)

Prior year development, net of reinsurance and prior year premiums

 

2.9

 

5.6

Accident year combined ratio, as adjusted

 

94.9

 

105.3

 

 

 

 

 

International

 

 

 

 

Combined ratio

 

90.1

 

93.2

Catastrophe losses and reinstatement premiums

 

(0.6)

 

(3.5)

Prior year development, net of reinsurance and prior year premiums

 

0.4

 

(1.1)

Accident year combined ratio, as adjusted

 

89.9

 

88.6

 

 

 

 

 

International - Commercial Lines

 

 

 

 

Combined ratio

 

88.1

 

89.4

Catastrophe losses and reinstatement premiums

 

(1.1)

 

(5.2)

Prior year development, net of reinsurance and prior year premiums

 

(0.3)

 

(2.6)

Accident year combined ratio, as adjusted

 

86.7

 

81.6

 

 

 

 

 

International - Personal Insurance

 

 

 

 

Loss ratio

 

50.6

 

54.8

Catastrophe losses and reinstatement premiums

 

 

(1.0)

Prior year development, net of reinsurance and prior year premiums

 

1.1

 

1.0

Accident year loss ratio, as adjusted

 

51.7

 

54.8

 

 

 

 

 

Combined ratio

 

93.0

 

98.9

Catastrophe losses and reinstatement premiums

 

 

(1.0)

Prior year development, net of reinsurance and prior year premiums

 

1.1

 

1.0

Accident year combined ratio, as adjusted

 

94.1

 

98.9

 

 

 

 

 

Global - Commercial Insurance

 

 

 

 

Combined ratio

 

91.8

 

86.3

Catastrophe losses and reinstatement premiums

 

(3.7)

 

(4.7)

Prior year development, net of reinsurance and prior year premiums

 

(0.2)

 

2.5

Accident year combined ratio, as adjusted

 

87.9

 

84.1

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation (continued)

($ in millions, except per common share data)

 

Reconciliation of General Insurance Return on Adjusted Segment Common Equity

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31, 2022

 

 

 

2021

 

 

2022

 

 

 

 

 

 

 

 

Adjusted pre-tax income

$

1,509

 

$

1,212

 

Interest expense on attributed financial debt

 

150

 

 

131

 

Adjusted pre-tax income including attributed interest expense

 

1,359

 

 

1,081

 

Income tax expense

 

305

 

 

291

 

Adjusted after-tax income

 

1,054

 

 

790

 

Dividends declared on preferred stock

 

3

 

 

3

 

Adjusted after-tax income attributable to common shareholders

$

1,051

 

$

787

 

 

 

 

 

 

 

 

Ending adjusted segment common equity

$

26,429

 

$

30,310

 

Average adjusted segment common equity

$

26,157

 

$

29,230

 

Return on adjusted segment common equity

 

16.1

%

 

10.8

%

 

 

 

 

 

 

 

Total segment shareholder’s equity

$

26,283

 

$

24,225

 

Less: Preferred equity

 

205

 

 

212

 

Total segment common equity

 

26,078

 

 

24,013

 

Less: Accumulated other comprehensive income (AOCI)

 

(189)

 

 

(6,979)

 

Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

162

 

 

(682)

 

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(351)

 

 

(6,297)

 

Total adjusted segment common equity

$

26,429

 

$

30,310

 

Reconciliation of Life and Retirement Return on Adjusted Segment Common Equity

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31, 2022

 

 

 

2021

 

 

2022

 

 

 

 

 

 

 

 

Adjusted pre-tax income

$

969

 

$

781

 

Interest expense on attributed financial debt

 

72

 

 

110

 

Adjusted pre-tax income including attributed interest expense

 

897

 

 

671

 

Income tax expense

 

181

 

 

131

 

Adjusted after-tax income

 

716

 

 

540

 

Dividends declared on preferred stock

 

2

 

 

2

 

Adjusted after-tax income attributable to common shareholders

$

714

 

$

538

 

 

 

 

 

 

 

 

Ending adjusted segment common equity

$

20,525

 

$

21,295

 

Average adjusted segment common equity

$

20,880

 

$

21,407

 

Return on adjusted segment common equity

 

13.7

%

 

10.1

%

 

 

 

 

 

 

 

Total segment shareholder’s equity

$

28,063

 

$

7,472

 

Less: Preferred equity

 

138

 

 

154

 

Total segment common equity

 

27,925

 

 

7,318

 

Less: Accumulated other comprehensive income (AOCI)

 

10,029

 

 

(16,157)

 

Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

2,629

 

 

(2,180)

 

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

7,400

 

 

(13,977)

 

Total adjusted segment common equity

$

20,525

 

$

21,295

 

American International Group, Inc.

Selected Financial Data and Non-GAAP Reconciliation (continued)

($ in millions, except per common share data)

 

Reconciliations of Premiums and Deposits

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2022

 

 

2021

 

 

2022

Individual Retirement:

 

 

 

 

 

Premiums

$

68

 

$

62

Deposits

 

3,244

 

 

3,764

Other

 

(4)

 

 

1

Premiums and deposits

$

3,308

 

$

3,827

 

 

 

 

 

 

Group Retirement:

 

 

 

 

 

Premiums

$

7

 

$

3

Deposits

 

1,855

 

 

2,240

Other

 

 

 

Premiums and deposits

$

1,862

 

$

2,243

 

 

 

 

 

 

Life Insurance:

 

 

 

 

 

Premiums

$

518

 

$

705

Deposits

 

426

 

 

410

Other

 

262

 

 

64

Premiums and deposits

$

1,206

 

$

1,179

 

 

 

 

 

 

Institutional Markets:

 

 

 

 

 

Premiums

$

2,150

 

$

1,375

Deposits

 

77

 

 

169

Other

 

6

 

 

7

Premiums and deposits

$

2,233

 

$

1,551

 

 

 

 

 

 

Total Life and Retirement:

 

 

 

 

 

Premiums

$

2,743

 

$

2,145

Deposits

 

5,602

 

 

6,583

Other

 

264

 

 

72

Premiums and deposits

$

8,609

 

$

8,800

 

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