SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2018

3. Segment Information

We report our results of operations consistent with the manner in which our chief operating decision makers review the business to assess performance and allocate resources, as follows.

General Insurance

General Insurance business is presented as two operating segments:

North America — consists of insurance businesses in the United States, Canada and Bermuda. This also includes the results of Validus Reinsurance, Ltd. and Western World Insurance Group, Inc. as of the acquisition date.
International — consists of insurance businesses in Japan, the United Kingdom, Europe, Asia Pacific, Latin America, Puerto Rico, Australia, the Middle East and Africa. This also includes the results of Talbot Holdings, Ltd. as of the acquisition date.

Results are presented before internal reinsurance transactions. North America and International operating segments consist of the following products:

– Commercial Lines — consists of Liability, Financial Lines, Property and Special Risks.

– Personal Insurance — consists of Personal Lines and Accident and Health.

Life and Retirement

Life and Retirement business is presented as four operating segments:

Individual Retirement — consists of fixed annuities, fixed index annuities, variable annuities and retail mutual funds.
Group Retirement — consists of group mutual funds, group fixed annuities, group variable annuities, individual annuity and investment products, financial planning and advisory services.
Life Insurance — primary products in the U.S. include term life and universal life insurance. International operations include distribution of life and health products in the UK and Ireland.
Institutional Markets — consists of stable value wrap products, structured settlement and pension risk transfer annuities, corporate- and bank-owned life insurance and guaranteed investment contracts (GICs).

Other Operations

Other Operations category consists of:

Income from assets held by AIG Parent and other corporate subsidiaries.
General operating expenses not attributable to specific reporting segments.
Interest expense.
Blackboard — a subsidiary focused on delivering commercial insurance solutions using digital technology, data analytics and automation.
Fuji Life — consists of term insurance, life insurance, endowment policies and annuities. The sale of this business was completed on April 30, 2017.

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, our Bermuda domiciled composite reinsurer, Fortitude Reinsurance Company Ltd. (Fortitude Re), formerly known as DSA Reinsurance Company, Ltd., is included in our Legacy Portfolio.

Legacy Life and Retirement Run-Off Lines - Reserves consist of certain structured settlements, pension risk transfer annuities and single premium immediate annuities written prior to April 2012. Also includes exposures to whole life, long-term care and exited accident & health product lines.
Legacy General Insurance Run-Off Lines - Reserves consist of excess workers’ compensation, environmental exposures and exposures to other products within General Insurance that are no longer actively marketed. Also includes the remaining reserves in Eaglestone Reinsurance Company (Eaglestone).
Legacy Investments – Includes investment classes that we have placed into run-off including holdings in direct investments as well as investments in global capital markets and global real estate.

We evaluate segment performance based on adjusted revenues and adjusted pre-tax income (loss). Adjusted revenues and adjusted pre-tax income (loss) are derived by excluding certain items from total revenues and net income (loss) attributable to AIG, respectively. For the items excluded from adjusted revenues and adjusted pre-tax income (loss) see the table below.

The following table presents AIG’s continuing operations by operating segment:

Three Months Ended September 30,	2018				2017
				Adjusted				Adjusted
		Adjusted		Pre-tax		Adjusted		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	4,129	$	(160)	$	3,634	$	(2,193)
International		3,853		(665)		3,867		(740)
Total General Insurance		7,982		(825)		7,501		(2,933)
Life and Retirement
Individual Retirement		1,335		393		1,343		718
Group Retirement		718		242		702		249
Life Insurance		809		16		1,000		112
Institutional Markets		284		62		1,091		79
Total Life and Retirement		3,146		713		4,136		1,158
Other Operations		135		(417)		127		(366)
Legacy Portfolio		814		84		1,013		286
AIG Consolidation and elimination		(42)		29		(119)		(1)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		12,035		(416)		12,658		(1,856)
Reconciling Items to revenues and pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		(5)		(14)		26		26
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains		-		76		-		84
Other income (expense) - net		(4)		-		(12)		-
Gain (Loss) on extinguishment of debt		-		(1)		-		(1)
Net realized capital losses^*		(540)		(524)		(922)		(922)
Income (loss) from divested businesses		-		2		-		(13)
Non-operating litigation reserves and settlements		-		(5)		1		-
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		(605)		-		7
Net loss reserve discount benefit (charge)		-		86		-		(48)
Pension expense related to a one-time lump sum payment to former employees		-		-		-		(49)
Integration and transaction costs associated with acquired businesses		-		(91)		-		-
Restructuring and other costs		-		(35)		-		(31)
Revenues and Pre-tax income (loss)	$	11,486	$	(1,527)	$	11,751	$	(2,803)


Nine Months Ended September 30,	2018				2017
				Adjusted				Adjusted
		Adjusted		Pre-Tax		Adjusted		Pre-Tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	10,895	$	567	$	11,145	$	(644)
International		11,758		(314)		11,315		(182)
Total General Insurance		22,653		253		22,460		(826)
Life and Retirement
Individual Retirement		4,062		1,354		4,099		1,815
Group Retirement		2,209		774		2,116		758
Life Insurance		2,962		243		3,043		272
Institutional Markets		838		196		1,946		204
Total Life and Retirement		10,071		2,567		11,204		3,049
Other Operations		454		(1,133)		1,227		(1,039)
Legacy Portfolio		2,431		363		3,235		1,059
AIG Consolidation and elimination		(214)		28		(237)		75
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		35,395		2,078		37,889		2,318
Reconciling Items to revenues and pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		(109)		(127)		117		117
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains		-		46		-		195
Other income (expense) - net		(29)		-		(32)		-
Gain (Loss) on extinguishment of debt		-		(10)		-		4
Net realized capital losses^*		(430)		(388)		(1,106)		(1,106)
Income (loss) from divested businesses		-		35		-		(173)
Non-operating litigation reserves and settlements		2		(30)		17		86
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		(607)		-		(258)
Net loss reserve discount benefit (charge)		-		305		-		(283)
Pension expense related to a one-time lump sum payment to former employees		-		-		-		(50)
Integration and transaction costs associated with acquired businesses		-		(91)		-		-
Restructuring and other costs		-		(259)		-		(259)
Revenues and Pre-tax income	$	34,829	$	952	$	36,885	$	591

* Includes all net realized capital 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.