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SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2018
SEGMENT INFORMATION  
SEGMENT INFORMATION

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.
  • United Guaranty — Mortgage insurance protects mortgage lenders and investors against the increased risk of borrower default related to high loan-to-value mortgages. The sale of this business was completed on December 31, 2016.
  • 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.

On December 31, 2016, we completed the sale of United Guaranty to Arch. See Note 1 for a further discussion.

In the second quarter of 2015, a United Guaranty subsidiary and certain of our General Insurance companies entered into a 50 percent quota share reinsurance agreement whereby the United Guaranty subsidiary (1) ceded 50 percent of the risk relating to policies written in 2014 that were current as of January 1, 2015 and (2) ceded 50 percent of the risk relating to all policies written in 2015 and 2016, each in exchange for a 30 percent ceding commission and reimbursements of 50 percent of the losses and loss adjustment expenses incurred on covered policies. Beginning in the third quarter of 2016, the effect of this intercompany reinsurance arrangements is included in the results of Property and Special Risks and Other Operations for all periods presented. Previously, this arrangement was eliminated for purposes of segment reporting. Concurrent with the closing of the sale of United Guaranty, we amended and restated this arrangement and expect the results of this arrangement to continue to be reported in Property and Special Risks.

Investment income of the General Insurance companies is attributed to the North America and International operating segments based on an internal investment income allocation model. The model estimates investable funds based primarily on loss reserves and unearned premiums. Investment income of the Life and Retirement companies is attributed to the Individual Retirement, Group Retirement, Life Insurance and Institutional Markets operating segments as well as the Legacy Life and Retirement Run-Off Lines based on invested assets in segregated product line portfolios; income from invested assets in excess of liabilities is allocated to product lines based on internal capital estimates.

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:

NetAdjusted
TotalInvestmentInterestAmortizationPre-Tax
(in millions) RevenuesIncomeExpenseof DACIncome (Loss)
2018
General Insurance
North America$14,619$2,305$-$1,859$(8)
International15,554363-2,737(461)
Total General Insurance30,1732,668-4,596(469)
Life and Retirement
Individual Retirement5,3383,827826301,681
Group Retirement2,8912,1724295933
Life Insurance4,0071,13725(50)330
Institutional Markets1,900786135246
Total Life and Retirement14,1367,9221626803,190
Other Operations636451,06610(1,584)
Legacy Portfolio3,0392,32530105213
AIG Consolidation and elimination(171)(232)85-59
Total AIG Consolidated adjusted revenues and adjusted
pre-tax income$47,813$12,728$1,343$5,391$1,409
Reconciling Items from adjusted pre-tax income to
pre-tax income (loss):
Changes in fair value of securities used to hedge guaranteed
living benefits(128)(128)--(154)
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains---(5)6
Other income (expense) - net(53)----
Loss on extinguishment of debt----(7)
Net realized capital losses*(254)(124)(34)-(193)
Income from divested businesses----38
Non-operating litigation reserves and settlements11---(19)
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements----(675)
Net loss reserve discount benefit (charge)----371
Pension expense related to a one-time lump sum payment to
former employees-----
Integration and transaction costs associated with acquired businesses----(124)
Restructuring and other costs----(395)
Revenues and Pre-tax income (loss)$47,389$12,476$1,309$5,386$257
2017
General Insurance
North America$14,600$3,145$31$1,305$(232)
International15,094523(9)2,460(581)
Total General Insurance29,6943,668223,765(813)
Life and Retirement
Individual Retirement5,5144,013584152,289
Group Retirement2,8482,16432841,004
Life Insurance4,0561,04413239274
Institutional Markets3,16859565264
Total Life and Retirement15,5867,8161097433,831
Other Operations1,41353968(9)(1,405)
Legacy Portfolio4,3912,776122761,470
AIG Consolidation and elimination(308)(280)(53)475
Total AIG Consolidated adjusted revenues and adjusted
pre-tax income$50,776$14,033$1,168$4,579$3,158
Reconciling Items from adjusted pre-tax income to
pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits146146--146
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains---(291)303
Other income (expense) - net(49)----
Gain on extinguishment of debt----5
Net realized capital losses(1,380)---(1,380)
Income from divested businesses----68
Non-operating litigation reserves and settlements27---129
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements----(303)
Net loss reserve discount benefit (charge)----(187)
Pension expense related to a one-time lump sum payment to
former employees----(60)
Restructuring and other costs----(413)
Revenues and Pre-tax income$49,520$14,179$1,168$4,288$1,466
2016
General Insurance
North America$17,005$3,041$28$1,444$(2,399)
International16,135513-2,677348
Total General Insurance33,1403,554284,121(2,051)
Life and Retirement
Individual Retirement5,7583,878502982,269
Group Retirement2,7692,14626129931
Life Insurance3,8181,03512182(37)
Institutional Markets1,43356344265
Total Life and Retirement13,7787,622926133,428
Other Operations2,51720797872(1,011)
Legacy Portfolio5,2502,9132821081,007
AIG Consolidation and elimination(494)(351)(120)(117)42
Total AIG Consolidated adjusted revenues and adjusted
pre-tax income$54,191$13,945$1,260$4,797$1,415
Reconciling Items from adjusted pre-tax income to
pre-tax income (loss):
Changes in fair value of securities used to hedge guaranteed
living benefits120120--120
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains---(276)195
Other income (expense) - net(44)----
Loss on extinguishment of debt----(74)
Net realized capital losses(1,944)---(1,944)
Income from divested businesses----545
Non-operating litigation reserves and settlements44---41
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements----42
Net loss reserve discount benefit (charge)----427
Pension expense related to a one-time lump sum payment to
former employees----(147)
Restructuring and other costs----(694)
Revenues and Pre-tax income (loss)$52,367$14,065$1,260$4,521$(74)

* 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.

The following table presents AIG’s year-end identifiable assets and capital expenditures by legal entity category:

Year-End Identifiable AssetsCapital Expenditures
(in millions)2018201720182017
General Insurance companies$110,007$114,841$171$239
Life and Retirement companies247,219289,4579488
Other140,428105,425103156
AIG Consolidation and Elimination(5,670)(11,422)--
Total Assets$491,984$498,301$368$483

The following table presents AIG’s consolidated total revenues and real estate and other fixed assets, net of accumulated depreciation, by major geographic area:

Real Estate and Other Fixed Assets,
Total Revenues*Net of Accumulated Depreciation
(in millions)201820172016201820172016
North America$31,003$34,149$36,871$1,479$1,630$1,326
International16,38615,37115,4966938921,334
Consolidated$47,389$49,520$52,367$2,172$2,522$2,660

* Revenues are generally reported according to the geographic location of the reporting unit. International revenues consists of revenues from our General Insurance International operating segment.