EQUITY

3 Months Ended

Mar. 31, 2019

EQUITY

EQUITY

12. Equity

Shares Outstanding

Preferred Stock

On March 14, 2019, we issued 20,000 shares of 5.85% Series A Non-Cumulative Preferred Stock (Series A Preferred Stock) (equivalent to 20,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of Series A Preferred Stock), $5.00 par value and $25,000 liquidation preference per share (equivalent to $25 per Depositary Share). After underwriting discounts and expenses, we received net proceeds of approximately $485 million.

We may redeem the Series A Preferred Stock at our option, (a) in whole, but not in part, at any time prior to March 15, 2024,within 90 days after the occurrence of a “Rating Agency Event,” at a redemption price equal to $25,500 per share of the Series A Preferred Stock (equivalent to $25.50 per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in respect of any dividends that have not been declared prior to such date), or (b) (i) in whole, but not in part, at any time prior to March 15, 2024, within 90 days after the occurrence of a “Regulatory Capital Event,” or (ii) in whole or in part, from time to time, on or after March 15, 2024, in each case, at a redemption price equal to $25,000 per share of the Series A Preferred Stock (equivalent to $25.00 per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in respect of any dividends that have not been declared prior to such date).

A “Rating Agency Event” is generally defined to mean that any nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Exchange Act that then publishes a rating for us amends, clarifies or changes the criteria it uses to assign equity credit to securities such as the Series A Preferred Stock, which amendment, clarification or change results in the shortening of the length of time the Series A Preferred Stock is assigned a particular level of equity credit by that rating agency as compared to the length of time it would have been assigned that level of equity credit by that rating agency or its predecessor on the initial issuance of the Series A Preferred Stock, or the lowering of the equity credit (including up to a lesser amount) assigned to the Series A Preferred Stock by that rating agency as compared to the equity credit assigned by that rating agency or its predecessor on the initial issuance of the Series A Preferred Stock. A “Regulatory Capital Event” is generally defined to mean our good faith determination that as a result of a change in law, rule or regulation, or a proposed change or an official judicial or administrative pronouncement, there is more than an insubstantial risk that the full liquidation preference of the Series A Preferred Stock would not qualify as capital (or a substantially similar concept) for purposes of any group capital standard to which we are or will be subject.

Holders of the Series A Preferred Stock will be entitled to receive dividend payments only when, as and if declared by our board of directors (or a duly authorized committee of the board). Dividends will be payable from the original date of issue at a rate of 5.85% per annum, payable quarterly, in arrears, on the fifteenth day of March, June, September and December of each year, beginning on June 15, 2019.Dividends on the Series A Preferred Stock will be non-cumulative.

In the event of any liquidation, dissolution or winding-up of the affairs of AIG, whether voluntary or involuntary, before any distribution or payment out of our assets may be made to or set aside for the holders of any junior stock, holders of the Series A Preferred Stock will be entitled to receive out of our assets legally available for distribution to our stockholders, an amount equal to $25,000 per share of Series A Preferred Stock (equivalent to $25.00 per Depositary Share), together with an amount equal to all declared and unpaid dividends (if any), but no amount in respect of any undeclared dividends prior to such payment date. Distributions will be made only to the extent of our assets that are available for distribution to stockholders (i.e., after satisfaction of all our liabilities to creditors, if any).

The Series A Preferred Stock does not have voting rights, except in limited circumstances, including in the case of certain dividend non-payments.

Common Stock

The following table presents a rollforward of outstanding shares:

Three Months Ended March 31, 2019	Common	Treasury	Common Stock
	Stock Issued	Stock	Outstanding
Shares, beginning of year	1,906,671,492	(1,040,062,063)	866,609,429
Shares issued	-	3,127,472	3,127,472
Shares repurchased	-	-	-
Shares, end of period	1,906,671,492	(1,036,934,591)	869,736,901

Dividends

Dividends are payable on AIG Common Stock only when, as and if declared by our Board of Directors in its discretion, from funds legally available for this purpose. In considering whether to pay a dividend on or purchase shares of AIG Common Stock, our Board of Directors considers a number of factors, including, but not limited to: the capital resources available to support our insurance operations and business strategies, AIG’s funding capacity and capital resources in comparison to internal benchmarks, expectations for capital generation, rating agency expectations for capital, regulatory standards for capital and capital distributions, and such other factors as our Board of Directors may deem relevant. The payment of dividends is also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which no dividends may be declared or paid on any AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock have been declared and paid or provided for.

The following table presents declaration date, record date, payment date and dividends paid per share on AIG Common Stock:

			Dividends Paid
Declaration Date	Record Date	Payment Date	Per Share
February 13, 2019	March 15, 2019	March 29, 2019	0.32
February 8, 2018	March 15, 2018	March 29, 2018	0.32

For a discussion of restrictions on payments of dividends to AIG Parent by its subsidiaries seeNote 19 to the Consolidated Financial Statements in the 2018 Annual Report.

Repurchase of AIG Common Stock

The following table presents repurchases of AIG Common Stock and warrants to purchase shares of AIG Common Stock:

Three Months Ended March 31,
(in millions)		2019		2018
Aggregate repurchases of common stock	$	-	$	298
Total number of common shares repurchased		-		5
Aggregate repurchases of warrants	$	-	$	2
Total number of warrants repurchased*		-		-

* For the three-month periods ended March 31,2018, we repurchased 97,553 warrants to purchase shares of AIG Common Stock. For the three-month periods ended March 31,2019, we did not repurchase any warrants to purchase shares of AIG Common Stock..

Our Board of Directors has authorized the repurchase of shares of AIG Common Stock and warrants to purchase shares of AIG Common Stock through a series of actions. On February 13, 2019, our Board of Directors authorized an additional increase of approximately $1.5 billion to its previous share repurchase authorization. As of March 31,2019, $2.0 billion remained under our share repurchase authorization. Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise (including through the purchase of warrants). Certain of our share repurchases have been and may from time to time be effected through Exchange Act Rule 10b5-1 repurchase plans.

We did not repurchase any shares of AIG Common Stock during the three months ended March 31,2019. The timing of any future repurchases will depend on market conditions, our business and strategic plans, financial condition, results of operations, liquidity and other factors. The repurchase of AIG Common Stock is also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which AIG may not (other than in limited circumstances) purchase, redeem or otherwise acquire AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock have been declared and paid or provided for.

Accumulated Other Comprehensive Income

The following table presents a rollforward of Accumulated other comprehensive income (loss):

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Other-Than-		(Depreciation)		Currency		Plan		Attributable to
		Temporary Credit		of All Other		Translation		Liabilities		Changes in
(in millions)		Impairments Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Balance, December 31, 2018, net of tax	$	(38)	$	2,426	$	(2,725)	$	(1,086)	$	10	$	(1,413)
Change in unrealized appreciation of investments		849		5,064		-		-		-		5,913
Change in deferred policy acquisition costs
adjustment and other		(8)		(856)		-		-		-		(864)
Change in future policy benefits		-		(1,068)		-		-		-		(1,068)
Change in foreign currency translation adjustments		-		-		188		-		-		188
Change in net actuarial loss		-		-		-		1		-		1
Change in prior service credit		-		-		-		(1)		-		(1)
Change in deferred tax liability		(165)		(432)		(24)		(1)		-		(622)
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		-		-
Total other comprehensive income (loss)		676		2,708		164		(1)		-		3,547
Noncontrolling interests		-		5		1		-		-		6
Balance, March 31, 2019, net of tax	$	638	$	5,129	$	(2,562)	$	(1,087)	$	10	$	2,128

Balance, December 31, 2017, net of tax	$	793	$	7,693	$	(2,090)	$	(931)	$	-	$	5,465
Cumulative effect of change in accounting
principles		169		(285)		(284)		(183)		7		(576)
Change in unrealized depreciation of investments		(240)		(4,754)		-		-		-		(4,994)
Change in deferred policy acquisition costs
adjustment and other		30		634		-		-		-		664
Change in future policy benefits		-		741		-		-		-		741
Change in foreign currency translation adjustments		-		-		172		-		-		172
Change in net actuarial loss		-		-		-		16		-		16
Change in prior service credit		-		-		-		(4)		-		(4)
Change in deferred tax asset (liability)		60		671		(14)		17		-		734
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		2		2
Total other comprehensive income (loss)		(150)		(2,708)		158		29		2		(2,669)
Noncontrolling interests		-		-		-		-		-		-
Balance, March 31, 2018, net of tax	$	812	$	4,700	$	(2,216)	$	(1,085)	$	9	$	2,220

The following table presents the other comprehensive income reclassification adjustments for the three-month periods ended March 31,2019 and 2018, respectively:

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Other-Than-		(Depreciation)		Currency		Plan		Attributable to
		Temporary Credit		of All Other		Translation		Liabilities		Changes in
(in millions)		Impairments Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
March 31, 2019
Unrealized change arising during period	$	841	$	3,109	$	188	$	(5)	$	-	$	4,133
Less: Reclassification adjustments
included in net income		-		(31)		-		(5)		-		(36)
Total other comprehensive income (loss),
before income tax expense		841		3,140		188		-		-		4,169
Less: Income tax expense		165		432		24		1		-		622
Total other comprehensive income (loss),
net of income tax expense	$	676	$	2,708	$	164	$	(1)	$	-	$	3,547
March 31, 2018
Unrealized change arising during period	$	(208)	$	(3,386)	$	172	$	3	$	2	$	(3,417)
Less: Reclassification adjustments
included in net income		2		(7)		-		(9)		-		(14)
Total other comprehensive income (loss),
before income tax expense (benefit)		(210)		(3,379)		172		12		2		(3,403)
Less: Income tax expense (benefit)		(60)		(671)		14		(17)		-		(734)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	(150)	$	(2,708)	$	158	$	29	$	2	$	(2,669)

The following table presents the effect of the reclassification of significant items out of Accumulated other comprehensive income on the respective line items in the Condensed Consolidated Statements of Income:

	Amount Reclassified
	from Accumulated Other
	Comprehensive Income
	Three Months Ended March 31,					Affected Line Item in the
(in millions)			2019		2018	Condensed Consolidated Statements of Income
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Investments		$	-	$	2	Other realized capital gains
Total			-		2
Unrealized appreciation (depreciation) of
all other investments
Investments			(31)		24	Other realized capital gains
Deferred acquisition costs adjustment			-		(31)	Amortization of deferred policy acquisition costs
Future policy benefits			-		-	Policyholder benefits and losses incurred
Total			(31)		(7)
Change in retirement plan liabilities adjustment
Prior-service credit			-		-	*
Actuarial losses			(5)		(9)	*
Total			(5)		(9)
Total reclassifications for the period		$	(36)	$	(14)

* These Accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 14.