SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2019

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., Western World Insurance Group, Inc. and Glatfelter Insurance Group as of their respective acquisition dates.

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 its 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 annuities, individual annuity and investment products, and 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.

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), 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. Beginning in the first quarter of 2019, on a prospective basis, the changes in the fair value of equity securities are excluded from adjusted pre-tax income (loss). 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,	2019				2018
				Adjusted				Adjusted
		Total		Pre-tax		Total		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	3,878	$	435	$	4,129	$	(160)
International		3,537		72		3,853		(665)
Total General Insurance		7,415		507		7,982		(825)
Life and Retirement
Individual Retirement		1,416		387		1,335		393
Group Retirement		726		203		718		242
Life Insurance		1,037		(7)		809		16
Institutional Markets		654		63		284		62
Total Life and Retirement		3,833		646		3,146		713
Other Operations		211		(454)		135		(417)
Legacy Portfolio		751		93		814		84
AIG Consolidation and elimination		(153)		(46)		(42)		29
Total AIG Consolidated adjusted revenues and adjusted pre-tax income (loss)		12,057		746		12,035		(416)
Reconciling items from adjusted pre-tax income to pre-tax income (loss):
Changes in fair value of securities used to hedge guaranteed
living benefits		25		12		(5)		(14)
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains (losses)		-		(65)		-		76
Changes in the fair value of equity securities		(51)		(51)		-		-
Professional fees related to regulatory or accounting changes		-		(3)		-		-
Other income (expense) - net		16		-		(4)		-
Gain (loss) on extinguishment of debt		-		-		-		(1)
Net realized capital gains (losses)*		867		881		(540)		(524)
Income (loss) from divested businesses		-		(9)		-		2
Non-operating litigation reserves and settlements		-		(5)		-		(5)
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		59		-		(605)
Net loss reserve discount benefit (charge)		-		(235)		-		86
Integration and transaction costs associated with acquired businesses		-		(3)		-		(91)
Restructuring and other costs		-		(67)		-		(35)
Revenues and Pre-tax income (loss)	$	12,914	$	1,260	$	11,486	$	(1,527)

Nine Months Ended September 30,	2019				2018
				Adjusted				Adjusted
		Total		Pre-Tax		Total		Pre-Tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	12,001	$	2,087	$	10,895	$	567
International		10,743		668		11,758		(314)
Total General Insurance		22,744		2,755		22,653		253
Life and Retirement
Individual Retirement		4,233		1,483		4,062		1,354
Group Retirement		2,225		728		2,209		774
Life Insurance		3,264		195		2,962		243
Institutional Markets		2,143		213		838		196
Total Life and Retirement		11,865		2,619		10,071		2,567
Other Operations		625		(1,256)		454		(1,133)
Legacy Portfolio		2,197		324		2,431		363
AIG Consolidation and elimination		(460)		(172)		(214)		28
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		36,971		4,270		35,395		2,078
Reconciling items from adjusted pre-tax income to pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		214		183		(109)		(127)
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains (losses)		-		(39)		-		46
Changes in the fair value of equity securities		6		6		-		-
Professional fees related to regulatory or accounting changes		-		(5)		-		-
Other income (expense) - net		27		-		(29)		-
Loss on extinguishment of debt		-		(13)		-		(10)
Net realized capital gains (losses)*		713		758		(430)		(388)
Income (loss) from divested businesses		-		(4)		-		35
Non-operating litigation reserves and settlements		-		(6)		2		(30)
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		211		-		(607)
Net loss reserve discount benefit (charge)		-		(920)		-		305
Integration and transaction costs associated with acquired businesses		-		(16)		-		(91)
Restructuring and other costs		-		(174)		-		(259)
Revenues and Pre-tax income	$	37,931	$	4,251	$	34,829	$	952

*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.