There were no material changes to our significant accounting policies with the exception of the policies listed below which were impacted by the adoption of LDTI. For additional information on our significant accounting policies not impacted by the adoption LDTI, see Note 2 to the Consolidated Financial Statements in the 2022 Annual Report.

Insurance revenues include premiums and policy fees. All premiums and policy fees are presented net of reinsurance, as applicable. Premiums from long-duration life products, other than universal and variable life contracts, are recognized as revenues when due. Premiums from individual and group annuity contracts that are life contingent are recognized as revenues when due.

For limited payment contracts, premiums are due over a significantly shorter period than the period over which benefits are provided. Prior to the adoption of LDTI on January 1, 2021, the difference between the gross premium received and the net premium was deferred and recognized in premiums in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits. This Deferred Profit Liability (DPL) was recorded in the Condensed Consolidated Balance Sheets in Other policyholder funds. After January 1, 2021, the difference between the gross premium received and recorded as revenue and the net premium is deferred and recognized in Policyholder benefits in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits. This DPL is recorded in the Condensed Consolidated Balance Sheets in Future policy benefits for life and accident and health insurance contracts.

Prior to the adoption of LDTI on January 1, 2021, reinsurance premiums ceded under yearly renewable term (YRT) reinsurance agreements were recognized as a reduction in revenues over the period the reinsurance coverage was utilized in proportion to the risks to which the premiums relate, while premiums ceded under modified coinsurance (modco) treaties were recognized when due. After January 1, 2021 all reinsurance premiums ceded are recognized when due, following a ceded net premium ratio methodology that also accrues a proportionate amount of estimated benefits.

Amounts received as payment for investment-oriented contracts such as universal life, variable annuities, fixed annuities, and fixed index annuities, are reported as deposits to Policyholder contract deposits or Separate account liabilities, as applicable. Revenues from these contracts are recorded in policy fees and consist of policy charges for the cost of insurance, policy administration charges, surrender charges and amortization of unearned revenue reserves. Policy fees are recognized as revenues in the period in which they are assessed against policyholders, unless the fees are designed to compensate AIG for services to be provided in the future. Prior to the adoption of LDTI on January 1, 2021, fees deferred as unearned revenue were amortized in relation to the incidence of estimated gross profits (EGPs) to be realized over the estimated lives of the contracts. After January 1, 2021 fees deferred as unearned revenue

In August 2018, the Financial Accounting Standards Board (FASB) issued an accounting standard update with the objective of making targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity.

The Company adopted the standard on January 1, 2023 using the modified retrospective transition method relating to liabilities for traditional and limited payment contracts and deferred policy acquisition costs. The Company also adopted the standard in relation to MRBs on a full retrospective basis. As of the January 1, 2021 transition date (Transition Date), the impact of the adoption of the standard was a net decrease to beginning Accumulated other comprehensive income (loss) (AOCI) of $2.2 billion and a net increase to beginning Retained earnings of $933 million primarily driven by (1) changes related to MRBs in our Individual Retirement and Group Retirement operating segments, including the impact of non-performance risk adjustments which reclassified the portion of the changes in fair value attributable to non-performance risk from Retained earnings to AOCI, (2) changes to the discount rate which most significantly impacted our Life Insurance and Institutional Markets operating segments, and (3) the removal of balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments.

The accounting for the Fortitude Reinsurance Company Ltd. (Fortitude Re) reinsurance contracts, including the discount rates, continued to be calculated using the same methodology and assumptions as the direct policies, and therefore have been recalculated on an LDTI basis. The accounting for reinsurance transactions between AIG and Fortitude Re structured as modified coinsurance (modco) remained unchanged.

Market risk benefits: The standard requires the measurement of all MRBs (e.g., living benefit and death benefit guarantees associated with variable annuities) associated with deposit (or account balance) contracts at fair value at each reporting period. Changes in fair value compared to prior periods are recorded and presented separately within the income statement, with the exception of our own credit risk, which are recognized in Other comprehensive income. MRBs impacted both Retained earnings and AOCI upon transition.

Discount rate assumption: The standard requires the discount rate assumption for the liability for future policy benefits to be updated at the end of each reporting period using an upper-medium grade (low credit risk) fixed income instrument yield that maximizes the use of observable market inputs. Upon transition, the Company had an adjustment to AOCI due to the fact that the market upper-medium grade (low credit risk) interest rates as of the Transition Date differed from reserve interest accretion rates.

Following adoption, the impact of changes to discount rates are recognized through Other comprehensive income. Changes resulting from updating the discount rate each reporting period primarily impact term life insurance and other traditional life insurance products, as well as pension risk transfer (PRT) and structured settlement products. For additional information on the discount rate assumption under accounting for Long-Duration Contracts Standard, see Note 11.

•Requires the review and, if necessary, update of future policy benefit assumptions at least annually for traditional and limited pay long duration contracts, with the recognition and separate presentation of any resulting re-measurement gain or loss (except for discount rate changes as noted above) in the Condensed Consolidated Statements of Income (Loss). For additional information, see Note 11.

•Increases disclosures of disaggregated rollforwards of several balances, including but not limited to liabilities for future policy benefits, deferred acquisition costs, account balances, MRBs, separate account liabilities and information about significant inputs, judgments and methods used in measurement and changes thereto and impact of those changes.


	Pre-Adoption, December 31, 2020	Cumulative Effect Adjustment as of January 1, 2021	Updated Balances Post Adoption of LDTI
(in millions)


Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes(a)	34,578	7,666	42,244
Reinsurance assets - other, net of allowance for credit losses and disputes(a)	38,963	469	39,432
Deferred income taxes	12,624	339	12,963
Deferred policy acquisition costs(b)	9,805	3,150	12,955
Market risk benefit assets(c)	—	338	338
Other assets, net of allowance for credit losses(d)	13,122	398	13,520
Total assets	586,481	12,360	598,841

Future policy benefits for life and accident and health insurance contracts(e)	56,878	10,486	67,364
Policyholder contract deposits(e)	154,470	(6,247)	148,223
Market risk benefit liabilities(c)	—	8,739	8,739
Other policyholder funds(f)	3,548	248	3,796
Other liabilities(g)	27,122	398	27,520
Total liabilities	519,282	13,624	532,906

Retained earnings	15,504	933	16,437
Accumulated other comprehensive income (loss)	13,511	(2,197)	11,314
Total AIG Shareholders' equity	66,362	(1,264)	65,098

Total equity	67,199	(1,264)	65,935
Total liabilities and equity	586,481	12,360	598,841


	As Previously Reported	Effect of Change	Updated Balances Post Adoption of LDTI
(in millions)


Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes	32,159	(1,408)	30,751
Reinsurance assets - other, net of allowance for credit losses and disputes	39,434	(463)	38,971
Deferred income taxes	15,144	(340)	14,804
Deferred policy acquisition costs	15,518	(2,661)	12,857
Market risk benefit assets	—	796	796
Other assets, net of allowance for credit losses	12,714	(330)	12,384
Total assets	526,634	(4,406)	522,228

Future policy benefits for life and accident and health insurance contracts	59,223	(7,309)	51,914
Policyholder contract deposits	158,891	(2,907)	155,984
Market risk benefit liabilities	—	4,736	4,736
Other policyholder funds	3,909	(446)	3,463
Other liabilities	26,456	301	26,757
Total liabilities	484,399	(5,625)	478,774
Additional paid-in capital	80,284	(369)	79,915
Retained earnings	33,032	1,861	34,893
Accumulated other comprehensive income (loss)	(22,092)	(524)	(22,616)
Total AIG Shareholders' equity	40,002	968	40,970
Non-redeemable noncontrolling interests	2,233	251	2,484
Total equity	42,235	1,219	43,454
Total liabilities and equity	526,634	(4,406)	522,228


Three Months Ended March 31, 2022		As Previously Reported		Effect of Change		Updated Balances Post Adoption of LDTI
(in millions, except per common share data)
Revenues:
Premiums	$	7,110	$	10	$	7,120
Policy fees		764		(34)		730
Total net realized gains (losses)		4,419		(840)		3,579
Total revenues		15,808		(864)		14,944
Benefits, losses and expenses:



Policyholder benefits and losses incurred		5,255		(195)		5,060
Change in the fair value of market risk benefits, net		—		(233)		(233)
Interest credited to policyholder account balances		877		2		879
Amortization of deferred acquisition costs		1,437		(300)		1,137
General operating and other expenses		2,181		(17)		2,164
Total benefits, losses and expenses		9,973		(743)		9,230
Income (loss) from continuing operations before income tax expense (benefit)		5,835		(121)		5,714
Income tax expense (benefit)		1,179		(25)		1,154
Income (loss) from continuing operations		4,656		(96)		4,560
Net income (loss)		4,656		(96)		4,560
Net income (loss) from continuing operations attributable to noncontrolling interests		396		(9)		387
Net income (loss) attributable to AIG		4,260		(87)		4,173
Net income (loss) attributable to AIG common shareholders		4,253		(87)		4,166
Income (loss) per common share attributable to AIG common shareholders:
Common stock - Basic		5.21		(0.11)		5.10
Common stock - Diluted		5.15		(0.11)		5.04


Three Months Ended March 31, 2022		As Previously Reported		Effect of Change		Updated Balances Post Adoption of LDTI
(in millions)

Net income	$	4,656	$	(96)	$	4,560
Other comprehensive income (loss), net of tax

Change in unrealized appreciation (depreciation) of all other investments		(13,607)		(2,534)		(16,141)
Change in fair value of market risk benefits related to our own credit risk		—		782		782
Change in the discount rates used to measure traditional and limited payment long-duration insurance contracts		—		2,290		2,290
Other comprehensive income (loss)		(13,648)		537		(13,111)
Comprehensive income (loss)		(8,992)		441		(8,551)
Comprehensive income (loss) attributable to noncontrolling interests		(665)		40		(625)
Comprehensive income (loss) attributable to AIG		(8,327)		401		(7,926)


Three Months Ended March 31, 2022		As Previously Reported		Effect of Change	Updated Balances Post Adoption of LDTI
(in millions)
Cash flows from operating activities:
Net income	$	4,656	$	(96)	$	4,560
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income (loss):
Unrealized gains in earnings - net		(2,006)		1,133		(873)
Change in the fair value of market risk benefits in earnings, net		—		(496)		(496)
Depreciation and other amortization		1,447		(313)		1,134
Changes in operating assets and liabilities:
Insurance reserves		1,734		(478)		1,256
Premiums and other receivables and payables - net		(4,164)		(2)		(4,166)
Reinsurance assets, net		(1,223)		416		(807)
Capitalization of deferred policy acquisition costs		(1,386)		(16)		(1,402)
Current and deferred income taxes - net		1,123		(25)		1,098
Other, net		(158)		(141)		(299)
Total adjustments		(4,599)		78		(4,521)
Net cash provided by operating activities		57		(18)		39
Cash flows from financing activities:
Policyholder contract deposits		6,392		18		6,410


Net cash used in financing activities		(595)		18		(577)

In March 2022, the FASB issued an accounting standard update that eliminates the accounting guidance for troubled debt restructurings for creditors and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The standard also updates the requirements for accounting for credit losses by adding enhanced disclosures for creditors related to loan refinancings and restructurings for borrowers experiencing financial difficulty. The Company adopted the standard prospectively as of January 1, 2023 and the standard did not have a material impact on our reported consolidated financial condition, results of operations, or cash flows. For the updated required disclosures, see Note 6.

On June 30, 2022, the FASB issued an accounting standards update to address diversity in practice by clarifying that a contractual sale restriction should not be considered in the measurement of the fair value of an equity security. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities. The guidance is effective for public companies for fiscal years beginning after December 15, 2023 and interim period within those years, with early adoption permitted. For entities other than investment companies, the accounting standards update applies prospectively, with any adjustments resulting from adoption recognized in earnings on the date of adoption. We are assessing the impact of this standard.