Held-For-Sale Classification

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Held-For-Sale Classification

4. Held-For-Sale Classification

HELD-FOR-SALE CLASSIFICATION

We report and classify a business as held-for-sale (Held-For-Sale Business) when management has approved the sale or received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the next 12 months and certain other specified criteria are met. A Held-For-Sale Business is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized.

Assets and liabilities related to a Held-For-Sale Business are reported in Assets held for sale and Liabilities held for sale, respectively, in our Condensed Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale. At June 30, 2023, the following businesses were reported and classified as held-for-sale:

Validus Re

To further simplify AIG's business model and reduce volatility in our portfolio, on May 22, 2023, AIG announced that it entered into a definitive agreement to sell Validus Re, including AlphaCat Managers Ltd. and the Talbot Treaty reinsurance business to RenaissanceRe for $2.7 billion in cash and approximately 1.3 million common shares of RenaissanceRe. Additionally, AIG agreed to retain 95 percent of the difference between (i) the reserves with respect to the business as of the closing date of the sale for losses occurring prior to the closing date and (ii) the associated reserve development following the closing date with respect to such losses. Any reserve development will be settled annually, commencing with the calendar year ending December 31, 2024. This arrangement stays in effect until the parties determine to terminate such arrangement (which they will re-evaluate on an annual basis beginning 5 years after the closing date) or until all such liabilities of the acquired reinsurance business have run off. This reserve cover is considered contingent consideration and will be recognized at fair value when the sale of Validus Re closes. The sale is expected to close in the fourth quarter of 2023, subject to regulatory approvals and other customary closing conditions. The results of Validus Re are reported in General Insurance.

CRS

On May 2, 2023, AIG announced that it reached an agreement to sell CRS, also purchased as part of the 2018 acquisition of Validus Holdings Ltd. in 2018, to AFG for approximately $240 million. The transaction closed on July 3, 2023. The historical results of CRS are reported in General Insurance.

The following table summarizes the components of assets and liabilities held-for-sale on the Condensed Consolidated Balance Sheets at June 30, 2023 after elimination of intercompany balances:

(in millions)		Validus Re		CRS		Total
Assets:
Bonds available for sale	$	4,568	$	—	$	4,568
Other invested assets		5		—		5
Short-term investments, including restricted cash of $46		389		29		418
Cash		191		—		191
Accrued investment income		26		—		26
Premiums and other receivables, net of allowance for credit losses and disputes		3,812		51		3,863
Reinsurance assets - other, net of allowance for credit losses and disputes		2,057		—		2,057
Deferred income taxes		75		—		75
Deferred policy acquisition costs		712		—		712
Other assets, net of allowance for credit losses(a)		591		189		780
Total assets held for sale	$	12,426	$	269	$	12,695
Liabilities:
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses	$	4,929	$	—	$	4,929
Unearned premiums		3,006		—		3,006
Other liabilities		1,220		173		1,393
Long-term debt		267		—		267
Total liabilities held for sale	$	9,422	$	173	$	9,595

(a)Other assets, net of allowance for credit losses includes goodwill and other intangibles of $318 million and $235 million, respectively, for Validus Re and $23 million and $20 million, respectively, for CRS.