10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-8787

American International Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-2592361
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
175 Water Street, New York, New York	10038
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 770-7000

________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $2.50 Per Share	AIG	New York Stock Exchange
Warrants (expiring January 19, 2021)	AIG WS	New York Stock Exchange
5.75% Series A-2 Junior Subordinated Debentures	AIG 67BP	New York Stock Exchange
4.875% Series A-3 Junior Subordinated Debentures	AIG 67EU	New York Stock Exchange
Stock Purchase Rights		New York Stock Exchange
Depositary Shares Each Representing a 1/1,000th Interest in a Share of Series A 5.85% Non-Cumulative Perpetual Preferred Stock	AIG PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of April 30, 2020, there were 861,290,649 shares outstanding of the registrant’s common stock.

AMERICAN INTERNATIONAL GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED

March 31, 2020

Table of Contents

FORM 10-Q
Item Number	Description		Page
Part I — Financial Information
ITEM 1	Condensed Consolidated Financial Statements		2
	Note 1.	Basis of Presentation	8
	Note 2.	Summary of Significant Accounting Policies	10
	Note 3.	Segment Information	14
	Note 4.	Held-For-Sale Classification	16
	Note 5.	Fair Value Measurements	17
	Note 6.	Investments	31
	Note 7.	Lending Activities	42
	Note 8.	Variable Interest Entities	46
	Note 9.	Derivatives and Hedge Accounting	47
	Note 10.	Insurance Liabilities	51
	Note 11.	Contingencies, Commitments and Guarantees	54
	Note 12.	Equity	56
	Note 13.	Earnings Per Common Share	61
	Note 14.	Employee Benefits	62
	Note 15.	Income Taxes	63
	Note 16.	Subsequent Events	66
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		67
	Cautionary Statement Regarding Forward-Looking Information		67
	Use of Non-GAAP Measures		70
	Critical Accounting Estimates		72
	Executive Summary		75
	Consolidated Results of Operations		83
	Business Segment Operations		88
	Investments		117
	Insurance Reserves		129
	Liquidity and Capital Resources		138
	Enterprise Risk Management		150
	Regulatory Environment		151
	Glossary		152
	Acronyms		155
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk		156
ITEM 4	Controls and Procedures		156
Part II — Other Information
ITEM 1	Legal Proceedings		157
ITEM 1A	Risk Factors		157
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds		159
ITEM 4	Mine Safety Disclosures		159
ITEM 6	Exhibits		160
Signatures			161

AIG | First Quarter 2020 Form 10-Q 1

Part I – Financial Information

Item 1. | Financial Statements

American International Group, Inc.

Condensed Consolidated Balance Sheets (unaudited)

	March 31,		December 31,
(in millions, except for share data)		2020		2019
Assets:
Investments:
Fixed maturity securities:
Bonds available for sale, at fair value (net of allowance for credit losses of $211 in 2020)
(amortized cost: 2020 - $234,586; 2019 - $233,230)	$	241,776	$	251,086
Other bond securities, at fair value (See Note 6)		5,353		6,682
Equity securities, at fair value (See Note 6)		624		841
Mortgage and other loans receivable, net of allowance for credit losses of $787 in 2020 and $438 in 2019		46,844		46,984
Other invested assets (portion measured at fair value: 2020 - $6,576; 2019 - $6,827)		17,966		18,792
Short-term investments, including restricted cash of $324 in 2020 and $188 in 2019
(portion measured at fair value: 2020 - $8,186; 2019 - $5,343)		19,773		13,230
Total investments		332,336		337,615
Cash		2,738		2,856
Accrued investment income		2,312		2,334
Premiums and other receivables, net of allowance for credit losses and disputes of $210 in 2020 and $178 in 2019		12,072		10,274
Reinsurance assets, net of allowance for credit losses and disputes of $310 in 2020 and $151 in 2019		39,927		37,977
Deferred income taxes		13,975		13,146
Deferred policy acquisition costs		11,889		11,207
Other assets, net of allowance for credit losses of $52 in 2020, including restricted cash of $257 in 2020 and $243 in 2019
(portion measured at fair value: 2020 - $3,311; 2019 - $3,151)		16,392		16,383
Separate account assets, at fair value		78,836		93,272
Total assets	$	510,477	$	525,064
Liabilities:
Liability for unpaid losses and loss adjustment expenses, net of allowance for credit losses of $14 in 2020	$	77,747	$	78,328
Unearned premiums		20,128		18,269
Future policy benefits for life and accident and health insurance contracts		49,803		50,512
Policyholder contract deposits (portion measured at fair value: 2020 - $8,153; 2019 - $6,910)		154,067		151,869
Other policyholder funds		3,460		3,428
Other liabilities (portion measured at fair value: 2020 - $637; 2019 - $1,100)		29,183		26,609
Long-term debt (portion measured at fair value: 2020 - $2,276; 2019 - $2,062)		25,268		25,479
Debt of consolidated investment entities		10,142		9,871
Separate account liabilities		78,836		93,272
Total liabilities		448,634		457,637
Contingencies, commitments and guarantees (See Note 11)		nil		nil
AIG shareholders’ equity:
Series A Non-cumulative preferred stock and additional paid in capital, $5.00 par value; 100,000,000 shares
authorized; shares issued: 2020 - 20,000 and 2019 - 20,000; liquidation preference $500		485		485
Common stock, $2.50 par value; 5,000,000,000 shares authorized; shares issued: 2020 - 1,906,671,492 and
2019 - 1,906,671,492		4,766		4,766
Treasury stock, at cost; 2020 - 1,045,380,884 shares; 2019 - 1,036,672,461 shares of common stock		(49,334)		(48,987)
Additional paid-in capital		81,188		81,345
Retained earnings		24,062		23,084
Accumulated other comprehensive income (loss)		(994)		4,982
Total AIG shareholders’ equity		60,173		65,675
Non-redeemable noncontrolling interests		1,670		1,752
Total equity		61,843		67,427
Total liabilities and equity	$	510,477	$	525,064
See accompanying Notes to Condensed Consolidated Financial Statements.

2 AIG | First Quarter 2020 Form 10-Q

American International Group, Inc.

Condensed Consolidated Statements of Income (unaudited)

	Three Months Ended March 31,
(dollars in millions, except per common share data)		2020		2019
Revenues:
Premiums	$	7,443	$	8,070
Policy fees		755		735
Net investment income		2,508		3,879
Net realized capital gains (losses)		3,519		(446)
Other income		218		218
Total revenues		14,443		12,456
Benefits, losses and expenses:
Policyholder benefits and losses incurred		6,325		6,679
Interest credited to policyholder account balances		957		940
Amortization of deferred policy acquisition costs		1,862		1,289
General operating and other expenses		2,153		2,053
Interest expense		355		349
(Gain) loss on extinguishment of debt		17		(2)
Net (gain) loss on sale or disposal of divested businesses		216		(6)
Total benefits, losses and expenses		11,885		11,302
Income from continuing operations before income tax expense		2,558		1,154
Income tax expense		904		217
Income from continuing operations		1,654		937
Income (loss) from discontinued operations, net of income taxes		-		-
Net income		1,654		937
Less:
Net income (loss) from continuing operations attributable to noncontrolling interests		(95)		283
Net income attributable to AIG		1,749		654
Less: Dividends on preferred stock		7		-
Net income attributable to AIG common shareholders	$	1,742	$	654
Income per common share attributable to AIG common shareholders:
Basic:
Income from continuing operations	$	1.99	$	0.75
Income from discontinued operations	$	-	$	-
Net income attributable to AIG common shareholders	$	1.99	$	0.75
Diluted:
Income from continuing operations	$	1.98	$	0.75
Income from discontinued operations	$	-	$	-
Net income attributable to AIG common shareholders	$	1.98	$	0.75
Weighted average shares outstanding:
Basic		874,213,630		875,383,084
Diluted		878,866,213		877,512,244
See accompanying Notes to Condensed Consolidated Financial Statements.

AIG | First Quarter 2020 Form 10-Q 3

American International Group, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)

	Three Months Ended March 31,
(in millions)		2020		2019
Net income	$	1,654	$	937
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed maturity securities on which
allowance for credit losses were taken		(359)		-
Change in unrealized appreciation of fixed maturity securities on which
other-than-temporary credit impairments were taken		-		676
Change in unrealized appreciation (depreciation) of all other investments		(5,542)		2,708
Change in foreign currency translation adjustments		(85)		164
Change in retirement plan liabilities adjustment		(7)		(1)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk		3		-
Other comprehensive income (loss)		(5,990)		3,547
Comprehensive income (loss)		(4,336)		4,484
Comprehensive income (loss) attributable to noncontrolling interests		(109)		289
Comprehensive income (loss) attributable to AIG	$	(4,227)	$	4,195
See accompanying Notes to Condensed Consolidated Financial Statements.

4 AIG | First Quarter 2020 Form 10-Q

American International Group, Inc.

Condensed Consolidated Statements of Equity (unaudited)

		Preferred														Non-
	Stock and											Accumulated		Total AIG		redeemable
	Additional							Additional				Other		Share-		Non-
		Paid-in		Common		Treasury		Paid-in		Retained	Comprehensive			holders'		controlling		Total
(in millions)		Capital		Stock		Stock		Capital		Earnings	Income (Loss)			Equity		Interests		Equity
Three Months Ended March 31, 2020
Balance, beginning of year	$	485	$	4,766	$	(48,987)	$	81,345	$	23,084	$	4,982	$	65,675	$	1,752	$	67,427
Cumulative effect of change in
accounting principle, net of tax		-		-		-		-		(487)		-		(487)		-		(487)
Preferred stock issued		-		-		-		-		-		-		-		-		-
Common stock issued under stock plans		-		-		160		(255)		-		-		(95)		-		(95)
Purchase of common stock		-		-		(500)		-		-		-		(500)		-		(500)
Net income (loss) attributable to AIG or
noncontrolling interests		-		-		-		-		1,749		-		1,749		(95)		1,654
Dividends on preferred stock		-		-		-		-		(7)		-		(7)		-		(7)
Dividends on common stock		-		-		-		-		(276)		-		(276)		-		(276)
Other comprehensive loss		-		-		-		-		-		(5,976)		(5,976)		(14)		(5,990)
Net increase due to acquisitions
and consolidations		-		-		-		-		-		-		-		48		48
Contributions from noncontrolling interests		-		-		-		-		-		-		-		1		1
Distributions to noncontrolling interests		-		-		-		-		-		-		-		(22)		(22)
Other		-		-		(7)		98		(1)		-		90		-		90
Balance, end of period	$	485	$	4,766	$	(49,334)	$	81,188	$	24,062	$	(994)	$	60,173	$	1,670	$	61,843

Three Months Ended March 31, 2019
Balance, beginning of year	$	-	$	4,766	$	(49,144)	$	81,268	$	20,884	$	(1,413)	$	56,361	$	948	$	57,309
Preferred stock issued		485		-		-		-		-		-		485		-		485
Common stock issued under stock plans		-		-		145		(222)		-		-		(77)		-		(77)
Purchase of common stock		-		-		-		-		-		-		-		-		-
Net income attributable to AIG or
noncontrolling interests		-		-		-		-		654		-		654		283		937
Dividends on preferred stock		-		-		-		-		-		-		-		-		-
Dividends on common stock		-		-		-		-		(278)		-		(278)		-		(278)
Other comprehensive income		-		-		-		-		-		3,541		3,541		6		3,547
Current and deferred income taxes		-		-		-		(1)		-		-		(1)		-		(1)
Net increase due to acquisitions
and consolidations		-		-		-		-		-		-		-		108		108
Contributions from noncontrolling interests		-		-		-		-		-		-		-		12		12
Distributions to noncontrolling interests		-		-		-		-		-		-		-		(59)		(59)
Other		-		-		-		103		(1)		-		102		8		110
Balance, end of period	$	485	$	4,766	$	(48,999)	$	81,148	$	21,259	$	2,128	$	60,787	$	1,306	$	62,093

See accompanying Notes to Condensed Consolidated Financial Statements.

AIG | First Quarter 2020 Form 10-Q 5

American International Group, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

	Three Months Ended March 31,
(in millions)		2020		2019
Cash flows from operating activities:
Net income	$	1,654	$	937
(Income) loss from discontinued operations		-		-
Adjustments to reconcile net income to net cash used in operating activities:
Noncash revenues, expenses, gains and losses included in income:
Net gains on sales of securities available for sale and other assets		(265)		(22)
Net (gain) loss on sale or disposal of divested businesses		216		(6)
(Gains) losses on extinguishment of debt		17		(2)
Unrealized (gains) losses in earnings - net		(2,549)		367
Equity in (income) loss from equity method investments, net of dividends or distributions		167		(83)
Depreciation and other amortization		1,878		1,299
Impairments of assets		25		125
Changes in operating assets and liabilities:
Insurance reserves		1,651		596
Premiums and other receivables and payables - net		(62)		315
Reinsurance assets and funds held under reinsurance treaties		(2,131)		(2,495)
Capitalization of deferred policy acquisition costs		(1,379)		(1,420)
Current and deferred income taxes - net		842		167
Other, net		(78)		(754)
Total adjustments		(1,668)		(1,913)
Net cash used in operating activities		(14)		(976)
Cash flows from investing activities:
Proceeds from (payments for)
Sales or distributions of:
Available for sale securities		7,040		6,370
Other securities		1,577		1,034
Other invested assets		1,447		1,118
Maturities of fixed maturity securities available for sale		6,768		4,957
Principal payments received on and sales of mortgage and other loans receivable		1,014		861
Purchases of:
Available for sale securities		(15,121)		(12,757)
Other securities		(317)		(287)
Other invested assets		(717)		(567)
Mortgage and other loans receivable		(1,733)		(1,504)
Net change in short-term investments		(6,023)		(1,221)
Other, net		5,432		17
Net cash used in investing activities		(633)		(1,979)
Cash flows from financing activities:
Proceeds from (payments for)
Policyholder contract deposits		4,979		5,629
Policyholder contract withdrawals		(4,337)		(4,195)
Issuance of long-term debt and debt of consolidated investment entities		673		1,449
Repayments of long-term debt and debt of consolidated investment entities		(884)		(589)
Borrowings under syndicated credit facility		1,300		-
Issuance of preferred stock, net of issuance costs		-		485
Purchase of common stock		(500)		-
Dividends paid on preferred stock		(7)		-
Dividends paid on common stock		(276)		(278)
Other, net		(288)		263
Net cash provided by financing activities		660		2,764
Effect of exchange rate changes on cash and restricted cash		10		12
Net increase (decrease) in cash and restricted cash		23		(179)
Cash and restricted cash at beginning of year		3,287		3,358
Change in cash of businesses held for sale		9		-
Cash and restricted cash at end of period	$	3,319	$	3,179

6 AIG | First Quarter 2020 Form 10-Q

American International Group, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)(continued)

Supplementary Disclosure of Condensed Consolidated Cash Flow Information

	Three Months Ended March 31,
(in millions)		2020		2019
Cash	$	2,738	$	2,565
Restricted cash included in Short-term investments*		324		251
Restricted cash included in Other assets*		257		363
Total cash and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	3,319	$	3,179

Cash paid during the period for:
Interest	$	323	$	315
Taxes	$	62	$	50
Non-cash investing activities:
Fixed maturity securities available for sale received in connection with pension risk transfer transactions	$	553	$	-
Non-cash financing activities:
Interest credited to policyholder contract deposits included in financing activities	$	869	$	878

*Includes funds held for tax sharing payments to AIG Parent, security deposits, and replacement reserve deposits related to our affordable housing investments.

See accompanying Notes to Condensed Consolidated Financial Statements.

AIG | First Quarter 2020 Form 10-Q 7

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 1. Basis of Presentation

1. Basis of Presentation

American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 80 countries and jurisdictions. AIG companies serve commercial and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG Common Stock, par value $2.50 per share (AIG Common Stock), is listed on the New York Stock Exchange (NYSE: AIG). Unless the context indicates otherwise, the terms “AIG,” “we,” “us” or “our” mean American International Group, Inc. and its consolidated subsidiaries and the term “AIG Parent” means American International Group, Inc. and not any of its consolidated subsidiaries.

These unaudited Condensed Consolidated Financial Statements do not include all disclosures that are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) and should be read in conjunction with the audited Consolidated Financial Statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the 2019 Annual Report). The condensed consolidated financial information as of December 31, 2019 included herein has been derived from the audited Consolidated Financial Statements in the 2019 Annual Report.

Certain of our foreign subsidiaries included in the Condensed Consolidated Financial Statements report on the basis of fiscal period ending November 30. The effect on our consolidated financial condition and results of operations of all material events occurring at these subsidiaries through the date of each of the periods presented in these Condensed Consolidated Financial Statements has been considered for adjustment and/or disclosure. In the opinion of management, these Condensed Consolidated Financial Statements contain normal recurring adjustments, including eliminations of material intercompany accounts and transactions, necessary for a fair statement of the results presented herein. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for the year ended December 31, 2020, especially when considering the risks and uncertainties associated COVID-19 and the impact it may have on our business, results of operations and financial condition.

We evaluated the need to recognize or disclose events that occurred subsequent to March 31, 2020 and prior to the issuance of these Condensed Consolidated Financial Statements.

Sales/disposals of Businesses

Fortitude Holdings

On November 13, 2018, AIG completed the sale of a 19.9 percent ownership interest in Fortitude Group Holdings, LLC (Fortitude Holdings) to TC Group Cayman Investments Holdings, L.P. (TCG), an affiliate of The Carlyle Group L.P. (Carlyle) (2018 Fortitude Sale). Upon completion of the 2018 Fortitude Sale, Fortitude Holdings owned 100 percent of the outstanding common shares of Fortitude Reinsurance Company Ltd (Fortitude Re) and AIG had an 80.1 percent ownership interest in Fortitude Holdings. We received $381 million in cash and will receive up to $95 million of deferred compensation following December 31, 2023, which is subject to a purchase price adjustment wherein AIG will reimburse TCG for adverse development in property casualty related reserves, based on an agreed methodology, that occurs on or prior to December 31, 2023, up to the value of TCG’s investment in Fortitude. Any amount due to TCG in respect of this purchase price adjustment will be offset by the amount of the $95 million otherwise due from TCG to AIG. To the extent we do not receive all or a portion of the planned distributions by May 13, 2020, TCG will pay us up to an additional $100 million, which amount shall adjust in proportion with the amount of the dividend received by AIG. In connection with the 2018 Fortitude Sale, we agreed to certain investment commitment targets into various Carlyle strategies and to certain minimum investment management fee payments within 36 months following the closing. We also will be required to pay a proportionate amount of an agreed make-whole fee to the extent we fail to satisfy such investment commitment targets.

8 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 1. Basis of Presentation

On November 25, 2019, AIG entered into a membership interest purchase agreement with Fortitude Holdings, Carlyle, Carlyle FRL, an investment fund advised by an affiliate of Carlyle (Carlyle FRL), T&D United Capital Co., Ltd. (T&D) and T&D Holdings, Inc., pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Carlyle FRL will purchase from AIG a 51.6 percent ownership interest in Fortitude Holdings and T&D will purchase from AIG a 25 percent ownership interest in Fortitude Holdings (Majority Interest Fortitude Sale). Upon closing of the Majority Interest Fortitude Sale, AIG will have a 3.5 percent ownership interest in Fortitude Holdings. The purchase price under the Majority Interest Fortitude Sale is subject to a post-closing purchase price adjustment pursuant to which AIG will pay Fortitude Re for certain adverse development in property casualty related reserves, based on an agreed methodology, that may occur on or prior to December 31, 2023, up to a maximum payment of $500 million. In connection with the Majority Interest Fortitude Sale agreement, AIG, Fortitude Holdings and TCG have agreed that, effective as of the closing of the Majority Interest Fortitude Sale, (i) AIG’s aforementioned investment commitment targets will be assumed by Fortitude Holdings and AIG will be released therefrom, (ii) the purchase price adjustment that AIG had agreed to provide TCG in the 2018 Fortitude Sale will be terminated, and (iii) Carlyle will remain obligated to pay AIG $95 million of deferred compensation at December 31, 2023 and up to an additional $100 million to the extent AIG does not receive all or a portion of the planned distributions by May 13, 2020, which amount shall adjust in proportion with the amount of the dividend received by AIG. We expect to contribute approximately $1.45 billion of the proceeds of the Majority Interest Fortitude Sale to certain of our insurance company subsidiaries for a period of time following the closing of the transaction. There can be no guarantee that we will receive the required regulatory approvals or that closing conditions will be satisfied in order to consummate the Majority Interest Fortitude Sale.

For further details on this transaction see Note 4 to the Condensed Consolidated Financial Statements.

Blackboard

At the end of March 2020, AIG decided to place Blackboard U.S. Holdings, Inc. (Blackboard), AIG’s technology-driven subsidiary, into run-off. As a result of this decision, AIG recognized a pre-tax loss of $210 million, primarily consisting of asset impairment charges.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of estimates and assumptions are considered our critical accounting estimates and are related to the determination of:

liability for unpaid losses and loss adjustment expenses (loss reserves);

valuation of future policy benefit liabilities and timing and extent of loss recognition;

valuation of liabilities for guaranteed benefit features of variable annuity products;

valuation of embedded derivatives for fixed index annuity and life products;

estimated gross profits to value deferred policy acquisition costs for investment-oriented products;

reinsurance assets;

impairment charges, including impairments on other invested assets and goodwill impairment;

allowances for credit losses primarily on loans, available for sale fixed maturity securities, reinsurance assets and premiums and other receivables;

liability for legal contingencies;

fair value measurements of certain financial assets and liabilities; and

income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability of future tax operating profitability of the character necessary to realize the net deferred tax asset and estimates associated with the Tax Cuts and Jobs Act (the Tax Act).

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of operations and cash flows could be materially affected.

AIG | First Quarter 2020 Form 10-Q 9

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 2. Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Accounting Standards Adopted During 2020

Financial Instruments - Credit Losses

In June 2016, the FASB issued an accounting standard that changed how entities account for current expected credit losses (CECL) for most financial assets, premiums receivable, trade receivables, off-balance sheet exposures and reinsurance receivables (the Financial Instruments Credit Losses Standard). The standard requires an allowance for credit losses based on the expectation of lifetime credit losses related to such financial assets subject to credit losses, including loans measured at amortized cost, reinsurance receivables and certain off-balance sheet credit exposures. Additionally, the impairment of available-for-sale debt securities, including purchased credit deteriorated securities, is subject to the new guidance and is measured in a similar manner, except that losses are recognized as allowances rather than reductions in the amortized cost of the securities. The standard allows for reversals of credit impairments in the event that the credit of an issuer improves. The standard also requires additional disclosures.

We adopted the standard on its effective date of January 1, 2020 using a modified retrospective method, which requires a cumulative effect adjustment to retained earnings. As of January 1, 2020, the impact of the adoption of the standard was a reduction in opening retained earnings of $487 million (after-tax) primarily driven by commercial mortgage loans, and, to a lesser extent, reinsurance receivables and recoverables.

The following table provides a rollforward of our allowance, including credit losses, in connection with the adoption of the Financial Instruments Credit Losses Standard as well as cross references to the applicable notes herein for additional information:

Three Months Ended March 31, 2020		Balance,		Cumulative Effect		Purchased Credit				Balance,
		Beginning		Adjustment as of		Deteriorated Initial		Increase		End of
(in millions)		of Year		January 1, 2020		Allowance		(Decrease)		Period
Securities available for sale(a)	$	-	$	-	$	13	$	198	$	211
Mortgage and other loan receivables(b)		438		318		-		31		787
Reinsurance recoverables (inclusive of
deposit accounted assets)(c)		151		224		-		(13)		362
Premiums and other receivables(d)		178		34		-		(2)		210
Contractual deductible recoverables(e)		-		14		-		-		14
Commercial mortgage loan commitments(f)		-		51		-		7		58
Total	$	767	$	641	$	13	$	221	$	1,642
Secondary impacts to certain long-duration
insurance contracts(g)				(27)
Tax impact				(127)
Total cumulative effect adjustment			$	487

(a)The allowance for credit losses is reported in Bonds available for sale in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 6 for additional information.

(b)The allowance for credit losses is reported in Mortgage and other loans receivable in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(c)The allowance for credit losses is reported for Reinsurance assets for reinsurance contracts that contain sufficient insurance risk, and reported in Other assets for insurance and reinsurance contracts that do not contain sufficient insurance risk in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred for reinsurance contracts that do contain sufficient insurance risk and Premiums for contracts that do not contain sufficient insurance risk in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(d)The allowance for credit losses is reported in Premiums and other receivables in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in General operating and other expenses in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(e)The allowance for credit losses is reported in Liability for unpaid losses and loss adjustment expenses in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income. Refer to Note 10 for additional information.

(f)The allowance for credit losses is reported in Other liabilities in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(g)This reflects adjustments to the amortization of DAC, unearned revenue reserve and sales inducement assets as well as impacts on the future policy benefits for certain universal life and variable annuity contracts.

10 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 2. Summary of Significant Accounting Policies

The following presents the impact of the adoption of the standard on reinsurance recoverables and premiums and other receivables.

Reinsurance — Credit Losses

The estimation of reinsurance recoverable involves a significant amount of judgment, particularly for latent exposures, such as asbestos, due to their long-tail nature. Reinsurance assets include reinsurance recoverable on unpaid losses and loss adjustment expenses that are estimated as part of our loss reserving process and, consequently, are subject to similar judgments and uncertainties as the estimation of gross loss reserves. Similarly, Other assets include reinsurance recoverable for contracts which are accounted for as deposits.

We assess the collectability of reinsurance recoverable balances in each reporting period, through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectable reinsurance that reduces the carrying amount of reinsurance and other assets on the consolidated balance sheets (collectively, the reinsurance recoverable balances). This estimate requires significant judgment for which key considerations include:

paid and unpaid amounts recoverable;

whether the balance is in dispute or subject to legal collection;

the relative financial health of the reinsurer as determined by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based upon our financial reviews; insurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are assigned ORRs that will generate significant allowance; and

whether collateral and collateral arrangements exist.

An estimate of the reinsurance recoverable’s lifetime expected credit losses is established utilizing a probability of default and loss given default method, which reflects the reinsurer’s ORR rating. The allowance for credit losses excludes disputed amounts. An allowance for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.

The total reinsurance recoverables as of March 31, 2020 were $42.2 billion. As of that date, utilizing AIG’s ORRs, (i) approximately 87 percent of the reinsurance recoverables are investment grade, of which 82 percent relate to General Insurance and 5 percent relate to Life and Retirement; (ii) approximately 12 percent of the reinsurance recoverables are non-investment grade, the majority of which relates to General Insurance; (iii) less than one percent of the non-investment grade reinsurance recoverables related to Life and Retirement and (iv) approximately one percent of the reinsurance recoverables relate to entities that are not rated by AIG.

As of March 31, 2020, approximately 76 percent of our non-investment grade reinsurance exposure relates to captive insurers. These arrangements are typically collateralized by letters of credit, funds held or trust agreements.

Reinsurance Recoverable Allowance

The following table presents a rollforward of the reinsurance recoverable allowance:

Three Months Ended March 31, 2020		General		Life and
(in millions)		Insurance		Retirement		Total
Balance, beginning of year	$	111	$	40	$	151
Initial allowance upon CECL adoption		202		22		224
Current period provision for expected credit losses and disputes		(4)		2		(2)
Write-offs charged against the allowance for credit losses and disputes		(3)		(4)		(7)
Other changes		(4)		-		(4)
Balance, end of period	$	302	$	60	$	362

There were no recoveries of credit losses previously written off for the three-month period ended March 31, 2020.

Past-Due Status

We consider a reinsurance asset to be past due when it is 90 days past due. Past due balances were not significant for any of the periods presented.

AIG | First Quarter 2020 Form 10-Q 11

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 2. Summary of Significant Accounting Policies

Premiums and other receivables — Credit Losses

Premiums and other receivables, net of allowance for credit losses include premium balances receivable, amounts due from agents and brokers and policyholders, trade receivables for the Direct Investment book and Global Capital Markets (GCM) and other receivables. Trade receivables for GCM include cash collateral posted to derivative counterparties that is not eligible to be netted against derivative liabilities. The allowance for credit losses and disputes for premiums and other receivables was $210 million at March 31, 2020. Our allowance for credit losses for premium receivables considers a combination of internal and external information relating to past events, current conditions and reasonable and supportable forecasts. Our allowance contemplates our contractual provisions. Upon default or delinquency of the policyholder we may be able to cease coverage for the remaining period. In certain jurisdictions we are unable to cancel coverage even in the event of delinquency or default by the policyholder. We consider premium and other receivable balances to be past due if the payment is not received after 90 days from the contractual obligation due date and record an allowance for disputes when there is reasonable uncertainty of the collectability of a disputed amount during the reporting period.

For further information regarding the impacts of the adoption of this standard see Notes 5, 6, 7, 10 and 12 to the Condensed Consolidated Financial Statements.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued an accounting standard that eliminates the requirement to calculate the implied fair value of goodwill, through a hypothetical purchase price allocation, to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit. An entity should also consider income tax effects from tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

We adopted the standard on its effective date of January 1, 2020. The adoption of the standard did not have a material impact on our financial position, results of operations or cash flows.

Cloud Computing Arrangements

In August 2018, the FASB issued an accounting standard that aligns the requirements for capitalizing implementation costs incurred in a cloud computing (or hosting) arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Capitalized implementation costs must be amortized over the term of the hosting arrangement. The accounting for the service element is not affected by the amendments in this update.

We adopted the standard prospectively on its effective date of January 1, 2020. The adoption of the standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates

In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to simplify and streamline the disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered, and issuers’ affiliates whose securities collateralize securities registered or being registered. Currently, the SEC permits the omission of separate financial statements of subsidiary issuers and guarantors when certain conditions are met and the parent company provides summarized financial information of the subsidiary issuers and guarantors. The amendments, among other things, allow companies to cease providing summarized financial information if the subsidiary issuer’s or guarantor’s reporting obligation has been suspended.

The amendments are effective January 4, 2021, with early adoption permitted. Effective March 31, 2020, AIG early adopted the amendment and ceased providing the summarized information for the subsidiary issuers and guarantors because the subsidiaries issuer’s reporting obligations have been suspended.

Future Application of Accounting Standards

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the 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 standard prescribes significant and comprehensive changes to recognition, measurement, presentation and disclosure as summarized below:

12 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 2. Summary of Significant Accounting Policies

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 below) in the income statement.

Requires the discount rate assumption 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 and recognizes the impact of changes to discount rates in other comprehensive income.

Simplifies the amortization of deferred policy acquisition costs (DAC) to a constant level basis over the expected term of the related contracts with adjustments for unexpected terminations, but no longer requires an impairment test.

Requires the measurement of all market risk benefits associated with deposit (or account balance) contracts at fair value through the income statement with the exception of instrument-specific credit risk changes, which will be recognized in other comprehensive income.

Increased disclosures of disaggregated roll-forwards of policy benefits, account balances, market risk benefits, separate account liabilities and information about significant inputs, judgments and methods used in measurement and changes thereto and impact of those changes.

In October 2019, the FASB affirmed its decision to defer the effective date of the standard to January 1, 2022. We plan to adopt the standard on its effective date. We have started our implementation efforts and we are evaluating the method of adoption and impact of the standard on our reported consolidated financial condition, results of operations, cash flows and required disclosures. The adoption of this standard is expected to have a significant impact on our consolidated financial condition, results of operations, cash flows and required disclosures, as well as systems, processes and controls.

Income Tax

On December 18, 2019, the FASB issued an accounting standard that simplifies the accounting for income taxes by eliminating certain exceptions to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendments also simplified other areas including the accounting for franchise taxes and enacted tax laws or rates, and clarified the accounting for transactions that result in the step-up in the tax basis of goodwill. The standard is effective on January 1, 2021, with early adoption permitted. We are assessing the impact of the standard on our consolidated financial condition, results of operations and cash flows.

Reference Rate Reform

On March 12, 2020, the FASB issued an accounting standard that provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The standard allows us to account for certain contract modifications that result from the discontinuation of the London Inter-Bank Offered Rate (LIBOR) or another reference rate as a continuation of the existing contract without additional analysis.

This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. We have started our implementation efforts and we are evaluating the method of adoption and impact of the standard on our reported consolidated financial condition, results of operations, cash flows and required disclosures.

Clarification of Accounting for Certain Equity Method Investments

On January 16, 2020, the FASB issued an accounting standard to clarify how a previously issued standard regarding a company’s ability to measure the fair value of certain equity securities without a readily determinable fair value should interact with equity method investments standards. The previously issued standard provides that such equity securities could be measured at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs (measurement alternative). The new standard clarifies that a company should consider observable transactions that require the company to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with the equity method immediately before applying or upon discontinuing the equity method.

The standard further clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option.

The standard is effective for interim and annual reporting periods beginning after December 15, 2020. We are evaluating the impact adoption of this standard will have on our consolidated financial condition, results of operations, cash flows and required disclosures.

AIG | First Quarter 2020 Form 10-Q 13

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 3. 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. (Validus), Western World Insurance Group, Inc. and Glatfelter Insurance Group (Glatfelter).

International — consists of regional insurance businesses in Japan, the UK, Europe, Asia Pacific, Latin America and Caribbean, Middle East and Africa, and China. This also includes the results of Talbot Holdings, Ltd.

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 consists primarily of:

Income from assets held by AIG Parent and other corporate subsidiaries.

General operating expenses not attributable to AIG reporting segments.

Certain compensation expenses attributable to Other Operations and reporting segments.

Amortization of value of distribution network acquired related to the Validus and Glatfelter acquisitions.

Interest expense attributable to AIG long-term debt as well as debt associated with consolidated investment entities.

Results also include Blackboard U.S. Holdings, Inc. — and its subsidiaries which are focused on delivering commercial insurance solutions using digital technology, data analytics and automation. At the end of March 2020, AIG decided to place Blackboard into run-off.

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, our Bermuda domiciled composite reinsurer, 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.

14 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 3. Segment Information

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. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. 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 March 31,	2020				2019
				Adjusted				Adjusted
		Total		Pre-tax		Total		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	3,414	$	409	$	4,098	$	934
International		3,253		92		3,704		334
Total General Insurance		6,667		501		7,802		1,268
Life and Retirement
Individual Retirement		1,370		306		1,351		508
Group Retirement		694		143		709		232
Life Insurance		1,091		55		1,073		116
Institutional Markets		1,017		70		1,071		68
Total Life and Retirement		4,172		574		4,204		924
Other Operations		162		(451)		139		(387)
Legacy Portfolio		264		(368)		706		112
AIG Consolidation and elimination		(145)		(84)		(97)		(70)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		11,120		172		12,754		1,847
Reconciling items from adjusted pre-tax income to pre-tax income:
Changes in fair value of securities used to hedge guaranteed living benefits		14		(7)		105		96
Changes in benefit reserves and DAC, VOBA and SIA related to net realized
capital gains (losses)		-		(538)		-		99
Changes in the fair value of equity securities		(191)		(191)		79		79
Professional fees related to regulatory or accounting changes		-		(13)		-		-
Other income (expense) - net		9		-		7		-
Gain (loss) on extinguishment of debt		-		(17)		-		2
Net realized capital gains (losses)*		3,485		3,502		(489)		(474)
Income (loss) from divested businesses		-		(216)		-		6
Non-operating litigation reserves and settlements		6		6		-		(1)
Favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		8		-		27
Net loss reserve discount charge		-		(56)		-		(473)
Integration and transaction costs associated with acquired businesses		-		(2)		-		(7)
Restructuring and other costs		-		(90)		-		(47)
Revenues and Pre-tax income	$	14,443	$	2,558	$	12,456	$	1,154

*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.

AIG | First Quarter 2020 Form 10-Q 15

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 4. 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 Held-For-Sale Business are reported in Other assets and Other liabilities, respectively, in our Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale.

At March 31, 2020, the following business was reported and classified as held-for-sale:

Fortitude Holdings

Fortitude Re was established during the first quarter of 2018 in connection with a series of affiliated reinsurance transactions related to our Legacy Portfolio. Those reinsurance transactions were designed to consolidate most of our Legacy Insurance Run-Off Lines into a single legal entity. As of March 31, 2020, the affiliated transactions included the cession of approximately $30.1 billion of reserves from our Legacy Life and Retirement Run-Off Lines and approximately $3.8 billion of reserves from our Legacy General Insurance Run-Off Lines related to business written by multiple wholly-owned AIG subsidiaries. Fortitude Re has approximately $2.7 billion of total assets after elimination of intercompany balances, primarily managed by AIG, and is AIG’s main run-off reinsurer with its own dedicated management team. In the second quarter of 2018, the Company formed Fortitude Holdings as the holding company for Fortitude Re.

On November 13, 2018, AIG completed the sale of a 19.9 percent ownership interest in Fortitude Holdings to TCG, an affiliate of Carlyle. Upon completion of the 2018 Fortitude Sale, Fortitude Holdings owned 100 percent of the outstanding common shares of Fortitude Re and AIG had an 80.1 percent ownership interest in Fortitude Holdings. We received $381 million in cash and will receive up to $95 million of deferred compensation following December 31, 2023, which is subject to a purchase price adjustment wherein AIG will reimburse TCG for adverse development in property casualty related reserves, based on an agreed methodology, that occurs on or prior to December 31, 2023, up to the value of TCG’s investment in Fortitude. Any amount due to TCG in respect of this purchase price adjustment will be offset by the amount of the $95 million otherwise due from TCG to AIG. To the extent we do not receive all or a portion of the planned distributions by May 13, 2020, TCG will pay us up to an additional $100 million, which amount shall adjust in proportion with the amount of the dividend received by AIG. In connection with the 2018 Fortitude Sale, we agreed to certain investment commitment targets into various Carlyle strategies and to certain minimum investment management fee payments within thirty-six months following the closing. We also will be required to pay a proportionate amount of an agreed make-whole fee to the extent we fail to satisfy such investment commitment targets.

On November 25, 2019, AIG entered into a membership interest purchase agreement with Fortitude Holdings, Carlyle, Carlyle FRL, T&D and T&D Holdings, Inc., pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Carlyle FRL will purchase from AIG a 51.6 percent ownership interest in Fortitude Holdings and T&D will purchase from AIG a 25 percent ownership interest in Fortitude Holdings. Upon closing of the Majority Interest Fortitude Sale, AIG will have a 3.5 percent ownership interest in Fortitude Holdings. The purchase price under the Majority Interest Fortitude Sale is subject to a post-closing purchase price adjustment pursuant to which AIG will pay Fortitude Re for certain adverse development in property casualty related reserves, based on an agreed methodology, that may occur on or prior to December 31, 2023, up to a maximum payment of $500 million. In connection with the Majority Interest Fortitude Sale agreement, AIG, Fortitude Holdings and TCG have agreed that, effective as of the closing of the Majority Interest Fortitude Sale, (i) AIG’s aforementioned investment commitment targets will be assumed by Fortitude Holdings and AIG will be released therefrom, (ii) the purchase price adjustment that AIG had agreed to provide TCG in the 2018 Fortitude Sale will be terminated, and (iii) Carlyle will remain obligated to pay AIG $95 million of deferred compensation at December 31, 2023 and up to an additional $100 million to the extent AIG does not receive all or a portion of the planned distributions by May 13, 2020, which amount shall adjust in proportion with the amount of the dividend received by AIG. We expect to contribute approximately $1.45 billion of the proceeds of the Majority Interest Fortitude Sale to certain of our insurance company subsidiaries for a period of time following the closing of the transaction. There can be no guarantee that we will receive the required regulatory approvals or that closing conditions will be satisfied in order to consummate the Majority Interest Fortitude Sale.

16 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 4. Held-For-Sale Classification

We recorded a loss of $98 million in 2019 in respect of our interest in Fortitude Holdings, which was recorded as a contra-asset within assets held for sale line below.

The transaction is expected to close in mid-2020, subject to required regulatory approvals and other customary closing conditions.

The following table summarizes the components of assets and liabilities held-for-sale on the Consolidated Balance Sheets after elimination of intercompany balances:

		March 31,		December 31,
(in millions)		2020		2019
Assets:
Bonds available for sale	$	2,308	$	2,187
Other bond securities		13		13
Other invested assets		58		45
Short-term investments		63		107
Cash		54		63
Accrued investment income		20		19
Deferred income taxes		(11)		(22)
Other assets		152		106
Assets of business held for sale		2,657		2,518
Less: Loss accrual		(98)		(98)
Total assets held for sale	$	2,559	$	2,420
Liabilities:
Other liabilities	$	14	$	15
Total liabilities held for sale	$	14	$	15

The affiliated reinsurance transactions executed in the first quarter of 2018 with Fortitude Re resulted in prepaid insurance assets on the ceding subsidiaries’ balance sheets of approximately $2.5 billion (after-tax) and related deferred acquisition costs of $0.5 billion (after-tax) at inception of the contract. The prepaid insurance assets have been eliminated in AIG’s consolidated financial statements since the counterparties were wholly owned.

Upon closing of the Majority Interest Fortitude Sale, AIG will recognize a loss for the portion of the unamortized balance of these assets that are not recoverable, if any, when AIG is no longer a controlling shareholder in Fortitude Holdings. As of March 31, 2020, the unamortized balances of the aforementioned prepaid insurance assets and related deferred acquisition costs were $2.2 billion (after-tax) and $0.4 billion (after-tax), respectively. As of December 31, 2019, the unamortized balances of the aforementioned prepaid insurance assets and related deferred acquisition costs were $2.3 billion (after-tax) and $0.4 billion (after-tax), respectively. The combined loss of $2.6 billion for the three-month period ended March 31, 2020 would be incremental to any gain or loss recognized on the Majority Interest Fortitude Sale. The incremental gain or loss we will recognize on the Majority Interest Fortitude Sale would be impacted, perhaps significantly, by market conditions existing at the time the Majority Interest Fortitude Sale closes.

5. Fair Value Measurements

Fair Value Measurements on a Recurring Basis

Assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets are measured and classified in accordance with a fair value hierarchy consisting of three “levels” based on the observability of valuation inputs:

Level 1: Fair value measurements based on quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments.

Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

AIG | First Quarter 2020 Form 10-Q 17

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions about the inputs a hypothetical market participant would use to value that asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value measurement based on the observability of the inputs used:

March 31, 2020							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)	Collateral			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	239	$	5,450	$	-	$	-	$	-	$	5,689
Obligations of states, municipalities and political subdivisions		-		13,338		2,102		-		-		15,440
Non-U.S. governments		48		14,119		6		-		-		14,173
Corporate debt		-		143,107		1,215		-		-		144,322
RMBS		-		19,170		11,687		-		-		30,857
CMBS		-		13,080		1,146		-		-		14,226
CDO/ABS		-		8,301		8,768		-		-		17,069
Total bonds available for sale		287		216,565		24,924		-		-		241,776
Other bond securities:
U.S. government and government sponsored entities		6		2,051		-		-		-		2,057
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		16		-		-		-		16
RMBS		-		318		149		-		-		467
CMBS		-		229		42		-		-		271
CDO/ABS		-		164		2,378		-		-		2,542
Total other bond securities		6		2,778		2,569		-		-		5,353
Equity securities		582		23		19		-		-		624
Other invested assets(b)		-		80		1,467		-		-		1,547
Derivative assets:
Interest rate contracts		2		6,621		-		-		-		6,623
Foreign exchange contracts		-		2,337		1		-		-		2,338
Equity contracts		87		1,003		150		-		-		1,240
Credit contracts		-		-		133		-		-		133
Other contracts		-		-		15		-		-		15
Counterparty netting and cash collateral		-		-		-		(4,645)		(4,840)		(9,485)
Total derivative assets		89		9,961		299		(4,645)		(4,840)		864
Short-term investments		1,732		6,454		-		-		-		8,186
Other assets		176		2,180		91		-		-		2,447
Separate account assets		74,591		4,245		-		-		-		78,836
Total	$	77,463	$	242,286	$	29,369	$	(4,645)	$	(4,840)	$	339,633
Liabilities:
Policyholder contract deposits	$	-	$	-	$	8,153	$	-	$	-	$	8,153
Derivative liabilities:
Interest rate contracts		2		4,224		-		-		-		4,226
Foreign exchange contracts		-		1,028		4		-		-		1,032
Equity contracts		8		62		7		-		-		77
Credit contracts		-		24		57		-		-		81
Other contracts		-		-		13		-		-		13
Counterparty netting and cash collateral		-		-		-		(4,645)		(147)		(4,792)
Total derivative liabilities		10		5,338		81		(4,645)		(147)		637
Other liabilities		-		-		-		-		-		-
Long-term debt		-		2,276		-		-		-		2,276
Total	$	10	$	7,614	$	8,234	$	(4,645)	$	(147)	$	11,066

18 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

December 31, 2019							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)		Collateral		Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	135	$	5,245	$	-	$	-	$	-	$	5,380
Obligations of states, municipalities and political subdivisions		-		13,197		2,121		-		-		15,318
Non-U.S. governments		60		14,809		-		-		-		14,869
Corporate debt		-		147,973		1,663		-		-		149,636
RMBS		-		19,397		13,408		-		-		32,805
CMBS		-		13,377		1,053		-		-		14,430
CDO/ABS		-		10,962		7,686		-		-		18,648
Total bonds available for sale		195		224,960		25,931		-		-		251,086
Other bond securities:
U.S. government and government sponsored entities		-		2,121		-		-		-		2,121
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		18		-		-		-		18
RMBS		-		346		143		-		-		489
CMBS		-		272		50		-		-		322
CDO/ABS		-		187		3,545		-		-		3,732
Total other bond securities		-		2,944		3,738		-		-		6,682
Equity securities		756		77		8		-		-		841
Other invested assets(b)		-		86		1,192		-		-		1,278
Derivative assets:
Interest rate contracts		1		3,199		-		-		-		3,200
Foreign exchange contracts		-		1,034		6		-		-		1,040
Equity contracts		5		593		171		-		-		769
Credit contracts		-		-		3		-		-		3
Other contracts		-		-		14		-		-		14
Counterparty netting and cash collateral		-		-		-		(2,427)		(1,806)		(4,233)
Total derivative assets		6		4,826		194		(2,427)		(1,806)		793
Short-term investments		2,299		3,044		-		-		-		5,343
Other assets		57		2,212		89		-		-		2,358
Separate account assets		89,069		4,203		-		-		-		93,272
Total	$	92,382	$	242,352	$	31,152	$	(2,427)	$	(1,806)	$	361,653
Liabilities:
Policyholder contract deposits	$	-	$	-	$	6,910	$	-	$	-	$	6,910
Derivative liabilities:
Interest rate contracts		4		2,745		-		-		-		2,749
Foreign exchange contracts		-		1,025		-		-		-		1,025
Equity contracts		8		111		20		-		-		139
Credit contracts		-		24		65		-		-		89
Other contracts		-		-		7		-		-		7
Counterparty netting and cash collateral		-		-		-		(2,427)		(527)		(2,954)
Total derivative liabilities		12		3,905		92		(2,427)		(527)		1,055
Other liabilities		-		45		-		-		-		45
Long-term debt		-		2,062		-		-		-		2,062
Total	$	12	$	6,012	$	7,002	$	(2,427)	$	(527)	$	10,072

(a)Represents netting of derivative exposures covered by qualifying master netting agreements.

(b)Excludes investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent), which totaled $5.0 billion and $5.5 billion as of March 31, 2020 and December 31, 2019, respectively.

AIG | First Quarter 2020 Form 10-Q 19

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Changes in Level 3 Recurring Fair Value Measurements

The following tables present changes during the three-month periods ended March 31, 2020 and 2019 in Level 3 assets and liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets and liabilities in the Condensed Consolidated Balance Sheets at March 31, 2020 and 2019:

																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states,
municipalities and
political subdivisions	$	2,121	$	5	$	(55)	$	137	$	27	$	(133)	$	-	$	2,102	$	-	$	(51)
Non-U.S. governments		-		-		-		-		6		-		-		6		-		-
Corporate debt		1,663		(67)		(81)		7		103		(410)		-		1,215		-		(29)
RMBS		13,408		132		(1,623)		(223)		19		(26)		-		11,687		-		(1,505)
CMBS		1,053		7		19		44		23		-		-		1,146		-		21
CDO/ABS		7,686		17		(557)		47		1,603		(28)		-		8,768		-		(536)
Total bonds available for sale(b)		25,931		94		(2,297)		12		1,781		(597)		-		24,924		-		(2,100)
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-		-
RMBS		143		(14)		-		20		-		-		-		149		(14)		-
CMBS		50		(7)		-		(1)		-		-		-		42		(8)		-
CDO/ABS		3,545		(173)		-		(994)		-		-		-		2,378		(262)		-
Total other bond securities		3,738		(194)		-		(975)		-		-		-		2,569		(284)		-
Equity securities		8		(1)		1		10		1		-		-		19		-		-
Mortgage and other loans
receivable		-		-		-		-		-		-		-		-		-		-
Other invested assets		1,192		(4)		-		129		150		-		-		1,467		14		-
Other assets		89		-		-		5		-		-		(3)		91		-		-
Total	$	30,958	$	(105)	$	(2,296)	$	(819)	$	1,932	$	(597)	$	(3)	$	29,070	$	(270)	$	(2,100)
																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	(Gains) Losses			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	6,910	$	1,171	$	-	$	72	$	-	$	-	$	-	$	8,153	$	(884)	$	-
Derivative liabilities, net:
Interest rate contracts		-		-		-		-		-		-		-		-		-		-
Foreign exchange contracts		(6)		3		-		6		-		-		-		3		1		-
Equity contracts		(151)		(26)		-		34		-		-		-		(143)		(14)		-
Credit contracts		62		(124)		-		(14)		-		-		-		(76)		118		-
Other contracts		(7)		(10)		-		15		-		-		-		(2)		10		-
Total derivative liabilities, net(c)		(102)		(157)		-		41		-		-		-		(218)		115		-
Total	$	6,808	$	1,014	$	-	$	113	$	-	$	-	$	-	$	7,935	$	(769)	$	-

20 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	2,000	$	(1)	$	97	$	24	$	29	$	(13)	$	-	$	2,136	$	-
Non-U.S. governments		11		-		-		(4)		-		(4)		-		3		-
Corporate debt		864		(3)		38		34		654		(55)		-		1,532		-
RMBS		14,199		227		24		(412)		23		(16)		-		14,045		-
CMBS		917		1		17		146		-		(189)		-		892		-
CDO/ABS		9,102		4		54		(45)		92		(367)		-		8,840		-
Total bonds available for sale		27,093		228		230		(257)		798		(644)		-		27,448		-
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-
RMBS		1,290		17		-		(41)		-		-		-		1,266		-
CMBS		77		4		-		3		-		-		-		84		3
CDO/ABS		4,478		68		-		(201)		-		(96)		-		4,249		24
Total other bond securities		5,845		89		-		(239)		-		(96)		-		5,599		27
Equity securities		27		-		-		-		-		(1)		-		26		-
Mortgage and other loans receivable		-		-		-		-		-		-		-		-		-
Other invested assets		587		-		-		4		-		-		-		591		2
Other assets		58		-		-		1		-		-		-		59		-
Total	$	33,610	$	317	$	230	$	(491)	$	798	$	(741)	$	-	$	33,723	$	29
				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value		(Gains) Losses		Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	4,116	$	569	$	-	$	193	$	-	$	-	$	-	$	4,878	$	(521)
Derivative liabilities, net:
Interest rate contracts		15		1		-		(1)		-		-		-		15		(1)
Foreign exchange contracts		(5)		(5)		-		9		-		-		-		(1)		(1)
Equity contracts		(75)		(16)		-		(5)		-		-		-		(96)		19
Credit contracts		227		(3)		-		(2)		-		-		-		222		4
Other contracts		(9)		(17)		-		18		-		-		-		(8)		17
Total derivative liabilities, net(c)		153		(40)		-		19		-		-		-		132		38
Total	$	4,269	$	529	$	-	$	212	$	-	$	-	$	-	$	5,010	$	(483)

(a)Reported in Other assets in the Condensed Consolidated Balance Sheets.

(b)As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized and unrealized (gains) losses included in income.

(c)Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

AIG | First Quarter 2020 Form 10-Q 21

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Net realized and unrealized gains and losses included in income related to Level 3 assets and liabilities shown above are reported in the Condensed Consolidated Statements of Income as follows:

		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	Gains (Losses)			Income		Total
Three Months Ended March 31, 2020
Assets:
Bonds available for sale*	$	198	$	(104)	$	-	$	94
Other bond securities		(462)		268		-		(194)
Equity securities		-		(1)		-		(1)
Other invested assets		(4)		-		-		(4)
Three Months Ended March 31, 2019
Assets:
Bonds available for sale	$	242	$	(14)	$	-	$	228
Other bond securities		87		2		-		89
Equity securities		-		-		-		-
Other invested assets		-		-		-		-
		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	(Gains) Losses			Income		Total
Three Months Ended March 31, 2020
Liabilities:
Policyholder contract deposits	$	-	$	1,171	$	-	$	1,171
Derivative liabilities, net		-		(143)		(14)		(157)
Three Months Ended March 31, 2019
Liabilities:
Policyholder contract deposits	$	-	$	569	$	-	$	569
Derivative liabilities, net		-		(24)		(16)		(40)

*As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized capital gains (losses).

22 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

The following table presents the gross components of purchases, sales, issuances and settlements, net, shown above, for the three-month periods ended March 31, 2020 and 2019 related to Level 3 assets and liabilities in the Condensed Consolidated Balance Sheets:

						Issuances		Purchases, Sales,
						and		Issuances and
(in millions)		Purchases		Sales		Settlements(a)		Settlements, Net(a)
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	145	$	(2)	$	(6)	$	137
Non-U.S. governments		-		-		-		-
Corporate debt		112		(5)		(100)		7
RMBS		336		-		(559)		(223)
CMBS		53		(2)		(7)		44
CDO/ABS		225		(22)		(156)		47
Total bonds available for sale		871		(31)		(828)		12
Other bond securities:
RMBS		25		-		(5)		20
CMBS		-		-		(1)		(1)
CDO/ABS		35		(579)		(450)		(994)
Total other bond securities		60		(579)		(456)		(975)
Equity securities		10		-		-		10
Mortgage and other loans receivable		-		-		-		-
Other invested assets		174		-		(45)		129
Other assets		-		-		5		5
Total assets	$	1,115	$	(610)	$	(1,324)	$	(819)
Liabilities:
Policyholder contract deposits	$	-	$	222	$	(150)	$	72
Derivative liabilities, net		(15)		8		48		41
Total liabilities	$	(15)	$	230	$	(102)	$	113
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	47	$	(15)	$	(8)	$	24
Non-U.S. governments		-		-		(4)		(4)
Corporate debt		49		-		(15)		34
RMBS		307		(26)		(693)		(412)
CMBS		184		-		(38)		146
CDO/ABS		198		(156)		(87)		(45)
Total bonds available for sale		785		(197)		(845)		(257)
Other bond securities:
Corporate debt		-		-		-		-
RMBS		-		-		(41)		(41)
CMBS		4		-		(1)		3
CDO/ABS		-		-		(201)		(201)
Total other bond securities		4		-		(243)		(239)
Equity securities		-		-		-		-
Mortgage and other loans receivable		-		-		-		-
Other invested assets		4		-		-		4
Other assets		-		-		1		1
Total assets	$	793	$	(197)	$	(1,087)	$	(491)
Liabilities:
Policyholder contract deposits	$	-	$	173	$	20	$	193
Derivative liabilities, net		(13)		-		32		19
Total liabilities	$	(13)	$	173	$	52	$	212

(a)There were no issuances during the three-month periods ended March 31, 2020 and 2019.

AIG | First Quarter 2020 Form 10-Q 23

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3 in the tables above. As a result, the unrealized gains (losses) on instruments held at March 31, 2020 and 2019 may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable inputs (e.g., changes in unobservable long-dated volatilities).

Transfers of Level 3 Assets and Liabilities

The Net realized and unrealized gains (losses) included in income (loss) or Other comprehensive income (loss) as shown in the table above excludes $(156) million and $(55) million of net gains (losses) related to assets and liabilities transferred into Level 3 during the three-month periods ended March 31, 2020 and 2019, respectively, and includes $(55) million and $(1) million of net gains (losses) related to assets and liabilities transferred out of Level 3 during the three-month periods ended March 31, 2020 and 2019, respectively.

Transfers of Level 3 Assets

During the three-month periods ended March 31, 2020 and 2019, transfers into Level 3 assets primarily included certain investments in private placement corporate debt, RMBS, CMBS and CDO/ABS. Transfers of private placement corporate debt and certain ABS into Level 3 assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based on inputs that are adjusted to better reflect our own assumptions regarding the characteristics of a specific security or associated market liquidity. The transfers of investments in RMBS, CMBS and CDO and certain ABS into Level 3 assets were due to diminished market transparency and liquidity for individual security types.

During the three-month periods ended March 31, 2020 and 2019, transfers out of Level 3 assets primarily included private placement and other corporate debt, CMBS, RMBS, CDO/ABS and certain investments in municipal securities. Transfers of certain investments in municipal securities, corporate debt, RMBS, CMBS and CDO/ABS out of Level 3 assets were based on consideration of market liquidity as well as related transparency of pricing and associated observable inputs for these investments. Transfers of certain investments in private placement corporate debt and certain ABS out of Level 3 assets were primarily the result of using observable pricing information that reflects the fair value of those securities without the need for adjustment based on our own assumptions regarding the characteristics of a specific security or the current liquidity in the market.

Transfers of Level 3 Liabilities

There were no significant transfers of derivative or other liabilities into or out of Level 3 for the three-month periods ended March 31, 2020 and 2019.

24 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS

The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments, and includes only those instruments for which information about the inputs is reasonably available to us, such as data from independent third-party valuation service providers and from internal valuation models. Because input information from third-parties with respect to certain Level 3 instruments (primarily CDO/ABS) may not be reasonably available to us, balances shown below may not equal total amounts reported for such Level 3 assets and liabilities:

	Fair Value at
	March 31,		Valuation		Range
(in millions)	2020		Technique	Unobservable Input(b)	(Weighted Average)
Assets:
Obligations of states, municipalities
and political subdivisions	$	1,616	Discounted cash flow	Yield	3.37% - 4.13% (3.75%)
Corporate debt		982	Discounted cash flow	Yield	2.11% - 6.18% (4.14%)
RMBS(a)		10,762	Discounted cash flow	Constant prepayment rate	4.46% - 13.12% (8.79%)
				Loss severity	30.78% - 76.29% (53.53%)
				Constant default rate	1.41% - 5.86% (3.63%)
				Yield	4.01% - 6.89% (5.45%)
CDO/ABS(a)		6,914	Discounted cash flow	Yield	3.93% - 7.94% (5.94%)
CMBS		555	Discounted cash flow	Yield	1.06% - 6.94% (4.00%)
Liabilities:
Embedded derivatives within
Policyholder contract deposits:
Guaranteed minimum withdrawal benefits (GMWB)		3,978	Discounted cash flow	Equity volatility	7.00% - 57.00%
				Base lapse rate	0.00% - 13.00%
				Dynamic lapse multiplier	50.00% - 143.00%
				Mortality multiplier(c)	38.00% - 147.00%
				Utilization	90.00% - 100.00%
				Equity / interest rate correlation	20.00% - 40.00%
				NPA(d)	1.31% - 2.80%
Index annuities		3,719	Discounted cash flow	Lapse rate	0.31% - 50.00%
				Mortality multiplier(c)	24.00% - 180.00%
				Option budget	0.00% - 4.00%
				NPA(d)	1.31% - 2.80%
Indexed life		434	Discounted cash flow	Base lapse rate	0.00% - 37.97%
				Mortality rate	0.00% - 100.00%
				NPA(d)	1.31% - 2.80%

AIG | First Quarter 2020 Form 10-Q 25

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

		Fair Value at
		December 31,	Valuation		Range
(in millions)		2019	Technique	Unobservable Input(b)	(Weighted Average)
Assets:
Obligations of states, municipalities
and political subdivisions	$	1,633	Discounted cash flow	Yield	3.35% - 3.95% (3.65%)
Corporate debt		1,087	Discounted cash flow	Yield	3.48% - 6.22% (4.85%)
RMBS(a)		11,746	Discounted cash flow	Constant prepayment rate	4.00% - 12.89% (8.44%)
				Loss severity	33.68% - 76.91% (55.29%)
				Constant default rate	1.68% - 6.17% (3.93%)
				Yield	2.52% - 4.53% (3.52%)
CDO/ABS(a)		6,025	Discounted cash flow	Yield	2.92% - 4.91% (3.91%)
CMBS		476	Discounted cash flow	Yield	2.77% - 5.18% (3.97%)
Liabilities:
Embedded derivatives within
Policyholder contract deposits:
GMWB		2,474	Discounted cash flow	Equity volatility	6.15% - 48.85%
				Base lapse rate	0.16% - 12.60%
				Dynamic lapse multiplier	50.00% - 143.00%
				Mortality multiplier(c)	38.00% - 147.00%
				Utilization	90.00% - 100.00%
				Equity / interest rate correlation	20.00% - 40.00%
				NPA(d)	0.12% - 1.53%
Index annuities		3,895	Discounted cash flow	Lapse rate	0.31% - 50.00%
				Mortality multiplier(c)	24.00% - 180.00%
				Option budget	1.00% - 4.00%
				NPA(d)	0.12% - 1.53%
Indexed life		510	Discounted cash flow	Base lapse rate	0.00% - 37.97%
				Mortality rate	0.00% - 100.00%
				NPA(d)	0.12% - 1.53%

(a)Information received from third-party valuation service providers. The ranges of the unobservable inputs for constant prepayment rate, loss severity and constant default rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CDO securitization vehicles and not necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the tranches purchased by us, because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price, position in the waterfall, senior versus subordinated position and attachment points. The weighted averaging for fixed maturity securities is based on the estimated fair value of the securities.

(b)Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.

(c)Mortality inputs are shown as multipliers of the 2012 Individual Annuity Mortality Basic table.

(d)The non-performance risk adjustment (NPA) applied as a spread over risk-free curve for discounting.

The ranges of reported inputs for Obligations of states, municipalities and political subdivisions, Corporate debt, RMBS, CDO/ABS, and CMBS valued using a discounted cash flow technique consist of one standard deviation in either direction from the value-weighted average. The preceding table does not give effect to our risk management practices that might offset risks inherent in these Level 3 assets and liabilities.

26 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Interrelationships between Unobservable Inputs

We consider unobservable inputs to be those for which market data is not available and that are developed using the best information available to us about the assumptions that market participants would use when pricing the asset or liability. Relevant inputs vary depending on the nature of the instrument being measured at fair value. The following paragraphs provide a general description of significant unobservable inputs along with interrelationships between and among the significant unobservable inputs and their impact on the fair value measurements. In practice, simultaneous changes in assumptions may not always have a linear effect on the inputs discussed below. Interrelationships may also exist between observable and unobservable inputs. Such relationships have not been included in the discussion below. For each of the individual relationships described below, the inverse relationship would also generally apply.

Fixed Maturity Securities

The significant unobservable input used in the fair value measurement of fixed maturity securities is yield. The yield is affected by the market movements in credit spreads and U.S. Treasury yields. The yield may be affected by other factors including constant prepayment rates, loss severity, and constant default rates. In general, increases in the yield would decrease the fair value of investments, and conversely, decreases in the yield would increase the fair value of investments.

Embedded derivatives within Policyholder contract deposits

Embedded derivatives reported within Policyholder contract deposits include interest crediting rates based on market indices within index annuities, indexed life, and GICs as well as GMWB within variable annuity and certain index annuity products. For any given contract, assumptions for unobservable inputs vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. The following unobservable inputs are used for valuing embedded derivatives measured at fair value:

Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. Increases in assumed volatility will generally increase the fair value of both the projected cash flows from rider fees as well as the projected cash flows related to benefit payments. Therefore, the net change in the fair value of the liability may be either a decrease or an increase, depending on the relative changes in projected rider fees and projected benefit payments.

Equity / interest rate correlation estimates the relationship between changes in equity returns and interest rates in the economic scenario generator used to value our GMWB embedded derivatives. In general, a higher positive correlation assumes that equity markets and interest rates move in a more correlated fashion, which generally increases the fair value of the liability.

Base lapse rate assumptions are determined by company experience and are adjusted at the contract level using a dynamic lapse function, which reduces the base lapse rate when the contract is in-the-money (when the contract holder’s guaranteed value, as estimated by the company, is worth more than their underlying account value). Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. Increases in assumed lapse rates will generally decrease the fair value of the liability, as fewer policyholders would persist to collect guaranteed withdrawal amounts.

Mortality rate assumptions, which vary by age and gender, are based on company experience and include a mortality improvement assumption. Increases in assumed mortality rates will decrease the fair value of the liability, while lower mortality rate assumptions will generally increase the fair value of the liability, because guaranteed payments will be made for a longer period of time.

Utilization assumptions estimate the timing when policyholders with a GMWB will elect to utilize their benefit and begin taking withdrawals. The assumptions may vary by the type of guarantee, tax-qualified status, the contract’s withdrawal history and the age of the policyholder. Utilization assumptions are based on company experience, which includes partial withdrawal behavior. Increases in assumed utilization rates will generally increase the fair value of the liability.

Option budget estimates the expected long-term cost of options used to hedge exposures associated with equity price changes. The level of option budgets determines future costs of the options, which impacts the growth in account value and the valuation of embedded derivatives.

AIG | First Quarter 2020 Form 10-Q 27

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Investments in Certain Entities Carried at Fair Value Using Net Asset Value Per Share

The following table includes information related to our investments in certain other invested assets, including private equity funds, hedge funds and other alternative investments that calculate net asset value per share (or its equivalent). For these investments, which are measured at fair value on a recurring basis, we use the net asset value per share to measure fair value.

		March 31, 2020				December 31, 2019
			Fair Value			Fair Value
			Using NAV			Using NAV
			Per Share (or		Unfunded	Per Share (or			Unfunded
(in millions)	Investment Category Includes		its equivalent)		Commitments	its equivalent)			Commitments
Investment Category
Private equity funds:
Leveraged buyout	Debt and/or equity investments made as part of a transaction in which assets of mature companies are acquired from the current shareholders, typically with the use of financial leverage	$	1,245	$	1,454	$	1,189	$	1,543
Real Estate / Infrastructure	Investments in real estate properties and infrastructure positions, including power plants and other energy generating facilities		412		451		400		290
Venture capital	Early-stage, high-potential, growth companies expected to generate a return through an eventual realization event, such as an initial public offering or sale of the company		130		142		111		155
Growth Equity	Funds that make investments in established companies for the purpose of growing their businesses		480		87		422		57
Mezzanine	Funds that make investments in the junior debt and equity securities of leveraged companies		377		339		325		414
Other	Includes distressed funds that invest in securities of companies that are in default or under bankruptcy protection, as well as funds that have multi-strategy, and other strategies		769		135		773		206
Total private equity funds			3,413		2,608		3,220		2,665
Hedge funds:
Event-driven	Securities of companies undergoing material structural changes, including mergers, acquisitions and other reorganizations		361		-		727		-
Long-short	Securities that the manager believes are undervalued, with corresponding short positions to hedge market risk		408		-		539		-
Macro	Investments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions		697		-		894		-
Distressed	Securities of companies that are in default, under bankruptcy protection or troubled		-		-		1		-
Other	Includes investments held in funds that are less liquid, as well as other strategies which allow for broader allocation between public and private investments		150		1		168		1
Total hedge funds			1,616		1		2,329		1
Total		$	5,029	$	2,609	$	5,549	$	2,666

Private equity fund investments included above are not redeemable, because distributions from the funds will be received when underlying investments of the funds are liquidated. Private equity funds are generally expected to have 10-year lives at their inception, but these lives may be extended at the fund manager’s discretion, typically in one or two-year increments.

The hedge fund investments included above, which are carried at fair value, are generally redeemable subject to the redemption notices period. The majority of our hedge fund investments are redeemable monthly or quarterly.

28 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

Fair Value Option

The following table presents the gains or losses recorded related to the eligible instruments for which we elected the fair value option:

Three Months Ended March 31,	Gain (Loss)
(in millions)		2020		2019
Assets:
Bonds	$	(60)	$	355
Alternative investments(a)		(139)		230
Liabilities:
Long-term debt(b)		(203)		(60)
Total gain (loss)	$	(402)	$	525

(a)Includes certain hedge funds, private equity funds and other investment partnerships.

(b)Includes GIAs, notes, bonds and mortgages payable.

We calculate the effect of these credit spread changes using discounted cash flow techniques that incorporate current market interest rates, our observable credit spreads on these liabilities and other factors that mitigate the risk of nonperformance such as cash collateral posted.

The following table presents the difference between fair value and the aggregate contractual principal amount of long-term debt for which the fair value option was elected:

	March 31, 2020						December 31, 2019
			Outstanding						Outstanding
(in millions)	Fair Value		Principal Amount		Difference		Fair Value		Principal Amount		Difference
Liabilities:
Long-term debt*	$	2,276	$	1,543	$	733	$	2,062	$	1,502	$	560

*Includes GIAs, notes, bonds, loans and mortgages payable.

FAIR VALUE MEASUREMENTS ON A NON-RECURRING BASIS

The following table presents assets measured at fair value on a non-recurring basis at the time of impairment and the related impairment charges recorded during the periods presented:

		Assets at Fair Value							Impairment Charges
		Non-Recurring Basis							Three Months Ended March 31,
(in millions)		Level 1		Level 2		Level 3		Total		2020		2019
March 31, 2020
Other investments	$	-	$	-	$	97	$	97	$	11	$	41
Other assets		-		-		-		-		12		8
Total	$	-	$	-	$	97	$	97	$	23	$	49
December 31, 2019
Other investments	$	-	$	-	$	329	$	329
Other assets		-		-		1		1
Total	$	-	$	-	$	330	$	330

AIG | First Quarter 2020 Form 10-Q 29

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 5. Fair Value Measurements

FAIR VALUE INFORMATION ABOUT FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE

The following table presents the carrying amounts and estimated fair values of our financial instruments not measured at fair value and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:

	Estimated Fair Value									Carrying
(in millions)		Level 1		Level 2		Level 3		Total		Value
March 31, 2020
Assets:
Mortgage and other loans receivable	$	-	$	100	$	47,508	$	47,608	$	46,844
Other invested assets		-		772		6		778		778
Short-term investments		-		11,587		-		11,587		11,587
Cash		2,738		-		-		2,738		2,738
Other assets		340		34		-		374		374
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		246		137,161		137,407		127,194
Other liabilities		14		4,333		-		4,347		4,347
Long-term debt and debt of consolidated investment entities		-		24,765		9,114		33,879		33,134
Separate account liabilities - investment contracts		-		74,711		-		74,711		74,711
December 31, 2019
Assets:
Mortgage and other loans receivable	$	-	$	101	$	48,904	$	49,005	$	46,984
Other invested assets		-		735		6		741		742
Short-term investments		-		7,887		-		7,887		7,887
Cash		2,856		-		-		2,856		2,856
Other assets		291		20		-		311		311
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		255		132,991		133,246		126,137
Other liabilities		15		3,048		-		3,063		3,063
Long-term debt and debt of consolidated investment entities		-		27,024		8,883		35,907		33,288
Separate account liabilities - investment contracts		-		88,770		-		88,770		88,770

30 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

6. Investments

Fixed Maturity Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

On January 1, 2020, AIG adopted the Financial Instruments Credit Losses Standard. Prior to the adoption of this standard, AIG did not record an allowance against the amortized cost basis of held to maturity securities. Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain structured securities, recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income.

For structured securities that are not high credit quality, the structured securities yields are based on expected cash flows which take into account both expected credit losses and prepayments. An allowance for credit losses is not established upon initial recognition of the asset (unless the security is determined to be PCD which is discussed in more detail below). Subsequently, differences between actual and expected cash flows and changes in expected cash flows are recognized as adjustments to the allowance for credit losses. Changes that cannot be reflected as adjustments to the allowance for credit losses are accounted for as prospective adjustments to yield.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain RMBS, CMBS and CDO/ABS, (collectively, structured securities), recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income. For structured securities that are not high credit quality, effective yields are recalculated and adjusted prospectively based on changes in expected undiscounted future cash flows. For purchased credit impaired (PCI) securities, at acquisition, the difference between the undiscounted expected future cash flows and the recorded investment in the securities represents the initial accretable yield, which is to be accreted into net investment income over the securities’ remaining lives on an effective level-yield basis. Subsequently, effective yields recognized on PCI securities are recalculated and adjusted prospectively to reflect changes in the contractual benchmark interest rates on variable rate securities and any significant increases in undiscounted expected future cash flows arising due to reasons other than interest rate changes.

AIG | First Quarter 2020 Form 10-Q 31

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Securities Available for Sale

The following table presents the amortized cost or cost and fair value of our available for sale securities:

		Amortized		Allowance		Gross		Gross
		Cost or		for Credit		Unrealized		Unrealized		Fair
(in millions)		Cost		Losses(a)		Gains		Losses		Value
March 31, 2020
Bonds available for sale:
U.S. government and government sponsored entities	$	4,664	$	-	$	1,042	$	(17)	$	5,689
Obligations of states, municipalities and political subdivisions		14,140		-		1,375		(75)		15,440
Non-U.S. governments		13,737		(7)		676		(233)		14,173
Corporate debt		140,356		(167)		9,073		(4,940)		144,322
Mortgage-backed, asset-backed and collateralized:
RMBS		29,433		(37)		2,069		(608)		30,857
CMBS		13,988		-		530		(292)		14,226
CDO/ABS		18,268		-		136		(1,335)		17,069
Total mortgage-backed, asset-backed and collateralized		61,689		(37)		2,735		(2,235)		62,152
Total bonds available for sale(c)	$	234,586	$	(211)	$	14,901	$	(7,500)	$	241,776
										Other-Than-
		Amortized		Gross		Gross				Temporary
		Cost or		Unrealized		Unrealized		Fair		Impairments
(in millions)		Cost		Gains		Losses		Value		in AOCI(b)
December 31, 2019
Bonds available for sale:
U.S. government and government sponsored entities	$	5,108	$	316	$	(44)	$	5,380	$	-
Obligations of states, municipalities and political subdivisions		13,960		1,390		(32)		15,318		-
Non-U.S. governments		14,042		884		(57)		14,869		(18)
Corporate debt		138,046		12,090		(500)		149,636		7
Mortgage-backed, asset-backed and collateralized:
RMBS		29,802		3,067		(64)		32,805		1,149
CMBS		13,879		576		(25)		14,430		34
CDO/ABS		18,393		348		(93)		18,648		14
Total mortgage-backed, asset-backed and collateralized		62,074		3,991		(182)		65,883		1,197
Total bonds available for sale(c)	$	233,230	$	18,671	$	(815)	$	251,086	$	1,186

(a)Represents the allowance for credit losses that has been recognized. Changes in the allowance for credit losses are recorded through the statements of income and are not recognized in other comprehensive income.

(b)Represents the amount of other-than-temporary impairments recognized in Accumulated other comprehensive income (loss). Amount includes unrealized gains and losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

(c)At March 31, 2020 and December 31, 2019, bonds available for sale held by us that were below investment grade or not rated totaled $25.1 billion and $27.8 billion, respectively.

32 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Securities Available for Sale in a Loss Position for Which No Allowance for Credit Loss Has Been Recorded

The following table summarizes the fair value and gross unrealized losses on our available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position for which no allowance for credit loss has been recorded:

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Bonds available for sale:
U.S. government and government sponsored entities	$	249	$	17	$	4	$	-	$	253	$	17
Obligations of states, municipalities and political
subdivisions		1,274		63		181		12		1,455		75
Non-U.S. governments		2,277		156		197		62		2,474		218
Corporate debt		45,529		4,213		1,171		485		46,700		4,698
RMBS		5,743		346		504		39		6,247		385
CMBS		4,653		282		104		10		4,757		292
CDO/ABS		11,229		950		2,734		385		13,963		1,335
Total bonds available for sale	$	70,954	$	6,027	$	4,895	$	993	$	75,849	$	7,020

Securities Available for Sale in a Loss Position

The following table summarizes the fair value and gross unrealized losses on our available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
December 31, 2019
Bonds available for sale:
U.S. government and government sponsored entities	$	1,461	$	44	$	63	$	-	$	1,524	$	44
Obligations of states, municipalities and political
subdivisions		672		21		246		11		918		32
Non-U.S. governments		1,105		12		343		45		1,448		57
Corporate debt		11,868		319		2,405		181		14,273		500
RMBS		3,428		28		1,367		36		4,795		64
CMBS		1,877		16		367		9		2,244		25
CDO/ABS		3,920		53		2,571		40		6,491		93
Total bonds available for sale	$	24,331	$	493	$	7,362	$	322	$	31,693	$	815

At March 31, 2020, we held 14,067 individual fixed maturity securities that were in an unrealized loss position and for which no allowance for credit losses has been recorded (including 1,041 individual fixed maturity securities that were in a continuous unrealized loss position for 12 months or more). At December 31, 2019, we held 5,695 individual fixed maturity securities that were in an unrealized loss position, of which 1,254 individual fixed maturity securities were in a continuous unrealized loss position for 12 months or more. We did not recognize the unrealized losses in earnings on these fixed maturity securities at March 31, 2020 because it was determined that such losses were due to non-credit factors. Additionally, we neither intend to sell the securities nor do we believe that it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. For fixed maturity securities with significant declines, we performed fundamental credit analyses on a security-by-security basis, which included consideration of credit enhancements, liquidity position, expected defaults, industry and sector analysis, forecasts and available market data.

AIG | First Quarter 2020 Form 10-Q 33

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Contractual Maturities of Fixed Maturity Securities Available for Sale

The following table presents the amortized cost and fair value of fixed maturity securities available for sale by contractual maturity:

	Total Fixed Maturity Securities
	Available for Sale
		Amortized Cost,
(in millions)		Net of Allowance		Fair Value
March 31, 2020
Due in one year or less	$	10,370	$	10,517
Due after one year through five years		42,552		42,479
Due after five years through ten years		41,923		41,993
Due after ten years		77,878		84,635
Mortgage-backed, asset-backed and collateralized		61,652		62,152
Total	$	234,375	$	241,776

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

The following table presents the gross realized gains and gross realized losses from sales or maturities of our available for sale securities:

Three Months Ended March 31,		2020				2019
		Gross		Gross		Gross		Gross
	Realized		Realized		Realized		Realized
(in millions)		Gains		Losses		Gains		Losses
Fixed maturity securities	$	380	$	166	$	93	$	124

For the three-month periods ended March 31, 2020 and 2019, the aggregate fair value of available for sale securities sold was $7.2 billion and $6.4 billion, respectively, which resulted in net realized capital gains (losses) of $214 million and $(31) million, respectively.

Other Securities Measured at Fair Value

The following table presents the fair value of fixed maturity securities measured at fair value based on our election of the fair value option and equity securities measured at fair value:

		March 31, 2020				December 31, 2019
		Fair	Percent			Fair	Percent
(in millions)		Value	of Total			Value	of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	2,057	34	%	$	2,121	28	%
Corporate debt		16	-			18	-
Mortgage-backed, asset-backed and collateralized:
RMBS		467	8			489	7
CMBS		271	5			322	4
CDO/ABS and other collateralized		2,542	43			3,732	50
Total mortgage-backed, asset-backed and collateralized		3,280	56			4,543	61
Total fixed maturity securities		5,353	90			6,682	89
Equity securities		624	10			841	11
Total	$	5,977	100	%	$	7,523	100	%

34 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Other Invested Assets

The following table summarizes the carrying amounts of other invested assets:

		March 31,		December 31,
(in millions)		2020		2019
Alternative investments(a) (b)	$	8,158	$	8,845
Investment real estate(c)		8,348		8,491
All other investments		1,460		1,456
Total	$	17,966	$	18,792

(a)At March 31, 2020, included hedge funds of $2.2 billion, private equity funds of $5.6 billion and affordable housing partnerships of $282 million. At December 31, 2019, included hedge funds of $3.3 billion, private equity funds of $5.2 billion and affordable housing partnerships of $331 million.

(b)At March 31, 2020, approximately 78 percent of our hedge fund portfolio is available for redemption in 2020. The remaining 22 percent will be available for redemption between 2021 and 2027.

(c)Net of accumulated depreciation of $720 million and $703 million at March 31, 2020 and December 31, 2019, respectively.

Net Investment Income

The following table presents the components of Net investment income:

Three Months Ended March 31,
(in millions)		2020		2019
Available for sale fixed maturity securities, including short-term investments	$	2,609	$	2,653
Other fixed maturity securities(a)		(60)		327
Equity securities		(191)		79
Interest on mortgage and other loans		513		498
Alternative investments(b)		(59)		419
Real estate		59		69
Other investments(c)		(215)		(52)
Total investment income		2,656		3,993
Investment expenses		148		114
Net investment income	$	2,508	$	3,879

(a)Included in the three-month periods ended March, 31 2020 and 2019 is income of $169 million and $28 million, respectively, for fixed maturity securities measured at fair value through income that economically hedge liabilities as described in (c) below.

(b)Includes income from hedge funds, private equity funds and affordable housing partnerships. Hedge funds are recorded as of the balance sheet date. Private equity funds are generally reported on a one-quarter lag.

(c)Included in the three-month periods ended March, 31 2020 and 2019 are losses of $202 million and $15 million, respectively, related to liabilities measured at fair value that are economically hedged with fixed maturity securities as described in (a) above.

Net Realized Capital Gains and Losses

Net realized capital gains and losses are determined by specific identification. The net realized capital gains and losses are generated primarily from the following sources:

Sales or full redemptions of available for sale fixed maturity securities, real estate and other alternative investments.

Reductions to the amortized cost basis of available for sale fixed maturity securities that have been written down due to our intent to sell them or it being more likely than not that we will be required to sell them.

Changes in the allowance for credit losses on bonds available for sale, mortgage and other loans receivable, and loans commitments.

Changes in fair value of derivatives except for those instruments that are designated as hedging instruments when the change in the fair value of the hedged item is not reported in Net realized capital gains (losses).

Foreign exchange gains and losses resulting from foreign currency transactions.

AIG | First Quarter 2020 Form 10-Q 35

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

The following table presents the components of Net realized capital gains (losses):

Three Months Ended March 31,
(in millions)		2020		2019
Sales of fixed maturity securities	$	214	$	(31)
Other-than-temporary impairments		-		(83)
Change in intent*		-		-
Change in allowance for credit losses on fixed maturity securities		(198)		-
Change in allowance for credit losses on loans		(38)		(24)
Foreign exchange transactions		(254)		(37)
Variable annuity embedded derivatives, net of related hedges		2,192		(261)
All other derivatives and hedge accounting		1,559		(72)
Other		44		62
Net realized capital gains (losses)	$	3,519	$	(446)

*For the three months ended March 31, 2019, the change in intent was included in Other-than-temporary impairments.

Change in Unrealized Appreciation (Depreciation) of Investments

The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale securities and other investments:

Three Months Ended March 31,
(in millions)		2020		2019
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	(10,455)	$	5,982
Other investments		-		(69)
Total increase (decrease) in unrealized appreciation (depreciation) of investments	$	(10,455)	$	5,913

The following table summarizes the unrealized gains and losses recognized in Net Investment Income during the reporting period on equity securities still held at the reporting date:

				Other Invested
(in millions)		Equities		Assets		Total
Three Months Ended March 31, 2020
Net gains and losses recognized during the period on equity securities	$	(191)	$	(129)	$	(320)
Less: Net gains and losses recognized during the period on equity securities sold
during the period		12		2		14
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	(203)	$	(131)	$	(334)
Three Months Ended March 31, 2019
Net gains and losses recognized during the period on equity securities	$	79	$	239	$	318
Less: Net gains and losses recognized during the period on equity securities sold
during the period		19		10		29
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	60	$	229	$	289

36 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Evaluating Investments for AN ALLOWANCE FOR CREDIT LOSSES/OTHER-than-TEMPORARY IMPAIRMENTS

Fixed Maturity Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. No allowance is established in these situations. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a decline in the fair value below the amortized cost is due to credit related factors, an allowance is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to realized capital losses. The allowance for credit losses is limited to the difference between amortized cost and fair value. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not associated with credit related factors is presented in unrealized appreciation (depreciation) of fixed maturity securities on which an allowance for credit losses were recognized (a separate component of accumulated other comprehensive income). Accrued interest is excluded from the measurement of the allowance for credit losses.

When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CDO, ABS) management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs, which vary by asset class:

Current delinquency rates;

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Expected prepayment speeds.

When estimating future cash flows for corporate, municipal and sovereign fixed maturity securities determined to be credit impaired, management considers:

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Scenarios specific to the issuer and the security, which may also include estimates of outcomes of corporate restructurings, political and macroeconomic factors, stability and financial strength of the issuer, the value of any secondary sources of repayment and the disposition of assets.

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

Credit losses are reassessed each period. The allowance for credit losses and the corresponding charge to realized capital losses can be reversed if conditions change, however, the allowance for credit losses will never be reduced below zero. When we determine that all or a portion of a fixed maturity security is uncollectable, the uncollectable amortized cost amount is written off with a corresponding reduction to the allowance for credit losses. If we collect cash flows that were previously written off the recovery is recognized by decreasing realized capital losses.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an other-than-temporary impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

AIG | First Quarter 2020 Form 10-Q 37

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

For fixed maturity securities for which a credit impairment has occurred, the amortized cost is written down to the estimated recoverable value with a corresponding charge to realized capital losses. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not related to a credit impairment is presented in unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were recognized (a separate component of accumulated other comprehensive income).

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

In periods subsequent to the recognition of an other-than-temporary impairment charge for available for sale fixed maturity securities that is not foreign exchange related, we prospectively accrete into earnings the difference between the new amortized cost and the expected undiscounted recoverable value over the remaining expected holding period of the security.

Credit Impairments

The following table presents a rollforward of the changes in allowance for credit losses on available for sale fixed maturity securities by major investment category:

Three Months Ended March 31, 2020				Non-
(in millions)	Structured		Structured			Total
Balance, beginning of year *	$	7	$	-	$	7
Additions:
Securities for which allowance for credit losses were not previously recorded		24		174		198
Purchases of available for sale debt securities accounted for as
purchased credit deteriorated assets		6		-		6
Reductions:
Securities sold during the period		-		-		-
Intent to sell security or more likely than not will be required to sell the security
before recovery of its amortized cost basis		-		-		-
Additional increases or decreases to the allowance for credit losses on securities
that had an allowance recorded in a previous period, for which there was no intent
to sell before recovery amortized cost basis		-		-		-
Write-offs charged against the allowance		-		-		-
Recoveries of amounts previously written off		-		-		-
Other		-		-		-
Balance, end of period	$	37	$	174	$	211

* The beginning balance incorporates the Day 1 gross up on PCD assets held as of January 1, 2020.

The following table presents a rollforward of the cumulative credit losses in other-than-temporary impairments recognized in earnings for available for sale fixed maturity securities:

Three Months Ended March 31, 2019
(in millions)
Balance, beginning of year	$	-
Increases due to:
Credit impairments on new securities subject to impairment losses		68
Additional credit impairments on previously impaired securities		6
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell		(21)
Accretion on securities previously impaired due to credit*		-
Balance, end of period	$	53

*Represents both accretion recognized due to changes in cash flows expected to be collected over the remaining expected term of the credit impaired securities and the accretion due to the passage of time.

38 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Purchased Credit Deteriorated/Impaired Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

We purchase certain RMBS securities that have experienced more-than-insignificant deterioration in credit quality since origination. Subsequent to the adoption of the Financial Instruments Credit Losses Standard these are referred to as PCD assets. At the time of purchase an allowance is recognized for these PCD assets by adding it to the purchase price to arrive at the initial amortized cost. There is no credit loss expense recognized upon acquisition of a PCD asset. When determining the initial allowance for credit losses, management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs:

Current delinquency rates;

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Expected prepayment speeds.

Subsequent to the acquisition date, the PCD assets follow the same accounting as other structured securities that are not high credit quality.

During the three-month period ended March 31, 2020, we purchased certain securities which had more than insignificant credit deterioration since their origination. These PCD securities are held in the portfolio of bonds available for sale in their natural classes at March 31, 2020.

The following table presents a reconciliation of the purchase price to the unpaid principal balance at the acquisition date of the PCD securities that were purchased with credit deterioration during the three-month period ended March 31, 2020:

(in millions)	March 31, 2020
Unpaid principal balance	$	187
Allowance for expected credit losses at acquisition		(6)
Purchase (discount) premium		(48)
Purchase price	$	133

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

We purchase certain RMBS securities that have experienced deterioration in credit quality since their issuance. We determine whether it is probable at acquisition that we will not collect all contractually required payments for these purchased credit impaired (PCI) securities, including both principal and interest. At acquisition, the timing and amount of the undiscounted future cash flows expected to be received on each PCI security is determined based on our best estimate using key assumptions, such as interest rates, default rates and prepayment speeds. At acquisition, the difference between the undiscounted expected future cash flows of the PCI securities and the recorded investment in the securities represents the initial accretable yield, which is accreted into Net investment income over their remaining lives on an effective yield basis. Additionally, the difference between the contractually required payments on the PCI securities and the undiscounted expected future cash flows represents the non-accretable difference at acquisition. The accretable yield and the non-accretable difference will change over time, based on actual payments received and changes in estimates of undiscounted expected future cash flows, which are discussed further below.

On a quarterly basis, the undiscounted expected future cash flows associated with PCI securities are re-evaluated based on updates to key assumptions. Declines in undiscounted expected future cash flows due to further credit deterioration as well as changes in the expected timing of the cash flows can result in the recognition of an other-than-temporary impairment charge, as PCI securities are subject to our policy for evaluating investments for other-than-temporary impairment. Changes to undiscounted expected future cash flows due solely to the changes in the contractual benchmark interest rates on variable rate PCI securities will change the accretable yield prospectively. Significant increases in undiscounted expected future cash flows for reasons other than interest rate changes are recognized prospectively as adjustments to the accretable yield.

AIG | First Quarter 2020 Form 10-Q 39

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

The following tables present information on our PCI securities, which are included in bonds available for sale as of December 31, 2019:

(in millions)	At Date of Acquisition
Contractually required payments (principal and interest)	$	35,139
Cash flows expected to be collected*		28,720
Recorded investment in acquired securities		19,382

*Represents undiscounted expected cash flows, including both principal and interest.

(in millions)	December 31, 2019
Outstanding principal balance	$	10,476
Amortized cost		6,970
Fair value		8,664

The following table presents activity for the accretable yield on PCI securities:

Three Months Ended March 31, 2019
(in millions)
Balance, beginning of year	$	7,210
Newly purchased PCI securities		12
Accretion		(172)
Effect of changes in interest rate indices		(134)
Net reclassification from (to) non-accretable difference, including effects of prepayments		(115)
Activities related to businesses reclassified to held for sale		-
Balance, end of period	$	6,801

Pledged Investments

Secured Financing and Similar Arrangements

We enter into secured financing transactions whereby certain securities are sold under agreements to repurchase (repurchase agreements), in which we transfer securities in exchange for cash, with an agreement by us to repurchase the same or substantially similar securities. Our secured financing transactions also include those that involve the transfer of securities to financial institutions in exchange for cash (securities lending agreements). In all of these secured financing transactions, the securities transferred by us (pledged collateral) may be sold or repledged by the counterparties. These agreements are recorded at their contracted amounts plus accrued interest, other than those that are accounted for at fair value.

Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral under these secured financing transactions, we may be required to transfer cash or additional securities as pledged collateral under these agreements. At the termination of the transactions, we and our counterparties are obligated to return the amounts borrowed and the securities transferred, respectively.

The following table presents the fair value of securities pledged to counterparties under secured financing transactions, including repurchase and securities lending agreements:

(in millions)		March 31, 2020		December 31, 2019
Fixed maturity securities available for sale	$	2,759	$	3,030

At March 31, 2020 and December 31, 2019, amounts borrowed under repurchase and securities lending agreements totaled $2.9 billion and $3.1 billion, respectively.

40 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

The following table presents the fair value of securities pledged under our repurchase agreements by collateral type and by remaining contractual maturity:

	Remaining Contractual Maturity of the Agreements
(in millions)	Overnight and Continuous			up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2020
Bonds available for sale:
Non-U.S. governments	$	4	$	22	$	-	$	-	$	-	$	26
Corporate debt		19		104		-		-		-		123
Total	$	23	$	126	$	-	$	-	$	-	$	149
December 31, 2019
Bonds available for sale:
Non-U.S. governments	$	2	$	71	$	-	$	-	$	-	$	73
Corporate debt		22		55		82		-		-		159
Total	$	24	$	126	$	82	$	-	$	-	$	232

The following table presents the fair value of securities pledged under our securities lending agreements by collateral type and by remaining contractual maturity:

	Remaining Contractual Maturity of the Agreements
(in millions)		Overnight and Continuous		up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2020
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	234	$	136	$	-	$	-	$	370
Non-U.S. governments		-		-		85		-		-		85
Corporate debt		-		1,083		740		-		-		1,823
RMBS		-		-		-		332		-		332
Total	$	-	$	1,317	$	961	$	332	$	-	$	2,610
December 31, 2019
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	-	$	386	$	-	$	-	$	386
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		1,071		947		-		-		2,018
RMBS		-		-		-		394		-		394
Total	$	-	$	1,071	$	1,333	$	394	$	-	$	2,798

We also enter into agreements in which securities are purchased by us under agreements to resell (reverse repurchase agreements), which are accounted for as secured financing transactions and reported as short-term investments or other assets, depending on their terms. These agreements are recorded at their contracted resale amounts plus accrued interest, other than those that are accounted for at fair value. In all reverse repurchase transactions, we take possession of or obtain a security interest in the related securities, and we have the right to sell or repledge this collateral received.

The following table presents information on the fair value of securities pledged to us under reverse repurchase agreements:

(in millions)		March 31, 2020		December 31, 2019
Securities collateral pledged to us	$	3,935	$	2,567
Amount sold or repledged by us		-		121

At March 31, 2020 and December 31, 2019, amounts loaned under reverse repurchase agreements totaled $3.9 billion and $2.6 billion, respectively.

We do not currently offset any secured financing transactions. All such transactions are collateralized and margined daily consistent with market standards and subject to enforceable master netting arrangements with rights of set off.

AIG | First Quarter 2020 Form 10-Q 41

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 6. Investments

Insurance – Statutory and Other Deposits

The total carrying value of cash and securities deposited by our insurance subsidiaries under requirements of regulatory authorities or other insurance-related arrangements, including certain annuity-related obligations and certain reinsurance treaties, was $8.7 billion at both March 31, 2020 and December 31, 2019.

Other Pledges and Restrictions

Certain of our subsidiaries are members of Federal Home Loan Banks (FHLBs) and such membership requires the members to own stock in these FHLBs. We owned an aggregate of $201 million and $194 million of stock in FHLBs at March 31, 2020 and December 31, 2019, respectively. In addition, our subsidiaries have pledged securities available for sale and residential loans associated with borrowings and funding agreements from FHLBs, with a fair value of $5.8 billion and $2.2 billion, respectively, at March 31, 2020 and $4.3 billion and $1.8 billion, respectively, at December 31, 2019.

Certain GIAs have provisions that require collateral to be posted or payments to be made by us upon a downgrade of our long-term debt ratings. The actual amount of collateral required to be posted to the counterparties in the event of such downgrades, and the aggregate amount of payments that we could be required to make, depend on market conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the downgrade. The fair value of securities pledged as collateral with respect to these obligations was approximately $1.6 billion and $1.5 billion at March 31, 2020 and December 31, 2019, respectively. This collateral primarily consists of securities of the U.S. government and government sponsored entities and generally cannot be repledged or resold by the counterparties.

Investments held in escrow accounts or otherwise subject to restriction as to their use were $430 million and $330 million, comprised of bonds available for sale and short term investments at March 31, 2020 and December 31, 2019, respectively.

7. Lending Activities

Mortgage and other loans receivable include commercial mortgages, residential mortgages, life insurance policy loans, commercial loans, and other loans and notes receivable. Commercial mortgages, residential mortgages, commercial loans, and other loans and notes receivable are carried at unpaid principal balances less allowance for credit losses and plus or minus adjustments for the accretion or amortization of discount or premium. Interest income on such loans is accrued as earned.

Direct costs of originating commercial mortgages, commercial loans, and other loans and notes receivable, net of nonrefundable points and fees, are deferred and included in the carrying amount of the related receivables. The amount deferred is amortized to income as an adjustment to earnings using the interest method. Premiums and discounts on purchased residential mortgages are also amortized to income as an adjustment to earnings using the interest method.

Life insurance policy loans are carried at unpaid principal balances. There is no allowance for policy loans because these loans serve to reduce the death benefit paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy.

Interest income is not accrued when payment of contractual principal and interest is not expected. Any cash received on impaired loans is generally recorded as a reduction of the current carrying amount of the loan. Accrual of interest income is generally resumed when delinquent contractual principal and interest is repaid or when a portion of the delinquent contractual payments are made and the ongoing required contractual payments have been made for an appropriate period. As of March 31, 2020, $4 million and $304 million of residential mortgage loans and commercial mortgage loans, respectively, were placed on nonaccrual status.

Accrued interest is presented separately and is included in Other assets on the Condensed Consolidated Balance Sheets. As of March 31, 2020, accrued interest receivable was $18 million and $130 million associated with residential mortgage loans and commercial mortgage loans, respectively.

A significant majority of commercial mortgages in the portfolio are non-recourse loans and, accordingly, the only guarantees are for specific items that are exceptions to the non-recourse provisions. It is therefore extremely rare for us to have cause to enforce the provisions of a guarantee on a commercial real estate or mortgage loan.

42 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 7. Lending Activities

The following table presents the composition of Mortgage and other loans receivable, net:

	March 31,			December 31,
(in millions)		2020		2019
Commercial mortgages(a)	$	36,291	$	36,170
Residential mortgages		6,718		6,683
Life insurance policy loans		2,061		2,065
Commercial loans, other loans and notes receivable		2,561		2,504
Total mortgage and other loans receivable		47,631		47,422
Allowance for credit losses(b)		(787)		(438)
Mortgage and other loans receivable, net	$	46,844	$	46,984

(a)Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 23 percent and 11 percent, respectively, at March 31, 2020 and 23 percent and 10 percent, respectively, at December 31, 2019).

(b)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

Nonperforming loans are generally those loans where payment of contractual principal or interest is more than 90 days past due. Nonperforming loans were not significant for all periods presented.

Credit Quality of Commercial Mortgages

The following table presents debt service coverage ratios^(a) for commercial mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
>1.2X	$	701	$	5,557	$	5,963	$	4,309	$	5,165	$	10,745	$	32,440
1.00 - 1.20X		115		255		505		338		162		2,072		3,447
<1.00X		-		74		-		-		-		330		404
Total commercial mortgages	$	816	$	5,886	$	6,468	$	4,647	$	5,327	$	13,147	$	36,291

The following table presents loan-to-value ratios^(b) for commercial mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
Less than 65%	$	567	$	4,567	$	4,508	$	3,584	$	4,032	$	10,745	$	28,003
65% to 75%		249		1,319		1,960		924		1,104		2,221		7,777
76% to 80%		-		-		-		-		191		5		196
Greater than 80%		-		-		-		139		-		176		315
Total commercial mortgages	$	816	$	5,886	$	6,468	$	4,647	$	5,327	$	13,147	$	36,291

The following table presents debt service coverage ratios and loan-to-value ratios for commercial mortgages:

December 31, 2019	Debt Service Coverage Ratios(a)
(in millions)		>1.20X		1.00X - 1.20X		<1.00X		Total
Loan-to-Value Ratios(b)
Less than 65%	$	23,013	$	2,440	$	245	$	25,698
65% to 75%		9,007		899		40		9,946
76% to 80%		200		6		-		206
Greater than 80%		184		2		134		320
Total commercial mortgages	$	32,404	$	3,347	$	419	$	36,170

(a)The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio was 2.0X at both March 31, 2020 and December 31, 2019. The debt service coverage ratios have been updated within the last three months.

(b)The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 56 percent at both March 31, 2020 and December 31, 2019. The loan-to-value ratios have been updated within the last three months.

AIG | First Quarter 2020 Form 10-Q 43

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 7. Lending Activities

The following table presents the credit quality performance indicators for commercial mortgages:

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total(c)	Total $
March 31, 2020
Credit Quality Performance
Indicator:
In good standing	718	$	14,153	$	10,478	$	5,221	$	3,574	$	2,156	$	438	$	36,020	99	%
Restructured(a)	5		-		87		25		-		101		-		213	1
90 days or less delinquent	1		1		-		-		-		-		-		1	-
>90 days delinquent or in
process of foreclosure	2		-		57		-		-		-		-		57	-
Total(b)	726	$	14,154	$	10,622	$	5,246	$	3,574	$	2,257	$	438	$	36,291	100	%
Allowance for credit losses		$	161	$	315	$	115	$	66	$	24	$	8	$	689	2	%

December 31, 2019
Credit Quality Performance
Indicator:
In good standing	736	$	13,698	$	10,553	$	5,332	$	3,663	$	2,211	$	522	$	35,979	99	%
Restructured(a)	3		-		89		-		-		101		-		190	1
90 days or less delinquent	1		1		-		-		-		-		-		1	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total(b)	740	$	13,699	$	10,642	$	5,332	$	3,663	$	2,312	$	522	$	36,170	100	%
Allowance for credit losses:
Specific		$	-	$	2	$	1	$	-	$	6	$	-	$	9	-	%
General			81		153		44		30		14		5		327	1
Total allowance for credit losses		$	81	$	155	$	45	$	30	$	20	$	5	$	336	1	%

(a)Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings see Note 8 to the Consolidated Financial Statements in the 2019 Annual Report.

(b)Does not reflect allowance for credit losses.

(c)Our commercial mortgage loan portfolio is current as to payments of principal and interest, for both periods presented. There were no significant amounts of nonperforming commercial mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented.

The following table presents credit quality performance indicators for residential mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
FICO*:
780 and greater	$	116	$	973	$	638	$	984	$	996	$	969	$	4,676
720 - 779		128		496		190		265		282		285		1,646
660 - 719		6		77		43		55		65		85		331
600 - 659		1		8		7		8		7		16		47
Less than 600		-		1		1		2		3		11		18
Total residential mortgages	$	251	$	1,555	$	879	$	1,314	$	1,353	$	1,366	$	6,718

*Fair Isaac Corporation (FICO) is the credit quality indicator used to evaluate consumer credit risk for residential mortgage loan borrowers and have been updated within the last three months

Methodology Used to Estimate the Allowance for Credit Losses

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

At the time of origination or purchase, an allowance for credit losses is established for mortgage and other loan receivables and is updated each reporting period. Changes in the allowance for credit losses are recorded in realized capital losses. This allowance reflects the risk of loss, even when that risk is remote, and reflects losses expected over the remaining contractual life of the loan. The allowance for credit losses considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions. We revert to historical information when we determine that we can no longer reliably forecast future economic assumptions.

44 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 7. Lending Activities

The allowances for the commercial mortgage loans and residential mortgage loans are estimated utilizing a Probability of Default /Loss Given Default model. Loss rate factors are determined based on historical data and adjusted for current and forecasted information. The loss rates are applied based on individual loan attributes and considering such data points as Loan-to-Value, FICO scores, and debt service coverage.

The estimate of credit losses also reflects management’s assumptions on certain macroeconomic factors that include, but are not limited to, gross domestic product growth, employment, inflation, housing price index, interest rates and credit spreads.

Accrued interest is excluded from the measurement of the allowance for credit losses and accrued interest is reversed through interest income once a loan is placed on nonaccrual.

When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance.

We also have off-balance sheet commitments related to our commercial mortgage loans. The liability for expected credit losses related to these commercial mortgage loan commitments is reported in Other liabilities in the Condensed Consolidated Balance Sheets. When a commitment is funded, we record a loan receivable and reclassify the liability for expected credit losses related to the commitment into loan allowance for expected credit losses. Other changes in the liability for expected credit losses on loan commitments are recorded in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

Mortgage and other loans receivable are considered impaired when collection of all amounts due under contractual terms is not probable. Impairment is measured using either i) the present value of expected future cash flows discounted at the loan’s effective interest rate, ii) the loan’s observable market price, if available, or iii) the fair value of the collateral if the loan is collateral dependent. Impairment of commercial mortgages is typically determined using the fair value of collateral while impairment of other loans is typically determined using the present value of cash flows or the loan’s observable market price. An allowance is typically established for the difference between the impaired value of the loan and its current carrying amount. Additional allowance amounts are established for incurred but not specifically identified impairments, based on statistical models primarily driven by past-due status, debt service coverage, loan-to-value ratio, property type and location, loan term, profile of the borrower and of the major property tenants, and loan seasoning. When all or a portion of a loan is deemed uncollectable, the uncollectable portion of the carrying amount of the loan is charged off against the allowance.

The following table presents a rollforward of the changes in the allowance for losses on Mortgage and other loans receivable^(a):

Three Months Ended March 31,	2020						2019
		Commercial		Other				Commercial			Other
(in millions)		Mortgages		Loans		Total		Mortgages			Loans		Total
Allowance, beginning of year	$	336	$	102	$	438	$	318		$	79	$	397
Initial allowance upon CECL adoption		311		7		318		-			-		-
Loans charged off		-		-		-		-			-		-
Recoveries of loans previously charged off		-		-		-		-			-		-
Net charge-offs		-		-		-		-			-		-
Provision for loan losses		42		(11)		31		5			20		25
Allowance, end of period	$	689	$	98	$	787	$	323	(b)	$	99	$	422

(a)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b)The March 31, 2019 total allowance was calculated prior to the adoption of ASC 326 on January 1, 2020. Of the total allowance, $3 million relates to individually assessed credit losses on $148 million of commercial mortgages at 2019.

As a result of the COVID-19 crisis, including the significant global economic slowdown and general market decline, our expectations and models used to estimate the allowance for losses on commercial and residential mortgage loans have been updated to reflect the current economic environment. The full impact of COVID-19 on real estate valuations remains uncertain and we will continue to review our valuations as further information becomes available.

During the three month period ended March 31, 2020, loans with a carrying value of $25 million were modified in troubled debt restructurings. There were no loans modified in troubled debt restructurings during the three-month period ended March 31, 2019.

AIG | First Quarter 2020 Form 10-Q 45

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 8. Variable Interest Entities

8. Variable Interest Entities

We enter into various arrangements with variable interest entities (VIEs) in the normal course of business and consolidate the VIEs when we determine we are the primary beneficiary. This analysis includes a review of the VIE’s capital structure, related contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and our involvement with the entity. When assessing the need to consolidate a VIE, we evaluate the design of the VIE as well as the related risks the entity was designed to expose the variable interest holders to.

The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of our decision-making ability and our ability to influence activities that significantly affect the economic performance of the VIE.

Balance Sheet Classification and Exposure to Loss

The following table presents the total assets and total liabilities associated with our variable interests in consolidated VIEs, as classified in the Condensed Consolidated Balance Sheets:

		Real Estate and				Affordable
		Investment		Securitization		Housing
(in millions)		Entities(d)		Vehicles(e)		Partnerships		Other		Total
March 31, 2020
Assets:
Bonds available for sale	$	256	$	6,255	$	-	$	-	$	6,511
Other bond securities		-		2,266		-		1		2,267
Mortgage and other loans receivable		-		4,025		-		-		4,025
Other invested assets		5,180		-		3,635		42		8,857
Other(a)		500		1,915		483		42		2,940
Total assets(b)	$	5,936	$	14,461	$	4,118	$	85	$	24,600
Liabilities:
Long-term debt	$	2,794	$	4,515	$	2,201	$	4	$	9,514
Other(c)		184		193		195		23		595
Total liabilities	$	2,978	$	4,708	$	2,396	$	27	$	10,109
December 31, 2019
Assets:
Bonds available for sale	$	177	$	7,239	$	-	$	-	$	7,416
Other bond securities		-		3,324		-		1		3,325
Mortgage and other loans receivable		-		3,860		-		-		3,860
Other invested assets		5,231		-		3,464		42		8,737
Other(a)		615		1,996		469		42		3,122
Total assets(b)	$	6,023	$	16,419	$	3,933	$	85	$	26,460
Liabilities:
Long-term debt	$	2,810	$	4,356	$	2,074	$	4	$	9,244
Other(c)		236		359		195		24		814
Total liabilities	$	3,046	$	4,715	$	2,269	$	28	$	10,058

(a)Comprised primarily of Short-term investments and Other assets at March 31, 2020 and December 31, 2019.

(b)The assets of each VIE can be used only to settle specific obligations of that VIE.

(c)Comprised primarily of Other liabilities at March 31, 2020 and December 31, 2019.

(d)At March 31, 2020 and December 31, 2019, off-balance sheet exposure primarily consisting of commitments to real estate and investment entities was $2.4 billion and $2.6 billion, respectively.

(e)At March 31, 2020 and December 31, 2019, the company had contributed total assets of $13.7 billion and $15.6 billion, respectively, into consolidated securitization vehicles.

46 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 8. Variable Interest Entities

We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where we have also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE. Interest holders in VIEs sponsored by us generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to us, except in limited circumstances when we have provided a guarantee to the VIE’s interest holders.

The following table presents total assets of unconsolidated VIEs in which we hold a variable interest, as well as our maximum exposure to loss associated with these VIEs:

			Maximum Exposure to Loss
		Total VIE		On-Balance		Off-Balance
(in millions)		Assets		Sheet(b)		Sheet			Total
March 31, 2020
Real estate and investment entities(a)	$	288,131	$	5,810	$	3,546		$	9,356
Affordable housing partnerships		3,064		397		-			397
Other		5,514		358		561	(c)		919
Total	$	296,709	$	6,565	$	4,107		$	10,672
December 31, 2019
Real estate and investment entities(a)	$	283,349	$	6,519	$	3,286		$	9,805
Affordable housing partnerships		3,351		453		-			453
Other		5,320		310		561	(c)		871
Total	$	292,020	$	7,282	$	3,847		$	11,129

(a)Comprised primarily of hedge funds and private equity funds.

(b)At March 31, 2020 and December 31, 2019, $6.4 billion and $7.0 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.

(c)These amounts represent our estimate of the maximum exposure to loss under certain insurance policies issued to VIEs if a hypothetical loss occurred to the extent of the full amount of the insured value. Our insurance policies cover defined risks and our estimate of liability is included in our insurance reserves on the balance sheet.

For additional information on VIEs see Note 11 to the Consolidated Financial Statements in the 2019 Annual Report.

9. Derivatives and Hedge Accounting

We use derivatives and other financial instruments as part of our financial risk management programs and as part of our investment operations.

For a discussion of our accounting policies and procedures regarding derivatives and hedge accounting see Note 12 to the Consolidated Financial Statements in the 2019 Annual Report.

Interest rate derivatives (such as interest rate swaps) are used to manage interest rate risk associated with embedded derivatives contained in insurance contract liabilities, fixed maturity securities, outstanding medium- and long-term notes as well as other interest rate sensitive assets and liabilities. Foreign exchange derivatives (principally foreign exchange forwards and swaps) are used to economically mitigate risk associated with non-U.S. dollar denominated debt, net capital exposures, foreign currency transactions, and foreign denominated investments. Equity derivatives are used to mitigate financial risk embedded in certain insurance liabilities and economically hedge certain investments. We use credit derivatives to manage our credit exposures. The derivatives are effective economic hedges of the exposures that they are meant to offset.

In addition to hedging activities, we also enter into derivative instruments with respect to investment operations, which may include, among other things, credit default swaps (CDSs) and purchases of investments with embedded derivatives, such as equity-linked notes and convertible bonds.

AIG | First Quarter 2020 Form 10-Q 47

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 9. Derivatives and Hedge Accounting

The following table presents the notional amounts of our derivatives and the fair value of derivative assets and liabilities in the Condensed Consolidated Balance Sheets:

	March 31, 2020								December 31, 2019
	Gross Derivative Assets				Gross Derivative Liabilities				Gross Derivative Assets				Gross Derivative Liabilities
		Notional		Fair		Notional		Fair		Notional		Fair		Notional		Fair
(in millions)		Amount		Value		Amount		Value		Amount		Value		Amount		Value
Derivatives designated as
hedging instruments:(a)
Interest rate contracts	$	735	$	18	$	316	$	11	$	495	$	3	$	410	$	7
Foreign exchange contracts		7,592		843		1,929		88		4,328		342		5,230		162
Derivatives not designated
as hedging instruments:(a)
Interest rate contracts		50,409		6,605		36,573		4,215		52,437		3,197		35,231		2,742
Foreign exchange contracts		12,350		1,495		8,818		944		8,133		698		12,093		863
Equity contracts		22,291		1,240		4,313		77		18,533		769		7,539		139
Credit contracts(b)		7,617		133		923		81		8,457		3		923		89
Other contracts(c)		41,563		15		56		13		40,582		14		56		7
Total derivatives, gross	$	142,557	$	10,349	$	52,928	$	5,429	$	132,965	$	5,026	$	61,482	$	4,009
Counterparty netting(d)				(4,645)				(4,645)				(2,427)				(2,427)
Cash collateral(e)				(4,840)				(147)				(1,806)				(527)
Total derivatives on condensed
consolidated balance sheets(f)			$	864			$	637			$	793			$	1,055

(a)Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.

(b)As of March 31, 2020 and December 31, 2019, included CDSs on super senior multi-sector CDOs with a net notional amount of $146 million and $152 million (fair value liability of $56 million and $48 million), respectively. The net notional amount represents the maximum exposure to loss on the portfolio.

(c)Consists primarily of stable value wraps and contracts with multiple underlying exposures.

(d)Represents netting of derivative exposures covered by a qualifying master netting agreement.

(e)Represents cash collateral posted and received that is eligible for netting.

(f)Freestanding derivatives only, excludes embedded derivatives. Derivative instrument assets and liabilities are recorded in Other assets and liabilities, respectively. Fair value of assets related to bifurcated embedded derivatives was zero at both March 31, 2020 and December 31, 2019. Fair value of liabilities related to bifurcated embedded derivatives was $8.2 billion and $6.9 billion, respectively, at March 31, 2020 and December 31, 2019. A bifurcated embedded derivative is generally presented with the host contract in the Condensed Consolidated Balance Sheets. Embedded derivatives are primarily related to guarantee features in variable annuity products, which include equity and interest rate components.

Collateral

We engage in derivative transactions that are not subject to a clearing requirement directly with unaffiliated third parties, in most cases, under International Swaps and Derivatives Association, Inc. (ISDA) Master Agreements. Many of the ISDA Master Agreements also include Credit Support Annex provisions, which provide for collateral postings that may vary at various ratings and threshold levels. We attempt to reduce our risk with certain counterparties by entering into agreements that enable collateral to be obtained from a counterparty on an upfront or contingent basis. We minimize the risk that counterparties might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value and generally requiring additional collateral to be posted upon the occurrence of certain events or circumstances. In addition, certain derivative transactions have provisions that require collateral to be posted upon a downgrade of our long-term debt ratings or give the counterparty the right to terminate the transaction. In the case of some of the derivative transactions, upon a downgrade of our long-term debt ratings, as an alternative to posting collateral and subject to certain conditions, we may assign the transaction to an obligor with higher debt ratings or arrange for a substitute guarantee of our obligations by an obligor with higher debt ratings or take other similar action. The actual amount of collateral required to be posted to counterparties in the event of such downgrades, or the aggregate amount of payments that we could be required to make, depends on market conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the downgrade.

Collateral posted by us to third parties for derivative transactions was $1.9 billion at March 31, 2020 and $2.2 billion at December 31, 2019. In the case of collateral posted under derivative transactions that are not subject to clearing, this collateral can generally be repledged or resold by the counterparties. Collateral provided to us from third parties for derivative transactions was $5.5 billion and $2.2 billion at March 31, 2020 and December 31, 2019, respectively. In the case of collateral provided to us under derivative transactions that are not subject to clearing, we generally can repledge or resell collateral.

48 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 9. Derivatives and Hedge Accounting

Offsetting

We have elected to present all derivative receivables and derivative payables, and the related cash collateral received and paid, on a net basis on our Condensed Consolidated Balance Sheets when a legally enforceable ISDA Master Agreement exists between us and our derivative counterparty. An ISDA Master Agreement is an agreement governing multiple derivative transactions between two counterparties. The ISDA Master Agreement generally provides for the net settlement of all, or a specified group, of these derivative transactions, as well as transferred collateral, through a single payment, and in a single currency, as applicable. The net settlement provisions apply in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions governed by the ISDA Master Agreement.

Hedge Accounting

We designated certain derivatives entered into with third parties as fair value hedges of available for sale investment securities held by our insurance subsidiaries. The fair value hedges include foreign currency forwards and cross currency swaps designated as hedges of the change in fair value of foreign currency denominated available for sale securities attributable to changes in foreign exchange rates. We also designated certain interest rate swaps entered into with third parties as fair value hedges of fixed rate GICs attributable to changes in benchmark interest rates.

We use foreign currency denominated debt and cross-currency swaps as hedging instruments in net investment hedge relationships to mitigate the foreign exchange risk associated with our non-U.S. dollar functional currency foreign subsidiaries. For net investment hedge relationships where issued debt is used as a hedging instrument, we assess the hedge effectiveness and measure the amount of ineffectiveness based on changes in spot rates. For net investment hedge relationships that use derivatives as hedging instruments, we assess hedge effectiveness and measure hedge ineffectiveness using changes in forward rates. For the three-month periods ended March 31, 2020 and 2019, we recognized gains of $99 million and $64 million, respectively, included in Change in foreign currency translation adjustment in Other comprehensive income related to the net investment hedge relationships.

A qualitative methodology is utilized to assess hedge effectiveness for net investment hedges, while regression analysis is employed for all other hedges.

The following table presents the gain (loss) recognized in earnings on our derivative instruments in fair value hedging relationships in the Condensed Consolidated Statements of Income:

	Gains/(Losses) Recognized in Earnings for:
	Hedging		Excluded		Hedged
(in millions)	Derivatives(a)		Components(b)		Items		Net Impact
Three Months Ended March 31, 2020
Interest rate contracts:
Interest credited to policyholder account balances	$	17	$	-	$	(17)	$	-
Net investment income		(3)		-		3		-
Foreign exchange contracts:
Realized capital gains/(losses)		305		281		(305)		281
Three Months Ended March 31, 2019
Interest rate contracts:
Interest credited to policyholder account balances	$	5	$	-	$	(5)	$	-
Net investment income		(1)		-		1		-
Foreign exchange contracts:
Realized capital gains/(losses)		(8)		(14)		8		(14)

(a)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are included in the assessment of hedge effectiveness.

(b)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are excluded from the assessment of hedge effectiveness and recognized in earnings on a mark-to-market basis.

AIG | First Quarter 2020 Form 10-Q 49

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 9. Derivatives and Hedge Accounting

Derivatives Not Designated as Hedging Instruments

The following table presents the effect of derivative instruments not designated as hedging instruments in the Condensed Consolidated Statements of Income:

	Gains (Losses)
Three Months Ended March 31,	Recognized in Earnings
(in millions)		2020		2019
By Derivative Type:
Interest rate contracts	$	2,573	$	359
Foreign exchange contracts		1,025		(28)
Equity contracts		1,103		(208)
Credit contracts		122		(8)
Other contracts		10		16
Embedded derivatives		(1,052)		(449)
Total	$	3,781	$	(318)
By Classification:
Policy fees	$	15	$	17
Net investment income		(2)		(5)
Net realized capital gains (losses)		3,752		(334)
Policyholder benefits and claims incurred		16		4
Total	$	3,781	$	(318)

CREDIT RISK-RELATED CONTINGENT FEATURES

We estimate that at March 31, 2020, based on our outstanding financial derivative transactions, a downgrade of our long-term senior debt ratings to BBB or BBB– by Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and/or a downgrade to Baa2 or Baa3 by Moody’s Investors’ Service, Inc. would permit counterparties to make additional collateral calls and permit certain counterparties to elect early termination of contracts, resulting in corresponding collateral postings and termination payments in the total amount of up to approximately $44 million. The aggregate fair value of our derivatives that were in a net liability position and that contain such credit risk-related contingencies which can be triggered below our long-term senior debt ratings of BBB+ or Baa1 was approximately $257 million and $336 million at March 31, 2020 and December 31, 2019, respectively. The aggregate fair value of assets posted as collateral under these contracts at March 31, 2020 and December 31, 2019, was approximately $399 million and $381 million, respectively.

Hybrid Securities with Embedded Credit Derivatives

We invest in hybrid securities (such as credit-linked notes) with the intent of generating income, and not specifically to acquire exposure to embedded derivative risk. As is the case with our other investments in RMBS, CMBS, CDOs and ABS, our investments in these hybrid securities are exposed to losses only up to the amount of our initial investment in the hybrid security. Other than our initial investment in the hybrid securities, we have no further obligation to make payments on the embedded credit derivatives in the related hybrid securities.

We elect to account for our investments in these hybrid securities with embedded written credit derivatives at fair value, with changes in fair value recognized in Net investment income and Other income. Our investments in these hybrid securities are reported as Other bond securities in the Condensed Consolidated Balance Sheets. The fair values of these hybrid securities were $2.3 billion and $3.3 billion at March 31, 2020 and December 31, 2019, respectively. These securities have par amounts of $5.3 billion and $7.4 billion at March 31, 2020 and December 31, 2019, respectively, and have remaining stated maturity dates that extend to 2052.

50 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 10. Insurance Liabilities

10. Insurance Liabilities

Liability for Unpaid Losses and Loss Adjustment Expenses (Loss Reserves)

Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Given the uncertainties around the impact from the COVID-19 crisis, including the significant global economic slowdown and general market decline, the full impact of COVID-19 and how it may ultimately impact the results of our insurance operations remains uncertain. In addition, in response to the crisis, new governmental, legislative and regulatory initiatives have been put in place and continue to be developed that could result in additional restrictions and requirements relating to our policies that may have a negative impact on our business operations. However, we have recorded our estimate of the ultimate liability for claims that have occurred as of the balance sheet date associated with COVID-19 which reflects our expectations given the current facts and circumstances. We will continue to monitor and review the impact. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development.

Our gross loss reserves before reinsurance and discount are net of contractual deductible recoverable amounts due from policyholders of approximately $12.3 billion and $12.2 billion at March 31, 2020 and December 31, 2019, respectively. These recoverable amounts are related to certain policies with high deductibles (in excess of high dollar amounts retained by the insured through self-insured retentions, deductibles, retrospective programs, or captive arrangements, each referred to generically as “deductibles”), primarily for U.S. commercial casualty business. With respect to the deductible portion of the claim, we manage and pay the entire claim on behalf of the insured and are reimbursed by the insured for the deductible portion of the claim. Thus, these recoverable amounts represent a credit exposure to us. At both March 31, 2020 and December 31, 2019, we held collateral of approximately $8.9 billion, for these deductible recoverable amounts, consisting primarily of letters of credit and funded trust agreements. Allowance for credit losses for the unsecured portion of these recoverable amounts was $14 million at March 31, 2020.

AIG | First Quarter 2020 Form 10-Q 51

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 10. Insurance Liabilities

The following table presents the roll-forward of activity in Loss Reserves:

	Three Months Ended
	March 31,
(in millions)		2020		2019
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	78,328	$	83,639
Reinsurance recoverable		(31,069)		(31,690)
Initial allowance upon CECL adoption		164		-
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		47,423		51,949
Losses and loss adjustment expenses incurred:
Current year		4,111		4,297
Prior years, excluding discount and amortization of deferred gain		(1)		(15)
Prior years, discount charge (benefit)		76		497
Prior years, amortization of deferred gain on retroactive reinsurance(a)		(75)		(86)
Total losses and loss adjustment expenses incurred		4,111		4,693
Losses and loss adjustment expenses paid:
Current year		(342)		(317)
Prior years		(4,351)		(5,639)
Total losses and loss adjustment expenses paid		(4,693)		(5,956)
Other changes:
Foreign exchange effect		(230)		216
Allowance for credit losses		-		-
Retroactive reinsurance adjustment (net of discount)(b)		22		(190)
Total other changes		(208)		26
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		46,633		50,712
Reinsurance recoverable		31,114		31,784
Total	$	77,747	$	82,496

(a)Includes $8 million and $9 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three-month periods ended March 31, 2020 and 2019, respectively.

(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $72 million and $307 million for the three-month periods ended March 31, 2020 and 2019, respectively.

On January 20, 2017, we entered into an adverse development reinsurance agreement with NICO, under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent of the paid losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit of $25 billion. At NICO’s 80 percent share, NICO’s limit of liability under the contract is $20 billion. We account for this transaction as retroactive reinsurance. We paid total consideration, including interest, of $10.2 billion. The consideration was placed into a collateral trust account as security for NICO’s claim payment obligations, and Berkshire has provided a parental guarantee to secure the obligations of NICO under the agreement. The total paid claims subject to the agreement as of March 31, 2020 were below the attachment point.

52 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 10. Insurance Liabilities

Discounting of Loss Reserves

At March 31, 2020 and December 31, 2019, the loss reserves reflect a net loss reserve discount of $1.6 billion and $1.5 billion, respectively, including tabular and non-tabular calculations based upon the following assumptions:

The discount for asbestos reserves has been fully amortized.

The tabular workers’ compensation discount is calculated based on a 3.5 percent interest rate and the mortality rate used in the 2007 U.S. Life Table.

The non-tabular workers’ compensation discount is calculated separately for companies domiciled in New York and Pennsylvania, and follows the statutory regulations (prescribed or permitted) for each state. For New York companies, the discount is based on a 5 percent interest rate and the companies’ own payout patterns. For the Pennsylvania companies, the statute specifies discount factors for accident years 2001 and prior, which are based on a 6 percent interest rate and an industry payout pattern. For accident years 2002 and subsequent, the discount is based on the payout patterns and investment yields of the companies.

In 2013 and in 2014, our Pennsylvania and Delaware regulators, respectively, approved use of a consistent discount rate (U.S. Treasury rate plus a liquidity premium) to all of our workers’ compensation reserves in our Pennsylvania-domiciled and Delaware domiciled companies, as well as our use of updated payout patterns specific to our primary and excess workers compensation portfolios. In 2020, these regulators also approved that the discount rate will be updated on an annual basis, with the next update being performed in the fourth quarter of 2020.

At March 31, 2020 and December 31, 2019, the discount consists of $593 million and $582 million of tabular discount, respectively, and $972 million and $967 million of non-tabular discount for workers’ compensation, respectively. During the three-month periods ended March 31, 2020 and 2019, the benefit (charge) from changes in discount of $(56) million and $(473) million, respectively, were recorded as part of the policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income.

The following table presents the components of the loss reserve discount discussed above:

	March 31, 2020						December 31, 2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
U.S. workers' compensation	$	2,087	$	657	$	2,744	$	2,134	$	666	$	2,800
Retroactive reinsurance		(1,179)		-		(1,179)		(1,251)		-		(1,251)
Total reserve discount*	$	908	$	657	$	1,565	$	883	$	666	$	1,549

*Excludes $170 million and $172 million of discount related to certain long tail liabilities in the UK at March 31, 2020 and December 31, 2019, respectively.

The following table presents the net loss reserve discount benefit (charge):

Three Months Ended March 31,	2020						2019
	North						North
	America						America
	Commercial		Legacy				Commercial		Legacy
(in millions)	Insurance		Portfolio			Total	Insurance		Portfolio			Total
Current accident year	$	20	$	-	$	20	$	24	$	-	$	24
Accretion and other adjustments to prior year discount		(67)		(9)		(76)		(251)		(13)		(264)
Effect of interest rate changes		-		-		-		(167)		(66)		(233)
Net reserve discount benefit (charge)		(47)		(9)		(56)		(394)		(79)		(473)
Change in discount on loss reserves ceded under
retroactive reinsurance		72		-		72		307		-		307
Net change in total reserve discount*	$	25	$	(9)	$	16	$	(87)	$	(79)	$	(166)

*Excludes $(2) million and $35 million discount related to certain long tail liabilities in the UK for the three-month periods ended March 31, 2020 and 2019, respectively.

AIG | First Quarter 2020 Form 10-Q 53

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 11. Contingencies, Commitments and Guarantees

11. Contingencies, Commitments and Guarantees

In the normal course of business, various contingent liabilities and commitments are entered into by AIG and our subsidiaries. In addition, AIG Parent guarantees various obligations of certain subsidiaries.

Although AIG cannot currently quantify its ultimate liability for unresolved litigation and investigation matters, including those referred to below, it is possible that such liability could have a material adverse effect on AIG’s consolidated financial condition or its consolidated results of operations or consolidated cash flows for an individual reporting period.

Legal Contingencies

Overview

In the normal course of business, AIG and our subsidiaries are subject to regulatory and government investigations and actions, and litigation and other forms of dispute resolution in a large number of proceedings pending in various domestic and foreign jurisdictions. Certain of these matters involve potentially significant risk of loss due to potential for significant jury awards and settlements, punitive damages or other penalties. Many of these matters are also highly complex and may seek recovery on behalf of a class or similarly large number of plaintiffs. It is therefore inherently difficult to predict the size or scope of potential future losses arising from these matters. In our insurance and reinsurance operations, litigation and arbitration concerning the scope of coverage under insurance and reinsurance contracts, and litigation and arbitration in which our subsidiaries defend or indemnify their insureds under insurance contracts, are generally considered in the establishment of our loss reserves. Separate and apart from the foregoing matters involving insurance and reinsurance coverage, AIG, our subsidiaries and their respective officers and directors are subject to a variety of additional types of legal proceedings brought by holders of AIG securities, customers, employees and others, alleging, among other things, breach of contractual or fiduciary duties, bad faith, indemnification and violations of federal and state statutes and regulations. With respect to these other categories of matters not arising out of claims for insurance or reinsurance coverage, we establish reserves for loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In many instances, we are unable to determine whether a loss is probable or to reasonably estimate the amount of such a loss and, therefore, the potential future losses arising from legal proceedings may exceed the amount of liabilities that we have recorded in our financial statements covering these matters. While such potential future charges could be material, based on information currently known to management, management does not believe, other than as may be discussed below, that any such charges are likely to have a material adverse effect on our financial position or results of operation.

Additionally, from time to time, various regulatory and governmental agencies review the transactions and practices of AIG and our subsidiaries in connection with industry-wide and other inquiries into, among other matters, the business practices of current and former operating insurance subsidiaries. Such investigations, inquiries or examinations could develop into administrative, civil or criminal proceedings or enforcement actions, in which remedies could include fines, penalties, restitution or alterations in our business practices, and could result in additional expenses, limitations on certain business activities and reputational damage. For example, among other matters, we are currently responding to governmental investigations and examinations pertaining to certain sales and compensation practices and payments and related disclosures in connection with financial planning services and the sale and distribution of related products, including 403(b) and similar retirement plans, by the Individual and Group Retirement business segments. We have cooperated, and will continue to cooperate, in producing documents and other information with respect to these matters.

Tax Litigation

We are party to pending tax litigation before the Southern District of New York. For additional information see Note 15 to the Condensed Consolidated Financial Statements.

Other Commitments

In the normal course of business, we enter into commitments to invest in limited partnerships, private equity funds and hedge funds and to purchase and develop real estate in the U.S. and abroad. These commitments totaled $6.9 billion at March 31, 2020.

54 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 11. Contingencies, Commitments and Guarantees

Guarantees

Subsidiaries

We have issued unconditional guarantees with respect to the prompt payment, when due, of all present and future payment obligations and liabilities of AIG Financial Products Corp. and related subsidiaries (collectively AIGFP) and of AIG Markets, Inc. (AIG Markets) arising from transactions entered into by AIG Markets.

In connection with AIGFP’s business activities, AIGFP has issued, in a limited number of transactions, standby letters of credit or similar facilities to equity investors of structured leasing transactions in an amount equal to the termination value owing to the equity investor by the lessee in the event of a lessee default (the equity termination value). The total amount outstanding at March 31, 2020 was $79 million. In those transactions, AIGFP has agreed to pay such amount if the lessee fails to pay. The amount payable by AIGFP is, in certain cases, partially offset by amounts payable under other instruments typically equal to the present value of scheduled payments to be made by AIGFP. In the event that AIGFP is required to make a payment to the equity investor, the lessee is unconditionally obligated to reimburse AIGFP. To the extent that the equity investor is paid the equity termination value from the standby letter of credit and/or other sources, including payments by the lessee, AIGFP takes an assignment of the equity investor’s rights under the lease of the underlying property. Because the obligations of the lessee under the lease transactions are generally economically defeased, lessee bankruptcy is the most likely circumstance in which AIGFP would be required to pay without reimbursement.

AIG Parent files a consolidated federal income tax return with certain subsidiaries and acts as an agent for the consolidated tax group when making payments to the Internal Revenue Service (IRS). AIG Parent and its subsidiaries have adopted, pursuant to a written agreement, a method of allocating consolidated federal income taxes. Under an Amended and Restated Tax Payment Allocation Agreement dated June 6, 2011 between AIG Parent and one of its Bermuda-domiciled insurance subsidiaries, AIG Life of Bermuda, Ltd. (AIGB), AIG Parent has agreed to indemnify AIGB for any tax liability (including interest and penalties) resulting from adjustments made by the IRS or other appropriate authorities to taxable income, special deductions or credits in connection with investments made by AIGB in certain affiliated entities.

Asset Dispositions

We are subject to financial guarantees and indemnity arrangements in connection with the completed sales of businesses pursuant to our asset disposition plan. The various arrangements may be triggered by, among other things, declines in asset values, the occurrence of specified business contingencies, the realization of contingent liabilities, developments in litigation or breaches of representations, warranties or covenants provided by us. These arrangements are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or are not applicable.

We are unable to develop a reasonable estimate of the maximum potential payout under certain of these arrangements. Overall, we believe that it is unlikely we will have to make any material payments related to completed sales under these arrangements, and no material liabilities related to these arrangements have been recorded in the Condensed Consolidated Balance Sheets.

Other

For additional discussion on commitments and guarantees associated with VIEs see Note 8 herein.

For additional disclosures about derivatives see Note 9 herein.

AIG | First Quarter 2020 Form 10-Q 55

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 12. Equity

12. Equity

Shares Outstanding

Preferred Stock

On March 14, 2019, we issued 20,000 shares of Series A 5.85% Non-Cumulative Perpetual 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 Securities Exchange Act of 1934, as amended (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.

On February 12, 2020, our Board of Directors declared a cash dividend of $365.625 per share on AIG’s Series A Preferred Stock. Holders of Depositary Shares each representing a 1/1,000th interest in a share of Series A Preferred Stock received $0.365625 per Depositary Share. The dividend was paid on March 16, 2020 to holders of record at the close of business on February 28, 2020.

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.

56 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 12. Equity

Common Stock

The following table presents a rollforward of outstanding shares:

Three Months Ended March 31, 2020	Common	Treasury	Common Stock
	Stock Issued	Stock	Outstanding
Shares, beginning of year	1,906,671,492	(1,036,672,461)	869,999,031
Shares issued	-	3,452,529	3,452,529
Shares repurchased	-	(12,160,952)	(12,160,952)
Shares, end of period	1,906,671,492	(1,045,380,884)	861,290,608

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 common share on AIG Common Stock:

				Dividends Paid
Declaration Date	Record Date	Payment Date		Per Common Share
February 12, 2020	March 16, 2020	March 30, 2020	$	0.32
February 13, 2019	March 15, 2019	March 29, 2019		0.32

For a discussion of restrictions on payments of dividends to AIG Parent by its subsidiaries see Note 20 to the Consolidated Financial Statements in the 2019 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)		2020		2019
Aggregate repurchases of common stock	$	500	$	-
Total number of common shares repurchased		12		-
Aggregate repurchases of warrants	$	-	$	-
Total number of warrants repurchased		-		-

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, 2020, $1.5 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.

In the first quarter of 2020, we executed an accelerated stock repurchase (ASR) agreement with a third-party financial institution. The total number of shares of AIG Common Stock repurchased in the three months ended March 31, 2020, and the aggregate purchase price of those shares, reflect our payment of $500 million in the aggregate under the ASR agreement and the receipt of approximately 12 million shares of AIG Common Stock in the aggregate.

AIG | First Quarter 2020 Form 10-Q 57

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 12. Equity

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 (LOSS)

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 Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Balance, December 31, 2019, net of tax	$	-	$	8,722	$	(2,625)	$	(1,122)	$	7	$	4,982
Change in unrealized depreciation of investments		(484)		(9,971)		-		-		-		(10,455)
Change in deferred policy acquisition costs
adjustment and other(a)		30		1,377		-		-		-		1,407
Change in future policy benefits		-		1,672		-		-		-		1,672
Change in foreign currency translation adjustments		-		-		(69)		-		-		(69)
Change in net actuarial loss		-		-		-		4		-		4
Change in prior service credit		-		-		-		(1)		-		(1)
Change in deferred tax asset (liability)		95		1,380		(16)		(10)		-		1,449
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		3		3
Total other comprehensive loss		(359)		(5,542)		(85)		(7)		3		(5,990)
Noncontrolling interests		-		(10)		(4)		-		-		(14)
Balance, March 31, 2020, net of tax	$	(359)	$	3,190	$	(2,706)	$	(1,129)	$	10	$	(994)

		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

(a)Includes net unrealized gains and losses attributable to businesses held for sale at March 31, 2020.

58 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 12. Equity

The following table presents the other comprehensive income (loss) reclassification adjustments for the three-month periods ended March 31, 2020 and 2019, respectively:

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
March 31, 2020
Unrealized change arising during period	$	(454)	$	(6,708)	$	(69)	$	(7)	$	3	$	(7,235)
Less: Reclassification adjustments
included in net income		-		214		-		(10)		-		204
Total other comprehensive income (loss),
before income tax expense (benefit)		(454)		(6,922)		(69)		3		3		(7,439)
Less: Income tax expense (benefit)		(95)		(1,380)		16		10		-		(1,449)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	(359)	$	(5,542)	$	(85)	$	(7)	$	3	$	(5,990)
		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

AIG | First Quarter 2020 Form 10-Q 59

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 12. Equity

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)			2020		2019	Condensed Consolidated Statements of Income
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses were taken
Investments		$	-	$	-	Other realized capital gains
Total			-		-
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Investments			-		-	Other realized capital gains
Total			-		-
Unrealized appreciation (depreciation) of
all other investments
Investments			214		(31)	Other realized capital gains
Total			214		(31)
Change in retirement plan liabilities adjustment
Prior-service credit			-		-	*
Actuarial losses			(10)		(5)	*
Total			(10)		(5)
Total reclassifications for the period		$	204	$	(36)

*These Accumulated other comprehensive income components are included in the computation of net periodic pension cost. For additional information see Note 14 herein.

60 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 13. Earnings Per Common Share (EPS)

13. Earnings Per Common Share (EPS)

The basic EPS computation is based on the weighted average number of common shares outstanding, adjusted to reflect all stock dividends and stock splits. The diluted EPS computation is based on those shares used in the basic EPS computation plus common shares that would have been outstanding assuming issuance of common shares for all dilutive potential common shares outstanding and adjusted to reflect all stock dividends and stock splits.

The following table presents the computation of basic and diluted EPS:

Three Months Ended March 31,
(dollars in millions, except per common share data)		2020		2019
Numerator for EPS:
Income from continuing operations	$	1,654	$	937
Less: Net income (loss) from continuing operations attributable to noncontrolling interests		(95)		283
Less: Preferred stock dividends		7		-
Income attributable to AIG common shareholders from continuing operations		1,742		654
Income from discontinued operations, net of income tax expense		-		-
Net income attributable to AIG common shareholders	$	1,742	$	654
Denominator for EPS:
Weighted average common shares outstanding — basic		874,213,630		875,383,084
Dilutive common shares		4,652,583		2,129,160
Weighted average common shares outstanding — diluted(a)		878,866,213		877,512,244
Income per common share attributable to AIG common shareholders:
Basic:
Income from continuing operations	$	1.99	$	0.75
Income from discontinued operations	$	-	$	-
Income attributable to AIG common shareholders	$	1.99	$	0.75
Diluted:
Income from continuing operations	$	1.98	$	0.75
Income from discontinued operations	$	-	$	-
Income attributable to AIG common shareholders	$	1.98	$	0.75

(a)Dilutive common shares included our share-based employee compensation plans and a weighted average portion of the 10-year warrants issued to AIG shareholders as part of AIG’s recapitalization in January 2011. The number of common shares excluded from diluted shares outstanding was 67.2 million and 64.3 million for the three-month periods ended March 31, 2020 and 2019, respectively, because the effect of including those common shares in the calculation would have been anti-dilutive.

For information about our repurchases of AIG Common Stock see Note 12 herein.

AIG | First Quarter 2020 Form 10-Q 61

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 14. Employee Benefits

14. Employee Benefits

We sponsor various defined benefit plans for eligible employees and retirees in the U.S. and certain non-U.S. countries.

The following table presents the components of net periodic benefit cost (credit) with respect to pension benefits:

	Pension
		U.S.		Non-U.S.
(in millions)		Plans		Plans		Total
Three Months Ended March 31, 2020
Components of net periodic benefit cost:
Service cost	$	1	$	5	$	6
Interest cost		34		3		37
Expected return on assets		(60)		(5)		(65)
Amortization of net loss		8		2		10
Net periodic benefit cost (credit)		(17)		5		(12)
Three Months Ended March 31, 2019
Components of net periodic benefit cost:
Service cost	$	2	$	6	$	8
Interest cost		44		4		48
Expected return on assets		(57)		(5)		(62)
Amortization of net loss		8		1		9
Net periodic benefit cost (credit)		(3)		6		3
Settlement (credit) charges		-		(4)		(4)
Net benefit cost (credit)	$	(3)	$	2	$	(1)

The service cost for our U.S. defined benefit plans only reflect administrative fees as the plans are frozen and no longer accrue benefits. We recognized net expense of $2 million for our U.S. and non-U.S. postretirement benefit plans for the three-month period ended March 31, 2020.

62 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 15. Income Taxes

15. Income Taxes

RECENT U.S. Tax law changes

On December 22, 2017, the U.S. enacted Public Law 115-97, known informally as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act includes provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries and for Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies. While the U.S. tax authorities issued formal guidance, including recently issued proposed and final regulations for BEAT and other provisions of the Tax Act, there are still certain aspects of the Tax Act that remain unclear and subject to substantial uncertainties. Additional guidance is expected in future periods. Such guidance may result in changes to the interpretations and assumptions we made and actions we may take, which may impact amounts recorded with respect to international provisions of the Tax Act, possibly materially. Consistent with accounting guidance, we treat BEAT as a period tax charge in the period the tax is incurred and have made an accounting policy election to treat GILTI taxes in a similar manner.

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to mitigate the economic impacts of the COVID-19 crisis. AIG does not expect the tax provisions of the CARES Act to have a material impact on AIG’s U.S. federal tax liabilities.

RECLASSIFICATION OF CERTAIN TAX EFFECTS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME

We use an item-by-item approach to release the stranded or disproportionate income tax effects in AOCI related to our available-for-sale securities. Under this approach, a portion of the disproportionate tax effects is assigned to each individual security lot at the date the amount becomes lodged. When the individual securities are sold, mature, or are otherwise impaired on an other-than-temporary basis, the assigned portion of the disproportionate tax effect is reclassified from AOCI to income from continuing operations.

Interim Tax Calculation Method

We use the estimated annual effective tax rate method in computing our interim tax provision. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, and are recorded in the period in which the change occurs. While certain impacts of the Tax Act are included in our annual effective tax rate, we continue to refine our calculations as additional information becomes available, which may result in changes to the estimated annual effective tax rate. As of March 31, 2020, the annual effective tax rate includes the tax effects of actual and projected COVID-19 related losses and market developments.

Interim Tax Expense (Benefit)

For the three-month period ended March 31, 2020, the effective tax rate on income from continuing operations was 35.3 percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 21 percent primarily due to tax charges associated with the establishment of U.S. federal valuation allowance related to certain tax attribute carryforwards, accrual of interest associated with IRS and other tax authority matters, the effect of foreign operations, state and local income taxes, excess tax charges related to share based compensation payments recorded through the income statement, and non-deductible transfer pricing charges, partially offset by tax benefits associated with tax exempt income, and reclassifications from accumulated other comprehensive income to income from continuing operations related to the disposal of available for sale securities. The effect of foreign operations is primarily related to income in our foreign operations taxed at statutory tax rates higher than 21 percent, other foreign taxes, and foreign income subject to U.S. taxation.

AIG | First Quarter 2020 Form 10-Q 63

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 15. Income Taxes

For the three-month period ended March 31, 2019, the effective tax rate on income from continuing operations was 18.8 percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 21 percent primarily due to tax benefits associated with tax exempt income, reclassifications from accumulated other comprehensive income to income from continuing operations related to the disposal of available for sale securities, and valuation allowance activity related to certain foreign subsidiaries, partially offset by tax charges associated with the effect of foreign operations, state and local income taxes, a net tax charge related to the accrual of IRS interest, excess tax charges related to share based compensation payments recorded through the income statement, and non-deductible transfer pricing charges. The effect of foreign operations is primarily related to income in our foreign operations taxed at statutory tax rates higher than 21 percent, other foreign taxes, and foreign income subject to U.S. taxation.

For the three-month period ended March 31, 2020, we consider our foreign earnings with respect to certain operations in Canada, South Africa, the Far East, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested. Given the uncertainties around the impact from the COVID-19 crisis, including the significant global economic slowdown and general market decline, we continue to monitor and review the impact on our reinvestment considerations, including regulatory oversight in the relevant jurisdictions.

Assessment of Deferred Tax Asset Valuation Allowance

The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.

Our framework for assessing the recoverability of the deferred tax asset requires us to consider all available evidence, including:

the nature, frequency, and amount of cumulative financial reporting income and losses in recent years;

the sustainability of recent operating profitability of our subsidiaries;

the predictability of future operating profitability of the character necessary to realize the net deferred tax asset, including forecasts of future income for each of our businesses and actual and planned business and operational changes;

the carryforward periods for the net operating loss, capital loss and foreign tax credit carryforwards, including the effect of reversing taxable temporary differences; and

prudent and feasible actions and tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax asset.

In performing our assessment of the recoverability of the deferred tax asset under this framework, we consider tax laws governing the utilization of the net operating loss, capital loss and foreign tax credit carryforwards in each applicable jurisdiction. Under U.S. tax law, a company generally must use its net operating loss carryforwards before it can use its foreign tax credit carryforwards, even though the carryforward period for the foreign tax credit is shorter than for the net operating loss. Our U.S. federal consolidated income tax group includes both life companies and non-life companies. While the U.S. taxable income of our non-life companies can be offset by our net operating loss carryforwards, only a portion (no more than 35 percent) of the U.S. taxable income of our life companies can be offset by those net operating loss carryforwards. The remaining tax liability of our life companies can be offset by the foreign tax credit carryforwards. Accordingly, we are able to utilize both the net operating loss and foreign tax credit carryforwards concurrently.

Recent events, including the COVID-19 crisis, multiple reductions in target interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, impacted actual and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the realizability of the net operating losses and foreign tax credit carryforwards, we have considered forecasts of future income for each of our businesses, including assumptions about future macro-economic and AIG-specific conditions and events, and any impact these conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of stresses of key assumptions and evaluated the effect on tax attribute utilization.

64 AIG | First Quarter 2020 Form 10-Q

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 15. Income Taxes

The carryforward periods of our foreign tax credit carryforwards range from tax years 2020 through 2023. Carryforward periods for our net operating losses extend from 2028 forward. However, utilization of a portion of our net operating losses is limited under separate return limitation year (SRLY) rules. Based on first quarter of 2020 events and our analysis of their potential impact on utilization of our tax attributes, we concluded that a valuation allowance should be established on a portion of our foreign tax credit carryforwards and SRLY net operating losses that are no longer more-likely-than-not to be realized. To the extent that the valuation allowance is attributed to changes in forecast of current year taxable income, the impact is included in our estimated annualized effective tax rate. The valuation allowance related to changes in forecasts of income in future periods as well as other items not related to the current year was recorded discretely in the first quarter of 2020. Accordingly, as of March 31, 2020, we have recorded a $274 million valuation allowance through continuing operations.

Notwithstanding the recent events, our forecasts of future taxable income, including prudent and feasible tax planning strategies, resulted in sufficient income to achieve realization of the U.S. federal net operating loss carryforwards prior to expiration. As of March 31, 2020, based on all available evidence, it is more likely than not that the U.S. federal net operating loss carryforwards will be utilized prior to expiration and, thus, no valuation allowance has been established.

Estimates of future taxable income, including income generated from prudent and feasible actions and tax planning strategies, impact of settlements with taxing authorities, and any changes to interpretations and assumptions related to the impact of the Tax Act could change in the near term, perhaps materially, which may require us to consider any potential impact to our assessment of the recoverability of the deferred tax asset. Additionally, estimates of future taxable income, including prudent and feasible tax planning strategies, may be further impacted by market developments arising from the COVID-19 crisis and uncertainty regarding its outcome. Such potential impact could be material to our consolidated financial condition or results of operations for an individual reporting period.

For the three-month period ended March 31, 2020, recent changes in market conditions, including interest rate fluctuations, impacted the unrealized tax gains and losses in the U.S. Life Insurance Companies’ available for sale securities portfolio, resulting in a deferred tax asset related to net unrealized tax capital losses. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of March 31, 2020, based on all available evidence, we concluded that no valuation allowance is necessary in the U.S. Life Insurance Companies’ available for sale securities portfolio.

For the three-month period ended March 31, 2020, recent changes in market conditions, including interest rate fluctuations, impacted the unrealized tax gains and losses in the U.S. non-life companies’ available for sale securities portfolio, resulting in a deferred tax asset related to net unrealized tax capital losses. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of March 31, 2020, based on all available evidence, we concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses that are not more-likely-than-not to be realized. For the three-month period ended March 31, 2020, we established $115 million of valuation allowance associated with the unrealized tax losses in the U.S. non-life companies’ available for sale securities portfolio, all of which was allocated to other comprehensive income.

For the three-month period ended March 31, 2020, we recognized a net increase of $9 million, in our deferred tax asset valuation allowance associated with certain foreign subsidiaries and state jurisdictions, primarily attributable to current year activity.

Tax Examinations and Litigation

On August 1, 2012, we filed a motion for partial summary judgment related to the disallowance of foreign tax credits associated with cross border financing transactions in the Southern District of New York. The Southern District of New York denied our summary judgment motion and upon AIG’s appeal, the U.S. Court of Appeals for the Second Circuit (the Second Circuit) affirmed the denial. AIG’s petition for certiorari to the U.S. Supreme Court from the decision of the Second Circuit was denied on March 7, 2016. As a result, the case has been remanded back to the Southern District of New York for a jury trial.

In January 2018, the parties reached non-binding agreements in principle on issues presented in the dispute and are currently reviewing the computations reflecting the settlement terms. The resolution is not final and is subject to various reviews. In 2019, we agreed with the IRS to execute an agreement for the tax years at issue in which AIG would waive restrictions on the assessment of additional tax related to the settlement of the underlying issues in those tax years. The litigation has been stayed pending the outcome of the review process. We can provide no assurance regarding the outcome of any such litigation or whether binding compromised settlements with the parties will ultimately be reached. We currently believe that we have adequate reserves for the potential liabilities that may result from these matters.

AIG | First Quarter 2020 Form 10-Q 65

ITEM 1 | Notes to Condensed Consolidated Financial Statements (unaudited) | 15. Income Taxes

Accounting for Uncertainty in Income Taxes

At March 31, 2020 and December 31, 2019, our unrecognized tax benefits, excluding interest and penalties, were $4.8 billion. At March 31, 2020 and December 31, 2019, our unrecognized tax benefits related to tax positions that, if recognized, would not affect the effective tax rate because they relate to such factors as the timing, rather than the permissibility, of the deduction were $44 million and $43 million, respectively. Accordingly, at both March 31, 2020 and December 31, 2019, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $4.7 billion.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At March 31, 2020 and December 31, 2019, we had accrued liabilities of $2.5 billion and $2.4 billion, respectively, for the payment of interest (net of the federal benefit) and penalties. For the three-month periods ended March 31, 2020 and 2019, we accrued expense (benefit) of $49 million and $58 million, respectively, for the payment of interest and penalties.

We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next 12 months by as much as $3.6 billion, principally as a result of potential resolutions or settlements of prior years’ tax items. The prior years’ tax items include unrecognized tax benefits related to the deductibility of certain expenses and matters related to cross border financing transactions.

16. Subsequent Events

Dividends Declared

On May 4, 2020, our Board of Directors declared a cash dividend on AIG Common Stock of $0.32 per share, payable on June 29, 2020 to shareholders of record on June 15, 2020. On May 4, 2020, our Board of Directors declared a cash dividend on AIG’s Series A Preferred Stock of $365.625 per share, payable on June 15, 2020 to holders of record on May 29, 2020.

LLOYD’S SYNDICATE 2019

On May 4, 2020, AIG announced the launch of Lloyd’s Syndicate 2019. This Syndicate will exclusively reinsure risks from AIG’s Private Client Group. Syndicate 2019 is managed by Talbot Underwriting Limited, the managing agency AIG acquired in 2018 as part of the Validus transaction.

66 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations

Glossary and Acronyms of Selected Insurance Terms and References

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), we use certain terms and abbreviations, which are summarized in the Glossary and Acronyms.

American International Group, Inc. (AIG) has incorporated into this discussion a number of cross-references to additional information included throughout this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019 (the 2019 Annual Report) to assist readers seeking additional information related to a particular subject.

In this Quarterly Report on Form 10-Q, unless otherwise mentioned or unless the context indicates otherwise, we use the terms “AIG,” the “Company,” “we,” “us” and “our” to refer to American International Group, Inc., a Delaware corporation, and its consolidated subsidiaries. We use the term “AIG Parent” to refer solely to American International Group, Inc., and not to any of its consolidated subsidiaries.

Cautionary Statement Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q and other publicly available documents may include, and officers and representatives of AIG may from time to time make and discuss, projections, goals, assumptions and statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These projections, goals, assumptions and statements are not historical facts but instead represent only a belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG’s control. These projections, goals, assumptions and statements include statements preceded by, followed by or including words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “focused on achieving,” “view,” “target,” “goal” or “estimate.” These projections, goals, assumptions and statements may relate to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, anticipated organizational, business or regulatory changes, the effect of catastrophes and macroeconomic events, such as COVID-19, anticipated dispositions, monetization and/or acquisitions of businesses or assets, or successful integration of acquired businesses, management succession and retention plans, exposure to risk, trends in operations and financial results.

AIG | First Quarter 2020 Form 10-Q 67

It is possible that AIG’s actual results and financial condition will differ, possibly materially, from the results and financial condition indicated in these projections, goals, assumptions and statements. Factors that could cause AIG’s actual results to differ, possibly materially, from those in the specific projections, goals, assumptions and statements include:

the adverse impact of COVID-19, including with respect to AIG’s business, financial condition and results of operations; changes in market and industry conditions, including the significant global economic slowdown, general market declines and disruptions to AIG’s operations driven by COVID-19 and responses thereto, including new or changed governmental policy and regulatory actions; the occurrence of catastrophic events, both natural and man-made, including COVID-19, pandemics and the effects of climate change; AIG’s ability to effectively execute on AIG 200 operational programs designed to achieve underwriting excellence, modernization of AIG’s operating infrastructure, enhanced user and customer experiences and unification of AIG; AIG’s ability to consummate the sale of its controlling interest in Fortitude Holdings and AIG’s ability to successfully manage Legacy Portfolios; changes in judgments concerning potential cost saving opportunities; actions by credit rating agencies; changes in judgments concerning insurance underwriting and insurance liabilities; the impact of potential information technology, cybersecurity or data security breaches, including as a result of cyber-attacks or security vulnerabilities, the likelihood of which may increase due to extended remote business operations as a result of COVID-19; disruptions in the availability of AIG’s electronic data systems or those of third parties; the effectiveness of strategies to recruit and retain key personnel and to implement effective succession plans; the requirements, which may change from time to time, of the global regulatory framework to which AIG is subject; significant legal, regulatory or governmental proceedings; concentrations in AIG’s investment portfolios; changes to the valuation of AIG’s investments; AIG’s ability to successfully dispose of, monetize and/or acquire businesses or assets or successfully integrate acquired businesses; changes in judgments concerning the recognition of deferred tax assets and the impairment of goodwill; the effectiveness of our risk management policies and procedures, including with respect to our business continuity and disaster recovery plans; and such other factors discussed in: –Part I, Item 2. MD&A of this Quarterly Report on Form 10-Q; and –Part I, Item 1A. Risk Factors and Part II, Item 7. MD&A of the 2019 Annual Report.

We are not under any obligation (and expressly disclaim any obligation) to update or alter any projections, goals, assumptions or other statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.

68 AIG | First Quarter 2020 Form 10-Q

INDEX TO ITEM 2
	Page
Use of Non-GAAP Measures	70
Critical Accounting Estimates	72
Executive Summary	75
Overview	75
Financial Performance Summary	77
AIG's Outlook – Industry and Economic Factors	79
Consolidated Results of Operations	83
Business Segment Operations	88
General Insurance	89
Life and Retirement	98
Other Operations	112
Legacy Portfolio	114
Investments	117
Overview	117
Investment Highlights in the First Quarter of 2020	117
Investment Strategies	117
Credit Ratings	119
Credit Impairments	126
Insurance Reserves	129
Loss Reserves	129
Life and Annuity Reserves and DAC	132
Liquidity and Capital Resources	138
Overview	138
Analysis of Sources and Uses of Cash	140
Liquidity and Capital Resources of AIG Parent and Subsidiaries	141
Credit Facilities	143
Contractual Obligations	144
Off-Balance Sheet Arrangements and Commercial Commitments	145
Debt	146
Credit Ratings	148
Financial Strength Ratings	149
Regulation and Supervision	149
Dividends	149
Repurchases of AIG Common Stock	149
Dividend Restrictions	150
Enterprise Risk Management	150
Overview	150
Regulatory Environment	151
Overview	151
Glossary	152
Acronyms	155

AIG | First Quarter 2020 Form 10-Q 69

ITEM 2 | Use of Non-GAAP Measures

Use of Non-GAAP Measures

Throughout this MD&A, we present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. Some of the measurements we use are “non-GAAP financial measures” under Securities and Exchange Commission rules and regulations. GAAP is the acronym for “generally accepted accounting principles” in the United States. The non-GAAP financial measures we present may not be comparable to similarly-named measures reported by other companies.

Book value per common share, excluding accumulated other comprehensive income (AOCI), and Book value per common share, excluding AOCI and deferred tax assets (DTA) (Adjusted book value per common share) are used to show the amount of our net worth on a per-common share basis. We believe these measures are useful to investors because they eliminate items that can fluctuate significantly from period to period, including changes in fair value of our available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. These measures also eliminate the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in these book value per common share metrics. Book value per common share, excluding AOCI, is derived by dividing total AIG common shareholders’ equity, excluding AOCI, by total common shares outstanding. Adjusted book value per common share is derived by dividing total AIG common shareholders’ equity, excluding AOCI and DTA (Adjusted Common Shareholders’ Equity), by total common shares outstanding. The reconciliation to book value per common share, the most comparable GAAP measure, is presented in the Executive Summary section of this MD&A.

Return on common equity – Adjusted after-tax income excluding AOCI and DTA (Adjusted return on common equity) is used to show the rate of return on common shareholders’ equity. We believe this measure is useful to investors because it eliminates items that can fluctuate significantly from period to period, including changes in fair value of our available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted return on common equity. Adjusted return on common equity is derived by dividing actual or annualized adjusted after-tax income attributable to AIG common shareholders by average Adjusted Common Shareholders’ Equity. The reconciliation to return on common equity, the most comparable GAAP measure, is presented in the Executive Summary section of this MD&A.

Adjusted after-tax income attributable to AIG common shareholders is derived by excluding the tax effected adjusted pre-tax income (APTI) adjustments described below, dividends on preferred stock, and the following tax items from net income attributable to AIG:

deferred income tax valuation allowance releases and charges;

changes in uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or operating performance; and

net tax charge related to the enactment of the Tax Cuts and Jobs Act (Tax Act);

and by excluding the net realized capital gains (losses) from noncontrolling interests.

We use the following operating performance measures because we believe they enhance the understanding of the underlying profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful comparisons with our insurance competitors. When we use these measures, reconciliations to the most comparable GAAP measure are provided on a consolidated basis in the Consolidated Results of Operations section of this MD&A.

Adjusted revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes). Adjusted revenues is a GAAP measure for our operating segments.

70 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Use of Non-GAAP Measures

Adjusted pre-tax income is derived by excluding the items set forth below from income from continuing operations before income tax. This definition is consistent across our segments. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. APTI is a GAAP measure for our segments. Excluded items include the following:

changes in fair value of securities used to hedge guaranteed living benefits; changes in benefit reserves and deferred policy acquisition costs (DAC), value of business acquired (VOBA), and sales inducement assets (SIA) related to net realized capital gains and losses; changes in the fair value of equity securities; loss (gain) on extinguishment of debt; 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. Earned income on such economic hedges is reclassified from net realized capital gains and losses to specific APTI line items based on the economic risk being hedged (e.g. net investment income and interest credited to policyholder account balances); income or loss from discontinued operations; net loss reserve discount benefit (charge); pension expense related to a one-time lump sum payment to former employees; income and loss from divested businesses; non-operating litigation reserves and settlements; restructuring and other costs related to initiatives designed to reduce operating expenses, improve efficiency and simplify our organization; the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain; integration and transaction costs associated with acquired businesses; losses from the impairment of goodwill; and non-recurring costs associated with the implementation of non-ordinary course legal or regulatory changes or changes to accounting principles.

General Insurance

–Ratios: We, along with most property and casualty insurance companies, use the loss ratio, the expense ratio and the combined ratio as measures of underwriting performance. These ratios are relative measurements that describe, for every $100 of net premiums earned, the amount of losses and loss adjustment expenses (which for General Insurance excludes net loss reserve discount), and the amount of other underwriting expenses that would be incurred. A combined ratio of less than 100 indicates underwriting income and a combined ratio of over 100 indicates an underwriting loss. Our ratios are calculated using the relevant segment information calculated under GAAP, and thus may not be comparable to similar ratios calculated for regulatory reporting purposes. The underwriting environment varies across countries and products, as does the degree of litigation activity, all of which affect such ratios. In addition, investment returns, local taxes, cost of capital, regulation, product type and competition can have an effect on pricing and consequently on profitability as reflected in underwriting income and associated ratios.

–Accident year loss and combined ratios, as adjusted: both the accident year loss and combined ratios, as adjusted, exclude catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting. Natural catastrophe losses are generally weather or seismic events having a net impact on AIG in excess of $10 million each and man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million threshold. We believe that as adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they exclude catastrophes and the impact of reserve discounting which are outside of management’s control. We also exclude prior year development to provide transparency related to current accident year results.

Life and Retirement

–Premiums and deposits: includes direct and assumed amounts received and earned on traditional life insurance policies, group benefit policies and life-contingent payout annuities, as well as deposits received on universal life, investment-type annuity contracts, Federal Home Loan Bank (FHLB) funding agreements and mutual funds.

Results from discontinued operations are excluded from all of these measures.

AIG | First Quarter 2020 Form 10-Q 71

ITEM 2 | Critical Accounting Estimates

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a significant degree of judgment.

The accounting policies that we believe are most dependent on the application of estimates and assumptions, which are critical accounting estimates, are related to the determination of:

loss reserves;

valuation of future policy benefit liabilities and timing and extent of loss recognition;

valuation of liabilities for guaranteed benefit features of variable annuity products;

valuation of embedded derivatives for fixed index annuity and life products;

estimated gross profits to value deferred acquisition costs for investment-oriented products;

reinsurance assets;

impairment charges, including impairments on other invested assets and goodwill impairment;

allowances for credit losses primarily on loans, available for sale fixed maturity securities, reinsurance assets and premiums and other receivables;

liability for legal contingencies;

fair value measurements of certain financial assets and liabilities; and

income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability of future tax operating profitability of the character necessary to realize the net deferred tax asset and estimates associated with the Tax Act.

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of operations and cash flows could be materially affected.

The following accounting estimates have been updated from the descriptions in the 2019 Annual Report on account of the new accounting standard the Financial Instruments Credit Losses Standard that we adopted on January 1, 2020 that changes how we account for current expected credit losses.

Reinsurance RECOVERABLE

The estimation of reinsurance recoverable involves a significant amount of judgment, particularly for latent exposures, such as asbestos, due to their long-tail nature. Reinsurance assets include reinsurance recoverable on unpaid losses and loss adjustment expenses that are estimated as part of our loss reserving process and, consequently, are subject to similar judgments and uncertainties as the estimation of gross loss reserves. Similarly, Other assets include reinsurance recoverable for contracts which are accounted for as deposits.

72 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Critical Accounting Estimates

We assess the collectability of reinsurance recoverable balances, at minimum on an annual basis, through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectable reinsurance that reduces the carrying amount of reinsurance and other assets on the balance sheet (collectively, the reinsurance recoverable balances). This estimate requires significant judgment for which key considerations include:

paid and unpaid amounts recoverable;

whether the balance is in dispute or subject to legal collection;

the relative financial health of the reinsurer as determined by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based upon our financial reviews; insurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are assigned ORRs that will generate significant allowance; and

whether collateral and collateral arrangements exist.

An estimate of the reinsurance recoverable’s lifetime expected credit losses is established utilizing a probability of default and loss given default method, which reflects the reinsurer’s ORR rating. The allowance for credit losses excludes disputed amounts. An allowance for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.

At March 31, 2020, the allowance for credit losses and disputes on reinsurance recoverable was $362 million, or less than one percent of the consolidated reinsurance recoverable.

Impairment Charges

Impairments of Investments

Available for sale securities

If we intend to sell a fixed maturity security, or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. No allowance is established in these situations. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a decline in the fair value below the amortized cost is due to credit related factors, an allowance is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to realized capital losses. The allowance for credit losses is limited to the difference between amortized cost and fair value. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not associated with credit related factors is presented in unrealized appreciation (depreciation) of fixed maturity securities on which an allowance for credit losses were recognized (a separate component of accumulated other comprehensive income).

Commercial and residential mortgage loans

At the time of origination or purchase, an allowance for credit losses is established for mortgage and other loan receivables and is updated each reporting period. Changes in the allowance for credit losses are recorded in realized capital losses. This allowance reflects the risk of loss, even when that risk is remote, and reflects losses expected over the remaining contractual life of the loan. The allowance for credit losses considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions. We revert to historical information when we determine that we can no longer reliably forecast future economic assumptions.

The allowances for the commercial mortgage loans and residential mortgage loans are estimated utilizing a Probability of Default /Loss Given Default model. Loss rate factors are determined based on historical data and adjusted for current and forecasted information. The loss rates are applied based on individual loan attributes and considering such data points as Loan-to-Value, FICO scores, and debt service coverage.

The estimate of credit losses also reflects management’s assumptions on certain macroeconomic factors that include, but are not limited to, gross domestic product growth, employment, inflation, housing price index, interest rates and credit spreads.

AIG | First Quarter 2020 Form 10-Q 73

ITEM 2 | Critical Accounting Estimates

Goodwill Impairment

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. At both March 31, 2020 and December 31, 2019, our goodwill balance was $4.0 billion. The operating segments with goodwill are our General Insurance business – North America and International operating segments, our Life and Retirement business – Life Insurance operating segment, Legacy Portfolio and Other Operations.

Goodwill is tested for impairment annually or more frequently if circumstances indicate an impairment may have occurred. The date of our annual goodwill Impairment testing is July 1. In 2019, for substantially all of the reporting units we performed quantitative assessments that supported a conclusion that the fair value of all of the reporting units tested exceeded their book value. To determine fair value, we primarily use a discounted expected future cash flow analysis that estimates and discounts projected future distributable earnings. Such analysis is principally based on our business projections that inherently include judgments regarding business trends.

COVID-19 has caused significant market volatility impacting our actual and projected results along with a decline in our stock price. During the quarter ended March 31, 2020, we performed an updated quantitative and qualitative assessment that continues to support a conclusion that fair values of all of our reporting units exceeded their book value. As this is an evolving crisis, we expect to continue to monitor developments and perform updated analyses as necessary.

For a complete discussion of goodwill impairment see Part I, Item 1A. Risk Factors – Estimates and Assumptions and Note 13 to the Consolidated Financial Statements in the 2019 Annual Report and in Part II, Item 1A. Risk Factors.

Income Taxes

Recoverability of Net Deferred Tax Asset

The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.

We consider a number of factors to reliably estimate future taxable income so we can determine the extent of our ability to realize net operating losses, foreign tax credits, realized capital loss and other carryforwards. These factors include forecasts of future income for each of our businesses and actual and planned business and operational changes, both of which include assumptions about future macroeconomic and AIG specific conditions and events. We subject the forecasts to stresses of key assumptions and evaluate the effect on tax attribute utilization. We also apply stresses to our assumptions about the effectiveness of relevant prudent and feasible tax planning strategies. We have also considered the impact of the Tax Act on our forecasts of taxable income, made certain assumptions related to interpretation of relevant new rules, and incorporated guidance issued by the U.S. tax authority. Our analysis also reflects the effect of slower utilization of our tax credits due to a reduction in the U.S. statutory tax rate as a result of the Tax Act.

Recent events, including the COVID-19 crisis, multiple reductions in target interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, impacted actual and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the realizability of the net operating losses and foreign tax credit carryforwards, we have considered forecasts of future income for each of our businesses, including assumptions about future macro-economic and AIG-specific conditions and events, and any impact these conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of stresses of key assumptions and evaluate the effect on tax attribute utilization.

The carryforward periods of our foreign tax credit carryforwards range from tax years 2020 through 2023. Carryforward periods for our net operating losses extend from 2028 forward. However, utilization of a portion of our net operating losses is limited under separate return limitation year (SRLY) rules. Based on the events that transpired in the first quarter of 2020 and our analysis of their potential impact on utilization of our tax attributes, we concluded that valuation allowance should be established on a portion of our foreign tax credit carryforwards and SRLY net operating losses that are no longer more-likely-than-not to be realized, all of which was allocated to continuing operations.

74 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Critical Accounting Estimates

Notwithstanding the recent events, our forecasts of future taxable income, including prudent and feasible tax planning strategies, resulted in sufficient income to achieve realization of the U.S. federal net operating loss carryforward prior to expiration.

For the three-month period ended March 31, 2020, recent changes in market conditions, including interest rate fluctuations, impacted the unrealized tax gains and losses in the U.S. Life Insurance Companies’ available for sale securities portfolio, resulting in a deferred tax asset related to net unrealized tax capital losses. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of March 31, 2020, based on all available evidence, we concluded that no valuation allowance is necessary in the U.S. Life Insurance Companies’ available for sale securities portfolio.

For the three-month period ended March 31, 2020, recent changes in market conditions, including interest rate fluctuations, impacted the unrealized tax gains and losses in the U.S. non-life companies’ available for sale securities portfolio, resulting in a deferred tax asset related to net unrealized tax capital losses. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of March 31, 2020, based on all available evidence, we concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses that are not more-likely-than-not to be realized. For the three-month period ended March 31, 2020, we established valuation allowance associated with the unrealized tax losses in the U.S. non-life companies’ available for sale securities portfolio, all of which was allocated to other comprehensive income.

For a complete discussion of our critical accounting estimates, see Part II, Item 7. MD&A — Critical Accounting Estimates in the 2019 Annual Report.

Executive Summary

Overview

This overview of the MD&A highlights selected information and may not contain all of the information that is important to current or potential investors in our securities. You should read this Quarterly Report on Form 10-Q, together with the 2019 Annual Report, in their entirety for a more detailed description of events, trends, uncertainties, risks and critical accounting estimates affecting us.

AIG | First Quarter 2020 Form 10-Q 75

ITEM 2 | Executive Summary

AIG’S OPERATING STRUCTURE

Our Core businesses include General Insurance, Life and Retirement and Other Operations. General Insurance consists of two operating segments – North America and International. Life and Retirement consists of four operating segments – Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. Blackboard U.S. Holdings, Inc. (Blackboard), AIG’s technology-driven subsidiary, is reported within Other Operations. At the end of March 2020, AIG decided to place Blackboard into run-off. We also report a Legacy Portfolio consisting of our run-off insurance lines and legacy investments that we consider non-core. Effective February 2018, our Bermuda-domiciled composite reinsurer, Fortitude Reinsurance Company Ltd (Fortitude Re) is included in our Legacy Portfolio. In November 2019, we announced the sale of a controlling financial interest in Fortitude Holdings, the holding company for Fortitude Re (Majority Interest Fortitude Sale). Upon closing of the Majority Interest Fortitude Sale, AIG will have a 3.5 percent ownership interest in Fortitude Holdings. There can be no guarantee that we will receive the required regulatory approvals or that closing conditions will be satisfied in order to consummate the Majority Interest Fortitude sale.

Consistent with how we manage our business, our General Insurance North America operating segment primarily includes insurance businesses in the United States, Canada and Bermuda. Our General Insurance International operating segment includes regional insurance businesses in Japan, the UK, Europe, Asia Pacific, Latin America and Caribbean, Middle East and Africa, and China. General Insurance results are presented before consideration of internal reinsurance agreements.

For further discussion on our business segments see Note 3 to the Condensed Consolidated Financial Statements.

Business Segments

General Insurance General Insurance is a leading provider of insurance products and services for commercial and personal insurance customers. It includes one of the world’s most far-reaching property casualty networks. General Insurance offers a broad range of products to customers through a diversified, multichannel distribution network. Customers value General Insurance’s strong capital position, extensive risk management and claims experience and its ability to be a market leader in critical lines of the insurance business.	Life and Retirement Life and Retirement is a unique franchise that brings together a broad portfolio of life insurance, retirement and institutional products offered through an extensive, multichannel distribution network. It holds long-standing, leading market positions in many of the markets it serves in the U.S. With its strong capital position, customer-focused service, breadth of product expertise and deep distribution relationships across multiple channels, Life and Retirement is well positioned to serve growing market needs.
General Insurance includes the following major operating companies: National Union Fire Insurance Company of Pittsburgh, Pa. (National Union); American Home Assurance Company (American Home); Lexington Insurance Company (Lexington); AIG General Insurance Company, Ltd. (AIG Sonpo); AIG Asia Pacific Insurance, Pte, Ltd.; AIG Europe S.A.; American International Group UK Ltd.; Validus Reinsurance, Ltd. (Validus); Talbot Holdings Ltd.; Western World Insurance Group, Inc. and Glatfelter Insurance Group (Glatfelter).	Life and Retirement includes the following major operating companies: American General Life Insurance Company (American General Life); The Variable Annuity Life Insurance Company (VALIC); The United States Life Insurance Company in the City of New York (U.S. Life); Laya Healthcare Limited and AIG Life Limited.
Other Operations Other Operations consists of businesses and items not attributed to our General Insurance and Life and Retirement segments or our Legacy Portfolio. It includes AIG Parent; Blackboard; deferred tax assets related to tax attributes; corporate expenses and intercompany eliminations. At the end of March 2020, AIG decided to place Blackboard into run-off.	Legacy Portfolio Legacy Portfolio includes Legacy Life and Retirement Run-Off Lines, Legacy General Insurance Run-Off Lines, and Legacy Investments. Effective February 2018, Fortitude Re, our Bermuda-domiciled composite reinsurer, is included in our Legacy Portfolio. On November 25, 2019, we announced an agreement to sell a controlling financial interest in Fortitude Group Holdings, LLC (Fortitude Holdings), the reinsurer of the majority of AIG’s Legacy Portfolio, which we anticipate closing in mid-2020, subject to regulatory approvals.

76 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Executive Summary

Financial Performance Summary

Net Income Attributable To AIG Common Shareholders Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Net income attributable to AIG Common Shareholders increased due to: net realized capital gains in the first quarter of 2020 compared to net realized capital losses in the same period in the prior year; lower net loss reserve discount charge; and the impact of noncontrolling interest attributed to Fortitude Re results as discussed in Consolidated Results of Operations. This increase was partially offset by: lower investment returns due to losses in our hedge funds and fair value option equity security holdings due to significant global declines in equity markets in the first quarter of 2020, and losses in our fixed maturity securities for which the fair value option was elected due to a significant widening of credit spreads in the quarter. This compares to the same period in the prior year where we experienced gains in our hedge funds and fair value option equity security holdings as a result of robust returns in equity markets and gains in our fixed maturity securities for which the fair value option was elected due to a drop in rates and narrowing of credit spreads; higher catastrophe losses primarily due to the impact of COVID-19 and natural catastrophe losses; higher variable annuity amortization of DAC and SIA due to significantly weaker equity market performance; and asset impairment charges as a result of Blackboard being placed into run-off. For further discussion see Consolidated Results of Operations.

Adjusted Pre-Tax Income (Loss)* Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Adjusted pre-tax income decreased primarily due to: lower investment returns due to losses in our hedge funds due to significant global declines in equity markets in the first quarter of 2020, and losses in our fixed maturity securities for which the fair value option was elected due to a significant widening of credit spreads in the quarter. This compares to the same period in the prior year where we experienced gains in our hedge funds as a result of robust returns in equity markets and gains in our fixed maturity securities for which the fair value option was elected due to a drop in rates and narrowing of credit spreads; higher catastrophe losses primarily due to the impact of COVID-19 and natural catastrophe losses; and higher variable annuity amortization of DAC and SIA due to significantly weaker equity market performance.

*Non-GAAP measure – for reconciliation of Non-GAAP to GAAP measures see Consolidated Results of Operations.

AIG | First Quarter 2020 Form 10-Q 77

ITEM 2 | Executive Summary

General Operating and Other Expenses Three Months Ended March 31, (in millions)

2020 and 2019 Comparison General operating and other expenses increased primarily due to higher professional fees. General operating and other expenses for the first quarters of 2020 and 2019 included approximately $90 million and $47 million of pre-tax restructuring and other costs, respectively, which were primarily comprised of employee severance charges and other exit costs related to organizational simplification, operational efficiency, and business rationalization.

Return on Common Equity	Adjusted Return on Common Equity*

*Non-GAAP measure – for reconciliation of Non-GAAP to GAAP measures see Consolidated Results of Operations.

Book Value Per Common Share	Adjusted Book Value Per Common Share*

*Non-GAAP measure – for reconciliation of Non-GAAP to GAAP measures see Consolidated Results of Operations.

78 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Executive Summary

AIG’s Outlook – Industry and economic factors

Our business is affected by industry and economic factors such as interest rates, currency exchange rates, credit and equity market conditions, catastrophic claims events, regulation, tax policy, competition, and general economic, market and political conditions. We continued to operate under difficult market conditions in the first quarter of 2020, characterized by factors such as the impact of COVID-19 and the related governmental and societal responses, historically low interest rates, global economic contraction, global trade tensions and the UK’s withdrawal from its membership in the European Union (the EU) (commonly referred to as Brexit). Brexit has also affected the U.S. dollar/British pound exchange rate and increased the volatility of exchange rates among the Euro, British pound and the Japanese yen (the Major Currencies), which may continue for some time.

Impact of COVID-19

We are continually assessing the impact on our business, operations and investments of COVID-19 and the resulting ongoing and severe economic and societal disruption. Adverse impacts to the global economy resulting from the crisis, including a global economic contraction, disruptions in financial markets, increased market volatility and declines in equity and other asset prices have had and may continue to have negative effects on our investments, our access to liquidity, our ability to generate new sales and the costs associated with claims. In addition, in response to the crisis, new governmental, legislative and regulatory initiatives have been put in place and continue to be developed that could result in additional restrictions and requirements relating to our policies that may have a negative impact on our business operations and capital.

General Insurance offers numerous products for which we are monitoring claims activity and assessing adverse impact on future sales in relation to the COVID-19 crisis. General Insurance had $419 million of pre-tax catastrophe losses, net of reinsurance, in the first quarter of 2020. This included $272 million of estimated COVID-19 losses related to travel, contingency, commercial property, trade credit, workers’ compensation and Validus Re. The remainder of the catastrophe losses were primarily weather-related. We are continually reassessing our exposures in light of unfolding developments in the U.S. and globally and evaluating coverage by our reinsurance arrangements.

In our Life & Retirement business, the most significant impacts relating to COVID-19 have been the impact of interest rate and equity market levels on spread and fee income, deferred acquisition cost amortization and reserving requirements. We are actively monitoring our claims activity and the potential direct and indirect impacts that COVID-19 may have across our portfolio of Life & Retirement businesses.

We have a diverse investment portfolio with material exposures to various forms of credit risk. Because of the far reaching economic impacts of COVID-19, it is likely that there will be continued impact on the value of the portfolio however at this point in time, uncertainty surrounding the duration and severity of the downturn make the short-term or long-term financial impact of the crisis difficult to quantify.

For additional information please see Part II, Item 1A. Risk Factors — COVID-19 is adversely affecting, and is expected to continue to adversely affect, our business, financial condition and results of operations, and its ultimate impact will depend on future developments that are uncertain and cannot be predicted, including the scope and duration of the crisis and actions taken by governmental and regulatory authorities in response thereto.

Impact of Changes in the Interest Rate Environment

While many benchmark U.S. interest rates had risen to recent period highs in 2018, more recent concerns about global trade and potential weakness in U.S. economic expansion led to declining interest rates in 2019. In the first quarter of 2020, interest rates declined further in response to COVID-19 with key benchmark rates in the U.S. and in many developed markets close to historic lows and, in some international jurisdictions, negative. The low interest rate environment negatively affects sales of interest rate sensitive products in our industry and negatively impacts the profitability of our existing business as we reinvest cash flows from investments, including increased calls and prepayments of fixed maturity securities and mortgage loans, at rates below the average yield of our existing portfolios. On the other hand, if rates rise, some of these impacts may abate while there may be different impacts, some of which are highlighted below. We actively manage our exposure to the interest rate environment through portfolio selection and asset-liability management, including spread management strategies for our investment-oriented products and economic hedging of interest rate risk from guarantee features in our variable and fixed index annuities.

Additionally, sustained low interest rates may result in higher pension expense due to the impact on discounting of projected benefit cash flows.

The severe market impacts in the first quarter of 2020 have, however, resulted in an increase in credit spreads that partially offset the decrease in benchmark rates.

AIG | First Quarter 2020 Form 10-Q 79

ITEM 2 | Executive Summary

Annuity Sales and Surrenders

The sustained low interest rate environment has a significant impact on the annuity industry. Low long-term interest rates put pressure on investment returns, which may negatively affect sales of interest rate sensitive products and reduce future profits on certain existing fixed rate products. However, our disciplined rate setting has helped to mitigate some of the pressure on investment spreads. Rapidly rising interest rates could create the potential for increased sales, but may also drive higher surrenders. Customers are, however, currently buying fixed annuities with surrender charge periods, generally in the three-to-five year range, in pursuit of higher returns, which may help mitigate increased early surrenders in a rising rate environment. In addition, older contracts that have higher minimum interest rates and continue to be attractive to the contract holders have driven better than expected persistency in fixed annuities, although the reserves for such contracts have continued to decrease over time in amount and as a percentage of the total annuity portfolio. We will closely monitor surrenders of fixed annuities as contracts with lower minimum interest rates come out of the surrender charge period in a more attractive rate environment. Low interest rates have also driven growth in our fixed index annuity products, which provide additional interest crediting, tied to favorable performance in certain equity market indices and the availability of guaranteed living benefits. Changes in interest rates significantly impact the valuation of our liabilities for annuities with guaranteed income features and the value of the related hedging portfolio.

Reinvestment and Spread Management

We actively monitor fixed income markets, including the level of interest rates, credit spreads and the shape of the yield curve. We also frequently review our interest rate assumptions and actively manage the crediting rates used for new and in-force business. Business strategies continue to evolve to maintain profitability of the overall business in light of the interest rate environment. A low interest rate environment puts margin pressure on pricing of new business and on existing products, due to the challenge of investing new money or recurring premiums and deposits, and reinvesting investment portfolio cash flows, in the low interest rate environment. In addition, there is investment risk associated with future premium receipts from certain in-force business. Specifically, the investment of these future premium receipts may be at a yield below that required to meet future policy liabilities.

The contractual provisions for renewal of crediting rates and guaranteed minimum crediting rates included in products may reduce spreads in a sustained low interest rate environment and thus reduce future profitability. Although this interest rate risk is partially mitigated through the asset-liability management process, product design elements and crediting rate strategies, a sustained low interest rate environment may negatively affect future profitability.

For additional information on our investment and asset-liability management strategies see Investments.

For investment-oriented products in our Individual Retirement, Group Retirement, Life Insurance and Institutional Markets businesses, our spread management strategies include disciplined pricing and product design for new business, modifying or limiting the sale of products that do not achieve targeted spreads, using asset-liability management to match assets to liabilities to the extent practicable, and actively managing crediting rates to help mitigate some of the pressure on investment spreads. Renewal crediting rate management is done under contractual provisions that were designed to allow crediting rates to be reset at pre-established intervals in accordance with state and federal laws and subject to minimum crediting rate guarantees. We will continue to adjust crediting rates on in-force business to mitigate the pressure on spreads from declining base yields, but our ability to lower crediting rates may be limited by the competitive environment, contractual minimum crediting rates, and provisions that allow rates to be reset only at pre-established intervals. As interest rates rise, we may need to raise crediting rates on in-force business for competitive and other reasons potentially reducing the impact of investing in a higher interest rate environment.

Of the aggregate fixed account values of our Individual Retirement and Group Retirement annuity products, 67 percent were crediting at the contractual minimum guaranteed interest rate at March 31, 2020. The percentage of fixed account values of our annuity products that are currently crediting at rates above one percent was 61 percent at March 31, 2020 and December 31, 2019, respectively. These businesses continue to focus on pricing discipline and strategies to manage the minimum guaranteed interest crediting rates offered on new sales in the context of regulatory requirements and competitive positioning. In the core universal life business in our Life Insurance business, 73 percent of the account values were crediting at the contractual minimum guaranteed interest rate at March 31, 2020.

80 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Executive Summary

The following table presents fixed annuity and universal life account values of our Individual Retirement, Group Retirement and Life Insurance operating segments by contractual minimum guaranteed interest rate and current crediting rates:

	Current Crediting Rates
March 31, 2020			1-50 Basis		More than 50
Contractual Minimum Guaranteed	At Contractual		Points Above		Basis Points
Interest Rate	Minimum		Minimum		Above Minimum
(in millions)	Guarantee		Guarantee		Guarantee			Total
Individual Retirement*
<=1%	$	7,199	$	2,072	$	19,415	$	28,686
> 1% - 2%		5,294		66		1,786		7,146
> 2% - 3%		11,501		229		55		11,785
> 3% - 4%		8,962		41		6		9,009
> 4% - 5%		513		-		4		517
> 5% - 5.5%		34		-		5		39
Total Individual Retirement	$	33,503	$	2,408	$	21,271	$	57,182
Group Retirement*
1%	$	1,718	$	2,734	$	4,379	$	8,831
> 1% - 2%		5,646		800		373		6,819
> 2% - 3%		14,685		5		-		14,690
> 3% - 4%		781		-		-		781
> 4% - 5%		7,030		-		-		7,030
> 5% - 5.5%		169		-		-		169
Total Group Retirement	$	30,029	$	3,539	$	4,752	$	38,320
Universal life insurance
1%	$	-	$	-	$	-	$	-
> 1% - 2%		121		-		370		491
> 2% - 3%		593		531		800		1,924
> 3% - 4%		1,680		207		130		2,017
> 4% - 5%		3,086		-		37		3,123
> 5% - 5.5%		203		-		-		203
Total universal life insurance	$	5,683	$	738	$	1,337	$	7,758
Total	$	69,215	$	6,685	$	27,360	$	103,260
Percentage of total		67	%	6	%	27	%	100	%

*Individual Retirement and Group Retirement amounts shown include fixed options within variable annuity products.

General Insurance

The impact of low interest rates on our General Insurance segment is primarily on our long-tail Casualty line of business. We currently expect limited impacts on our existing long-tail Casualty business as the duration of our assets is slightly longer than that of our liabilities. Sustained low interest rates would potentially impact new and renewal business for the long-tail Casualty line as we may not be able to adjust our future pricing consistent with our profitability objectives to fully offset the impact of investing at lower rates. However, we will continue to maintain pricing discipline and risk selection.

In addition, for our General Insurance segment and General Insurance Run-Off Lines reported within the Legacy Portfolio, sustained low interest rates may unfavorably affect the net loss reserve discount for workers’ compensation, and to a lesser extent could favorably impact assumptions about future medical costs, the combined net effect of which could result in higher net loss reserves.

AIG | First Quarter 2020 Form 10-Q 81

ITEM 2 | Executive Summary

Standard of Care Developments

In our Life and Retirement business, we and our distributors are subject to laws and regulations regarding the standard of care applicable to sales of our products and the provision of advice to our customers. In recent years, many of these laws and regulations have been revised or reexamined while others have been newly adopted. We continue to closely follow these legislative and regulatory activities. For additional information regarding these legislative and regulatory activities, see Item 1. Business – Regulation – U.S. Regulation – Standard of Care Developments in the 2019 Annual Report. Changes in standard of care requirements or new standards issued by governmental authorities, such as the Department of Labor, the SEC, the National Association of Insurance Commissioners (NAIC) or state regulators and/or legislators, may affect our businesses, results of operations and financial condition. While we cannot predict the long-term impact of these legislative and regulatory developments on our Life and Retirement businesses, we believe our diverse product offerings and distribution relationships position us to compete effectively in this evolving marketplace.

Impact of Currency Volatility

Currency volatility remains acute. Such volatility affected line item components of income for those businesses with substantial international operations. In particular, growth trends in net premiums written reported in U.S. dollars can differ significantly from those measured in original currencies. The net effect on underwriting results, however, is significantly mitigated, as both revenues and expenses are similarly affected.

These currencies may continue to fluctuate, in either direction, especially as a result of the UK’s announced exit from the EU, and such fluctuations will affect net premiums written growth trends reported in U.S. dollars, as well as financial statement line item comparability.

General Insurance businesses are transacted in most major foreign currencies. The following table presents the average of the quarterly weighted average exchange rates of the Major Currencies, which have the most significant impact on our businesses:

Three Months Ended March 31,			Percentage
Rate for 1 USD	2020	2019	Change
Currency:
GBP	0.77	0.78	(2)	%
EUR	0.91	0.88	3	%
JPY	109.45	110.50	(1)	%

Unless otherwise noted, references to the effects of foreign exchange in the General Insurance discussion of results of operations are with respect to movements in the Major Currencies included in the preceding table.

Other Industry Developments

On September 7, 2017, the UK Ministry of Justice announced a proposal to increase the Ogden rate from negative 0.75 percent to between zero and one percent. Following this announcement, on December 20, 2018 the UK Parliament passed the Civil Liability Act 2018 which implements a new framework for determining the Ogden rate and requires the UK Ministry of Justice to start a review of the Ogden rate within 90 days of its commencement and review periodically thereafter. The Ministry of Justice concluded a public call for evidence on January 30, 2019 prior to beginning its first review. On July 15, 2019, the UK Ministry of Justice announced a change in the Ogden rate from negative 0.75 percent to negative 0.25 percent with an effective date of August 5, 2019.

82 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Consolidated Results of Operations

Consolidated Results of Operations

The following section provides a comparative discussion of our Consolidated Results of Operations on a reported basis for the three-month periods ended March 31, 2020 and 2019. Factors that relate primarily to a specific business are discussed in more detail within the business segment operations section.

For a discussion of the Critical Accounting Estimates that affect our results of operations see the Critical Accounting Estimates section of this MD&A and Part II, Item 7. MD&A — Critical Accounting Estimates in the 2019 Annual Report.

The following table presents our consolidated results of operations and other key financial metrics:

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Revenues:
Premiums	$	7,443	$	8,070	(8)	%
Policy fees		755		735	3
Net investment income		2,508		3,879	(35)
Net realized capital gains (losses)		3,519		(446)	NM
Other income		218		218	-
Total revenues		14,443		12,456	16
Benefits, losses and expenses:
Policyholder benefits and losses incurred		6,325		6,679	(5)
Interest credited to policyholder account balances		957		940	2
Amortization of deferred policy acquisition costs		1,862		1,289	44
General operating and other expenses		2,153		2,053	5
Interest expense		355		349	2
(Gain) loss on extinguishment of debt		17		(2)	NM
Net (gain) loss on sale or disposal of divested businesses		216		(6)	NM
Total benefits, losses and expenses		11,885		11,302	5
Income (loss) from continuing operations before
income tax expense (benefit)		2,558		1,154	122
Income tax expense (benefit)		904		217	317
Income (loss) from continuing operations		1,654		937	77
Income (loss) from discontinued operations,
net of income taxes		-		-	NM
Net income (loss)		1,654		937	77
Less: Net income (loss) attributable to
noncontrolling interests		(95)		283	NM
Net income (loss) attributable to AIG		1,749		654	167
Less: Dividends on preferred stock		7		-	NM
Net income (loss) attributable to AIG common
shareholders	$	1,742	$	654	166	%

	March 31,			December 31,
(in millions, except per common share data)		2020		2019
Balance sheet data:
Total assets	$	510,477	$	525,064
Long-term debt and debt of consolidated investment entities		35,410		35,350
Total AIG shareholders’ equity		60,173		65,675
Book value per common share		69.30		74.93
Book value per common share, excluding AOCI		70.45		69.20
Adjusted book value per common share		60.55		58.89

AIG | First Quarter 2020 Form 10-Q 83

ITEM 2 | Consolidated Results of Operations

The following table presents a reconciliation of Book value per common share to Book value per common share, excluding AOCI and Book value per common share, excluding AOCI and DTA (Adjusted book value per common share), which are non-GAAP measures. For additional information see Use of Non-GAAP Measures.

		March 31,		December 31,
(in millions, except per common share data)		2020		2019
Total AIG shareholders' equity	$	60,173	$	65,675
Preferred equity		485		485
Total AIG common shareholders' equity		59,688		65,190
Accumulated other comprehensive income (loss)		(994)		4,982
Total AIG common shareholders' equity, excluding AOCI		60,682		60,208
Deferred tax assets		8,535		8,977
Adjusted common shareholders' equity	$	52,147	$	51,231
Total common shares outstanding		861,290,608		869,999,031
Book value per common share	$	69.30	$	74.93
Book value per common share, excluding AOCI		70.45		69.20
Adjusted book value per common share		60.55		58.89

The following table presents a reconciliation of Return on common equity to Adjusted return on common equity, which is a non-GAAP measure. For additional information see Use of Non-GAAP Measures.

	Three Months Ended						Year Ended
	March 31,						December 31,
(dollars in millions)		2020			2019			2019
Actual or annualized net income attributable to AIG common shareholders	$	6,968		$	2,616		$	3,326
Actual or annualized adjusted after-tax income attributable to AIG common shareholders		396			5,552			4,084
Average AIG common shareholders' equity	$	62,439		$	58,332		$	62,205
Average AOCI		1,994			358			3,261
Average AIG common shareholders' equity, excluding average AOCI		60,445			57,974			58,944
Average DTA		8,756			10,040			9,605
Average adjusted AIG common shareholders' equity	$	51,689		$	47,934		$	49,339
Return on common equity		11.2	%		4.5	%		5.3	%
Adjusted return on common equity		0.8	%		11.6	%		8.3	%

84 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Consolidated Results of Operations

The following table presents a reconciliation of pre-tax income/net income (loss) attributable to AIG to adjusted pre-tax income/adjusted after-tax income attributable to AIG:

Three Months Ended March 31,	2020								2019
			Total Tax		Non-						Total Tax		Non-
			(Benefit)		controlling			After			(Benefit)		controlling			After
(in millions, except per common share data)	Pre-tax		Charge		Interests(b)			Tax	Pre-tax		Charge		Interests(b)			Tax
Pre-tax income/net income
including noncontrolling interests	$	2,558	$	904	$	-	$	1,654	$	1,154	$	217	$	-	$	937
Noncontrolling interests						95		95						(283)		(283)
Pre-tax income/net income
attributable to AIG	$	2,558	$	904	$	95	$	1,749	$	1,154	$	217	$	(283)	$	654
Dividends on preferred stock								7								-
Net income attributable to AIG
common shareholders							$	1,742							$	654
Changes in uncertain tax positions and
other tax adjustments				(5)		-		5				12		-		(12)
Deferred income tax valuation allowance
(releases) charges				(283)		-		283				38		-		(38)
Changes in fair value of securities used to
hedge guaranteed living benefits		7		2		-		5		(96)		(20)		-		(76)
Changes in benefit reserves and DAC, VOBA and
SIA related to net realized capital gains (losses)		538		113		-		425		(99)		(21)		-		(78)
Changes in the fair value of equity securities		191		40		-		151		(79)		(17)		-		(62)
Favorable prior year development and
related amortization changes ceded under
retroactive reinsurance agreements		(8)		(2)		-		(6)		(27)		(5)		-		(22)
(Gain) loss on extinguishment of debt		17		4		-		13		(2)		(1)		-		(1)
Net realized capital (gains) losses(a)		(3,502)		(767)		-		(2,735)		474		109		-		365
(Income) loss from divested businesses		216		45		-		171		(6)		(1)		-		(5)
Non-operating litigation reserves and settlements		(6)		(1)		-		(5)		1		1		-		-
Net loss reserve discount (benefit) charge		56		12		-		44		473		99		-		374
Integration and transaction costs
associated with acquired businesses		2		-		-		2		7		2		-		5
Restructuring and other costs		90		19		-		71		47		10		-		37
Professional fees related to regulatory or
accounting changes		13		3		-		10		-		-		-		-
Noncontrolling interests primarily related to
net realized capital gains (losses) of
Fortitude Holdings' standalone results(b)						(77)		(77)						247		247
Adjusted pre-tax income/Adjusted
after-tax income (loss) attributable to
AIG common shareholders	$	172	$	84	$	18	$	99	$	1,847	$	423	$	(36)	$	1,388
Weighted average diluted shares outstanding								878.9								877.5
Income (loss) per common share attributable
to AIG common shareholders (diluted)							$	1.98							$	0.75
Adjusted after-tax income per common
share attributable to AIG common
shareholders (diluted)							$	0.11							$	1.58

(a)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.

AIG | First Quarter 2020 Form 10-Q 85

ITEM 2 | Consolidated Results of Operations

(b)Noncontrolling interests is primarily due to the 19.9 percent investment in Fortitude Holdings by an affiliate of The Carlyle Group L.P. (Carlyle), which occurred in the fourth quarter of 2018. Carlyle is allocated 19.9 percent of Fortitude Holdings’ standalone financial results. Fortitude Holdings’ results are mostly eliminated in AIG’s consolidated income from continuing operations given that its results arise from intercompany transactions. Noncontrolling interests is calculated based on the standalone financial results of Fortitude Holdings. The most significant component of Fortitude Holdings’ standalone results is the change in fair value of the embedded derivatives which changes with movements in interest rates and credit spreads, and which is recorded in net realized capital gains and losses of Fortitude Holdings. In accordance with AIG's adjusted after-tax income definition, realized capital gains and losses are excluded from noncontrolling interests.

Fortitude Holdings’ summarized financial information (standalone results) is presented below:

	2020				2019
Three Months Ended March 31,		Fortitude	AIG Noncontrolling			Fortitude		AIG Noncontrolling
(in millions)		Holdings		Interest		Holdings		Interest
Revenues	$	230	$	46	$	606	$	121
Expenses		458		91		472		94
Adjusted pre-tax income (loss)		(228)		(45)		134		27
Taxes on adjusted pre-tax income (loss)		(48)		(10)		28		6
Adjusted after-tax income (loss), excluding realized capital gains (losses)		(180)		(35)		106		21
Net realized capital gains (losses)		(489)		(97)		1,573		313
Taxes on realized capital gains (losses)		(103)		(20)		330		66
After-tax net realized capital gains (losses)		(386)		(77)		1,243		247
Net income (loss)	$	(566)	$	(112)	$	1,349	$	268

first quarter pre-tax income Comparison for 2020 and 2019

Pre-tax income increased in the first quarter of 2020 compared to the first quarter of 2019 primarily due to:

Net realized capital gains in the first quarter of 2020 compared to net realized capital losses in the first quarter of 2019 due to:

–Life and Retirement guaranteed living benefits, net of hedges, which reflected net realized capital gains in the first quarter of 2020 compared to net realized capital losses in the first quarter of 2019, primarily due to changes in the movement in the non-performance or “own credit” risk adjustment (NPA), which is not hedged as part of our economic hedging program (see Insurance Reserves – Life and Annuity Reserves and DAC – Variable Annuity Guaranteed Benefits and Hedging Results);

–net realized capital gains in the first quarter of 2020 on foreign exchange hedges compared to net realized capital losses in the first quarter of 2019 due to the U.S. dollar appreciating against the euro and the British pound; and

–net realized capital gains in the first quarter of 2020 on interest rate hedges compared to net realized capital losses in the first quarter of 2019 due to the decline in interest rates.

lower net loss reserve discount charge.

This increase was partially offset by:

lower investment returns due to losses in our hedge funds and fair value option equity security holdings due to significant global declines in equity markets in the first quarter of 2020, and losses from fixed maturity securities for which the fair value option was elected due to a significant widening of credit spreads in the current quarter. This compares to the same period in the prior year where we experienced gains in our hedge funds and fair value option equity security holdings as a result of robust returns in equity markets and gains in our fixed maturity securities for which the fair value option was elected due to a drop in rates and narrowing of credit spreads; and

higher catastrophe losses primarily due to the impact of COVID-19 and natural catastrophe losses;

higher variable annuity amortization of DAC and SIA due to significantly weaker equity market performance; and

asset impairment charges as a result of Blackboard being placed into run-off.

86 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Consolidated Results of Operations

RECENT U.S. Tax law changes

On December 22, 2017, the U.S. enacted Public Law 115-97, known informally as the Tax Act. The Tax Act includes provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries and for Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies. While the U.S. tax authorities issued formal guidance, including recently issued proposed and final regulations for BEAT and other provisions of the Tax Act, there are still certain aspects of the Tax Act that remain unclear and subject to substantial uncertainties. Additional guidance is expected in future periods. Such guidance may result in changes to the interpretations and assumptions we made and actions we may take, which may impact amounts recorded with respect to international provisions of the Tax Act, possibly materially. Consistent with accounting guidance, we treat BEAT as a period tax charge in the period the tax is incurred and have made an accounting policy election to treat GILTI taxes in a similar manner.

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to mitigate the economic impacts of the COVID-19 crisis. AIG does not expect the tax provisions of the CARES Act to have a material impact on AIG’s U.S. federal tax liabilities.

Repatriation Assumptions

For 2020, we consider our foreign earnings with respect to certain operations in Canada, South Africa, the Far East, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested. Given the uncertainties around the impact from the COVID-19 crisis, including the significant global economic slowdown and general market decline, we continue to monitor and review the impact on our reinvestment considerations, including regulatory oversight in the relevant jurisdictions.

Interim Tax Calculation Method

We use the estimated annual effective tax rate method in computing our interim tax provision. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions and are recorded in the period in which the change occurs. While certain impacts of the Tax Act are included in our annual effective tax rate, we continue to refine our calculations as additional information becomes available, which may result in changes to the estimated annual effective tax rate. As of March 31, 2020, the annual effective tax rate includes the tax effects of actual and projected COVID-19 related losses and market developments.

Income Tax expense analysis

For the three-month period ended March 31, 2020, the effective tax rate on income from continuing operations was 35.3 percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 21 percent primarily due to tax charges associated with the establishment of U.S. federal valuation allowance related to a portion of our foreign tax credit and separate return limitation year (SRLY) net operating loss carryforwards, accrual of interest associated with IRS and other tax authority matters, the effect of foreign operations, state and local income taxes, excess tax charges related to share based compensation payments recorded through the income statement, and non-deductible transfer pricing charges, partially offset by tax benefits associated with tax exempt income, and reclassifications from accumulated other comprehensive income to income from continuing operations related to the disposal of available for sale securities. The effect of foreign operations is primarily related to income in our foreign operations taxed at statutory tax rates higher than 21 percent, other foreign taxes, and foreign income subject to U.S. taxation.

For the three-month period ended March 31, 2019, the effective tax rate on income from continuing operations was 18.8 percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 21 percent primarily due to tax benefits associated with tax exempt income, reclassifications from accumulated other comprehensive income to income from continuing operations related to the disposal of available for sale securities, and valuation allowance activity related to certain foreign subsidiaries, partially offset by tax charges associated with the effect of foreign operations, state and local income taxes, a net tax charge related to the accrual of IRS interest, excess tax charges related to share based compensation payments recorded through the income statement, and non-deductible transfer pricing charges. The effect of foreign operations is primarily related to income in our foreign operations taxed at statutory tax rates higher than 21 percent, other foreign taxes, and foreign income subject to U.S. taxation.

AIG | First Quarter 2020 Form 10-Q 87

ITEM 2 | Business Segment Operations

Business Segment Operations

Our business operations consist of General Insurance, Life and Retirement, Other Operations, and a Legacy Portfolio.

General Insurance consists of two operating segments: North America and International. Life and Retirement consists of four operating segments: Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. Other Operations consists of businesses and items not allocated to our other businesses, which are primarily AIG Parent and Blackboard. At the end of March 2020, AIG decided to place Blackboard into run-off. Our Legacy Portfolio consists of our Legacy Life and Retirement Run-Off Lines, Legacy General Insurance Run-Off Lines, and Legacy Investments. Effective February 2018, Fortitude Re is included in our Legacy Portfolio.

The following table summarizes Adjusted pre-tax income (loss) from our business segment operations. See also Note 3 to the Condensed Consolidated Financial Statements.

Three Months Ended March 31,
(in millions)		2020		2019
Core business:
General Insurance
North America	$	409	$	934
International		92		334
General Insurance		501		1,268
Life and Retirement
Individual Retirement		306		508
Group Retirement		143		232
Life Insurance		55		116
Institutional Markets		70		68
Life and Retirement		574		924
Other Operations		(451)		(387)
Consolidations, eliminations and other adjustments		(84)		(70)
Total Core		540		1,735
Legacy Portfolio		(368)		112
Adjusted pre-tax income	$	172	$	1,847

88 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | General Insurance

General Insurance

General Insurance is managed by our geographic markets of North America and International. Our global presence is reflected in our multinational capabilities to provide our Commercial Lines and Personal Insurance products within these geographic markets.

PRODUCTS AND DISTRIBUTION
Liability: Products include general liability, environmental, commercial automobile liability, workers’ compensation, excess casualty and crisis management insurance products. Casualty also includes risk- sharing and other customized structured programs for large corporate and multinational customers. Financial Lines: Products include professional liability insurance for a range of businesses and risks, including directors and officers, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance. Property: Products include commercial and industrial property insurance products and services that cover exposures to man-made and natural disasters, including business interruption. Special Risks: Products include aerospace, political risk, trade credit, portfolio solutions, energy-related property insurance products, surety, marine and crop insurance. Personal Lines: Products include personal auto and property in selected markets and insurance for high net worth individuals offered through AIG Private Client Group in the U.S. that covers auto, homeowners, umbrella, yacht, fine art and collections. In addition, we offer extended warranty insurance and services covering electronics, appliances, and HVAC. Accident & Health: Products include voluntary and sponsor-paid personal accident and supplemental health products for individuals, employees, associations and other organizations, as well as a broad range of travel insurance products and services for leisure and business travelers.
General Insurance products in North America and International markets are distributed through various channels, including captive and independent agents, brokers, affinity partners, airlines and travel agents, and retailers. Our distribution network is aided by our competitive position to write multiple-national and cross-border risks in both Commercial Lines and Personal Insurance.

BUSINESS STRATEGY

Profitable Growth: Deploy capital efficiently to act opportunistically and optimize diversity within the portfolio to grow in profitable lines, geographies and customer segments. Look to inorganic growth opportunities in profitable markets and segments to expand our capabilities and footprint.

Reinsurance Optimization: Strategically partner with reinsurers to reduce exposure to losses arising from frequency of large catastrophic events and the severity from individual risk losses. We strive to optimize our reinsurance program to manage volatility and protect the balance sheet from tail events and unpredictable net losses in support of our profitable growth objectives.

Underwriting Excellence: Empower and increase accountability of the underwriter and continue to integrate underwriting, claims and actuarial to enable better decision making. Focus on enhancing risk selection, driving consistent underwriting best practices and building robust monitoring standards to improve underwriting results.

AIG | First Quarter 2020 Form 10-Q 89

ITEM 2 | Business Segment Operations | General Insurance

COMPETITION and challenges

Operating in a highly competitive industry, General Insurance competes against several hundred companies, specialty insurance organizations, mutual companies and other underwriting organizations in the U.S. In international markets, we compete for business with the foreign insurance operations of large global insurance groups and local companies in specific market areas and product types. Insurance companies compete through a combination of risk acceptance criteria, product pricing, service and terms and conditions. General Insurance seeks to distinguish itself in the insurance industry primarily based on its well-established brand, global franchise, multinational capabilities, financial and capital strength, innovative products, claims expertise to handle complex claims, expertise in providing specialized coverages and customer service.

We serve our business and individual customers on a global basis — from the largest multinational corporations to local businesses and individuals. Our clients benefit from our substantial underwriting expertise.

Our challenges include:

long-tail Commercial Lines exposures that create added challenges to pricing and risk management;

over-capacity in certain lines of business that creates downward market pressure on pricing;

tort environment volatility in certain jurisdictions and lines of business; and

volatility in claims arising from natural and man-made catastrophes, including public health events, such as the COVID-19 crisis.

OUTLOOK—INDUSTRY AND ECONOMIC FACTORS

Below is a discussion of the industry and economic factors impacting our operating segments:

The impact of COVID-19 is evolving rapidly and will depend upon the scope and duration of the crisis as well as the actions taken by governments, regulators and other third parties in response, all of which are highly uncertain at this time. The results for the first quarter of 2020 include COVID-19 related impacts to both our estimate for catastrophe losses as well as our investment returns, most prominently in our alternative investment portfolio. The impact of COVID-19 on our earned premium was not material this quarter given the timing of the significant global economic slowdown. The recessionary impact of COVID-19 could adversely affect our clients, particularly in certain industry segments where demand is likely to drop significantly. The impact of COVID-19 on our business will depend on how long the government-mandated safety precautions, including “stay at home” orders, are in place and how quickly and in what manner economic activity rebounds. Certain government-mandated safety precautions, such as the “stay at home” orders could benefit our claims experience as certain loss events may become less likely as economic and social activity are suppressed. The regulatory approach to the crisis and impact on the insurance industry is also developing, which adds to the uncertainty we are facing.

General Insurance – North America

Commercial Lines over recent years has experienced challenging market conditions, with widespread excess capacity increasing competition and suppressing rates across multiple classes of business. However, in more recent periods we are seeing growing market support for rate increases in challenged segments where major carriers are reducing their risk appetite and market capacity is contracting as a result. We are seeing rate increases across U.S. Financial Lines and Liability segments (outside of workers’ compensation), with a common driver being higher industry-wide claims severity trends, as well as within our Property and Specialty portfolios. We continue to achieve positive rate increases across a number of lines and classes of business as a result of our disciplined underwriting strategy and focus on risk selection. Despite the higher rates, our retention of business remains consistent with historical levels and in certain instances has increased. These retention rates are often coupled with a reduction in our limits due to our exposure management strategy. Further, we continue to achieve growth in several of our Commercial Lines high margin businesses, although these market segments remain highly competitive.

Personal Insurance growth prospects are supported by the need for full life cycle products and coverage, increases in personal wealth accumulation, and awareness of insurance protection and risk management. We compete in the high net worth market, accident and health insurance, travel insurance, and warranty services and will continue to expand our innovative products and services to distribution partners and clients.

General Insurance – International

We believe our global presence provides Commercial Lines and Personal Insurance a distinct competitive advantage, as the demand for multinational cross-border coverage and services increases due to the growing number of international customers, while giving us the ability to respond quickly to local market conditions and build client relationships.

90 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | General Insurance

The Commercial Lines market continues to be highly competitive, due to increased market capacity and ample availability of capital. Despite this, we continue to grow our most profitable segments and diversify our portfolio across all regions by expanding into new product lines (e.g., cyber), new client segments (e.g., middle market) and new distribution channels (e.g., digital and national brokers) while remaining a market leader in key developed and developing markets. Overall, Commercial lines are showing positive rate increases in selective products and markets where market events or withdrawal of capability have favorably impacted pricing. We are maintaining our underwriting discipline, reducing gross and net limits, increasing use of reinsurance to reduce volatility, as well as continuing our risk selection strategy to improve profitability.

Personal Insurance focuses on individual customers, as well as group and corporate clients. Although market competition within Personal Insurance has increased, we continue to benefit from the underwriting quality, portfolio diversity, and generally low volatility of the short-tailed risk in these business lines, although some product classes are exposed to catastrophe losses.

General INSURANCE RESULTS

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Underwriting results:
Net premiums written	$	5,921	$	6,033	(2)	%
Decrease in unearned premiums		158		680	(77)
Net premiums earned		6,079		6,713	(9)
Losses and loss adjustment expenses incurred(a)		4,059		4,233	(4)
Acquisition expenses:
Amortization of deferred policy acquisition costs		986		1,159	(15)
Other acquisition expenses		345		303	14
Total acquisition expenses		1,331		1,462	(9)
General operating expenses		776		839	(8)
Underwriting income (loss)		(87)		179	NM
Net investment income		588		1,089	(46)
Adjusted pre-tax income	$	501	$	1,268	(60)	%

Loss ratio(a)	66.8	63.1	3.7
Acquisition ratio	21.9	21.8	0.1
General operating expense ratio	12.8	12.5	0.3
Expense ratio	34.7	34.3	0.4
Combined ratio(a)	101.5	97.4	4.1
Adjustments for accident year loss ratio, as adjusted
and accident year combined ratio, as adjusted:
Catastrophe losses and reinstatement premiums	(6.9)	(2.7)	(4.2)
Prior year development, net of (additional) return premium on loss sensitive business	0.9	1.0	(0.1)
Adjustment for ceded premiums under reinsurance contracts related to prior accident years and other	-	0.4	NM
Accident year loss ratio, as adjusted	60.8	61.8	(1.0)
Accident year combined ratio, as adjusted	95.5	96.1	(0.6)

(a)Consistent with our definition of APTI, excludes net loss reserve discount and the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.

The following table presents General Insurance net premiums written by operating segment, showing change on both reported and constant dollar basis:

Three Months Ended March 31,					Percentage Change in
(in millions)		2020		2019	U.S. dollars		Original Currency
North America	$	2,770	$	2,578	7	%	8	%
International		3,151		3,455	(9)		(8)
Total net premiums written	$	5,921	$	6,033	(2)	%	(2)	%

AIG | First Quarter 2020 Form 10-Q 91

ITEM 2 | Business Segment Operations | General Insurance

The following tables present General Insurance accident year catastrophes by geography^(a) and number of events:

Catastrophes^(b)

	# of			North
(in millions)	Events			America		International		Total
Three Months Ended March 31, 2020
Flooding and rainstorms	2		$	17	$	10	$	27
Windstorms and hailstorms	4			49		45		94
Earthquakes	2			16		10		26
COVID-19	N/A	(c)		123		149		272
Total catastrophe-related charges	8		$	205	$	214	$	419
Three Months Ended March 31, 2019
Flooding and rainstorms	1		$	-	$	10	$	10
Windstorms and hailstorms	4			158		7		165
Total catastrophe-related charges	5		$	158	$	17	$	175

(a)Geography: North America primarily includes insurance businesses in the United States, Canada and Bermuda. International includes regional insurance businesses in Japan, the UK, Europe, Asia Pacific, Latin America and Caribbean, Middle East and Africa, and China. General Insurance results are presented before consideration of internal reinsurance agreements.

(b)Natural catastrophe losses are generally weather or seismic events having a net impact on AIG in excess of $10 million each and man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million threshold.

(c)As COVID-19 continues to evolve and affects many lines of business, the number of events is yet to be determined.

North america Results

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Underwriting results:
Net premiums written	$	2,770	$	2,578	7	%
Decrease in unearned premiums		149		575	(74)
Net premiums earned		2,919		3,153	(7)
Losses and loss adjustment expenses incurred(a)		2,108		2,189	(4)
Acquisition expenses:
Amortization of deferred policy acquisition costs		444		508	(13)
Other acquisition expenses		127		106	20
Total acquisition expenses		571		614	(7)
General operating expenses		326		361	(10)
Underwriting loss		(86)		(11)	NM
Net investment income		495		945	(48)
Adjusted pre-tax income	$	409	$	934	(56)	%

Loss ratio(a)	72.2	69.4	2.8
Acquisition ratio	19.6	19.5	0.1
General operating expense ratio	11.2	11.4	(0.2)
Expense ratio	30.8	30.9	(0.1)
Combined ratio(a)	103.0	100.3	2.7
Adjustments for accident year loss ratio, as adjusted
and accident year combined ratio, as adjusted:
Catastrophe losses and reinstatement premiums	(7.0)	(5.1)	(1.9)
Prior year development, net of (additional) return premium on loss sensitive business	0.2	1.8	(1.6)
Adjustment for ceded premiums under reinsurance contracts related to prior accident years and other	-	1.0	NM
Accident year loss ratio, as adjusted	65.4	67.1	(1.7)
Accident year combined ratio, as adjusted	96.2	98.0	(1.8)

(a)Consistent with our definition of APTI, excludes net loss reserve discount and the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.

92 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | General Insurance

Business and Financial Highlights

The North America General Insurance business continues to make progress in strengthening our underwriting, actively managing our portfolio to improve business mix and articulating our revised risk appetite to the marketplace. We are leading the industry across a number of lines in terms of driving rate momentum to improve rate adequacy while simultaneously increasing the level of business retained. As we see increasing disruption in the marketplace, we are well placed to capitalize on opportunities, including within our excess and surplus business which is seeing an increase in submission flow and achieving significant rate change.

Adjusted pre-tax income decreased in the first quarter of 2020 compared to the same period in the prior year primarily due to lower net investment income, higher catastrophe losses primarily due to the impact of COVID-19 and lower favorable prior year loss reserve development, partially offset by improvements in the core business as evidenced by the lower current accident year loss ratio, as adjusted and lower general operating expense reflecting ongoing expense discipline.

Net premiums written increased in the first quarter of 2020 compared to the same period in the prior year primarily due to business growth and strong Commercial lines rate increases despite late quarter reduction in premiums due to the impact of COVID-19, partially offset by underwriting actions taken through 2019.

For a discussion of 2020 reinsurance programs see Part II, Item 7 MD&A - Enterprise Risk Management in our 2019 Annual Report.

North America Adjusted Pre-Tax Income Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Adjusted pre-tax income decreased primarily due to: decrease in net investment income reflecting loss on alternative investments, driven by hedge funds and lower income on fixed income securities; higher catastrophe losses primarily due to the impact of COVID-19; and lower favorable prior year loss reserve development. These decreases were partially offset by: the lower accident year loss ratio, as adjusted primarily driven by improved business mix, strong premium rate increases, as well as benefits from underwriting actions in 2019; and lower general operating expense reflecting ongoing expense discipline.

AIG | First Quarter 2020 Form 10-Q 93

ITEM 2 | Business Segment Operations | General Insurance

North America Net Premiums Written Three Months Ended March 31, (in millions)
	2020 and 2019 Comparison Net premiums written increased primarily due to: growth in our assumed reinsurance business, Retail and Wholesale Property as well as strong Commercial lines rate increases. This increase was partially offset by: lower production primarily due to underwriting actions taken through 2019.

North America Combined Ratios Three Months Ended March 31,

2020 and 2019 Comparison The increase in the combined ratio reflected an increase in the loss ratio slightly offset by a decrease in the general operating expense ratio. The increase in the loss ratio reflected: lower favorable prior year loss reserve development; and higher catastrophe losses primarily due to the impact of COVID-19. These increases in the loss ratio were partially offset by a lower accident year loss ratio, as adjusted primarily driven by improved business mix, strong rate increases, as well as benefits from underwriting actions taken in 2019. The decrease in the general operating expense ratio reflected ongoing expense discipline.

94 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | General Insurance

International Results

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Underwriting results:
Net premiums written	$	3,151	$	3,455	(9)	%
Decrease in unearned premiums		9		105	(91)
Net premiums earned		3,160		3,560	(11)
Losses and loss adjustment expenses incurred		1,951		2,044	(5)
Acquisition expenses:
Amortization of deferred policy acquisition costs		542		651	(17)
Other acquisition expenses		218		197	11
Total acquisition expenses		760		848	(10)
General operating expenses		450		478	(6)
Underwriting income (loss)		(1)		190	NM
Net investment income		93		144	(35)
Adjusted pre-tax income	$	92	$	334	(72)	%

Loss ratio	61.7	57.4	4.3
Acquisition ratio	24.1	23.8	0.3
General operating expense ratio	14.2	13.4	0.8
Expense ratio	38.3	37.2	1.1
Combined ratio	100.0	94.6	5.4
Adjustments for accident year loss ratio, as adjusted
and accident year combined ratio, as adjusted:
Catastrophe losses and reinstatement premiums	(6.7)	(0.5)	(6.2)
Prior year development, net of (additional) return premium on loss sensitive business	1.4	0.4	1.0
Adjustment for ceded premiums under reinsurance contracts related to prior accident years	-	-	NM
Accident year loss ratio, as adjusted	56.4	57.3	(0.9)
Accident year combined ratio, as adjusted	94.7	94.5	0.2

Business and Financial Highlights

The International General Insurance business is focused on underwriting profits and improved efficiency, further improving underwriting margins, and growing profitably in segments and geographies that support our growth strategy.

Adjusted pre-tax income decreased in the first quarter of 2020 compared to the same period in the prior year primarily due to higher catastrophe losses (due to the combination of COVID-19 and natural catastrophe losses), as well as lower net investment income partially offset by more favorable prior year loss development. The accident year loss ratio, as adjusted continued to improve reflecting the better premium rate environment, underwriting improvements and better risk selection.

Net premiums written, excluding the impact of foreign exchange, decreased in the first quarter of 2020 compared to the same period in the prior year primarily due to lower production primarily due to underwriting actions taken through 2019 as well as lower premiums from run-off business, partially offset by premium rate increases.

For a discussion of 2020 reinsurance programs see Part II, Item 7 MD&A - Enterprise Risk Management in our 2019 Annual Report.

AIG | First Quarter 2020 Form 10-Q 95

ITEM 2 | Business Segment Operations | General Insurance

International Adjusted Pre-Tax Income (Loss) Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Adjusted pre-tax Income decreased primarily due to: higher catastrophe losses (due to the combination of COVID-19 and natural catastrophe losses); and lower net investment income from fixed income securities. The above decreases were partially offset by slightly more favorable prior year loss development and an improvement in the accident year loss ratio, as adjusted reflecting premium rate increases, benefits from underwriting actions and better risk selection.

International Net Premiums Written Three Months Ended March 31, (in millions)
	2020 and 2019 Comparison Net premiums written, excluding the impact of foreign exchange, decreased due to: lower production primarily due to underwriting actions taken through 2019 partially offset by premium rate increases; and lower premiums from run-off business.

96 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | General Insurance

International Combined Ratios Three Months Ended March 31,

2020 and 2019 Comparison The increase in the combined ratio reflected an increase in both the loss ratio and expense ratio. The increase in the loss ratio was primarily driven by: higher catastrophe losses (due to the combination of COVID-19 and natural catastrophe losses); partially offset by lower accident year loss ratio as adjusted reflecting premium rate increases, and benefits from underwriting actions. The increase in the expense ratio reflected a higher general operating expense ratio driven by lower premiums.

AIG | First Quarter 2020 Form 10-Q 97

ITEM 2 | Business Segment Operations | Life and Retirement

Life and Retirement

PRODUCTS AND DISTRIBUTION
	Variable Annuities: Products include variable annuities that offer a combination of growth potential, death benefit features and income protection features. Variable annuities are distributed primarily through banks, wirehouses, and regional and independent broker-dealers. Index Annuities: Products include fixed index annuities that provide growth potential based in part on the performance of a market index as well as optional living guaranteed features that provide lifetime income protection. Fixed index annuities are distributed primarily through banks, broker-dealers, independent marketing organizations and independent insurance agents. Fixed Annuities: Products include single premium fixed annuities, immediate annuities and deferred income annuities. Certain fixed deferred annuity products offer optional income protection features. The fixed annuities product line maintains an industry-leading position in the U.S. bank distribution channel by designing products collaboratively with banks and offering an efficient and flexible administration platform. Retail Mutual Funds: Includes our mutual fund offerings and related administration and servicing operations. Retail Mutual Funds are distributed primarily through broker-dealers.
	Group Retirement: Products and services consist of group mutual funds, group annuities, individual annuity and investment products, and financial planning and advisory services, and plan administrative and compliance services. In March 2019, the products and services marketed by The Variable Annuity Life Insurance Company were rebranded under the AIG Retirement Services name to allow the business to fully leverage the strength and scale of the AIG brand. Legal entity names, however, remain unchanged: The Variable Annuity Life Insurance Company and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company. AIG Retirement Services career financial advisors and independent financial advisors provide retirement plan participants with enrollment support and comprehensive financial planning services.
	Life Insurance: In the U.S., products primarily include term life and universal life insurance distributed through independent marketing organizations, independent insurance agents, financial advisors and direct marketing. International operations include the distribution of life and health products in the UK and Ireland.
	Institutional Markets: Products primarily include stable value wrap products, structured settlement and pension risk transfer annuities, corporate- and bank-owned life insurance and guaranteed investment contracts (GICs). Institutional Markets products are primarily distributed through specialized marketing and consulting firms and structured settlement brokers.

98 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

FHLB Funding Agreements are issued through our Individual Retirement, Group Retirement and Institutional Markets operating segments. Funding agreements are issued by our U.S. Life and Retirement companies to FHLBs in their respective districts at fixed or floating rates over specified periods, which can be prepaid at our discretion. Proceeds are generally invested in fixed income securities and other suitable investments to generate spread income. These investment contracts do not have mortality or morbidity risk and are similar to GICs.

BUSINESS STRATEGY

Deliver client-centric solutions through our unique franchise by bringing together a broad portfolio of life insurance, retirement and institutional products offered through an extensive, multichannel distribution network. Life and Retirement focuses on ease of doing business, offering valuable solutions, and expanding and deepening its distribution relationships across multiple channels.

Position market leading businesses to serve growing needs by continually enhancing product solutions, service delivery and digital capabilities while using data and analytics in an innovative manner to improve customer experience.

Individual Retirement will continue to capitalize on the opportunity to meet consumer demand for guaranteed income by maintaining innovative variable and index annuity products, while also managing risk from guarantee features through risk-mitigating product design and well-developed economic hedging capabilities. Our fixed annuity products provide diversity in our annuity product suite by offering stable returns for retirement savings.

Group Retirement continues to enhance its technology platform to improve the customer experience for plan sponsors and individual participants. AIG Retirement Services’ (formerly VALIC) self-service tools paired with its career financial advisors provide a compelling service platform. Group Retirement’s strategy also involves providing financial planning services for its clients and meeting their need for income in retirement.

Life Insurance in the U.S. will continue to position itself for growth and changing market dynamics while continuing to execute strategies to enhance returns. Our focus is on materializing success from a multi-year effort of building state-of-the-art platforms and underwriting innovations, which are expected to bring process improvements and cost efficiencies. In the UK, AIG Life Insurance will continue to focus on growing the business organically and through potential acquisition opportunities.

Institutional Markets continues to grow its assets under management across multiple product lines, including stable value wrap, GICs and pension risk transfer annuities. Our growth strategy is opportunistic and allows us to pursue select transactions that meet our risk-adjusted return requirements.

Enhance Operational Effectiveness by simplifying processes and operating environments to increase competitiveness, improve service and product capabilities and facilitate delivery of our target customer experience. We continue to invest in technology to improve operating efficiency and ease of doing business for our distribution partners and customers. We believe that simplifying our operating models will enhance productivity and support further profitable growth.

Manage our Balance Sheet through a rigorous approach to our products and portfolio. We match our product design and high quality investments with our asset and liability exposures to maximize our ability to meet cash and liquidity needs under various operating scenarios.

Deliver Value Creation and Manage Capital by striving to deliver solid earnings through disciplined pricing, sustainable underwriting improvements, expense efficiency, and diversification of risk, while optimizing capital allocation and efficiency within insurance entities to enhance return on common equity.

AIG | First Quarter 2020 Form 10-Q 99

ITEM 2 | Business Segment Operations | Life and Retirement

COMPETITION and challenges

Life and Retirement operates in the highly competitive insurance and financial services industry in the U.S. and select international markets, competing against various financial services companies, including banks and other life insurance and mutual fund companies. Competition is primarily based on product pricing and design, distribution, financial strength, customer service and ease of doing business.

Our business remains competitive due to its long-standing market leading positions, innovative products, distribution relationships across multiple channels, customer-focused service and strong financial ratings.

Our primary challenges include:

a sustained low interest rate environment, which makes it difficult to profitably price new products and puts margin pressure on existing business due to lower reinvestment yields;

increased competition in our primary markets, including aggressive pricing of annuities by private equity-backed annuity writers, increased competition and consolidation of employer groups in the group retirement planning market, and competitors with different profitability targets in the pension risk transfer space as well as other product lines;

increasingly complex new and proposed regulatory requirements, which have affected industry growth and costs; and

upgrading our technology and underwriting processes while managing general operating expenses.

OUTLOOK—INDUSTRY AND ECONOMIC FACTORS

Below is a discussion of the industry and economic factors impacting our specific operating segments:

The impact of COVID-19 is evolving rapidly and will depend upon the scope and duration of the crisis as well as the actions taken by governments, regulators and other third parties in response, all of which are highly uncertain at this time. The results for the first quarter of 2020 include COVID-19 related market impacts increasing Variable Annuity DAC/SIA amortization and reserves due to the equity market decline as well as our investment returns, primarily due to lower yield enhancements from losses on securities for which the fair value option was elected. The impact of COVID-19 on our premiums and deposits as well as claims incurred was not material this quarter primarily due to the timing of the COVID-19 outbreak in the U.S., late in the first quarter. The regulatory approach to the crisis and impact on the insurance industry is an unknown factor which adds more uncertainty.

Individual Retirement

Increasing life expectancy and reduced expectations for traditional retirement income from defined benefit programs and fixed income securities are leading Americans to seek additional financial security as they approach retirement. The strong demand for individual index and fixed deferred annuities with guaranteed income features has attracted increased competition in this product space. In response to the continued low interest rate environment, which has added pressure to profit margins, we have developed guaranteed income benefits for variable, fixed index, and fixed deferred annuities with margins that are less sensitive to the level of interest rates.

Changes in the capital markets (interest rate environment, equity markets, volatility) can have a significant impact on sales, surrender rates, investment returns, guaranteed income features, and spreads in the annuity industry.

Group Retirement

Group Retirement competes in the defined contribution market under the AIG Retirement Services brand. AIG Retirement Services is a leading retirement plan provider in the U.S. for K-12 schools and school districts, higher education, healthcare, government and other not-for-profit institutions. The defined contribution market is a highly efficient and competitive market that requires support for both plan sponsors and individual participants. To meet this challenge, AIG Retirement Services is investing in a client-focused technology platform to support improved compliance and self-service functionality. AIG Retirement Services’ model pairs self-service tools with its career financial advisors who provide individual plan participants with enrollment support and comprehensive financial planning services.

Changes in the capital markets (interest rate environment, equity markets, volatility) can have a significant impact on investment returns, guaranteed income features, and spreads, and a moderate impact on sales and surrender rates.

100 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

Life Insurance

Consumers have a significant need for life insurance, whether it is used for income replacement for their surviving family, estate planning or wealth transfer. Additionally, consumers use life insurance to provide living benefits in case of chronic, critical or terminal illnesses, and to supplement retirement income.

In response to consumer needs and a sustained low interest rate environment, our Life Insurance product portfolio will continue to promote products with lower long-duration interest rate risk and mitigate exposure to products that have long-duration interest rate risk through sales levels and hedging strategies.

As life insurance ownership remains at historical lows in the U.S. and the UK, efforts to expand the reach and increase the affordability of life insurance are critical. The industry is investing in consumer-centric efforts to reduce traditional barriers to securing life protection by simplifying the sales and service experience. Digitally enabled processes and tools provide a fast, friendly and simple path to life insurance protection.

Institutional Markets

Institutional Markets serves a variety of needs for corporate clients. Demand is driven by a number of factors including the macroeconomic and regulatory environment. We expect to see continued growth in the pension risk transfer market as corporate plan sponsors look to transfer asset or liability, longevity, administrative and operational risks associated with their defined benefit plans.

Changes in the interest rate environment can have a significant impact on investment returns and net investment spreads, as well as reduce the tax efficiency associated with institutional life insurance products, dampening organic growth opportunities.

For additional discussion of the impact of market interest rate movement on our Life and Retirement business see Executive Summary – AIG’s Outlook – Industry and Economic Factors – Impact of Changes in the Interest Rate Environment.

life and retirement RESULTS

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Revenues:
Premiums	$	1,223	$	1,229	-	%
Policy fees		726		707	3
Net investment income		2,003		2,042	(2)
Advisory fee and other income		220		226	(3)
Total adjusted revenues		4,172		4,204	(1)
Benefits, losses and expenses:
Policyholder benefits and losses incurred		1,720		1,566	10
Interest credited to policyholder account balances		897		887	1
Amortization of deferred policy acquisition costs		318		200	59
General operating and other expenses*		622		587	6
Interest expense		41		40	3
Total benefits, losses and expenses		3,598		3,280	10
Adjusted pre-tax income	$	574	$	924	(38)	%

*Includes general operating expenses, non-deferrable commissions, other acquisition expenses, advisory fee expenses and other expenses.

Our insurance companies generate significant revenues from investment activities. As a result, the operating segments in Life and Retirement are subject to variances in net investment income on the asset portfolios that support insurance liabilities and surplus.

For additional information on our investment strategy, asset-liability management process and invested asset composition see Investments.

AIG | First Quarter 2020 Form 10-Q 101

ITEM 2 | Business Segment Operations | Life and Retirement

Individual Retirement Results

Three Months Ended March 31,						Percentage
(in millions)		2020		2019		Change
Revenues:
Premiums	$	41	$	11		273	%
Policy fees		207		193		7
Net investment income		975		999		(2)
Advisory fee and other income		147		148		(1)
Benefits and expenses:
Policyholder benefits and losses incurred		138		31		345
Interest credited to policyholder account balances		444		424		5
Amortization of deferred policy acquisition costs		221		120		84
Non deferrable insurance commissions		79		77		3
Advisory fee expenses		52		54		(4)
General operating expenses		110		118		(7)
Interest expense		20		19		5
Adjusted pre-tax income	$	306	$	508		(40)	%
Fixed annuities base net investment spread:
Base yield		4.36	%	4.68	%	(32)	bps
Cost of funds		2.61		2.71		(10)
Fixed annuities base net investment spread		1.75	%	1.97	%	(22)	bps

Business and Financial Highlights

The market environment continues to reflect uncertainties in the annuity business resulting from a sustained low interest rate environment as well as the COVID-19 crisis. Interest rates declined significantly in the first quarter of 2020 and are at historical lows. Premiums and deposits decreased in the first quarter of 2020 compared to the same period in the prior year. Net flows decreased in the first quarter of 2020 compared to the same period in the prior year primarily due to lower sales in Fixed and Index Annuities, and Retail Mutual Funds, as well as higher surrenders and withdrawals partially offset by higher Variable Annuity sales.

Adjusted pre-tax income decreased in the first quarter of 2020 compared to the same period in the prior year, primarily driven by increases in Variable Annuity DAC/SIA amortization and reserves due to the equity market decline, lower yield enhancements from losses on securities for which the fair value option was elected, lower base investment yield and lower hedge fund returns. Partially offsetting these decreases were higher private equity income and growth in invested assets.

102 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

Individual Retirement Adjusted Pre-Tax Income Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Adjusted pre-tax income decreased primarily due to: increases in Variable Annuity DAC/SIA amortization and reserves due to the equity market decline; and decrease in net investment income driven by lower yield enhancements from losses on securities for which the fair value option was elected, and lower base investment yield, partially offset by increases in invested assets. Partially offsetting these decreases were: Higher gains on alternative investments due to higher private equity income partially offset by lower hedge fund returns.

Individual Retirement GAAP Premiums, Premiums and Deposits, Surrenders and Net Flows

For Individual Retirement, premiums primarily represent amounts received on life-contingent payout annuities. Premiums increased in the three-month period ended March 31, 2020 compared to the same period in the prior year.

Premiums and deposits is a non-GAAP financial measure that includes, in addition to direct and assumed premiums, deposits received on investment-type annuity contracts, FHLB funding agreements and mutual funds under administration.

Net flows for annuity products in Individual Retirement represent premiums and deposits less death, surrender and other withdrawal benefits. Net flows for mutual funds represent deposits less withdrawals.

The following table presents a reconciliation of Individual Retirement GAAP premiums to premiums and deposits:

Three Months Ended March 31,
(in millions)		2020		2019
Premiums	$	41	$	11
Deposits		3,078		4,175
Other		(3)		-
Premiums and deposits	$	3,116	$	4,186

AIG | First Quarter 2020 Form 10-Q 103

ITEM 2 | Business Segment Operations | Life and Retirement

The following table presents surrenders as a percentage of average reserves:

Three Months Ended March 31,	2020		2019
Surrenders as a percentage of average reserves
Fixed annuities	6.7	%	8.1	%
Variable and index annuities	6.4		6.0

The following table presents reserves for fixed annuities and variable and index annuities by surrender charge category:

	March 31, 2020				December 31, 2019
				Variable				Variable
		Fixed		and Index		Fixed		and Index
(in millions)		Annuities		Annuities		Annuities		Annuities
No surrender charge	$	27,385	$	21,455	$	27,804	$	24,393
Greater than 0% - 2%		2,488		8,652		2,059		9,397
Greater than 2% - 4%		2,893		13,630		3,209		15,296
Greater than 4%		16,316		32,876		16,453		31,833
Non-surrenderable		1,696		535		1,664		525
Total reserves	$	50,778	$	77,148	$	51,189	$	81,444

Individual Retirement annuities are typically subject to a four- to seven-year surrender charge period, depending on the product. For fixed annuities, the proportion of reserves subject to surrender charge at March 31, 2020 was flat compared to December 31, 2019. The decrease in reserves with no surrender charge for variable and index annuities at March 31, 2020 compared to December 31, 2019 is principally due to lower equity markets that resulted in a decline in variable annuities separate account reserves.

A discussion of the significant variances in premiums and deposits and net flows for each product line follows:

Individual Retirement Premiums and Deposits (P&D) and Net Flows Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Fixed Annuities premiums and deposits decreased primarily due to lower bank, broker dealer and Independent Market Organization distribution sales driven by a decline in interest rates, and lower sales of products with living benefit features. Net flows were negative primarily due to lower premiums and deposits partially offset by lower surrenders compared to positive net flows in the first quarter 2019. Variable and Index Annuities premiums and deposits increased primarily due to higher variable annuity sales driven by higher broker dealer and bank distribution sales partially offset by a decrease in index annuity sales driven by a decline in the broker dealer and wirehouse distribution channels. Variable annuity net flows remained negative but improved primarily due to increase in sales partially offset by higher surrenders. Index annuity net flows decreased primarily due to lower sales and higher surrenders. Retail Mutual Funds premiums and deposits decreased due to continued negative industry trends in U.S. actively managed equity funds and underperformance within our largest fund. Net flows remained negative and deteriorated reflecting lower deposits and higher surrenders and withdrawals.

104 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

Group Retirement Results

Three Months Ended March 31,						Percentage
(in millions)		2020		2019		Change
Revenues:
Premiums	$	6	$	4		50	%
Policy fees		109		100		9
Net investment income		517		541		(4)
Advisory fee and other income		62		64		(3)
Benefits and expenses:
Policyholder benefits and losses incurred		33		10		230
Interest credited to policyholder account balances		281		282		-
Amortization of deferred policy acquisition costs		35		12		192
Non deferrable insurance commissions		28		28		-
Advisory fee expenses		24		23		4
General operating expenses		139		111		25
Interest expense		11		11		-
Adjusted pre-tax income	$	143	$	232		(38)	%
Base net investment spread:
Base yield		4.39	%	4.59	%	(20)	bps
Cost of funds		2.69		2.76		(7)
Base net investment spread		1.70	%	1.83	%	(13)	bps

Business and Financial Highlights

Group Retirement is focused on implementing initiatives to grow its business. However, external factors, including increased competition and the consolidation of healthcare providers and other employers in target markets, continue to impact Group Retirement’s customer retention. Premiums and deposits decreased in the first quarter of 2020 compared to the same period in 2019. Net flows remained negative but improved in the first quarter of 2020 compared to the same period of 2019 due to lower surrenders partially offset by lower premiums and deposits.

Adjusted pre-tax income decreased in the first quarter of 2020 compared to the same period in 2019 primarily from higher variable annuity DAC amortization and reserves due to weaker equity market performance, higher general operating expenses, lower gains on securities for which the fair value option was elected, and lower gains on base net investment spread primarily due to lower reinvestment yields. Partially offsetting these decreases were higher investment returns in our alternative investment portfolio including higher private equity returns and higher policy fee income driven by growth of assets.

AIG | First Quarter 2020 Form 10-Q 105

ITEM 2 | Business Segment Operations | Life and Retirement

Group Retirement Adjusted Pre-Tax Income Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Adjusted pre-tax income decreased primarily due to: higher variable annuity DAC amortization and reserves due to weaker equity market performance; higher general operating expenses primarily due to increased legal expenses and continued investment in people and technology; lower net investment income, primarily from lower gains on securities for which the fair value option was elected and lower hedge fund returns due to widening spreads partially offset by higher gains on alternative investment portfolio driven by higher private equity returns and higher gain on calls; and decrease in base net investment spread primarily due to lower reinvestment yields and lower accretion; Partially offsetting these decreases were: higher policy fee income net of expenses primarily driven by growth of assets.

Group Retirement GAAP Premiums, Premiums and Deposits, Surrenders and Net Flows

For Group Retirement, premiums primarily represent amounts received on life-contingent payout annuities. Premiums in the first quarter of 2020, which primarily represents immediate annuities, increased compared to 2019. Overall, premiums are not a significant driver of the Group Retirement results.

Premiums and deposits is a non-GAAP financial measure that includes, in addition to direct and assumed premiums, deposits received on investment-type annuity contracts, FHLB funding agreements and mutual funds under administration.

Net flows for annuity products included in Group Retirement represent premiums and deposits less death, surrender and other withdrawal benefits. Net flows for mutual funds represent deposits less withdrawals.

The following table presents a reconciliation of Group Retirement GAAP premiums to premiums and deposits:

Three Months Ended March 31,
(in millions)		2020		2019
Premiums	$	6	$	4
Deposits		1,849		2,059
Premiums and deposits	$	1,855	$	2,063

The following table presents Group Retirement surrenders as a percentage of average reserves and mutual funds under administration:

Three Months Ended March 31,	2020		2019
Surrenders as a percentage of average reserves and mutual funds	9.4	%	11.8	%

106 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

The following table presents reserves for Group Retirement annuities by surrender charge category:

		March 31,			December 31,
(in millions)		2020	(a)		2019	(a)
No surrender charge(b)	$	65,519		$	71,912
Greater than 0% - 2%		578			1,140
Greater than 2% - 4%		501			672
Greater than 4%		5,950			6,038
Non-surrenderable		615			614
Total reserves	$	73,163		$	80,376

(a)Excludes mutual fund assets under administration of $17.8 billion and $21.7 billion at March 31, 2020 and December 31, 2019, respectively.

(b)Group Retirement amounts in this category include general account reserves of approximately $6.2 billion at both March 31, 2020 and December 31, 2019, which are subject to 20 percent annual withdrawal limitations at the participant level and general account reserves of $5.6 billion and $5.4 billion at March 31, 2020 and December 31, 2019, respectively, which are subject to 20 percent annual withdrawal limitations at the plan level.

Group Retirement annuities are typically subject to a five- to seven-year surrender charge period, depending on the product. At March 31, 2020, Group Retirement annuity reserves decreased compared to December 31, 2019 primarily due to weaker equity market performance. The surrender rate in the first quarter of 2020 decreased due to fewer large plan surrenders compared to the same period in the prior year.

A discussion of the significant variances in premiums and deposits and net flows follows:

Group Retirement Premiums and Deposits and Net Flows Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Net flows remained negative but improved primarily due to lower surrenders partially offset by decreased deposits. There were approximately $185 million of large plan surrenders in the first quarter of 2020 compared to approximately $566 million of large plan surrenders for the same period in the prior year. External factors including consolidation of healthcare providers and other employers in target markets continue to impact Group Retirement customer retention.

AIG | First Quarter 2020 Form 10-Q 107

ITEM 2 | Business Segment Operations | Life and Retirement

Life Insurance Results

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Revenues:
Premiums	$	419	$	395	6	%
Policy fees		370		373	(1)
Net investment income		291		291	-
Other income		11		14	(21)
Benefits and expenses:
Policyholder benefits and losses incurred		709		638	11
Interest credited to policyholder account balances		92		92	-
Amortization of deferred policy acquisition costs		61		67	(9)
Non deferrable insurance commissions		27		12	125
General operating expenses		140		141	(1)
Interest expense		7		7	-
Adjusted pre-tax income	$	55	$	116	(53)	%

Business and Financial Highlights

Life Insurance is focused on selling profitable new products through strategic channels to enhance future returns. Adjusted pre-tax income decreased in the first quarter of 2020 compared to the same period in the prior year primarily due to higher mortality and insurance reserves, and prior year favorable reserve and reinsurance refinements.

Life Insurance Adjusted Pre-Tax Income Three Months Ended March 31, (in millions)
	2020 and 2019 Comparison Adjusted pre-tax income decreased primarily due to:  Higher mortality and insurance reserves; and  Prior year favorable reserve and reinsurance refinements.

108 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

Life Insurance GAAP Premiums and Premiums and Deposits

Premiums for Life Insurance represent amounts received on traditional life insurance policies, primarily term life and international life and health. Premiums, excluding the effect of foreign exchange, increased in the first quarter of 2020 compared to the same period in the prior year. Premiums and deposits for Life Insurance is a non-GAAP financial measure that includes direct and assumed premiums as well as deposits received on universal life insurance.

The following table presents a reconciliation of Life Insurance GAAP premiums to premiums and deposits:

Three Months Ended March 31,
(in millions)		2020		2019
Premiums	$	419	$	395
Deposits		402		406
Other		194		194
Premiums and deposits	$	1,015	$	995

A discussion of the significant variances in premiums and deposits follows:

Life Insurance Premiums and Deposits Three Months Ended March 31, (in millions)
	2020 and 2019 Comparison Premiums and deposits, excluding the effect of foreign exchange, increased primarily due to growth in international life, health and group premiums.

AIG | First Quarter 2020 Form 10-Q 109

ITEM 2 | Business Segment Operations | Life and Retirement

Institutional markets Results

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Revenues:
Premiums	$	757	$	819	(8)	%
Policy fees		40		41	(2)
Net investment income		220		211	4
Benefits and expenses:
Policyholder benefits and losses incurred		840		887	(5)
Interest credited to policyholder account balances		80		89	(10)
Amortization of deferred policy acquisition costs		1		1	-
Non deferrable insurance commissions		7		8	(13)
General operating expenses		16		15	7
Interest expense		3		3	-
Adjusted pre-tax income	$	70	$	68	3	%

Business and Financial Highlights

Institutional Markets continued to opportunistically grow its portfolio, which drove the increase in net investment income. Product distribution continues to be strong and the business is focused on maintaining pricing discipline.

Institutional Markets Adjusted Pre-Tax Income Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Decrease in premiums and policyholder benefits were primarily due to pension risk transfer business written in 2019 compared to 2020. Adjusted pre-tax income increased primarily due to: higher net investment income from growth in reserves; decrease in interest crediting results from impact of lower interest rates on floating-rate GICs and related hedging; and favorable mortality experience.

110 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Life and Retirement

Institutional markets GAAP Premiums and Premiums and Deposits

Premiums for Institutional Markets primarily represent amounts received on pension risk transfer or structured settlement annuities with life contingencies. Premiums decreased in the first quarter of 2020 compared to the same period in the prior year primarily driven by the pension risk transfer business written in the first quarter of 2019.

Premiums and deposits for Institutional Markets is a non-GAAP financial measure that includes direct premiums as well as deposits received on investment-type annuity contracts, including GICs. Deposits also include FHLB funding agreements.

The following table presents a reconciliation of Institutional Markets GAAP premiums to premiums and deposits:

Three Months Ended March 31,
(in millions)		2020		2019
Premiums	$	757	$	819
Deposits		152		286
Other		8		7
Premiums and deposits	$	917	$	1,112

A discussion of the significant variances in premiums and deposits follows:

Institutional Markets Premiums and Deposits Three Months Ended March 31, (in millions)
	2020 and 2019 Comparison Premiums and deposits decreased due to lower deposits on GICs and lower pension risk transfer sales.

AIG | First Quarter 2020 Form 10-Q 111

ITEM 2 | Business Segment Operations | Other Operations

Other Operations

Other Operations consists of income from assets held by AIG Parent and other corporate subsidiaries, general operating expenses not attributable to AIG reporting segments, certain compensation expenses attributable to Other Operations and reporting segments, amortization of value of distribution network acquired related to the Validus and Glatfelter acquisitions, and interest expense attributable to AIG long-term debt as well as debt associated with consolidated investment entities. Other Operations also includes Blackboard – a subsidiary focused on delivering commercial insurance solutions using digital technology, data analytics and automation. At the end of March 2020, AIG decided to place Blackboard into run-off.

Other Operations Results

Three Months Ended March 31,					Percentage
(in millions)		2020		2019	Change
Revenues:
Premiums	$	15	$	12	25	%
Net investment income:
Interest and dividends - available for sale securities		26		27	(4)
Interest and dividends - fair value option securities		(8)		4	NM
Other investment income - consolidated investment entities		94		53	77
Other investment income		16		19	(16)
Total net investment income		128		103	24
Other income		19		24	(21)
Total adjusted revenues		162		139	17
Benefits, losses and expenses:
Policyholder benefits and losses incurred		11		4	175
Acquisition expenses - amortization of deferred policy acquisition costs		4		5	(20)
General operating expenses		280		214	31
Interest expense:
Interest - corporate		259		260	-
Interest - other (primarily consolidated investment entities)*		59		43	37
Total interest expense		318		303	5
Total benefits, losses and expenses		613		526	17
Adjusted pre-tax loss before consolidation and eliminations		(451)		(387)	(17)
Consolidation, eliminations and other adjustments		(84)		(70)	(20)
Adjusted pre-tax loss	$	(535)	$	(457)	(17)	%
Adjusted pre-tax loss by activities:
Corporate (Parent and Service Companies):
General operating expenses	$	(244)	$	(181)	(35)	%
Interest expense		(259)		(260)	-
All other income (expense), net		20		41	(51)
Total Corporate (Parent and Service Companies)		(483)		(400)	(21)
Consolidated investment portfolio		48		22	118
Blackboard		(16)		(9)	(78)
Consolidation, eliminations and other adjustments:
Consolidation, eliminations and other adjustments - consolidated investment entities		(104)		(92)	(13)
Consolidation, eliminations and other adjustments - other		20		22	(9)
Total consolidation, eliminations and other adjustments		(84)		(70)	(20)
Adjusted pre-tax loss	$	(535)	$	(457)	(17)	%

*Interest expense-other primarily represents interest expense on consolidated investment entities of $46 million and $31 million in 2020 and 2019, respectively, and costs of derivatives used to economically hedge foreign denominated debt of $12 million and $9 million in 2020 and 2019, respectively.

112 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Other Operations

2020 and 2019 Comparison

Adjusted pre-tax loss increased primarily due to:

higher corporate general operating expenses due to higher compensation and technology costs; and

higher interest expenses driven by debt associated with consolidated investment entities.

The increase in adjusted pre-tax loss was partially offset by:

higher net investment income associated with consolidated investment entities.

AIG | First Quarter 2020 Form 10-Q 113

ITEM 2 | Business Segment Operations | Legacy Portfolio

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, our Bermuda-domiciled composite reinsurer, 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.

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.

BUSINESS STRATEGY

For Legacy insurance lines, securing the interests of our policyholders and insureds is paramount. We have considered and continue to evaluate the following strategies for these lines:

•Third-party and affiliated reinsurance and retrocessions to improve capital efficiency.

•Commutations of assumed reinsurance and direct policy buy-backs.

•Enhanced insured policyholder options and claims resolution strategies.

•Enhanced asset liability management and expense management.

For Legacy investments, our business strategy is to maximize liquidity to AIG Parent and minimize book value impairments while sourcing for our insurance companies attractive assets for their portfolios.

SALE OF FORTITUDE HOLDINGS

Fortitude Re was established during the first quarter of 2018 in connection with a series of affiliated reinsurance transactions related to our Legacy Portfolio. Those reinsurance transactions were designed to consolidate most of our Legacy Insurance Run-Off Lines into a single legal entity. As of March 31, 2020, the affiliated transactions included the cession of approximately $30.1 billion of reserves from our Legacy Life and Retirement Run-Off Lines and approximately $3.8 billion of reserves from our Legacy General Insurance Run-Off Lines related to business written by multiple wholly-owned AIG subsidiaries. Fortitude Re has approximately $2.7 billion of total assets after elimination of intercompany balances, primarily managed by AIG, and is AIG’s main run-off reinsurer with its own dedicated management team. In the second quarter of 2018, we formed Fortitude Holdings to act as a holding company for Fortitude Re.

On November 13, 2018, AIG completed the sale of a 19.9 percent ownership interest in Fortitude Holdings to TC Group Cayman Investments Holdings, L.P. (TCG), an affiliate of Carlyle. Upon completion of the 2018 Fortitude Sale, Fortitude Holdings owned 100 percent of the outstanding common shares of Fortitude Re and AIG had an 80.1 percent ownership interest in Fortitude Holdings. AIG received $381 million in cash and will receive up to $95 million of deferred compensation following December 31, 2023, which is subject to a purchase price adjustment wherein AIG will reimburse TCG for adverse development in property casualty related reserves, based on an agreed methodology, that occurs on or prior to December 31, 2023, up to the value of TCG’s investment in Fortitude. Any amount due to TCG in respect of this purchase price adjustment will be offset by the amount of the $95 million otherwise due from TCG to AIG. To the extent AIG does not receive all or a portion of the planned distributions by May 13, 2020, TCG will pay us up to an additional $100 million, which amount shall adjust in proportion with the amount of the dividend received by AIG. In connection with the 2018 Fortitude Sale, we agreed to certain investment commitment targets into various Carlyle strategies and to certain minimum investment management fee payments within thirty-six months following the closing. AIG also will be required to pay a proportionate amount of an agreed make-whole fee to the extent we fail to satisfy such investment commitment targets.

On November 25, 2019, AIG entered into a membership interest purchase agreement with Fortitude Holdings, Carlyle, Carlyle FRL, an investment fund advised by an affiliate of Carlyle (Carlyle FRL), T&D United Capital Co., Ltd. (T&D) and T&D Holdings, Inc., pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Carlyle FRL will purchase from AIG a 51.6 percent ownership interest in Fortitude Holdings and T&D will purchase from AIG a 25 percent ownership interest in Fortitude Holdings. Upon closing of the Majority Interest Fortitude Sale, AIG will have a 3.5 percent ownership interest in Fortitude Holdings.

114 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Business Segment Operations | Legacy Portfolio

The purchase price under the Majority Interest Fortitude Sale is subject to a post-closing purchase price adjustment pursuant to which AIG will pay Fortitude Re for certain adverse development in property casualty related reserves, based on an agreed methodology, that may occur on or prior to December 31, 2023, up to a maximum payment of $500 million. In connection with the Majority Interest Fortitude Sale agreement, AIG, Fortitude Holdings and TCG have agreed that, effective as of the closing of the Majority Interest Fortitude Sale, (i) AIG’s aforementioned investment commitment targets will be assumed by Fortitude Holdings and AIG will be released therefrom, (ii) the purchase price adjustment that AIG had agreed to provide TCG in the 2018 Fortitude Sale will be terminated, and (iii) Carlyle will remain obligated to pay AIG $95 million of deferred compensation at December 31, 2023 and up to an additional $100 million to the extent AIG does not receive all or a portion of the planned distributions by May 13, 2020, which amount shall adjust in proportion with the amount of the dividend received by AIG. We expect to contribute approximately $1.45 billion of the proceeds of the Majority Interest Fortitude Sale to certain of our insurance company subsidiaries for a period of time following the closing of the transaction. There can be no guarantee that we will receive the required regulatory approvals or that closing conditions will be satisfied in order to consummate the Majority Interest Fortitude Sale.

The affiliated reinsurance transactions executed in the first quarter of 2018 with Fortitude Re resulted in prepaid insurance assets on the ceding subsidiaries’ balance sheets of approximately $2.5 billion (after-tax) and related deferred acquisition costs of $0.5 billion (after-tax) at inception of the contract. The prepaid insurance assets have been eliminated in AIG’s consolidated financial statements since the counterparties were wholly owned.

Upon closing of the Majority Interest Fortitude Sale, AIG will recognize a loss for the portion of the unamortized balance of these assets that are not recoverable, if any, when we are no longer a controlling shareholder in Fortitude Holdings. As of March 31, 2020, the unamortized balances of the aforementioned prepaid insurance assets and related deferred acquisition costs were $2.2 billion (after-tax) and $0.4 billion (after-tax), respectively. This combined loss of $2.6 billion would be incremental to any gain or loss recognized on the Majority Interest Fortitude Sale. The incremental gain or loss we will recognize on the Majority Interest Fortitude Sale would be impacted, perhaps significantly, by market conditions existing at the time the Majority Interest Fortitude Sale closes.

LEGACY PORTFOLIO RESULTS

Three Months Ended March 31,						Percentage
(in millions)		2020		2019		Change
Revenues:
Premiums	$	124	$	118		5	%
Policy fees		29		30		(3)
Net investment income		127		575		(78)
Other income (loss)		(16)		(17)		6
Total adjusted revenues		264		706		(63)
Benefits, losses and expenses:
Policyholder benefits and losses and loss adjustment
expenses incurred		507		432		17
Interest credited to policyholder account balances		51		54		(6)
Amortization of deferred policy acquisition costs		18		18		-
General operating and other expenses		52		85		(39)
Interest expense		4		5		(20)
Total benefits, losses and expenses		632		594		6
Adjusted pre-tax income (loss)	$	(368)	$	112		NM	%
Adjusted pre-tax income (loss) by type:
General Insurance Run-Off Lines	$	36	$	15		140	%
Life and Retirement Run-Off Lines		(133)		87		NM
Legacy Investments		(271)		10		NM
Adjusted pre-tax income (loss)	$	(368)	$	112		NM	%
				March 31,		December 31,
(in millions)				2020		2019
Selected Balance Sheet Data
Legacy Investments, net of related debt			$	1,352	$	2,002
Legacy General Insurance run-off reserves				5,147		5,409
Legacy Life and Retirement run-off reserves				37,817		38,728

AIG | First Quarter 2020 Form 10-Q 115

ITEM 2 | Business Segment Operations | Legacy Portfolio

Business and Financial Highlights

Legacy insurance lines, including those ceded to Fortitude Re, continue to run-off as anticipated for Legacy General Insurance and Legacy Life and Retirement Run-Off Lines. Legacy investments have been reduced significantly over the last several years declining from $6.7 billion at December 31, 2016 to $1.4 billion at March 31, 2020. The remaining Legacy investments primarily include structured credit junior notes for which we have elected the fair value option and real estate investments.

Legacy Portfolio Adjusted Pre-Tax Income Three Months Ended March 31, (in millions)

2020 and 2019 Comparison Adjusted pre-tax income decreased due to: Lower Legacy Investment earnings due to a losses on fair value option portfolios in the first quarter of 2020 compared to gains in the first quarter of 2019; and Lower Legacy Life and Retirement earnings due to lower net investment income, primarily from lower returns from hedge funds and lower gains on securities for which the fair value option was elected. These decreases were partially offset by higher Legacy General Insurance earnings due to higher net investment income.

116 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Investments

Investments

Overview

Our investment strategies are tailored to the specific business needs of each operating unit by targeting an asset allocation mix that provides diversification from an asset class, sector, issuer, and geographic perspective. The primary objectives are generation of investment income, preservation of capital, liquidity management and growth of surplus. The majority of assets backing our insurance liabilities consist of fixed maturity securities.

The impact of COVID-19 is evolving rapidly and will depend upon the scope and duration of the crisis as well as the actions taken by governments, regulators and other third parties in response, all of which are highly uncertain at this time. Adverse changes and developments affecting the global economy, including a significant global economic slowdown, stock market declines and increased financial market volatility may have near-term and long-term negative effects on our overall investment portfolio. Within our diversified investment portfolio, there may be exposures to certain segments of the economy significantly affected by the crisis, which could result in the recognition of credit losses and increases in our allowance for credit losses if businesses remain closed and the impact of the crisis on the global economy worsens.

Investment Highlights in the first quarter of 2020

A drop in interest rates was more than offset by a significant widening of credit spreads that resulted in a net unrealized loss movement in our investment portfolio. Net unrealized gains in our available for sale portfolio decreased to approximately $7.4 billion as of March 31, 2020 from approximately $17.9 billion as of December 31, 2019.

We continued to make investments in structured securities and other fixed maturity securities with favorable risk compared to return characteristics to improve yields and increase net investment income.

We experienced lower investment returns due to losses in our hedge funds and fair value option equity security holdings due to significant volatility and declines in equity markets in the first quarter of 2020, and losses from fixed maturity securities for which the fair value option was elected due to a significant widening of credit spreads in the current quarter. This compares to the same period in the prior year where we experienced gains in our hedge funds and fair value options equity security holdings as a result of robust equity market returns, and gains in our fixed maturities securities portfolio for which we elected the fair value option due to a drop in rates and narrowing credit spreads.

Blended investment yields on new investments were lower than blended rates on investments that were sold, matured or called.

Implemented CECL (Current Expected Credit Losses), the new credit loss accounting standard, in the first quarter of 2020.

Investment Strategies

Investment strategies are assessed at the business segment level and involve considerations that include local and general market conditions, duration and cash flow management, risk appetite and volatility constraints, rating agency and regulatory capital considerations, and tax and legal investment limitations.

Some of our key investment strategies are as follows:

Our fundamental strategy across the portfolios is to seek investments with similar characteristics to the associated insurance liabilities to the extent practicable. AIG embeds Environmental, Social and Governance (ESG) considerations in its fundamental investment analysis of the companies or projects we invest in to ensure that they have sustainable earnings over the full term of our investment. AIG considers internal and external factors and evaluates changes in consumer behavior, industry trends related to ESG factors as well as the ability of the management of companies to respond appropriately to these changes in order to maintain their competitive advantage.

We seek to originate investments that offer enhanced yield through illiquidity premiums, such as private placements and commercial mortgage loans, which also add portfolio diversification. These assets typically afford credit protections through covenants, ability to customize structures that meet our insurance liability needs, and deeper due diligence given information access.

Given our global presence, we have access to assets that provide diversification from local markets. To the extent we purchase these investments, we generally hedge the currency risk using derivatives, which could provide opportunities to earn higher risk adjusted returns compared to risk assets in the functional currency.

AIG | First Quarter 2020 Form 10-Q 117

ITEM 2 | Investments

AIG Parent, included in Other Operations, actively manages its assets and liabilities in terms of products, counterparties and duration. AIG Parent’s liquidity sources are held primarily in the form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities that can be readily monetized through sales or repurchase agreements. These securities allow us to diversify sources of liquidity while reducing the cost of maintaining sufficient liquidity.

Within the U.S., the Life and Retirement and General Insurance investments are generally split between reserve backing and surplus portfolios.

–Insurance reserves are backed by mainly investment grade fixed maturity securities that meet our duration, current risk-return, tax, liquidity, credit quality and diversification objectives. We assess asset classes based on their fundamental risk, including credit (public and private), commercial mortgages and residential mortgages regardless of whether such investments are bonds, loans, or structured products.

–Surplus investments seek to enhance portfolio returns and are generally comprised of a mix of fixed maturity investment grade and below investment grade securities and various alternative asset classes, including private equity, real estate equity, and hedge funds. Over the past few years, hedge fund investments have been reduced with more emphasis given to private equity, real estate and private credit.

Outside of the U.S., fixed maturity securities held by insurance companies consist primarily of high-grade securities generally denominated in the currencies of the countries in which we operate.

Asset Liability Management

The investment strategy within the General Insurance companies focuses on growth of surplus, maintenance of sufficient liquidity for unanticipated insurance claims, and preservation of capital. General Insurance invests primarily in fixed maturity securities issued by corporations, municipalities and other governmental agencies; structured securities collateralized by, among other assets, residential and commercial real estate; and commercial mortgage loans. Fixed maturity securities of the General Insurance companies’ North America operations have an average duration of 3.2 years. Fixed maturity securities of the General Insurance companies’ international operations have an average duration of 3.6 years.

While invested assets backing reserves of the General Insurance companies are primarily invested in conventional liquid fixed maturity securities, we have continued to allocate to asset classes that offer higher yields through structural and illiquidity premiums, particularly in our North America operations. In addition, we continue to invest in both fixed rate and floating rate asset-backed investments to manage our exposure to potential changes in interest rates and inflation. We seek to diversify the portfolio across asset classes, sectors, and issuers to mitigate idiosyncratic portfolio risks.

In addition, a portion of the surplus of General Insurance is invested in a diversified portfolio of alternative investments that seek to balance liquidity, volatility and growth of surplus. There is a higher allocation to equity-oriented investments in General Insurance surplus relative to other AIG portfolios given the underlying inflation risks inherent in that business. Although these alternative investments are subject to periodic earnings fluctuations, they have historically achieved yields in excess of the fixed maturity portfolio yields and have provided added diversification to the broader portfolio.

The investment strategy of the Life and Retirement companies is to provide net investment income to back liabilities that result in stable distributable earnings and enhance portfolio value, subject to asset liability management, capital, and regulatory constraints.

The Life and Retirement companies use asset-liability management as a primary tool to monitor and manage risk in their businesses. The Life and Retirement companies maintain a diversified, high- to-medium quality portfolio of fixed maturity securities issued by corporations, municipalities and other governmental agencies; structured securities collateralized by, among other assets, residential and commercial real estate; and commercial mortgage loans that, to the extent practicable, match the duration characteristics of the liabilities. The investment portfolio of each product line is tailored to the specific characteristics of its insurance liabilities, and as a result, duration varies between distinct portfolios. The interest rate environment has a direct impact on the asset liability management profile of the businesses, and an extended low interest rate environment may result in a lengthening of liability durations from initial estimates, primarily due to lower lapses, which may require us to further extend the duration of the investment portfolio. A further lengthening of the portfolio will be assessed in the context of available market opportunities as longer duration markets may not provide similar diversification benefits as shorter duration markets.

Fixed maturity securities of the Life and Retirement companies’ domestic operations have an average duration of 8.1 years. We seek to diversify the portfolio across asset classes, sectors, and issuers to mitigate idiosyncratic portfolio risks.

In addition, the Life and Retirement companies seek to enhance surplus portfolio returns through investments in a diversified portfolio of alternative investments. Although these alternative investments are subject to periodic earnings fluctuations, they have historically achieved yields in excess of the fixed maturity portfolio yields.

118 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Investments

NAIC Designations of Fixed Maturity Securities

The Securities Valuation Office (SVO) of the NAIC evaluates the investments of U.S. insurers for statutory reporting purposes and assigns fixed maturity securities to one of six categories called ‘NAIC Designations.’ In general, NAIC Designations of ‘1’ highest quality, or ‘2’ high quality, include fixed maturity securities considered investment grade, while NAIC Designations of ‘3’ through ‘6’ generally include fixed maturity securities referred to as below investment grade. The NAIC has adopted revised rating methodologies for certain structured securities, including non-agency RMBS and CMBS, which are intended to enable a more precise assessment of the value of such structured securities and increase the accuracy in assessing expected losses to better determine the appropriate capital requirement for such structured securities. These methodologies result in an improved NAIC Designation for such securities compared to the rating typically assigned by the three major rating agencies. The following tables summarize the ratings distribution of AIG subsidiaries fixed maturity security portfolio by NAIC Designation, and the distribution by composite AIG credit rating, which is generally based on ratings of the three major rating agencies.

For a full description of the composite AIG credit ratings see – Credit Ratings.

The following table presents the fixed maturity security portfolio categorized by NAIC Designation, at fair value:

March 31, 2020
(in millions)
																Total
						Total										Below
						Investment										Investment
NAIC Designation		1		2		Grade		3		4		5		6		Grade		Total
Other fixed maturity securities	$	94,702	$	71,537	$	166,239	$	7,429	$	6,746	$	1,067	$	167	$	15,409	$	181,648
Mortgage-backed, asset-backed and collateralized		59,303		3,631		62,934		278		87		98		2,036		2,499		65,433
Total*	$	154,005	$	75,168	$	229,173	$	7,707	$	6,833	$	1,165	$	2,203	$	17,908	$	247,081

*Excludes $48 million of fixed maturity securities for which no NAIC Designation is available.

The following table presents the fixed maturity security portfolio categorized by composite AIG credit rating, at fair value:

March 31, 2020
(in millions)
														Total
						Total								Below
						Investment						CCC and		Investment
Composite AIG Credit Rating		AAA/AA/A		BBB		Grade		BB		B		Lower		Grade		Total
Other fixed maturity securities	$	95,866	$	69,736	$	165,602	$	7,391	$	6,734	$	1,921	$	16,046	$	181,648
Mortgage-backed, asset-backed and collateralized		50,075		4,240		54,315		642		358		10,118		11,118		65,433
Total*	$	145,941	$	73,976	$	219,917	$	8,033	$	7,092	$	12,039	$	27,164	$	247,081

*Excludes $48 million of fixed maturity securities for which no NAIC Designation is available.

Credit Ratings

At March 31, 2020, approximately 89 percent of our fixed maturity securities were held by our domestic entities. Approximately 17 percent of these securities were rated AAA by one or more of the principal rating agencies, and approximately 12 percent were rated below investment grade or not rated. Our investment decision process relies primarily on internally generated fundamental analysis and internal risk ratings. Third-party rating services’ ratings and opinions provide one source of independent perspective for consideration in the internal analysis.

Moody’s Investors Service Inc. (Moody’s), Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc. (S&P), or similar foreign rating services rate a significant portion of our foreign entities’ fixed maturity securities portfolio. Rating services are not available for some foreign-issued securities. Our Credit Risk Management department closely reviews the credit quality of the foreign portfolio’s non-rated fixed maturity securities. At March 31, 2020, approximately 25 percent of such investments were either rated AAA or, on the basis of our internal analysis, were equivalent from a credit standpoint to securities rated AAA, and approximately 6 percent were below investment grade or not rated. Approximately 29 percent of the foreign entities’ fixed maturity securities portfolio is comprised of sovereign fixed maturity securities supporting policy liabilities in the country of issuance.

AIG | First Quarter 2020 Form 10-Q 119

ITEM 2 | Investments

Composite AIG Credit Ratings

With respect to our fixed maturity securities, the credit ratings in the table below and in subsequent tables reflect: (a) a composite of the ratings of the three major rating agencies, or when agency ratings are not available, the rating assigned by the NAIC SVO (99 percent of total fixed maturity securities), or (b) our equivalent internal ratings when these investments have not been rated by any of the major rating agencies or the NAIC. The “Non-rated” category in those tables consists of fixed maturity securities that have not been rated by any of the major rating agencies, the NAIC or us.

For a discussion of credit risks associated with Investments see Enterprise Risk Management.

The following table presents the composite AIG credit ratings of our fixed maturity securities calculated on the basis of their fair value:

	Available for Sale				Other				Total
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
(in millions)		2020		2019		2020		2019		2020		2019
Rating:
Other fixed maturity
securities
AAA	$	11,814	$	11,821	$	2,057	$	2,121	$	13,871	$	13,942
AA		31,032		31,141		-		-		31,032		31,141
A		50,954		49,437		11		11		50,965		49,448
BBB		69,736		75,598		-		-		69,736		75,598
Below investment grade		15,079		15,905		5		7		15,084		15,912
Non-rated		1,009		1,301		-		-		1,009		1,301
Total	$	179,624	$	185,203	$	2,073	$	2,139	$	181,697	$	187,342
Mortgage-backed, asset-
backed and collateralized
AAA	$	29,164	$	29,419	$	345	$	365	$	29,509	$	29,784
AA		14,006		14,816		177		201		14,183		15,017
A		6,246		6,861		137		165		6,383		7,026
BBB		3,724		4,154		515		98		4,239		4,252
Below investment grade		8,969		10,575		2,102		3,630		11,071		14,205
Non-rated		43		58		4		84		47		142
Total	$	62,152	$	65,883	$	3,280	$	4,543	$	65,432	$	70,426
Total
AAA	$	40,978	$	41,240	$	2,402	$	2,486	$	43,380	$	43,726
AA		45,038		45,957		177		201		45,215		46,158
A		57,200		56,298		148		176		57,348		56,474
BBB		73,460		79,752		515		98		73,975		79,850
Below investment grade		24,048		26,480		2,107		3,637		26,155		30,117
Non-rated		1,052		1,359		4		84		1,056		1,443
Total	$	241,776	$	251,086	$	5,353	$	6,682	$	247,129	$	257,768

120 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Investments

Available-for-Sale Investments

The following table presents the fair value of our available-for-sale securities:

		Fair Value at		Fair Value at
		March 31,		December 31,
(in millions)		2020		2019
Bonds available for sale:
U.S. government and government sponsored entities	$	5,689	$	5,380
Obligations of states, municipalities and political subdivisions		15,440		15,318
Non-U.S. governments		14,173		14,869
Corporate debt		144,322		149,636
Mortgage-backed, asset-backed and collateralized:
RMBS		30,857		32,805
CMBS		14,226		14,430
CDO/ABS		17,069		18,648
Total mortgage-backed, asset-backed and collateralized		62,152		65,883
Total bonds available for sale*	$	241,776	$	251,086

*At March 31, 2020 and December 31, 2019, the fair value of bonds available for sale held by us that were below investment grade or not rated totaled $25.1 billion and $27.8 billion, respectively.

The following table presents the fair value of our aggregate credit exposures to non-U.S. governments for our fixed maturity securities:

	March 31,		December 31,
(in millions)		2020		2019
Japan	$	1,666	$	1,651
Canada		971		989
France		880		1,013
United Kingdom		602		638
Germany		552		593
Indonesia		516		589
United Arab Emirates		439		494
Israel		438		399
Norway		393		410
Panama		334		348
Other		7,382		7,745
Total	$	14,173	$	14,869

AIG | First Quarter 2020 Form 10-Q 121

ITEM 2 | Investments

The following table presents the fair value of our aggregate European credit exposures by major sector for our fixed maturity securities:

	March 31, 2020
						Non-					December 31,
				Financial		Financial		Structured				2019
(in millions)		Sovereign		Institution		Corporates		Products		Total		Total
Euro-Zone countries:
France	$	880	$	1,742	$	1,442	$	-	$	4,064	$	4,304
Germany		552		159		2,512		-		3,223		3,329
Netherlands		304		935		1,077		89		2,405		2,626
Ireland		62		154		395		1,263		1,874		2,132
Belgium		179		119		898		-		1,196		1,254
Spain		40		270		763		-		1,073		1,122
Luxembourg		-		240		340		-		580		381
Italy		3		99		361		-		463		482
Finland		88		43		40		-		171		192
Austria		160		3		-		-		163		164
Other - EuroZone		486		71		210		-		767		826
Total Euro-Zone	$	2,754	$	3,835	$	8,038	$	1,352	$	15,979	$	16,812
Remainder of Europe:
United Kingdom	$	602	$	3,650	$	7,975	$	2,313	$	14,540	$	15,798
Switzerland		30		1,061		647		-		1,738		1,879
Sweden		129		290		116		-		535		582
Norway		393		45		69		-		507		549
Russian Federation		187		41		204		-		432		425
Other - Remainder of Europe		57		28		110		-		195		262
Total - Remainder of Europe	$	1,398	$	5,115	$	9,121	$	2,313	$	17,947	$	19,495
Total	$	4,152	$	8,950	$	17,159	$	3,665	$	33,926	$	36,307

122 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Investments

Investments in Municipal Bonds

At March 31, 2020, the U.S. municipal bond portfolio was composed primarily of essential service revenue bonds and high-quality tax-exempt bonds with 91 percent of the portfolio rated A or higher.

The following table presents the fair values of our available for sale U.S. municipal bond portfolio by state and municipal bond type:

	March 31, 2020
		State		Local				Total	December 31,
		General		General				Fair		2019
(in millions)		Obligation		Obligation		Revenue		Value		Total Fair Value
State:
New York	$	6	$	381	$	2,684	$	3,071	$	3,059
California		732		383		1,937		3,052		2,928
Texas		96		529		865		1,490		1,512
Illinois		84		143		853		1,080		1,072
Massachusetts		431		-		327		758		745
Ohio		47		1		433		481		482
Georgia		107		71		276		454		459
Virginia		9		-		418		427		493
Washington		168		-		247		415		405
Florida		10		-		399		409		355
Pennsylvania		106		1		297		404		395
Washington, D.C.		11		-		296		307		316
Missouri		-		-		280		280		277
All other states(a)		382		280		2,150		2,812		2,820
Total(b)(c)	$	2,189	$	1,789	$	11,462	$	15,440	$	15,318

(a)We did not have material credit exposure to the government of Puerto Rico.

(b)Excludes certain university and not-for-profit entities that issue their bonds in the corporate debt market. Includes industrial revenue bonds.

(c)Includes $447 million of pre-refunded municipal bonds.

Investments in Corporate Debt Securities

The following table presents the industry categories of our available for sale corporate debt securities:

		Fair Value at		Fair Value at
Industry Category		March 31,		December 31,
(in millions)		2020		2019
Financial institutions:
Money Center/Global Bank Groups	$	9,924	$	10,701
Regional banks — other		650		659
Life insurance		2,919		3,166
Securities firms and other finance companies		254		334
Insurance non-life		5,413		5,492
Regional banks — North America		6,662		6,825
Other financial institutions		13,017		13,608
Utilities		19,256		19,424
Communications		9,918		9,939
Consumer noncyclical		20,305		19,997
Capital goods		7,752		8,006
Energy		10,696		13,379
Consumer cyclical		10,543		10,989
Basic		5,230		5,617
Other		21,783		21,500
Total*	$	144,322	$	149,636

*At March 31, 2020 and December 31, 2019, respectively, approximately 90 and 89 percent of these investments were rated investment grade.

AIG | First Quarter 2020 Form 10-Q 123

ITEM 2 | Investments

Our investments in the energy category, as a percentage of total investments in available-for-sale fixed maturities, were 4.4 percent and 5.3 percent at March 31, 2020 and December 31, 2019, respectively. While the energy investments are primarily investment grade and are actively managed, the category continues to experience volatility that could adversely affect credit quality and fair value.

Investments in RMBS

The following table presents AIG’s RMBS available for sale securities:

		Fair Value at		Fair Value at
		March 31,		December 31,
(in millions)		2020		2019
Agency RMBS	$	15,811	$	15,721
Alt-A RMBS		7,123		8,484
Subprime RMBS		2,403		2,654
Prime non-agency		4,082		4,451
Other housing related		1,438		1,495
Total RMBS(a)(b)	$	30,857	$	32,805

(a)Includes approximately $7.3 billion and $8.7 billion at March 31, 2020 and December 31, 2019, respectively, of certain RMBS that had experienced deterioration in credit quality since their origination. For additional discussion on Purchased Credit Impaired Securities see Note 6 to the Condensed Consolidated Financial Statements.

(b)The weighted average expected life was five years at March 31, 2020 and six years at December 31 2019.

Our underwriting practices for investing in RMBS, other asset-backed securities (ABS) and CDOs take into consideration the quality of the originator, the manager, the servicer, security credit ratings, underlying characteristics of the mortgages, borrower characteristics, and the level of credit enhancement in the transaction.

Investments in CMBS

The following table presents our CMBS available for sale securities:

		Fair Value at		Fair Value at
		March 31,		December 31,
(in millions)		2020		2019
CMBS (traditional)	$	10,999	$	11,250
Agency		2,210		2,051
Other		1,017		1,129
Total	$	14,226	$	14,430

The fair value of CMBS holdings remained stable during the first quarter of 2020. The majority of our investments in CMBS are in tranches that contain substantial protection features through collateral subordination. The majority of CMBS holdings are traditional conduit transactions, broadly diversified across property types and geographical areas.

Investments in ABS/CDOs

The following table presents our ABS/CDO available for sale securities by collateral type:

		Fair value at		Fair value at
		March 31,		December 31,
(in millions)		2020		2019
Collateral Type:
ABS	$	8,620	$	9,274
Bank loans (collateralized loan obligation)		8,418		9,330
Other		31		44
Total	$	17,069	$	18,648

124 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Investments

Commercial Mortgage Loans

At March 31, 2020, we had direct commercial mortgage loan exposure of $36.3 billion. All commercial mortgage loans were current or performing according to their restructured terms.

The following table presents the commercial mortgage loan exposure by location and class of loan based on amortized cost:

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial		Hotel			Others		Total	Total
March 31, 2020
State:
New York	101	$	2,509	$	4,979	$	458	$	375	$	98	$	-	$	8,419	23	%
California	72		849		1,341		246		551		805		33		3,825	11
New Jersey	47		1,671		32		413		81		27		32		2,256	6
Texas	52		563		1,161		173		139		145		-		2,181	6
Florida	71		447		157		503		218		217		-		1,542	4
Massachusetts	13		539		243		547		25		-		-		1,354	4
Illinois	19		505		440		10		18		-		22		995	3
Washington, D.C.	14		503		299		-		-		18		-		820	2
Pennsylvania	21		80		17		522		46		24		-		689	2
Ohio	24		173		10		187		267		-		-		637	2
Other states	203		2,133		735		1,254		725		400		8		5,255	14
Foreign	89		4,182		1,208		933		1,129		523		343		8,318	23
Total*	726	$	14,154	$	10,622	$	5,246	$	3,574	$	2,257	$	438	$	36,291	100	%

December 31, 2019
State:
New York	99	$	2,377	$	4,913	$	457	$	376	$	98	$	-	$	8,221	23	%
California	74		736		1,341		249		572		817		41		3,756	10
New Jersey	48		1,635		44		370		81		27		33		2,190	6
Texas	52		501		1,163		174		141		145		-		2,124	6
Florida	74		393		234		544		218		217		10		1,616	3
Massachusetts	13		540		245		549		25		-		-		1,359	4
Illinois	19		505		441		10		18		-		22		996	3
Washington, D.C.	13		447		302		-		-		18		-		767	2
Pennsylvania	23		81		20		528		46		25		-		700	2
Ohio	25		174		10		188		269		-		5		646	2
Other states	215		2,073		740		1,276		740		401		44		5,274	15
Foreign	85		4,237		1,189		987		1,177		564		367		8,521	24
Total*	740	$	13,699	$	10,642	$	5,332	$	3,663	$	2,312	$	522	$	36,170	100	%

*Does not reflect allowance for credit losses.

For additional discussion on commercial mortgage loans see Note 8 to the Consolidated Financial Statements in the 2019 Annual Report.

AIG | First Quarter 2020 Form 10-Q 125

ITEM 2 | Investments

Credit Impairments

The following table presents a rollforward of the changes in allowance for credit losses on available for sale fixed maturity securities by major investment category:

Three Months Ended March 31, 2020				Non-
(in millions)	Structured		Structured			Total
Balance, beginning of year *	$	7	$	-	$	7
Additions:
Securities for which allowance for credit losses were not previously recorded		24		174		198
Purchases of available for sale debt securities accounted for as
purchased credit deteriorated assets		6		-		6
Reductions:
Securities sold during the period		-		-		-
Intent to sell security or more likely than not will be required to sell the security
before recovery of its amortized cost basis		-		-		-
Additional increases or decreases to the allowance for credit losses on securities
that had an allowance recorded in a previous period, for which there was no intent
to sell before recovery amortized cost basis		-		-		-
Write-offs charged against the allowance		-		-		-
Recoveries of amounts previously written off		-		-		-
Other		-		-		-
Balance, end of period	$	37	$	174	$	211

*The beginning balance incorporates the Day 1 gross up on PCD assets held as of January 1, 2020.

Prior to January 1, 2020, we recorded other-than-temporary impairment charges of $83 million in the first quarter of 2019.

For a discussion of our allowance for credit losses on available for sale securities accounting policy see Note 6 to the Condensed Consolidated Financial Statements.

126 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Investments

The following table shows the aging of the unrealized losses of fixed maturity securities, the extent to which the fair value is less than amortized cost or cost, and the number of respective items in each category:

March 31, 2020		Less Than or Equal					Greater Than 20%					Greater Than 50%
		to 20% of Cost(b)					to 50% of Cost(b)					of Cost(b)					Total
Aging(a)			Unrealized					Unrealized					Unrealized					Unrealized
(dollars in millions)		Cost(c)		Loss	Items(e)		Cost(c)		Loss	Items(e)		Cost(c)		Loss	Items(e)		Cost(c)		Loss(d)	Items(e)
Investment grade
bonds
0-6 months	$	58,241	$	3,302	8,143	$	3,291	$	911	388	$	42	$	23	6	$	61,574	$	4,236	8,537
7-11 months		1,033		74	186		87		27	17		11		6	1		1,131		107	204
12 months or more		3,901		395	617		833		226	103		111		64	12		4,845		685	732
Total	$	63,175	$	3,771	8,946	$	4,211	$	1,164	508	$	164	$	93	19	$	67,550	$	5,028	9,473
Below investment
grade bonds
0-6 months	$	15,999	$	1,262	4,491	$	1,558	$	487	491	$	411	$	242	90	$	17,968	$	1,991	5,072
7-11 months		94		11	70		98		33	54		20		15	13		212		59	137
12 months or more		582		52	219		607		198	104		289		172	48		1,478		422	371
Total	$	16,675	$	1,325	4,780	$	2,263	$	718	649	$	720	$	429	151	$	19,658	$	2,472	5,580
Total bonds
0-6 months	$	74,240	$	4,564	12,634	$	4,849	$	1,398	879	$	453	$	265	96	$	79,542	$	6,227	13,609
7-11 months		1,127		85	256		185		60	71		31		21	14		1,343		166	341
12 months or more		4,483		447	836		1,440		424	207		400		236	60		6,323		1,107	1,103
Total(e)	$	79,850	$	5,096	13,726	$	6,474	$	1,882	1,157	$	884	$	522	170	$	87,208	$	7,500	15,053

(a)Represents the number of consecutive months that fair value has been less than cost by any amount.

(b)Represents the percentage by which fair value is less than cost at March 31, 2020.

(c)For bonds, represents amortized cost net of allowance.

(d)The effect on Net income of unrealized losses after taxes will be mitigated upon realization because certain realized losses will result in current decreases in the amortization of certain DAC.

(e)Item count is by CUSIP by subsidiary.

The allowance for credit losses was $13 million for investment grade bonds, and $198 million for below investment grade bonds as of March 31, 2020.

Change in Unrealized Gains and Losses on Investments

The change in net unrealized gains and losses on investments in the first quarter of 2020 was primarily attributable to decreases in the fair value of fixed maturity securities. For the first quarter of 2020, net unrealized gains related to fixed maturity securities decreased by $10.5 billion due primarily to a significant widening of credit spreads.

The change in net unrealized gains and losses on investments in the first quarter of 2019 was primarily attributable to increases in the fair value of fixed maturity securities. For the first quarter of 2019, net unrealized gains related to fixed maturity securities increased by $6.0 billion due primarily to a decrease in rates and a narrowing of credit spreads.

For further discussion of our investment portfolio see also Note 6 to the Condensed Consolidated Financial Statements.

AIG | First Quarter 2020 Form 10-Q 127

ITEM 2 | Investments

Net Realized Capital Gains and Losses

The following table presents the components of Net realized capital gains (losses):

Three Months Ended March 31,
(in millions)		2020		2019
Sales of fixed maturity securities	$	214	$	(31)
Other-than-temporary impairments		-		(83)
Change in intent*		-		-
Change in allowance for credit losses on fixed maturity securities		(198)		-
Change in allowance for credit losses on loans		(38)		(24)
Foreign exchange transactions		(254)		(37)
Variable annuity embedded derivatives, net of related hedges		2,192		(261)
All other derivatives and hedge accounting		1,559		(72)
Other		44		62
Net realized capital gains (losses)	$	3,519	$	(446)

*For the three months ended March 31, 2019, the change in intent was included in Other-than-temporary impairments.

Net realized capital gains in the first quarter of 2020 compared to losses in the same period in the prior year due to derivative gains versus derivative losses in the prior year and gains on sales of securities versus losses in the prior period.

Net realized capital losses in the first quarter of 2019 due primarily to derivative losses and other-than-temporary impairment charges.

Variable annuity embedded derivatives, net of related hedges, reflected gains in the first quarter of 2020 compared to losses in the first quarter of 2019 primarily due to changes in the non-performance or “own credit” risk adjustment used in the valuation of the variable annuities with guaranteed minimum withdrawal benefits (GMWB) embedded derivative, which are not hedged as part of our economic hedging program.

For additional discussion of market risk management related to these product features see Enterprise Risk Management – Insurance Risks – Life and Retirement Companies’ Key Risks – Variable Annuity, Index Annuity and Universal Life Risk Management and Hedging Programs in the 2019 Annual Report. For more information on the economic hedging target and the impact to pre-tax income of this program see Insurance Reserves – Life and Annuity Reserves and DAC – Variable Annuity Guaranteed Benefits and Hedging Results in this MD&A.

For further discussion of our investment portfolio see also Note 6 to the Condensed Consolidated Financial Statements.

128 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Insurance Reserves

Insurance Reserves

Liability for unpaid losses and loss adjustment expenses (Loss Reserves)

The following table presents the components of our gross and net loss reserves by segment and major lines of business*:

	March 31, 2020						December 31, 2019
	Net liability for		Reinsurance		Gross liability		Net liability for		Reinsurance		Gross liability
	unpaid losses		recoverable on		for unpaid		unpaid losses		recoverable on		for unpaid
	and loss		unpaid losses and		losses and		and loss		unpaid losses and		losses and
	adjustment		loss adjustment		loss adjustment		adjustment		loss adjustment		loss adjustment
(in millions)	expenses		expenses		expenses		expenses		expenses		expenses
General Insurance:
U.S. Workers' Compensation
(net of discount)	$	4,187	$	5,539	$	9,726	$	4,330	$	5,494	$	9,824
U.S. Excess Casualty		4,185		5,411		9,596		4,285		5,073		9,358
U.S. Other Casualty		4,174		4,643		8,817		4,064		4,695		8,759
U.S. Financial Lines		4,938		2,241		7,179		5,154		2,221		7,375
U.S. Property and Special risks		5,404		2,602		8,006		4,950		2,807		7,757
U.S. Personal Insurance		1,238		984		2,222		1,287		988		2,275
UK/Europe Casualty and Financial Lines		6,064		934		6,998		6,234		1,268		7,502
UK/Europe Property and Special risks		2,672		1,186		3,858		2,573		1,191		3,764
UK/Europe and Japan Personal Insurance		1,990		552		2,542		1,962		519		2,481
Other product lines		5,738		2,305		8,043		6,238		2,053		8,291
Unallocated loss adjustment expenses		1,805		884		2,689		1,824		882		2,706
Total General Insurance		42,395		27,281		69,676		42,901		27,191		70,092
Legacy Portfolio - Run-Off Lines:
U.S. Run-Off Long Tail Insurance Lines
(net of discount)		3,701		3,546		7,247		3,769		3,587		7,356
Other run-off product lines		130		66		196		164		66		230
Unallocated loss adjustment expenses		358		114		472		377		115		492
Total Legacy Portfolio - Run-Off Lines		4,189		3,726		7,915		4,310		3,768		8,078
Other Operations (Blackboard)		49		107		156		48		110		158
Total	$	46,633	$	31,114	$	77,747	$	47,259	$	31,069	$	78,328

*Includes loss reserve discount of $1.6 billion and $1.5 billion as of March 31, 2020 and December 31, 2019 respectively. For discussion of loss reserve discount see Note 10 to the Condensed Consolidated Financial Statements.

Prior Year Development

The following table summarizes incurred (favorable) unfavorable prior year development net of reinsurance by segment:

Three Months Ended March 31,
(in millions)		2020		2019
General Insurance:
North America*	$	(13)	$	(60)
International		(47)		(12)
Total General Insurance	$	(60)	$	(72)
Legacy Portfolio - Run-Off Lines		-		(2)
Total prior year (favorable) unfavorable development	$	(60)	$	(74)

*Includes the amortization attributed to the deferred gain at inception from the National Indemnity Company (NICO) adverse development reinsurance agreement of $53 million and $58 million for the three-month periods ended March 31, 2020 and 2019, respectively. Consistent with our definition of APTI, the amount excludes the portion of (favorable)/unfavorable prior year reserve development for which we have ceded the risk under the NICO reinsurance agreements of $6 million and $1 million for the three-month periods ended March 31, 2020 and 2019, respectively. The related changes in amortization of the deferred gain were $22 million and $28 million for the three-month periods ended March 31, 2020 and 2019, respectively.

AIG | First Quarter 2020 Form 10-Q 129

ITEM 2 | Insurance Reserves

Net Loss Development

In the three-month period ended March 31, 2020, we recognized favorable prior year loss reserve development of $60 million.

The key components of this development were as follows:

North America

amortization of the deferred gain from the adverse development reinsurance agreement with NICO; and

adverse development in Personal Insurance.

International

favorable development in International Casualty recoveries.

In the three-month period ended March 31, 2019, we recognized favorable prior year loss reserve development of $74 million. The key components of this development were as follows:

North America

amortization of the deferred gain from the adverse development reinsurance agreement with NICO;

favorable development in U.S. Property and Special Risks driven by favorable catastrophe activity; and

adverse development in Excess Casualty.

International

favorable development in Europe and Japan Personal Insurance and Europe Property and Special Risks; and

adverse development in Europe Casualty and Financial Lines.

The following tables summarize incurred (favorable) unfavorable prior year development net of reinsurance, by segment and major lines of business, and by accident year groupings:

Three Months Ended March 31, 2020
(in millions)		Total		2019		2018 & Prior
General Insurance North America:
U.S. Workers' Compensation	$	(28)	$	2	$	(30)
U.S. Excess casualty		(13)		-		(13)
U.S. Other casualty		(11)		-		(11)
U.S. Financial lines		(8)		-		(8)
U.S. Property and Special Risks		(2)		(5)		3
U.S. Personal insurance		40		47		(7)
Other product lines		9		(14)		23
Total General Insurance North America	$	(13)	$	30	$	(43)
General Insurance International:
UK/Europe casualty and financial lines	$	-	$	-	$	-
UK/Europe property and Special Risks		(9)		(13)		4
UK/Europe and Japan Personal insurance		(12)		(12)		-
Other product lines		(26)		4		(30)
Total General Insurance International	$	(47)	$	(21)	$	(26)
Legacy Portfolio - Run-Off Lines		-		-		-
Total prior year (favorable) unfavorable development	$	(60)	$	9	$	(69)

130 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Insurance Reserves

Three Months Ended March 31, 2019
(in millions)		Total		2018		2017 & Prior
General Insurance North America:
U.S. Workers' Compensation	$	(19)	$	2	$	(21)
U.S. Excess casualty		17		-		17
U.S. Other casualty		(9)		-		(9)
U.S. Financial lines		(10)		-		(10)
U.S. Property and Special Risks		(46)		6		(52)
U.S. Personal insurance		9		(12)		21
Other product lines		(2)		-		(2)
Total General Insurance North America	$	(60)	$	(4)	$	(56)
General Insurance International:
UK/Europe casualty and financial lines	$	51	$	3	$	48
UK/Europe property and Special Risks		(33)		(2)		(31)
UK/Europe and Japan Personal insurance		(44)		(43)		(1)
Other product lines		14		(32)		46
Total General Insurance International	$	(12)	$	(74)	$	62
Legacy Portfolio - Run-off Lines		(2)		2		(4)
Total prior year (favorable) unfavorable development	$	(74)	$	(76)	$	2

We note that for certain categories of claims (e.g., construction defect claims and environmental claims) and for reinsurance recoverable, losses may sometimes be reclassified to an earlier or later accident year as more information about the date of occurrence becomes available to us.

Significant Reinsurance Agreements

In the first quarter of 2017, we entered into an adverse development reinsurance agreement with NICO, under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent of the losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit of $25 billion. We account for this transaction as retroactive reinsurance. This transaction resulted in a gain, which under U.S. GAAP retroactive reinsurance accounting is deferred and amortized into income over the settlement period. NICO created a collateral trust account as security for their claim payment obligations to us, into which they deposited the consideration paid under the agreement, and Berkshire Hathaway Inc. has provided a parental guarantee to secure NICO’s obligations under the agreement.

For a description of AIG’s catastrophe reinsurance protection for 2020, see Part II, Item 7. MD&A – Enterprise Risk Management – Insurance Risks – General Insurance Companies’ Key Risks – Natural Catastrophe Risk in our 2019 Annual Report.

AIG | First Quarter 2020 Form 10-Q 131

ITEM 2 | Insurance Reserves

The table below shows the calculation of the deferred gain on the adverse development reinsurance agreement as of March 31, 2020 and as of December 31, 2019, showing the effect of discounting of loss reserves and amortization of the deferred gain.

		March 31,		December 31,
(in millions)		2020		2019
Gross Covered Losses
Covered reserves before discount	$	18,473	$	19,064
Inception to date losses paid		23,552		22,954
Attachment point		(25,000)		(25,000)
Covered losses above attachment point	$	17,025	$	17,018
Deferred Gain Development
Covered losses above attachment ceded to NICO (80%)	$	13,620	$	13,614
Consideration paid including interest		(10,188)		(10,188)
Pre-tax deferred gain before discount and amortization		3,432		3,426
Discount on ceded losses(a)		(1,179)		(1,251)
Pre-tax deferred gain before amortization		2,253		2,175
Inception to date amortization of deferred gain at inception		(746)		(693)
Inception to date amortization attributed to changes in deferred gain(b)		(115)		(101)
Deferred gain liability reflected in AIG's balance sheet	$	1,392	$	1,381

(a)For the period from inception to March 31, 2020, the accretion of discount and a reduction in effective interest rates was offset by changes in estimates of the amount and timing of future recoveries under the adverse development reinsurance agreement.

(b)Excluded from our definition of APTI.

The following table presents the rollforward of activity in the deferred gain from the adverse development reinsurance agreement:

Three Months Ended March 31,
(in millions)		2020		2019
Balance at beginning of year, net of discount	$	1,381	$	1,382
(Favorable) unfavorable prior year reserve development ceded to NICO(a)		6		2
Amortization attributed to deferred gain at inception(b)		(53)		(58)
Amortization attributed to changes in deferred gain(c)		(14)		(20)
Changes in discount on ceded loss reserves		72		307
Balance at end of period, net of discount	$	1,392	$	1,613

(a)Prior year reserve development ceded to NICO under the retroactive reinsurance agreement is deferred under U.S. GAAP.

(b)Represents amortization of the deferred gain recognized in APTI.

(c)Excluded from APTI and included in U.S. GAAP.

The lines of business subject to this agreement have been the source of the majority of the prior year adverse development charges over the past several years. The agreement is expected to result in lower capital charges for reserve risks at our U.S. insurance subsidiaries. In addition, we would expect future net investment income to decline as a result of lower invested assets.

For a summary of significant reinsurers see Item 7. MD&A – Enterprise Risk Management – Insurance Risks – Reinsurance Activities – Reinsurance Recoverable in our 2019 Annual Report.

LIFE AND ANNUITY reserves and dac

The following section provides discussion of life and annuity reserves and deferred policy acquisition costs.

Variable Annuity Guaranteed Benefits and Hedging Results

Our Individual Retirement and Group Retirement businesses offer variable annuity products with GMWB riders that provide guaranteed living benefit features. The liabilities for GMWB are accounted for as embedded derivatives measured at fair value. The fair value of the embedded derivatives may fluctuate significantly based on market interest rates, equity prices, credit spreads, market volatility, policyholder behavior and other factors.

132 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Insurance Reserves

In addition to risk-mitigating features in our variable annuity product design, we have an economic hedging program designed to manage market risk from GMWB, including exposures to changes in interest rates, equity prices, credit spreads and volatility. The hedging program utilizes derivative instruments, including but not limited to equity options, futures contracts and interest rate swap and swaption contracts, as well as fixed maturity securities with a fair value election.

For additional discussion of market risk management related to these product features see Enterprise Risk Management – Insurance Risks – Life and Retirement Companies’ Key Risks – Variable Annuity, Index Annuity and Universal Life Risk Management and Hedging Programs in our 2019 Annual Report.

Differences in Valuation of Embedded Derivatives and Economic Hedge Target

The variable annuity hedging program utilizes an economic hedge target, which represents an estimate of the underlying economic risks in our GMWB riders. The economic hedge target differs from the U.S. GAAP valuation of the GMWB embedded derivatives primarily due to the following:

The economic hedge target includes 100 percent of rider fees in present value calculations; the U.S. GAAP valuation reflects only those fees attributed to the embedded derivative such that the initial value at contract issue equals zero;

The economic hedge target uses best estimate actuarial assumptions and excludes explicit risk margins used for U.S. GAAP valuation, such as margins for policyholder behavior, mortality, and volatility; and

The economic hedge target excludes the non-performance or “own credit” risk adjustment used in the U.S. GAAP valuation, which reflects a market participant’s view of our claims-paying ability by incorporating a different spread (the NPA spread) to the curve used to discount projected benefit cash flows.

Because the discount rate includes the NPA spread and other explicit risk margins, the U.S. GAAP valuation is generally less sensitive to movements in interest rates and other market factors, and to changes from actuarial assumption updates, than the economic hedge target.

For more information on our valuation methodology for embedded derivatives within policyholder contract deposits see Note 5 to the Condensed Consolidated Financial Statements.

The market value of the hedge portfolio compared to the economic hedge target at any point in time may be different and is not expected to be fully offsetting. In addition to the derivatives held in conjunction with the variable annuity hedging program, the Life and Retirement companies have cash and invested assets available to cover future claims payable under these guarantees. The primary sources of difference between the change in the fair value of the hedging portfolio and the economic hedge target include:

Basis risk due to the variance between expected and actual fund returns, which may be either positive or negative;

Realized volatility versus implied volatility;

Actual versus expected changes in the hedge target driven by assumptions not subject to hedging, particularly policyholder behavior; and

Risk exposures that we have elected not to explicitly or fully hedge.

The following table presents a reconciliation between the fair value of the U.S. GAAP embedded derivatives and the value of our economic hedge target:

		March 31,		December 31,
(in millions)		2020		2019
Reconciliation of embedded derivatives and economic hedge target:
Embedded derivative liability	$	3,978	$	2,474
Exclude non-performance risk adjustment		(6,719)		(2,504)
Embedded derivative liability, excluding NPA		10,697		4,978
Adjustments for risk margins and differences in valuation		(6,346)		(2,394)
Economic hedge target liability	$	4,351	$	2,584

Impact on Pre-tax Income (Loss)

The impact on our pre-tax income (loss) of the variable annuity guaranteed living benefits and related hedging results includes changes in the fair value of the GMWB embedded derivatives, and changes in the fair value of related derivative hedging instruments, both of which are recorded in Other realized capital gains (losses). Realized capital gains (losses), as well as net investment income from changes in the fair value of fixed maturity securities used in the hedging program, are excluded from adjusted pre-tax income of Individual Retirement and Group Retirement.

AIG | First Quarter 2020 Form 10-Q 133

ITEM 2 | Insurance Reserves

The change in the fair value of the embedded derivatives and the change in the value of the hedging portfolio are not expected to be fully offsetting, primarily due to the differences in valuation between the economic hedge target, the U.S. GAAP embedded derivatives and the fair value of the hedging portfolio, as discussed above. When corporate credit spreads widen, the change in the NPA spread generally reduces the fair value of the embedded derivative liabilities, resulting in a gain, and when corporate credit spreads narrow or tighten, the change in the NPA spread generally increases the fair value of the embedded derivative liabilities, resulting in a loss. In addition to changes driven by credit market-related movements in the NPA spread, the NPA balance also reflects changes in business activity and in the net amount at risk from the underlying guaranteed living benefits.

The following table presents the net increase (decrease) to consolidated pre-tax income (loss) from changes in the fair value of the GMWB embedded derivatives and related hedges, excluding related DAC amortization:

Three Months Ended March 31,
(in millions)		2020		2019
Change in fair value of embedded derivatives, excluding NPA	$	(5,601)	$	215
Change in fair value of variable annuity hedging portfolio:
Fixed maturity securities*		7		96
Interest rate derivative contracts		2,194		293
Equity derivative contracts		1,384		(593)
Change in fair value of variable annuity hedging portfolio		3,585		(204)
Change in fair value of embedded derivatives excluding NPA, net of hedging portfolio		(2,016)		11
Change in fair value of embedded derivatives due to NPA spread		2,646		(163)
Change in fair value of embedded derivatives due to change in NPA volume		1,569		(13)
Total change due to NPA		4,215		(176)
Net impact on pre-tax income (loss)	$	2,199	$	(165)
By Consolidated Income Statement line
Net investment income	$	7	$	96
Net realized capital gains (losses)		2,192		(261)
Net impact on pre-tax income (loss)	$	2,199	$	(165)

*Beginning in July 2019, the fixed maturity securities portfolio used in the hedging program was rebalanced to reposition the portfolio from a duration, sector, and issuer perspective. As part of this rebalancing, fixed maturity securities where we elected the fair value option were sold. Later in the quarter, as new fixed maturity securities were purchased, they were classified as available for sale. The change in fair value of available-for-sale fixed maturity securities and recognized as a component of other comprehensive income was reduced $13 million for the three-month period ended March 31, 2020.

The net impact on pre-tax income of $2.2 billion from the GMWB embedded derivatives and related hedges in the three-month period ended March 31, 2020 (excluding related DAC amortization) was driven by widening of credits spreads on the economic hedge target as well as the NPA spread, impact of lower interest rates that resulted in NPA volume gains from higher expected GMWB payments, offset by the impact of lower interest rates on the change in the fair value of embedded derivatives excluding NPA, net of the hedging portfolio. In the first quarter of 2019, the net impact on pre-tax loss of $165 million was primarily driven by losses from credit spread tightening and lower equity volatility on the economic hedge target and the impact of tighter credit spreads on the NPA spread.

The change in the fair value of the GMWB embedded derivatives, excluding NPA, in the first quarter of 2020 reflected losses from decreases in interest rates and lower equity markets, offset by widening of crediting spreads. The change in the fair value of the GMWB embedded derivatives, excluding NPA, in the first quarter of 2019 reflected gains from higher equity markets, offset by losses from decreases in interest rates, tightening of credit spreads, and lower equity volatility.

Fair value gains or losses in the hedging portfolio are typically not fully offset by increases or decreases in liabilities on a U.S. GAAP basis, due to the NPA and other risk margins used for U.S. GAAP valuation that cause the embedded derivatives to be less sensitive to changes in market rates than the hedge portfolio. On an economic basis, the changes in the fair value of the hedge portfolio were partially offset by the increase in the economic hedge target, as discussed below. In the first quarter of 2020, we estimated a net mark to market gain of approximately $2 billion from our hedging activities related to our economic hedge target primarily driven by widening credit spreads. In the first quarter of 2019, we estimated a net mark to market gain of approximately $160 million from our hedging activities related to our economic hedge target primarily driven by a modeling refinement to our economic projections.

Change in Economic Hedge Target

The increase in the economic hedge target liability in the first quarter of 2020 was primarily due to lower interest rates, lower equity markets, offset by widening credit spreads.

134 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Insurance Reserves

Change in Fair Value of the Hedging Portfolio

The changes in the fair value of the economic hedge target and, to a lesser extent, the embedded derivative valuation under U.S. GAAP, were offset in part by the following changes in the fair value of the variable annuity hedging portfolio:

Changes in the fair value of interest rate derivative contracts, which included swaps, swaptions and futures, resulted in gains driven by lower interest rates in the first quarters of 2020 and 2019.

Changes in the fair value of equity derivative contracts, which included futures and options, resulted in gains in the first quarter of 2020 versus losses in the first quarter of 2019, which varied based on the relative change in equity market returns in the respective periods.

Changes in the fair value of fixed maturity securities, primarily corporate bonds, are used as a capital-efficient way to economically hedge interest rate and credit spread-related risk. Beginning in July 2019, the change in the fair value of available-for-sale hedging bonds is reported as a component of comprehensive income in the Condensed Consolidated Statements of Comprehensive Income (Loss). Prior to July 2019, the change in the fair value of the hedging bonds, which was excluded from the adjusted pre-tax income of the Individual Retirement and Group Retirement segments, was reported in net investment income on the Consolidated Statements of Income (Loss). The change in the fair value of the corporate bond hedging program in the first quarter of 2020 reflected gains due to decreases in interest rates offset by widening credit spreads. The change in the fair value of the corporate bond hedging program in the first quarter of 2019 reflected gains due to decreases in interest rates, and tightening of credit spreads.

DAC

The following table summarizes the major components of the changes in DAC, including VOBA, within the Life and Retirement companies, excluding DAC of the Legacy Portfolio:

Three Months Ended March 31,
(in millions)		2020		2019
Balance, beginning of year	$	7,901	$	9,046
Initial allowance upon CECL adoption		15		-
Acquisition costs deferred		260		323
Amortization expense:
Related to realized capital gains and losses		(535)		93
All other operating amortization		(318)		(200)
Increase (decrease) in DAC due to foreign exchange		(32)		7
Change related to unrealized depreciation (appreciation) of investments		1,195		(781)
Balance, end of period*	$	8,486	$	8,488

*DAC balance excluding the amount related to unrealized depreciation (appreciation) of investments was $9.3 billion and $9.6 billion at March 31, 2020 and 2019, respectively.

DAC and Reserves Related to Unrealized Appreciation of Investments

DAC and Reserves for universal life and investment-type products (collectively, investment-oriented products) are adjusted at each balance sheet date to reflect the change in DAC, unearned revenue, and benefit reserves with an offset to Other comprehensive income (OCI) as if securities available for sale had been sold at their stated aggregate fair value and the proceeds reinvested at current yields (shadow Investment-Oriented Adjustments). Similarly, for long-duration traditional products, significant unrealized appreciation of investments in a sustained low interest rate environment may cause additional future policy benefit liabilities (shadow Loss Adjustments) with an offset to OCI to be recorded.

Shadow adjustments to DAC and unearned revenue generally move in the opposite direction of the change in unrealized appreciation of the available for sale securities portfolio, reducing the reported DAC and unearned revenue balance when market interest rates decline. Conversely, shadow adjustments to benefit reserves generally move in the same direction as the change in unrealized appreciation of the available for sale securities portfolio, increasing reported future policy benefit liabilities balance when market interest rates decline.

Market conditions in the first quarter of 2020 drove an $8.4 billion decrease in the unrealized appreciation of fixed maturity securities held to support businesses in the Life and Retirement companies at March 31, 2020 compared to December 31, 2019. At March 31, 2020, the shadow Investment-Oriented Adjustments reflected increases in DAC and unearned revenues and decreases in future policy benefit liabilities compared to December 31, 2019, while the shadow Loss Adjustments reflected a decrease in future policy benefit liabilities.

AIG | First Quarter 2020 Form 10-Q 135

ITEM 2 | Insurance Reserves

Reserves

The following table presents a rollforward of insurance reserves by operating segments for Life and Retirement, including future policy benefits, policyholder contract deposits, other policy funds, and separate account liabilities, as well as Retail Mutual Funds and Group Retirement mutual fund assets under administration:

Three Months Ended March 31,
(in millions)		2020		2019
Individual Retirement
Balance at beginning of period, gross	$	144,928	$	132,729
Premiums and deposits		3,116		4,186
Surrenders and withdrawals		(3,887)		(3,222)
Death and other contract benefits		(823)		(831)
Subtotal		(1,594)		133
Change in fair value of underlying assets and reserve accretion, net of
policy fees		(7,419)		5,763
Cost of funds*		412		403
Other reserve changes		(268)		55
Balance at end of period		136,059		139,083
Reinsurance ceded		(313)		(316)
Total Individual Retirement insurance reserves and mutual fund assets	$	135,746	$	138,767
Group Retirement
Balance at beginning of period, gross	$	102,049	$	91,685
Premiums and deposits		1,855		2,063
Surrenders and withdrawals		(2,260)		(2,781)
Death and other contract benefits		(182)		(157)
Subtotal		(587)		(875)
Change in fair value of underlying assets and reserve accretion, net of
policy fees		(10,705)		5,807
Cost of funds*		278		278
Other reserve changes		(88)		11
Balance at end of period		90,947		96,906
Total Group Retirement insurance reserves and mutual fund assets	$	90,947	$	96,906
Life Insurance
Balance at beginning of period, gross	$	22,096	$	19,719
Premiums and deposits		926		908
Surrenders and withdrawals		(147)		(173)
Death and other contract benefits		(137)		(143)
Subtotal		642		592
Change in fair value of underlying assets and reserve accretion, net of
policy fees		(383)		(262)
Cost of funds*		92		93
Other reserve changes		(1,191)		69
Balance at end of period		21,256		20,211
Reinsurance ceded		(1,160)		(1,238)
Total Life Insurance reserves	$	20,096	$	18,973

136 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Insurance Reserves

Institutional Markets
Balance at beginning of period, gross	$	21,588	$	19,839
Premiums and deposits		917		1,112
Surrenders and withdrawals		(105)		(246)
Death and other contract benefits		(294)		(158)
Subtotal		518		708
Change in fair value of underlying assets and reserve accretion, net of
policy fees		93		205
Cost of funds*		80		89
Other reserve changes		17		(8)
Balance at end of period		22,296		20,833
Reinsurance ceded		(45)		(43)
Total Institutional Markets reserves	$	22,251	$	20,790
Total insurance reserves and mutual fund assets
Balance at beginning of period, gross	$	290,661	$	263,972
Premiums and deposits		6,814		8,269
Surrenders and withdrawals		(6,399)		(6,422)
Death and other contract benefits		(1,436)		(1,289)
Subtotal		(1,021)		558
Change in fair value of underlying assets and reserve accretion, net of
policy fees		(18,414)		11,513
Cost of funds*		862		863
Other reserve changes		(1,530)		127
Balance at end of period		270,558		277,033
Reinsurance ceded		(1,518)		(1,597)
Total insurance reserves and mutual fund assets	$	269,040	$	275,436

*Excludes amortization of deferred sales inducements.

Insurance reserves of Life and Retirement, as well as Retail Mutual Funds and Group Retirement mutual fund assets under administration, were comprised of the following balances:

		March 31,		December 31,
(in millions)		2020		2019
Future policy benefits	$	18,015	$	17,963
Policyholder contract deposits		149,876		147,545
Other policy funds		277		271
Separate account liabilities		76,786		91,222
Total insurance reserves*		244,954		257,001
Mutual fund assets		25,604		33,660
Total insurance reserves and mutual fund assets	$	270,558	$	290,661

*Excludes reserves related to the Legacy Portfolio.

AIG | First Quarter 2020 Form 10-Q 137

ITEM 2 | Liquidity and Capital Resources

Liquidity and Capital Resources

Overview

Liquidity refers to the ability to generate sufficient cash resources to meet our payment obligations. It is defined as cash and unencumbered assets that can be monetized in a short period of time at a reasonable cost. We endeavor to manage our liquidity prudently through various risk committees, policies and procedures, and a stress testing and liquidity risk framework established by our Treasury group with oversight by Enterprise Risk Management (ERM). Our liquidity risk framework is designed to manage liquidity at both AIG Parent and its subsidiaries to meet our financial obligations for a minimum of six months under a liquidity stress scenario.

See Part II Item 7. MD&A — Enterprise Risk Management — Risk Appetite, Limits, Identification, and Measurement and Enterprise Risk Management — Liquidity Risk Management in the 2019 Annual Report for additional information.

Capital refers to the long-term financial resources available to support the operation of our businesses, fund business growth, and cover financial and operational needs that arise from adverse circumstances. Our primary source of ongoing capital generation is derived from the profitability of our insurance subsidiaries. We must comply with numerous constraints on our minimum capital positions. These constraints drive the requirements for capital adequacy at AIG and the individual businesses and are based on internally-defined risk tolerances, regulatory requirements, rating agency and creditor expectations and business needs. Actual capital levels are monitored on a regular basis, and using ERM’s stress testing methodology, we evaluate the capital impact of potential macroeconomic, financial and insurance stresses in relation to the relevant capital constraints of both AIG and our insurance subsidiaries.

We believe that we have sufficient liquidity and capital resources to satisfy future requirements and meet our obligations to policyholders, customers, creditors and debt-holders, including those arising from reasonably foreseeable contingencies or events.

Nevertheless, some circumstances may cause our cash or capital needs to exceed projected liquidity or readily deployable capital resources. Additional collateral calls, deterioration in investment portfolios or reserve strengthening affecting statutory surplus, higher surrenders of annuities and other policies, downgrades in credit ratings, or catastrophic losses may result in significant additional cash or capital needs and loss of sources of liquidity and capital. In addition, regulatory and other legal restrictions could limit our ability to transfer funds freely, either to or from our subsidiaries.

Depending on market conditions, regulatory and rating agency considerations and other factors, we may take various liability and capital management actions. Liability management actions may include, but are not limited to, repurchasing or redeeming outstanding debt, issuing new debt or engaging in debt exchange offers. Capital management actions may include, but are not limited to, issuing preferred stock, paying dividends to our shareholders and AIG Common Stock, par value $2.50 per share (AIG Common Stock) and/or warrant repurchases.

138 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Liquidity and Capital Resources

LIQUIDITY AND CAPITAL RESOURCES HIGHLIGHTS

Sources

AIG Parent Funding from Subsidiaries

During the first quarter of 2020, AIG Parent received $397 million in dividends and loan repayments from subsidiaries. Of this amount, $240 million consisted of dividends in the form of cash and fixed maturity securities from our General Insurance companies and $157 million consisted of dividends and loan repayments in the form of cash from our Life and Retirement companies.

AIG Parent also received a net amount of $459 million in tax sharing payments in the form of cash from our insurance businesses in the first quarter of 2020. The tax sharing payments may be subject to further adjustment in future periods.

Revolving Credit Facility

On March 20, 2020, AIG Parent borrowed $1.3 billion under its $4.5 billion committed, revolving syndicated credit facility.

Uses

Debt Reduction

In March 2020, we redeemed $350 million aggregate principal amount of our 4.35% Callable Notes Due 2045.

We also made other repurchases of and repayments on debt instruments of approximately $560 million during the first quarter of 2020. AIG Parent made interest payments on our debt instruments totaling $226 million during the first quarter of 2020.

Dividend

We paid a cash dividend of $365.625 per share on AIG’s Series A 5.85% Non-Cumulative Perpetual Preferred Stock (Series A Preferred Stock) during the first quarter of 2020 totaling $7 million.

We paid a cash dividend of $0.32 per share on AIG Common Stock during the first quarter of 2020 totaling $276 million.

Repurchase of Common Stock

We repurchased approximately 12 million shares of AIG Common Stock during the first quarter of 2020, for an aggregate purchase price of $500 million, under an accelerated stock repurchase (ASR) agreement executed in February 2020.

AIG | First Quarter 2020 Form 10-Q 139

ITEM 2 | Liquidity and Capital Resources

Analysis of Sources and Uses of Cash

The following table presents selected data from AIG's Condensed Consolidated Statements of Cash Flows:

Three Months Ended March 31,
(in millions)		2020		2019
Sources:
Changes in policyholder contract balances	$	642	$	1,434
Issuance of long-term debt and debt of consolidated investment entities		673		1,449
Borrowings under syndicated credit facility		1,300		-
Issuance of preferred stock, net of issuance costs		-		485
Net cash provided by other financing activities		-		263
Total sources		2,615		3,631
Uses:
Net cash used in operating activities		(14)		(976)
Net cash used in other investing activities		(633)		(1,979)
Repayments of long-term debt and debt of consolidated investment entities		(884)		(589)
Purchase of common stock		(500)		-
Dividends paid on preferred stock		(7)		-
Dividends paid on common stock		(276)		(278)
Net cash provided by (used in) other financing activities		(288)		-
Total uses		(2,602)		(3,822)
Effect of exchange rate changes on cash and restricted cash		10		12
Increase (decrease) in cash and restricted cash	$	23	$	(179)

The following table presents a summary of AIG’s Condensed Consolidated Statement of Cash Flows:

Three Months Ended March 31,
(in millions)		2020		2019
Summary:
Net cash provided by (used in) operating activities	$	(14)	$	(976)
Net cash provided by (used in) investing activities		(633)		(1,979)
Net cash provided by (used in) financing activities		660		2,764
Effect of exchange rate changes on cash and restricted cash		10		12
Net Increase (decrease) in cash and restricted cash		23		(179)
Cash and restricted cash at beginning of year		3,287		3,358
Change in cash of businesses held for sale		9		-
Cash and restricted cash at end of period	$	3,319	$	3,179

Operating Cash Flow Activities

Insurance companies generally receive most premiums in advance of the payment of claims or policy benefits. The ability of insurance companies to generate positive cash flow is affected by the frequency and severity of losses under their insurance policies, policy retention rates and operating expenses.

Interest payments totaled $323 million in the first quarter of 2020 compared to $315 million in the first quarter of 2019. Excluding interest payments, AIG had operating cash inflows of $309 million in the first quarter of 2020 compared to operating cash outflows of $661 million in the first quarter of 2019.

Investing Cash Flow Activities

Net cash used in investing activities in the first quarter of 2020 was $633 million compared to net cash used in investing activities of $2.0 billion in the first quarter of 2019.

140 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Liquidity and Capital Resources

Financing Cash Flow Activities

Net cash provided by financing activities in the first quarter of 2020 reflected:

•approximately $1.3 billion inflow from AIG’s committed, revolving syndicated credit facility;

•approximately $276 million in the aggregate to pay a dividend of $0.32 per share on AIG Common Stock;

•approximately $7 million to pay a dividend of $365.625 per share on AIG’s Series A Preferred Stock;

•$500 million to repurchase approximately 12 million shares of AIG Common Stock; and

•approximately $211 million in net outflows from the issuance and repayment of long-term debt and debt of consolidated investment entities.

Net cash provided by financing activities in the first quarter of 2019 reflected:

•approximately $278 million in the aggregate to pay a dividend of $0.32 per share on AIG Common Stock;

•approximately $860 million in net inflows from the issuance and repayment of long-term debt and debt of consolidated investment entities; and

•approximately $485 million inflow from the issuance of AIG’s Series A Preferred Stock.

Liquidity and Capital Resources of AIG Parent and Subsidiaries

AIG Parent

As of March 31, 2020, AIG Parent had approximately $10.7 billion in liquidity sources. AIG Parent’s liquidity sources are primarily held in the form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities and also include a committed, revolving syndicated credit facility. Fixed maturity securities primarily include U.S. government and government sponsored entity securities, U.S. agency mortgage-backed securities, corporate and municipal bonds and certain other highly rated securities. AIG Parent actively manages its assets and liabilities in terms of products, counterparties and duration. Based upon an assessment of funding needs, the liquidity sources can be readily monetized through sales or repurchase agreements or contributed as admitted assets to regulated insurance companies. AIG Parent liquidity is monitored through the use of various internal liquidity risk measures. AIG Parent’s primary sources of liquidity are dividends, distributions, loans and other payments from subsidiaries and credit facilities. AIG Parent’s primary uses of liquidity are for debt service, capital and liability management, and operating expenses.

We believe that we have sufficient liquidity and capital resources to satisfy our reasonably foreseeable future requirements and meet our obligations to our creditors, debt-holders and insurance company subsidiaries. We expect to access the debt and preferred equity markets from time to time to meet funding requirements as needed.

We utilize our capital resources to support our businesses, with the majority of capital allocated to our insurance operations. Should we have or generate more capital than is needed to support our business strategies (including organic growth or acquisition opportunities) or mitigate risks inherent to our business, we may develop plans to distribute such capital to shareholders via dividends or AIG Common Stock repurchase authorizations or deploy such capital towards liability management.

In the normal course, it is expected that a portion of the capital released by our insurance operations, by our other operations or through the utilization of AIG’s deferred tax assets may be available to support our business strategies, for distribution to shareholders or for liability management.

In developing plans to distribute capital, AIG considers a number of factors, including, but not limited to: AIG’s business and strategic plans, expectations for capital generation and utilization, AIG’s funding capacity and capital resources in comparison to internal benchmarks, as well as rating agency expectations, regulatory standards and internal stress tests for capital.

AIG | First Quarter 2020 Form 10-Q 141

ITEM 2 | Liquidity and Capital Resources

The following table presents AIG Parent's liquidity sources:

	As of		As of
(in millions)	March 31, 2020		December 31, 2019
Cash and short-term investments(a)	$	5,112	$	2,804
Unencumbered fixed maturity securities(b)		2,376		4,777
Total AIG Parent liquidity		7,488		7,581
Available capacity under committed, syndicated credit facility(c)		3,200		4,500
Total AIG Parent liquidity sources	$	10,688	$	12,081

(a)Cash and short-term investments include reverse repurchase agreements totaling $3.0 billion and $2.1 billion as of March 31, 2020 and December 31, 2019, respectively.

(b)Unencumbered securities consist of publicly traded, investment grade rated fixed maturity securities. Fixed maturity securities primarily include U.S. government and government sponsored entity securities, U.S. agency mortgage-backed securities, corporate and municipal bonds and certain other highly rated securities.

(c)For additional information relating to this committed, syndicated credit facility see Credit Facilities below.

Insurance Companies

We expect that our insurance companies will be able to continue to satisfy reasonably foreseeable future liquidity requirements and meet their obligations, including those arising from reasonably foreseeable contingencies or events, through cash from operations and, to the extent necessary, monetization of invested assets. Our insurance companies’ liquidity resources are primarily held in the form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities.

Each of our material insurance companies’ liquidity is monitored through various internal liquidity risk measures. The primary sources of liquidity are premiums, fees, reinsurance recoverables and investment income and maturities. The primary uses of liquidity are paid losses, reinsurance payments, benefit claims, surrenders, withdrawals, interest payments, dividends, expenses, investment purchases and collateral requirements.

Our General Insurance companies may require additional funding to meet capital or liquidity needs under certain circumstances. Large catastrophes may require us to provide additional support to our affected operations. Downgrades in our credit ratings could put pressure on the insurer financial strength ratings of our subsidiaries, which could result in non-renewals or cancellations by policyholders and adversely affect a subsidiary’s ability to meet its own obligations. Increases in market interest rates may adversely affect the financial strength ratings of our subsidiaries, as rating agency capital models may reduce the amount of available capital relative to required capital. Other potential events that could cause a liquidity strain include an economic collapse of a nation or region significant to our operations, nationalization, catastrophic terrorist acts, pandemics or other events causing economic or political upheaval.

For a discussion regarding risks associated with COVID-19, see Part II Item 1A –Risk Factors – COVID-19 is adversely affecting, and is expected to continue to adversely affect, financial condition and results of operations, and its ultimate impact will depend on future developments that are uncertain and cannot be predicted, including the scope and duration of the crisis and actions taken by governmental and regulatory authorities in response thereto.

Management believes that because of the size and liquidity of our Life and Retirement companies’ investment portfolios, normal deviations from projected claim or surrender experience would not create significant liquidity risk. Furthermore, our Life and Retirement companies’ products contain certain features that mitigate surrender risk, including surrender charges. However, in times of extreme capital markets disruption, liquidity needs could outpace resources. As part of their risk management framework, our Life and Retirement companies continue to evaluate and, where appropriate, pursue strategies and programs to improve their liquidity position and facilitate their ability to maintain a fully invested asset portfolio.

Certain of our U.S. insurance companies are members of the FHLBs in their respective districts. Borrowings from FHLBs are used to supplement liquidity or for other uses deemed appropriate by management. Our U.S. General Insurance companies had no outstanding borrowings from FHLBs at both March 31, 2020 and December 31, 2019. Our U.S. Life and Retirement companies had $3.6 billion and $3.5 billion which were due to FHLBs in their respective districts at March 31, 2020 and December 31, 2019, respectively, under funding agreements issued through our Individual Retirement, Group Retirement and Institutional Markets operating segments, which were reported in Policyholder contract deposits. Proceeds from funding agreements are generally invested in fixed income securities and other investments intended to generate spread income. These investment contracts do not have mortality or morbidity risk and are similar to GICs. In addition, our U.S. Life and Retirement companies had no outstanding borrowings in the form of cash advances from FHLBs at both March 31, 2020 and December 31, 2019.

Certain of our U.S. Life and Retirement companies have programs, which began in 2012, that lend securities from their investment portfolio to supplement liquidity or for other uses as deemed appropriate by management. Under these programs, these U.S. Life and Retirement companies lend securities to financial institutions and receive cash as collateral equal to 102 percent of the fair value of the loaned securities. Cash collateral received is invested in short-term investments or partially used for short-term liquidity purposes.

142 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Liquidity and Capital Resources

Additionally, the aggregate amount of securities that a Life and Retirement company is able to lend under its program at any time is limited to five percent of its general account statutory-basis admitted assets. Our U.S. Life and Retirement companies had $2.6 billion and $2.8 billion of securities subject to these agreements at March 31, 2020 and December 31, 2019, respectively, and $2.9 billion of liabilities to borrowers for collateral received at both March 31, 2020 and December 31, 2019, respectively.

AIG generally manages capital between AIG Parent and our insurance companies through internal, Board-approved policies and limits, as well as management standards. In addition, AIG Parent has unconditional capital maintenance agreements (CMAs) in place with certain subsidiaries. Nevertheless, regulatory and other legal restrictions could limit our ability to transfer capital freely, either to or from our subsidiaries.

In February 2018, AIG Parent entered into a CMA with Fortitude Re. Among other things, the CMA provides that AIG Parent will maintain available statutory capital and surplus in each of Fortitude Re’s long term business fund and general business account at or above a stress threshold percentage of its projected enhanced capital requirement in respect of the applicable fund, as defined under Bermuda law. As of March 31, 2020, the stress threshold percentage under this CMA was 125 percent.

AIG Parent and/or certain subsidiaries are parties to several letter of credit agreements with various financial institutions, which issue letters of credit from time to time in support of our insurance companies. These letters of credit are subject to reimbursement by AIG Parent and/or certain subsidiaries in the event of a drawdown by our insurance companies. Letters of credit issued in support of the General Insurance companies totaled approximately $3.0 billion at March 31, 2020. Letters of credit issued in support of the Life and Retirement companies totaled approximately $852 million at March 31, 2020. Letters of credit issued in support of Fortitude Re totaled $550 million at March 31, 2020.

In the first quarter of 2020, our General Insurance companies collectively paid a total of approximately $240 million in dividends in the form of cash and fixed maturity securities to AIG Parent. The fixed maturity securities primarily included U.S. treasuries.

In the first quarter of 2020, our Life and Retirement companies collectively paid a total of approximately $157 million in dividends and loan repayments in the form of cash to AIG Parent.

Tax Matters

If the settlement agreements in principle are concluded in our ongoing dispute related to the disallowance of foreign tax credits associated with cross border financing transactions, we will be required to make a payment to the U.S. Treasury. Although we can provide no assurance regarding whether the non-binding settlements will be finalized, the amount we currently expect to pay based on current proposed settlement terms is approximately $1.7 billion, including obligations of AIG Parent and subsidiaries. This amount is net of payments previously made with respect to cross border financing transactions involving matters dating back to 1997 and other matters largely related to the same tax years. There remains uncertainty with regard to whether the settlements in principle will ultimately be approved by the relevant authorities as well as the amount and timing of any potential payment(s) or prepayment(s), one or more of which could be made as early as the third quarter of 2020. AIG has waived assessment on certain amounts and the IRS will seek payment through a Notice and Demand for Payment once their administrative steps are completed.

For additional information regarding this matter see Note 15 to the Condensed Consolidated Financial Statements.

Credit Facilities

We maintain a committed, revolving syndicated credit facility (the Facility) as a potential source of liquidity for general corporate purposes. The Facility provides for aggregate commitments by the bank syndicate to provide unsecured revolving loans and/or standby letters of credit of up to $4.5 billion without any limits on the type of borrowings and is scheduled to expire in June 2022.

To further increase AIG Parent liquidity, on March 20, 2020, we borrowed $1.3 billion under the Facility. As of March 31, 2020, a total of $3.2 billion remains available under the Facility. Our ability to utilize the Facility is not contingent on our credit ratings. However, our ability to utilize the Facility is conditioned on the satisfaction of certain legal, operating, administrative and financial covenants and other requirements contained in the Facility. These include covenants relating to our maintenance of a specified total consolidated net worth and total consolidated debt to total consolidated capitalization. Failure to satisfy these and other requirements contained in the Facility would restrict our access to the Facility and could have a material adverse effect on our financial condition, results of operations and liquidity. We expect to utilize the Facility from time to time, and may use the proceeds for general corporate purposes.

AIG | First Quarter 2020 Form 10-Q 143

ITEM 2 | Liquidity and Capital Resources

Contractual Obligations

The following table summarizes contractual obligations in total, and by remaining maturity:

March 31, 2020			Payments due by Period
		Total	Remainder of			2021 -		2023 -
(in millions)		Payments		2020		2022		2024		2025		Thereafter
Insurance operations
Loss reserves(a)	$	80,491	$	16,073	$	22,020	$	11,578	$	3,758	$	27,062
Insurance and investment contract liabilities		278,559		14,343		32,084		30,227		13,733		188,172
Borrowings		1,344		121		228		-		-		995
Syndicated credit facility		-		-		-		-		-		-
Interest payments on borrowings		778		25		99		99		50		505
Other long-term obligations		-		-		-		-		-		-
Total	$	361,172	$	30,562	$	54,431	$	41,904	$	17,541	$	216,734
Other
Insurance and investment contract liabilities		-		-		-		-		-		-
Borrowings	$	23,879	$	1,384	$	3,216	$	2,824	$	1,931	$	14,524
Syndicated credit facility		1,300		1,300		-		-		-		-
Interest payments on borrowings		13,585		780		1,796		1,582		731		8,696
Other long-term obligations		420		112		200		96		-		12
Total	$	39,184	$	3,576	$	5,212	$	4,502	$	2,662	$	23,232
Consolidated
Loss reserves(a)	$	80,491	$	16,073	$	22,020	$	11,578	$	3,758	$	27,062
Insurance and investment contract liabilities		278,559		14,343		32,084		30,227		13,733		188,172
Borrowings		25,223		1,505		3,444		2,824		1,931		15,519
Syndicated credit facility		1,300		1,300		-		-		-		-
Interest payments on borrowings		14,363		805		1,895		1,681		781		9,201
Other long-term obligations(b)		420		112		200		96		-		12
Total(c)	$	400,356	$	34,138	$	59,643	$	46,406	$	20,203	$	239,966

(a)Represents loss reserves, undiscounted and gross of reinsurance.

(b)Primarily includes contracts to purchase future services and other capital expenditures.

(c)Does not reflect unrecognized tax benefits of $4.8 billion. See Note 15 to the Condensed Consolidated Financial Statements for additional information.

Loss Reserves

Loss reserves relate to our General Insurance companies and represent estimates of future loss and loss adjustment expense payments based on historical loss development payment patterns. Due to the significance of the assumptions used, the payments by period presented above could be materially different from actual required payments. We believe that our General Insurance companies maintain adequate financial resources to meet the actual required payments under these obligations.

Insurance and Investment Contract Liabilities

Insurance and investment contract liabilities, including GIC liabilities, relate to our Life and Retirement companies. These liabilities include various investment-type products with contractually scheduled maturities, including periodic payments. These liabilities also include benefit and claim liabilities, of which a significant portion represents policies and contracts that do not have stated contractual maturity dates and may not result in any future payment obligations. For these policies and contracts (i) we are not currently making payments until the occurrence of an insurable event, such as death or disability, (ii) payments are conditional on survivorship or (iii) payment may occur due to a surrender or other non-scheduled event beyond our control.

We have made significant assumptions to determine the estimated undiscounted cash flows of these contractual policy benefits. These assumptions include mortality, morbidity, future lapse rates, expenses, investment returns and interest crediting rates, offset by expected future deposits and premiums on in-force policies. Due to the significance of the assumptions, the periodic amounts presented could be materially different from actual required payments. The amounts presented in this table are undiscounted and exceed the future policy benefits and policyholder contract deposits included in the Consolidated Balance Sheets.

We believe that our Life and Retirement companies have adequate financial resources to meet the payments actually required under these obligations. These subsidiaries have substantial liquidity in the form of cash and short-term investments. In addition, our Life and Retirement companies maintain significant levels of investment grade rated fixed maturity securities, including substantial holdings in government and corporate bonds, and could seek to monetize those holdings in the event operating cash flows are

144 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Liquidity and Capital Resources

insufficient. We expect liquidity needs related to GIC liabilities to be funded through cash flows generated from maturities and sales of invested assets.

Borrowings

Our borrowings exclude those incurred by consolidated investments and include hybrid financial instrument liabilities recorded at fair value. We expect to repay the long-term debt maturities and interest accrued on borrowings by AIG through maturing investments and dispositions of invested assets, future cash flows from operations, cash flows generated from invested assets, future debt or preferred stock issuance and other financing arrangements. Borrowings supported by assets of AIG include various notes and bonds payable as well as GIAs that are supported by cash and investments held by AIG Parent and certain non-insurance subsidiaries for the repayment of those obligations.

Off-Balance Sheet Arrangements and Commercial Commitments

The following table summarizes Off-Balance Sheet Arrangements and Commercial Commitments in total, and by remaining maturity:

March 31, 2020				Amount of Commitment Expiring
		Total Amounts		Remainder		2021 -		2023 -
(in millions)		Committed		of 2020		2022		2024		2025		Thereafter
Insurance operations
Guarantees:
Standby letters of credit	$	163	$	144	$	8	$	-	$	-	$	11
Guarantees of indebtedness		59		55		4		-		-		-
All other guarantees(a)		23		4		19		-		-		-
Commitments:
Investment commitments(b)		6,482		2,221		3,332		890		35		4
Commitments to extend credit		3,257		717		1,589		657		148		146
Letters of credit		2		2		-		-		-		-
Other commercial commitments		11		3		5		3		-		-
Total(c)	$	9,997	$	3,146	$	4,957	$	1,550	$	183	$	161
Other
Guarantees:
Liquidity facilities(d)	$	74	$	-	$	-	$	-	$	-	$	74
Standby letters of credit		80		80		-		-		-		-
All other guarantees		403		403		-		-		-		-
Commitments:
Investment commitments(b)		393		88		164		117		-		24
Commitments to extend credit		-		-		-		-		-		-
Letters of credit		11		11		-		-		-		-
Total(c)(e)	$	961	$	582	$	164	$	117	$	-	$	98
Consolidated
Guarantees:
Liquidity facilities(d)	$	74	$	-	$	-	$	-	$	-	$	74
Standby letters of credit		243		224		8		-		-		11
Guarantees of indebtedness		59		55		4		-		-		-
All other guarantees(a)		426		407		19		-		-		-
Commitments:
Investment commitments(b)		6,875		2,309		3,496		1,007		35		28
Commitments to extend credit		3,257		717		1,589		657		148		146
Letters of credit		13		13		-		-		-		-
Other commercial commitments		11		3		5		3		-		-
Total(c)(e)	$	10,958	$	3,728	$	5,121	$	1,667	$	183	$	259

(a)Excludes potential amounts for indemnification obligations included in asset sales agreements. For further information on indemnification obligations see Note 11 to the Condensed Consolidated Financial Statements.

(b)Includes commitments to invest in private equity funds, hedge funds and other funds and commitments to purchase and develop real estate in the United States and abroad. The commitments to invest in private equity funds, hedge funds and other funds are called at the discretion of each fund, as needed for funding new investments or expenses of the fund. The expiration of these commitments is estimated in the table above based on the expected life cycle of the related fund, consistent with past trends of requirements for funding. Investors under these commitments are primarily insurance and real estate subsidiaries.

AIG | First Quarter 2020 Form 10-Q 145

ITEM 2 | Liquidity and Capital Resources

(c)Does not include guarantees, CMAs or other support arrangements among AIG consolidated entities.

(d)Primarily represents liquidity facilities provided in connection with certain municipal swap transactions and collateralized bond obligations.

(e)Excludes commitments with respect to pension plans. The remaining annual pension contribution for 2020 is expected to be approximately $47 million for U.S. and non-U.S. plans.

Arrangements with Variable Interest Entities

We enter into various arrangements with variable interest entities (VIEs) in the normal course of business, and we consolidate a VIE when we are the primary beneficiary of the entity.

For a further discussion of our involvement with VIEs see Note 8 to the Condensed Consolidated Financial Statements.

Indemnification Agreements

We are subject to financial guarantees and indemnity arrangements in connection with our sales of businesses. These arrangements may be triggered by declines in asset values, specified business contingencies, the realization of contingent liabilities, litigation developments, or breaches of representations, warranties or covenants provided by us. These arrangements are typically subject to time limitations, defined by contract or by operation of law, such as by prevailing statutes of limitation. Depending on the specific terms of the arrangements, the maximum potential obligation may or may not be subject to contractual limitations.

For additional information regarding our indemnification agreements see Note 11 to the Condensed Consolidated Financial Statements.

We have recorded liabilities for certain of these arrangements where it is possible to estimate them. These liabilities are not material in the aggregate. We are unable to develop a reasonable estimate of the maximum potential payout under some of these arrangements. Overall, we believe that it is unlikely we will have to make any material payments under these arrangements.

Debt

The following table provides the rollforward of AIG’s total debt outstanding:

		Balance at				Maturities		Effect of					Balance at
Three Months Ended March 31,		December 31,				and		Foreign		Other		March 31,
(in millions)		2019		Issuances	Repayments			Exchange		Changes			2020
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable	$	20,467	$	-	$	(350)	$	(79)	$	10		$	20,048
Junior subordinated debt		1,542		-		-		(8)		-			1,534
AIG Japan Holdings Kabushiki Kaisha		344		-		-		5		-			349
AIGLH notes and bonds payable		282		-		-		-		-			282
AIGLH junior subordinated debt		361		-		-		-		-			361
Validus notes and bonds payable		353		-		-		-		(1)			352
Total AIG general borrowings		23,349		-		(350)		(82)		9			22,926
AIG borrowings supported by assets:(a)
Series AIGFP matched notes and bonds payable		21		-		-		-		-			21
GIAs, at fair value		2,003		34		(31)		-		209	(b)		2,215
Notes and bonds payable, at fair value		59		-		(2)		-		4	(b)		61
Total AIG borrowings supported by assets		2,083		34		(33)		-		213			2,297
Total debt issued or guaranteed by AIG		25,432		34		(383)		(82)		222			25,223
Other subsidiaries' notes, bonds, loans and
mortgages payable - not guaranteed by AIG		47		4		(6)		-		-			45
Total long-term debt		25,479		38		(389)		(82)		222			25,268
Syndicated credit facility(c)		-		1,300		-		-		-			1,300
Debt of consolidated investment entities - not
guaranteed by AIG(d)		9,871		635		(521)		(27)		184	(e)		10,142
Total debt	$	35,350	$	1,973	$	(910)	$	(109)	$	406		$	36,710

(a)AIG Parent guarantees all such debt, except for Series AIGFP matched notes and bonds payable, which are direct obligations of AIG Parent. Collateral posted to third parties was $1.5 billion at both March 31, 2020 and December 31, 2019. This collateral primarily consists of securities of the U.S. government and government sponsored entities and generally cannot be repledged or resold by the counterparties.

(b)Primarily represents adjustments to the fair value of debt.

(c)Syndicated credit facility is reported in Other liabilities in the Condensed Consolidated Balance Sheets.

146 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Liquidity and Capital Resources

(d)At March 31, 2020, includes debt of consolidated investment entities related to real estate investments of $3.1 billion, affordable housing partnership investments of $2.2 billion and other securitization vehicles of $4.8 billion. At December 31, 2019, includes debt of consolidated investment entities related to real estate investments of $3.2 billion, affordable housing partnership investments of $2.1 billion and other securitization vehicles of $4.6 billion.

(e)Includes the effect of consolidating previously unconsolidated partnerships.

TOTAL DEBT OUTSTANDING

(in millions)

Debt Maturities

The following table summarizes maturing long-term debt and syndicated credit facility at March 31, 2020 of AIG for the next four quarters:

		Second		Third		Fourth		First
		Quarter		Quarter		Quarter		Quarter
(in millions)		2020		2020		2020		2021		Total
AIG general borrowings	$	121	$	638	$	708	$	1,499	$	2,966
AIG borrowings supported by assets		8		27		3		2		40
Other subsidiaries' notes, bonds, loans and mortgages payable		40		-		-		-		40
Syndicated credit facility		1,300		-		-		-		1,300
Total	$	1,469	$	665	$	711	$	1,501	$	4,346

AIG | First Quarter 2020 Form 10-Q 147

ITEM 2 | Liquidity and Capital Resources

The following table presents maturities of long-term debt (including unamortized original issue discount, hedge accounting valuation adjustments and fair value adjustments, when applicable) and syndicated credit facility:

March 31, 2020			Remainder		Year Ending
(in millions)		Total		2020		2021		2022		2023		2024		2025	Thereafter
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable	$	20,048	$	1,346	$	1,499	$	1,511	$	1,553	$	998	$	1,258	$	11,883
Junior subordinated debt		1,534		-		-		-		-		-		-		1,534
AIG Japan Holdings Kabushiki Kaisha		349		121		228		-		-		-		-		-
AIGLH notes and bonds payable		282		-		-		-		-		-		-		282
AIGLH junior subordinated debt		361		-		-		-		-		-		-		361
Validus notes and bonds payable		352		-		-		-		-		-		-		352
Total AIG general borrowings		22,926		1,467		1,727		1,511		1,553		998		1,258		14,412
AIG borrowings supported by assets:
Series AIGFP matched notes and
bonds payable		21		-		-		-		-		-		-		21
GIAs, at fair value		2,215		38		154		52		126		147		673		1,025
Notes and bonds payable, at fair value		61		-		-		-		-		-		-		61
Total AIG borrowings supported by assets		2,297		38		154		52		126		147		673		1,107
Total debt issued or guaranteed by AIG		25,223		1,505		1,881		1,563		1,679		1,145		1,931		15,519
Debt not guaranteed by AIG:
Other subsidiaries notes, bonds, loans
and mortgages payable		45		40		2		1		1		1		-		-
Total debt not guaranteed by AIG		45		40		2		1		1		1		-		-
Syndicated credit facility		1,300		1,300		-		-		-		-		-		-
Total	$	26,568	$	2,845	$	1,883	$	1,564	$	1,680	$	1,146	$	1,931	$	15,519

Credit Ratings

Credit ratings estimate a company’s ability to meet its obligations and may directly affect the cost and availability of financing to that company. The following table presents the credit ratings of AIG and certain of its subsidiaries as of the date of this filing. Figures in parentheses indicate the relative ranking of the ratings within the agency’s rating categories; that ranking refers only to the major rating category and not to the modifiers assigned by the rating agencies.

	Short-Term Debt		Senior Long-Term Debt
	Moody’s	S&P	Moody’s(a)	S&P(b)	Fitch(c)
American International Group, Inc.	P-2 (2nd of 3)	A-2 (2nd of 8)	Baa 1 (4th of 9)	BBB+ (4th of 9)	BBB+ (4th of 9)
	Stable Outlook		Stable Outlook	Stable Outlook	Stable Outlook
AIG Financial Products Corp.(d)	P-2	A-2	Baa 1	BBB+
	Stable Outlook		Stable Outlook	Stable Outlook

(a)Moody’s appends numerical modifiers 1, 2 and 3 to the generic rating categories to show relative position within the rating categories.

(b)S&P ratings may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

(c)Fitch ratings may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

(d)AIG guarantees all obligations of AIG Financial Products Corp.

These credit ratings are current opinions of the rating agencies. They may be changed, suspended or withdrawn at any time by the rating agencies as a result of changes in, or unavailability of, information or based on other circumstances. Ratings may also be withdrawn at our request.

We are party to some agreements that contain “ratings triggers.” Depending on the ratings maintained by one or more rating agencies, these triggers could result in (i) the termination or limitation of credit availability or a requirement for accelerated repayment, (ii) the termination of business contracts or (iii) a requirement to post collateral for the benefit of counterparties.

In the event of a downgrade of AIG’s long-term senior debt ratings, AIGFP and certain other AIG entities would be required to post additional collateral under some derivative and other transactions, or certain of the counterparties of AIGFP or of such other AIG entities would be permitted to terminate such transactions early.

148 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Liquidity and Capital Resources

The actual amount of collateral that we would be required to post to counterparties in the event of such downgrades, or the aggregate amount of payments that we could be required to make, depends on market conditions, the fair value of outstanding affected transactions and other factors prevailing at the time of the downgrade.

For a discussion of the effects of downgrades in our credit ratings see Note 9 to the Condensed Consolidated Financial Statements and Part I, Item 1A. Risk Factors – Liquidity, Capital and Credit in our 2019 Annual Report.

FINANCIAL STRENGTH Ratings

Financial Strength ratings estimate an insurance company’s ability to pay its obligations under an insurance policy. The following table presents the ratings of our significant insurance subsidiaries as of the date of this filing.

	A.M. Best	S&P	Fitch	Moody’s
National Union Fire Insurance Company of Pittsburgh, Pa.	A	A+	A	A2
Lexington Insurance Company	A	A+	A	A2
American Home Assurance Company (U.S.)	A	A+	A	A2
American General Life Insurance Company	A	A+	A+	A2
The Variable Annuity Life Insurance Company	A	A+	A+	A2
United States Life Insurance Company in the City of New York	A	A+	A+	A2
AIG Europe S.A.	NR	A+	NR	A2
American International Group UK Ltd.	A	A+	NR	A2
AIG General Insurance Co. Ltd.	NR	A+	NR	NR
Validus Reinsurance, Ltd.	A	A	NR	A2

These financial strength ratings are current opinions of the rating agencies. They may be changed, suspended or withdrawn at any time by the rating agencies as a result of changes in, or unavailability of, information or based on other circumstances.

For a discussion of the effects of downgrades in our financial strength ratings see Note 9 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Part I, Item 1A. Risk Factors – Liquidity, Capital and Credit in our 2019 Annual Report.

Regulation and Supervision

For a discussion of our regulation and supervision by different regulatory authorities in the United States and abroad, including with respect to our liquidity and capital resources see Part I, Item 1. Business — Regulation and Part I, Item 1A. Risk Factors — Regulation in our 2019 Annual Report, and Regulatory Environment below in this Quarterly Report on Form 10-Q.

Dividends

On February 12, 2020, our Board of Directors declared a cash dividend on AIG Common Stock of $0.32 per share, payable on March 30, 2020 to shareholders of record on March 16, 2020. On May 4, 2020, our Board of Directors declared a cash dividend on AIG Common Stock of $0.32 per share, payable on June 29, 2020 to shareholders of record on June 15, 2020.

On February 12, 2020, our Board of Directors declared a cash dividend on AIG’s Series A Preferred Stock of $365.625 per share, payable on March 16, 2020 to holders of record on February 28, 2020. On May 4, 2020, our Board of Directors declared a cash dividend on AIG’s Series A Preferred Stock of $365.625 per share, payable on June 15, 2020 to holders of record on May 29, 2020.

The payment of any future dividends will be at the discretion of our Board of Directors and will depend on various factors, as discussed further in Note 12 to the Condensed Consolidated Financial Statements.

Repurchases 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 to its previous repurchase authorization of AIG Common Stock of approximately $1.5 billion. As of May 4, 2020, $1.5 billion remained under the authorization.

During the first quarter of 2020, we repurchased approximately 12 million shares of AIG Common Stock for an aggregate purchase price of $500 million under ASR agreement executed in February 2020 with a third-party financial institution.

AIG | First Quarter 2020 Form 10-Q 149

ITEM 2 | Liquidity and Capital Resources

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. The timing of any future share repurchases will depend on market conditions, our business and strategic plans, financial condition, results of operations, liquidity and other factors, as discussed further in Note 12 to the Condensed Consolidated Financial Statements.

Dividend Restrictions

Payments of dividends to AIG by its insurance subsidiaries are subject to certain restrictions imposed by regulatory authorities.

For a discussion of restrictions on payments of dividends by our subsidiaries see Note 20 to the Consolidated Financial Statements in the 2019 Annual Report.

Enterprise Risk Management

Risk management includes the identification and measurement of various forms of risk, the establishment of risk thresholds and the creation of processes intended to maintain risks within these thresholds while optimizing returns. We consider risk management an integral part of managing our core businesses and a key element of our approach to corporate governance.

Overview

We have an integrated process for managing risks throughout our organization in accordance with our firm-wide risk appetite. Our Board of Directors has oversight responsibility for the management of risk. Our Enterprise Risk Management Department supervises and integrates the risk management functions in each of our business units, providing senior management with a consolidated view of AIG’s major risk positions. Within each business unit, senior leaders and executives approve risk-taking policies and targeted risk tolerance within the framework provided by ERM. ERM supports our businesses and management by embedding risk management in our key day-to-day business processes and in identifying, assessing, quantifying, monitoring, reporting, and mitigating the risks taken by our businesses and AIG overall. Nevertheless, our risk management efforts may not always be successful and material adverse effects on our business, results of operations, cash flows, liquidity or financial condition may occur.

AIG employs a Three Lines of Defense model. AIG’s business leaders assume full accountability for the risks and controls in their operating units, and ERM performs a review, challenge and oversight function. The third line consists of our Internal Audit Group that provides independent assurance for AIG’s Board.

For a further discussion of AIG’s risk management program see Part II, Item 7. MD&A ─ Enterprise Risk Management in the 2019 Annual Report.

As of March 31, 2020, there have been no material changes in our economic exposure to market risk from December 31, 2019, a description of which may be found in our Annual Report on Form 10-K, for the year ended December 31, 2019, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” filed with the Securities and Exchange Commission. See Item 1A, “Risk Factors” included in the Annual Report on Form 10-K on how difficult conditions in the financial markets and the economy generally may materially adversely affect our business and results of our operations.

150 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Regulatory Environment

Regulatory Environment

Overview

Our operations around the world are subject to regulation by many different types of regulatory authorities, including insurance, securities, derivatives, investment advisory and thrift regulators in the United States and abroad. The insurance and financial services industries generally have been subject to heightened regulatory scrutiny and supervision in recent years.

Our insurance subsidiaries are subject to regulation and supervision by the states and jurisdictions in which they do business. We expect that the domestic and international regulations applicable to us and our regulated entities will continue to evolve for the foreseeable future.

In particular, significant legislative and regulatory activity has occurred at both the U.S. federal and state levels, as well as globally, in response to COVID-19 and its impact on insurance consumers. For example, legislative and regulatory measures are currently being contemplated at the federal level and in a number of U.S. states, including New York, to expand coverages beyond our policy language, in some cases with retroactive effect. Many states have issued regulations or guidance requiring insurers to offer accommodations to policyholders adversely impacted by COVID-19, including requirements to defer payment of, or refund, premiums, postpone policy lapses, and have sought information and data from insurers on a number of topics, including operational preparedness, policyholder data, and other matters. A number of states have also passed legislation or issued other guidance that creates a presumption of coverage under workers’ compensation insurance for certain people impacted by COVID-19. In most cases, the presumption applies to first responders and medical professionals, with efforts underway in some states to further expand the scope of the presumption. Members of the U.S. Congress have held discussions and sought information with respect to business interruption, travel and other insurance lines impacted by the COVID-19 crisis and have floated a number of potential loss-sharing programs, some of which contemplate participation by insurers. In the EU and UK, insurance regulators have issued recommendations or requirements for insurance groups subject to their jurisdiction to temporarily suspend discretionary dividend payments and share buybacks for the benefit of shareholders, and variable remuneration policies such as cash bonuses. We cannot predict what form legal and regulatory responses to concerns about COVID-19 and related public health issues will take, or how such responses will impact our business. We continue to actively monitor these developments and to cooperate fully with all government authorities as they develop their responses.

In addition to the information set forth in this Quarterly Report on Form 10-Q, our regulatory status is also discussed in Part II, Item 1A. Risk Factors —COVID-19 is adversely affecting, and is expected to continue to adversely affect, our business, financial condition and results of operations, and its ultimate impact will depend on future developments that are uncertain and cannot be predicted, including the scope and duration of the crisis and actions taken by governmental and regulatory authorities in response thereto, and Part I, Item 1. Business – Regulation, Part I, Item 1A. Risk Factors – Regulation and Note 20 to the Consolidated Financial Statements in the 2019 Annual Report.

AIG | First Quarter 2020 Form 10-Q 151

Glossary

Glossary

Accident year The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually reported, booked or paid.

Accident year combined ratio, as adjusted The combined ratio excluding catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting.

Accident year loss ratio, as adjusted The loss ratio excluding catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting.

Acquisition ratio Acquisition costs divided by net premiums earned. Acquisition costs are those costs incurred to acquire new and renewal insurance contracts and also include the amortization of VOBA and DAC. Acquisition costs vary with sales and include, but are not limited to, commissions, premium taxes, direct marketing costs and certain costs of personnel engaged in sales support activities such as underwriting.

Additional premium represents a premium on an insurance policy over and above the initial premium imposed at the beginning of the policy. An additional premium may be assessed if the insured’s risk is found to have increased significantly.

Adjusted revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes). Adjusted revenues is a GAAP measure for our operating segments.

Assets under administration include assets under management and Retail Mutual Funds and Group Retirement mutual fund assets that we sell or administer.

Assets under management include assets in the general and separate accounts of our subsidiaries that support liabilities and surplus related to our life and annuity insurance products and the notional value of stable value wrap contracts.

Base Spread Net investment income excluding income from alternative investments and other enhancements, less interest credited excluding amortization of sales inducement assets.

Base Yield Net investment income excluding income from alternative investments and other enhancements, as a percentage of average base invested asset portfolio, which excludes alternative investments, other bond securities and certain other investments for which the fair value option has been elected.

Book value per common share, excluding accumulated other comprehensive income (AOCI) and Book value per common share, excluding AOCI and deferred tax assets (DTA) (Adjusted book value per common share) are non-GAAP measures and are used to show the amount of our net worth on a per-common share basis. Book value per common share, excluding AOCI, is derived by dividing total AIG common shareholders’ equity, excluding AOCI, by total common shares outstanding. Adjusted book value per common share is derived by dividing total AIG common shareholders’ equity, excluding AOCI and DTA (Adjusted Common Shareholders’ Equity), by total common shares outstanding.

Casualty insurance Insurance that is primarily associated with the losses caused by injuries to third persons, i.e., not the insured, and the legal liability imposed on the insured as a result.

Combined ratio Sum of the loss ratio and the acquisition and general operating expense ratios.

CSA Credit Support Annex A legal document generally associated with an ISDA Master Agreement that provides for collateral postings which could vary depending on ratings and threshold levels.

CVA Credit Valuation Adjustment The CVA adjusts the valuation of derivatives to account for nonperformance risk of our counterparty with respect to all net derivative assets positions. Also, the CVA reflects the fair value movement in AIGFP's asset portfolio that is attributable to credit movements only, without the impact of other market factors such as interest rates and foreign exchange rates. Finally, the CVA also accounts for our own credit risk in the fair value measurement of all derivative net liability positions and liabilities where AIG has elected the fair value option, when appropriate.

DAC Deferred Policy Acquisition Costs Deferred costs that are incremental and directly related to the successful acquisition of new business or renewal of existing business.

152 AIG | First Quarter 2020 Form 10-Q

Glossary

DAC Related to Unrealized Appreciation (Depreciation) of Investments An adjustment to DAC and Reserves for investment-oriented products, equal to the change in DAC and Unearned Revenue amortization that would have been recorded if fixed maturity securities available for sale and also, prior to 2018, equity securities at fair value had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. An adjustment to benefit reserves for investment-oriented products is also recognized to reflect the application of the benefit ratio to the accumulated assessments that would have been recorded if fixed maturity securities available for sale and also, prior to 2018, equity securities at fair value had been sold at their stated aggregate fair value and the proceeds reinvested at current yields (collectively referred to as “shadow Investment-Oriented Adjustments”).

For long-duration traditional products, significant unrealized appreciation of investments in a sustained low interest rate environment may cause additional future policy benefit liabilities to be recorded (shadow loss reserves).

Deferred Gain on Retroactive Reinsurance Retroactive reinsurance is a reinsurance contract in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events. If the amount of premium paid by the ceding reinsurer is less than the related ceded loss reserves, the resulting gain is deferred and amortized over the settlement period of the reserves. Any related development on the ceded loss reserves recoverable under the contract would increase the deferred gain if unfavorable, or decrease the deferred gain if favorable.

Expense ratio Sum of acquisition expenses and general operating expenses, divided by net premiums earned.

General operating expense ratio General operating expenses divided by net premiums earned. General operating expenses are those costs that are generally attributed to the support infrastructure of the organization and include but are not limited to personnel costs, projects and bad debt expenses. General operating expenses exclude losses and loss adjustment expenses incurred, acquisition expenses, and investment expenses.

GIC/GIA Guaranteed Investment Contract/Guaranteed Investment Agreement A contract whereby the seller provides a guaranteed repayment of principal and a fixed or floating interest rate for a predetermined period of time.

IBNR Incurred But Not Reported Estimates of claims that have been incurred but not reported to us.

ISDA Master Agreement An agreement between two counterparties, which may have multiple derivative transactions with each other governed by such agreement, that generally provides for the net settlement of all or a specified group of these derivative transactions, as well as pledged collateral, through a single payment, in a single currency, in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions.

LAE Loss Adjustment Expenses The expenses directly attributed to settling and paying claims of insureds and include, but are not limited to, legal fees, adjuster’s fees and the portion of general expenses allocated to claim settlement costs.

Loan-to-Value Ratio Principal amount of loan amount divided by appraised value of collateral securing the loan.

Loss Ratio Losses and loss adjustment expenses incurred divided by net premiums earned.

Loss reserve development The increase or decrease in incurred losses and loss adjustment expenses related to prior years as a result of the re-estimation of loss reserves at successive valuation dates for a given group of claims.

Loss reserves Liability for unpaid losses and loss adjustment expenses. The estimated ultimate cost of settling claims relating to insured events that have occurred on or before the balance sheet date, whether or not reported to the insurer at that date.

Master netting agreement An agreement between two counterparties who have multiple derivative contracts with each other that provides for the net settlement of all contracts covered by such agreement, as well as pledged collateral, through a single payment, in a single currency, in the event of default on or upon termination of any one such contract.

Natural catastrophe losses are generally weather or seismic events having a net impact on AIG in excess of $10 million each and man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million threshold.

Net premiums written represent the sales of an insurer, adjusted for reinsurance premiums assumed and ceded, during a given period. Net premiums earned are the revenue of an insurer for covering risk during a given period. Net premiums written are a measure of performance for a sales period, while Net premiums earned are a measure of performance for a coverage period.

Noncontrolling interests The portion of equity ownership in a consolidated subsidiary not attributable to the controlling parent company.

Policy fees An amount added to a policy premium, or deducted from a policy cash value or contract holder account, to reflect the cost of issuing a policy, establishing the required records, sending premium notices and other related expenses.

Pool A reinsurance arrangement whereby all of the underwriting results of the pool members are combined and then shared by each member in accordance with its pool participation percentage.

AIG | First Quarter 2020 Form 10-Q 153

Glossary

Premiums and deposits – Life and Retirement includes direct and assumed amounts received and earned on traditional life insurance policies, group benefit policies and life-contingent payout annuities, as well as deposits received on universal life, investment-type annuity contracts, FHLB funding agreements and mutual funds.

Prior year development See Loss reserve development.

RBC Risk-Based Capital A formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks inherent in its business.

Reinstatement premiums Additional premiums payable to reinsurers or receivable from insurers to restore coverage limits that have been reduced or exhausted as a result of reinsured losses under certain excess of loss reinsurance treaties.

Reinsurance The practice whereby one insurer, the reinsurer, in consideration of a premium paid to that insurer, agrees to indemnify another insurer, the ceding company, for part or all of the liability of the ceding company under one or more policies or contracts of insurance which it has issued.

Retroactive Reinsurance See Deferred Gain on Retroactive Reinsurance.

Return on common equity – Adjusted after-tax income excluding AOCI and DTA (Adjusted return on common equity) is a non-GAAP measure and is used to show the rate of return on common shareholders’ equity. Adjusted return on common equity is derived by dividing actual or annualized adjusted after-tax income attributable to AIG common shareholders by average Adjusted Common Shareholders’ Equity.

Return premium represents amounts given back to the insured in the case of a cancellation, an adjustment to the rate or an overpayment of an advance premium.

SIA Sales Inducement Asset Represents enhanced crediting rates or bonus payments to contract holders on certain annuity and investment contract products that meet the criteria to be deferred and amortized over the life of the contract.

Solvency II Legislation in the European Union which reforms the insurance industry’s solvency framework, including minimum capital and solvency requirements, governance requirements, risk management and public reporting standards. The Solvency II Directive (2009/138/EEC) was adopted on November 25, 2009 and became effective on January 1, 2016.

Subrogation The amount of recovery for claims we have paid our policyholders, generally from a negligent third party or such party’s insurer.

Surrender charge A charge levied against an investor for the early withdrawal of funds from a life insurance or annuity contract, or for the cancellation of the agreement.

Surrender rate represents annualized surrenders and withdrawals as a percentage of average reserves and Group Retirement mutual fund assets under administration.

Unearned premium reserve Liabilities established by insurers and reinsurers to reflect unearned premiums, which are usually refundable to policyholders if an insurance or reinsurance contract is canceled prior to expiration of the contract term.

VOBA Value of Business Acquired Present value of projected future gross profits from in-force policies of acquired businesses.

154 AIG | First Quarter 2020 Form 10-Q

Acronyms

Acronyms

A&H Accident and Health Insurance	GMWB Guaranteed Minimum Withdrawal Benefits
ABS Asset-Backed Securities	ISDA International Swaps and Derivatives Association, Inc.
AUM Assets Under Management	Moody's Moody's Investors’ Service Inc.
CDO Collateralized Debt Obligations	NAIC National Association of Insurance Commissioners
CDS Credit Default Swap	NM Not Meaningful
CMA Capital Maintenance Agreement	ORR Obligor Risk Ratings
CMBS Commercial Mortgage-Backed Securities	OTC Over-the-Counter
EGPs Estimated gross profits	OTTI Other-Than-Temporary Impairment
FASB Financial Accounting Standards Board	RMBS Residential Mortgage-Backed Securities
FRBNY Federal Reserve Bank of New York	S&P Standard & Poor’s Financial Services LLC
GAAP Accounting principles generally accepted in the United	SEC Securities and Exchange Commission
States of America	URR Unearned revenue reserve
GMDB Guaranteed Minimum Death Benefits	VIE Variable Interest Entity

AIG | First Quarter 2020 Form 10-Q 155

ITEM 3 | Quantitative and Qualitative Disclosures About Market Risk

ITEM 3 | Quantitative and Qualitative Disclosures About Market Risk

Included in Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – Enterprise Risk Management.

ITEM 4 | Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by AIG management, with the participation of AIG’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2020. Based on this evaluation, AIG’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2020.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that have occurred during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

156 AIG | First Quarter 2020 Form 10-Q

Part II – Other Information

ITEM 1 | Legal Proceedings

For a discussion of legal proceedings see Note 11 to the Condensed Consolidated Financial Statements, which is incorporated herein by reference.

ITEM 1A | Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the following risk factor, as well as the other risk factors discussed in Part I, Item 1A. Risk Factors in our 2019 Annual Report.

COVID-19 is adversely affecting, and is expected to continue to adversely affect, our business, financial condition and results of operations, and its ultimate impact will depend on future developments that are uncertain and cannot be predicted, including the scope and duration of the crisis and actions taken by governmental and regulatory authorities in response thereto.

The COVID-19 crisis, and the governmental responses thereto, are causing ongoing and severe economic and societal disruption accompanied by significant market volatility. We are continually assessing its impact and, due to the evolving and uncertain nature of the COVID-19 crisis, cannot estimate its ultimate impact on our business, financial condition and results of operations or the full extent to which the crisis has caused or will cause certain risks to our business, including those discussed in our Form 10-K for the fiscal year ended December 31, 2019 (“2019 10-K”), to be heightened or realized.

Adverse changes and developments affecting the global economy, including the significant global economic slowdown, recent economic downturn, stock market decline and increased financial market volatility, individually and in the aggregate, have had and may continue to have near-term negative effects on our overall investment portfolio. Within our investment portfolio, there is concentrated exposure to certain segments of the economy, including real estate and real estate-related securities, which exposes us to negative impacts from the deferral of mortgage payments, renegotiated commercial mortgage loans or outright mortgage defaults, as well as significant exposures to certain industries negatively impacted by the recent economic downturn, such as energy and utilities and global financial institutions. Moreover, continued low interest rates or a continued or increased slowdown in the U.S. or global economy may adversely affect the values of, and cash flows derived from, the investment assets we hold. These circumstances may also lead to increased defaults or distressed situations among the investments in our investment portfolio. Market volatility may also create dislocations or decreases in observable market activity or availability of information used in the valuation of our assets and liabilities, which could negatively impair the estimates and assumptions used to run our business or result in greater variability and subjectivity in our investment decisions.

Furthermore, market disruptions and uncertainty may negatively affect our credit ratings or our ability to generate or access liquidity we may need to operate our business and meet our obligations, including to pay interest on our debt, discharge or refinance our maturing debt obligations, meet capital needs of our subsidiaries, and to satisfy our regulatory capital and liquidity ratios. If the economic downturn persists, an increased number of clients and policyholders may face difficulty paying insurance premiums (and global regulators may seek to implement premium relief measures as a result), especially as certain industries, such as travel and hospitality, are dislocated, which could impair our cash flows. As a holding company, AIG Parent depends on dividends, distributions and other payments from its subsidiaries for its liquidity needs; these subsidiaries’ ability to pay dividends, make distributions or otherwise generate parent liquidity may, depending on the duration and severity of the COVID-19 crisis, be reduced to the extent they are unable to generate sufficient distributable income or in the event regulators restrict dividends or other payments from subsidiaries to parent companies. We also depend on access to capital markets and other financing sources, including our $4.5 billion revolving syndicated credit facility, and access to these funding sources may become restricted or unavailable, and the terms on which additional financing is available may be adversely affected or limited, if the COVID-19 crisis continues to impair the global economy.

AIG | First Quarter 2020 Form 10-Q 157

Our insurance businesses have and may continue to experience increased claim volume under both our Life and Retirement Insurance products, which are offered primarily in the U.S., the jurisdiction that currently has the highest number of COVID-19 cases and deaths worldwide, and our General Insurance policies, which are offered both in the U.S. and internationally, including commercial property (business interruption), travel, trade credit, accident and health, workers’ compensation, directors and officers, event cancellation and liability insurance. Beginning in March 2020, COVID-19 adversely affected our premium volumes in some of our insurance lines, and we expect our premium volumes in some of our insurance lines to be more significantly adversely affected in the second quarter of 2020 and possibly for the remainder of 2020 and beyond, if economic contraction continues. Demand for certain insurance product lines, such as travel insurance, has and may continue to decrease and our policies with premium adjustment features tied to exposure levels, as is the case in certain specialty and casualty lines, may be triggered. We may also experience changes to underwriting guidelines and/or higher expenses associated with our insurance businesses, including higher legal costs as a result of potential coverage disputes. While we seek to mitigate our exposure through reinsurance, the availability of reinsurance relief will typically depend on several factors including the timing and nature of how individual claims manifest, which may not be immediately known. Furthermore, due to the scope and uncertain duration of the COVID-19 crisis, reinsurance may not be available or, if available, may be more difficult or costly to obtain in general or for certain types of coverage, such as natural catastrophes, going forward. Increased economic uncertainty and increased unemployment resulting from the economic impacts of the spread of COVID-19 may also result in policyholders seeking sources of liquidity such as policy loans and withdrawals at rates greater than expected. If policyholder behavior, including lapse and surrender rates significantly exceed vary our expectations, it could have a material adverse effect on our business, requiring our subsidiaries to accelerate the amortization of deferred policy acquisition costs and record additional liabilities for future policy benefits.

Government officials have recommended or mandated precautions to mitigate the spread of COVID-19, including prohibitions on congregating in heavily populated areas, stay-at-home orders and similar measures. As a result, we have implemented work-from-home business continuity plans for non-essential staff globally. Our results may be adversely impacted by these and other actions taken to contain or reduce the impact of COVID-19, and the extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted. Moreover, an extended remote work environment may put significant stress on our business continuity plans and prove them to be less effective than expected. Our business operations may also be significantly disrupted if our critical workforce, key vendors, third-party suppliers or counterparties we transact business with, are unable to work effectively, including because of illness, quarantines, government actions in response to COVID-19 or other reasons, or if the technology on which our remote business operations rely, some of which is developed and maintained by third parties, is materially disrupted or becomes unavailable. Certain pre-existing operational risks may be exacerbated, notably with respect to potential phishing or other cybersecurity-related attacks, privacy risk incidents, fraud, increased reliance on technology, operational resilience and risks related to the operations and resiliency of our vendors, third-party suppliers and counterparties. Further, significant disruption to our businesses could adversely affect the timing or terms of, or our ability to execute, key business strategies, transactions and initiatives, such as AIG 200, resulting in higher costs or reduced savings or lower profit than was expected.

In addition, COVID-19 has given rise to global regulatory initiatives intended to encourage or require insurers to implement actions intended to assist policyholders adversely impacted by COVID-19 (in some cases with retroactive effect), including lapse or payment moratoriums, premium refunds, contributions to relief funds and similar measures. The initiatives could impair our cash flows and, without regulatory relief, could reduce our subsidiaries’ capital ratios. In addition, in certain jurisdictions legislative initiatives have emerged threatening to require insurers to provide insurance coverage beyond the scope of the original contract by re-writing contracts on a retroactive basis, including with respect to the availability of business interruption coverage in commercial property policies, or creating insurance solutions prospectively. Such initiatives could result in requirements or restrictions that negatively impact our business operations or require us to pay beyond the provisions of original insurance policies and assumed reinsurance contracts.

Due to the evolving and uncertain nature of the COVID-19 crisis, we cannot estimate its ultimate impact at this time. Depending on the scope and duration of the COVID-19 crisis, the events described above may have an adverse effect, which could be material, on our business, results of operations and financial condition. In addition, we could experience other potential impacts as a result of COVID-19, including, but not limited to, potential impairment charges to the carrying amounts of goodwill, deferred tax assets, and increased reserve builds to levels that are difficult to accurately estimate. Further, new and potentially unforeseen risks beyond those described above and in our 2019 10-K may arise as a result of the COVID-19 crisis and the actions taken by governmental and regulatory authorities to mitigate its impact. Even after the crisis subsides, it is possible that the U.S. and other major economies will experience a prolonged recession, in which event our businesses, results of operations and financial condition could be materially and adversely affected.

158 AIG | First Quarter 2020 Form 10-Q

ITEM 2 | Unregistered Sales of Equity Securities and Use of Proceeds

	Total Number		Average	Total Number of Shares	Approximate Dollar Value of Shares
	of Shares		Price Paid	Purchased as Part of Publicly	that May Yet Be Purchased Under the
Period	Repurchased		per Share	Announced Plans or Programs	Plans or Programs (in millions)
January 1 – 31	-	$	-	-		$	2,000
February 1 – 29	7,658,643		41.12	7,658,643			1,685
March 1 – 31	4,502,309		41.12	4,502,309			1,500
Total	12,160,952	$	41.12	12,160,952		$	1,500

On February 13, 2019, our Board of Directors authorized an additional increase to its previous repurchase authorization of AIG Common Stock of $1.5 billion.

During the first quarter of 2020, we repurchased approximately 12 million shares of AIG Common Stock for an aggregate purchase price of $500 million under an accelerated stock repurchase (ASR) agreement executed in February 2020 with a third-party financial institution.

As of March 31, 2020, approximately $1.5 billion remained under the authorization. We did not repurchase any shares of AIG Common Stock or any warrants to purchase shares of AIG Common Stock from April 1, 2020 to May 4, 2020. 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. The timing of any future share 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 and warrants to purchase shares of AIG Common Stock is also subject to the terms of AIG’s Series A 5.85% Non-Cumulative Preferred Stock (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.

ITEM 4 | Mine Safety Disclosures

Not applicable.

AIG | First Quarter 2020 Form 10-Q 159

ITEM 6 | Exhibits

Exhibit Index

Exhibit Number	Description	Location
10	(1) AIG Long Term Incentive Plan (as amended and restated January 2020)	Incorporated by reference to Exhibit 10.48 to AIG’s Annual Report on Form 10-K, filed with the SEC on February 21, 2020 (File No. 1-8787).
	(2) Form of AIG Long Term Incentive Award Agreement	Incorporated by reference to Exhibit 10.49 to AIG’s Annual Report on Form 10-K, filed with the SEC on February 21, 2020 (File No. 1-8787).
31	Rule 13a-14(a)/15d-14(a) Certifications	Filed herewith.
32	Section 1350 Certifications*	Filed herewith.
101	Interactive data files pursuant to Rule 405 of Regulation S-T formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019, (ii) the Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019, (iii) the Condensed Consolidated Statements of Equity for the three months ended March 31, 2020 and 2019, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019, (v) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 and (vi) the Notes to the Condensed Consolidated Financial Statements	Filed herewith.
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)	Filed herewith.

*This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

160 AIG | First Quarter 2020 Form 10-Q

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN INTERNATIONAL GROUP, INC.

(Registrant)

/S/ MARK D. LYONS

Mark D. Lyons

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

/S/ ELIAS F. HABAYEB

Elias F. Habayeb

Senior Vice President

Deputy Chief Financial Officer and

Chief Accounting Officer

(Principal Accounting Officer)

Dated: May 5, 2020

AIG | First Quarter 2020 Form 10-Q 161

EX-31

Exhibit 31

CERTIFICATIONS

I, Brian Duperreault, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American International Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2020

/S/ BRIAN DUPERREAULT

Brian Duperreault

Chief Executive Officer

CERTIFICATIONS

I, Mark D. Lyons, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American International Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2020

/S/ MARK D. LYONS

Mark D. Lyons

Executive Vice President and

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION

In connection with this Quarterly Report on Form 10-Q of American International Group, Inc. (the “Company”) for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Duperreault, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 5, 2020

/S/ BRIAN DUPERREAULT

Brian Duperreault

Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

CERTIFICATION

In connection with this Quarterly Report on Form 10-Q of American International Group, Inc. (the “Company”) for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark D. Lyons, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 5, 2020

/S/ MARK D. LYONS

Mark D. Lyons

Executive Vice President and

Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Condensed Consolidated Balance Sheets (Parenthetical - assets and liabilities) - USD ($) $ in Millions	Mar. 31, 2020		Dec. 31, 2019
Assets:
Bonds available for sale, allowance for credit losses	$ 211		$ 0
Bonds available for sale, amortized cost	234,586		233,230
Mortgage and other loans receivable, allowance for credit losses	787		438
Other invested assets, portion measured at fair value	6,576		6,827
Short-term investments, portion measured at fair value	8,186		5,343
Premiums and other receivables, allowance for credit losses and disputes	210		178
Reinsurance assets, allowance for credit losses and disputes	310		151
Other assets, allowance for credit losses	52
Other assets, portion measured at fair value	3,311		3,151
Liabilities:
Liability for unpaid losses and loss adjustment expenses, allowance for credit losses	14		0
Policyholder contract deposits, portion measured at fair value	8,153		6,910
Other liabilities, portion measured at fair value	637		1,100
Long-term debt, portion measured at fair value	2,276		2,062
Other assets
Assets:
Short-term investments, restricted cash	257	[1]	243
Short-term investments
Assets:
Short-term investments, restricted cash	$ 324	[1]	$ 188

[1] Includes funds held for tax sharing payments to AIG Parent, security deposits, and replacement reserve deposits related to our affordable housing investments.

XML

LENDING ACTIVITIES

3 Months Ended

Mar. 31, 2020

LENDING ACTIVITIES

LENDING ACTIVITIES

7. Lending Activities

Mortgage and other loans receivable include commercial mortgages, residential mortgages, life insurance policy loans, commercial loans, and other loans and notes receivable. Commercial mortgages, residential mortgages, commercial loans, and other loans and notes receivable are carried at unpaid principal balances less allowance for credit losses and plus or minus adjustments for the accretion or amortization of discount or premium. Interest income on such loans is accrued as earned.

Direct costs of originating commercial mortgages, commercial loans, and other loans and notes receivable, net of nonrefundable points and fees, are deferred and included in the carrying amount of the related receivables. The amount deferred is amortized to income as an adjustment to earnings using the interest method. Premiums and discounts on purchased residential mortgages are also amortized to income as an adjustment to earnings using the interest method.

Life insurance policy loans are carried at unpaid principal balances. There is no allowance for policy loans because these loans serve to reduce the death benefit paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy.

Interest income is not accrued when payment of contractual principal and interest is not expected. Any cash received on impaired loans is generally recorded as a reduction of the current carrying amount of the loan. Accrual of interest income is generally resumed when delinquent contractual principal and interest is repaid or when a portion of the delinquent contractual payments are made and the ongoing required contractual payments have been made for an appropriate period. As of March 31, 2020, $4 million and $304 million of residential mortgage loans and commercial mortgage loans, respectively, were placed on nonaccrual status.

Accrued interest is presented separately and is included in Other assets on the Condensed Consolidated Balance Sheets. As of March 31, 2020, accrued interest receivable was $18 million and $130 million associated with residential mortgage loans and commercial mortgage loans, respectively.

A significant majority of commercial mortgages in the portfolio are non-recourse loans and, accordingly, the only guarantees are for specific items that are exceptions to the non-recourse provisions. It is therefore extremely rare for us to have cause to enforce the provisions of a guarantee on a commercial real estate or mortgage loan.

The following table presents the composition of Mortgage and other loans receivable, net:

	March 31,			December 31,
(in millions)		2020		2019
Commercial mortgages(a)	$	36,291	$	36,170
Residential mortgages		6,718		6,683
Life insurance policy loans		2,061		2,065
Commercial loans, other loans and notes receivable		2,561		2,504
Total mortgage and other loans receivable		47,631		47,422
Allowance for credit losses(b)		(787)		(438)
Mortgage and other loans receivable, net	$	46,844	$	46,984

(a)Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 23 percent and 11 percent, respectively, at March 31, 2020 and 23 percent and 10 percent, respectively, at December 31, 2019).

(b)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

Nonperforming loans are generally those loans where payment of contractual principal or interest is more than 90 days past due. Nonperforming loans were not significant for all periods presented.

Credit Quality of Commercial Mortgages

The following table presents debt service coverage ratios^(a) for commercial mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
>1.2X	$	701	$	5,557	$	5,963	$	4,309	$	5,165	$	10,745	$	32,440
1.00 - 1.20X		115		255		505		338		162		2,072		3,447
<1.00X		-		74		-		-		-		330		404
Total commercial mortgages	$	816	$	5,886	$	6,468	$	4,647	$	5,327	$	13,147	$	36,291

The following table presents loan-to-value ratios^(b) for commercial mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
Less than 65%	$	567	$	4,567	$	4,508	$	3,584	$	4,032	$	10,745	$	28,003
65% to 75%		249		1,319		1,960		924		1,104		2,221		7,777
76% to 80%		-		-		-		-		191		5		196
Greater than 80%		-		-		-		139		-		176		315
Total commercial mortgages	$	816	$	5,886	$	6,468	$	4,647	$	5,327	$	13,147	$	36,291

The following table presents debt service coverage ratios and loan-to-value ratios for commercial mortgages:

December 31, 2019	Debt Service Coverage Ratios(a)
(in millions)		>1.20X		1.00X - 1.20X		<1.00X		Total
Loan-to-Value Ratios(b)
Less than 65%	$	23,013	$	2,440	$	245	$	25,698
65% to 75%		9,007		899		40		9,946
76% to 80%		200		6		-		206
Greater than 80%		184		2		134		320
Total commercial mortgages	$	32,404	$	3,347	$	419	$	36,170

(a)The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio was 2.0X at both March 31, 2020 and December 31, 2019. The debt service coverage ratios have been updated within the last three months.

(b)The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 56 percent at both March 31, 2020 and December 31, 2019. The loan-to-value ratios have been updated within the last three months.The following table presents the credit quality performance indicators for commercial mortgages:

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total(c)	Total $
March 31, 2020
Credit Quality Performance
Indicator:
In good standing	718	$	14,153	$	10,478	$	5,221	$	3,574	$	2,156	$	438	$	36,020	99	%
Restructured(a)	5		-		87		25		-		101		-		213	1
90 days or less delinquent	1		1		-		-		-		-		-		1	-
>90 days delinquent or in
process of foreclosure	2		-		57		-		-		-		-		57	-
Total(b)	726	$	14,154	$	10,622	$	5,246	$	3,574	$	2,257	$	438	$	36,291	100	%
Allowance for credit losses		$	161	$	315	$	115	$	66	$	24	$	8	$	689	2	%

December 31, 2019
Credit Quality Performance
Indicator:
In good standing	736	$	13,698	$	10,553	$	5,332	$	3,663	$	2,211	$	522	$	35,979	99	%
Restructured(a)	3		-		89		-		-		101		-		190	1
90 days or less delinquent	1		1		-		-		-		-		-		1	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total(b)	740	$	13,699	$	10,642	$	5,332	$	3,663	$	2,312	$	522	$	36,170	100	%
Allowance for credit losses:
Specific		$	-	$	2	$	1	$	-	$	6	$	-	$	9	-	%
General			81		153		44		30		14		5		327	1
Total allowance for credit losses		$	81	$	155	$	45	$	30	$	20	$	5	$	336	1	%

(a)Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings see Note 8 to the Consolidated Financial Statements in the 2019 Annual Report.

(b)Does not reflect allowance for credit losses.

(c)Our commercial mortgage loan portfolio is current as to payments of principal and interest, for both periods presented. There were no significant amounts of nonperforming commercial mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented.

The following table presents credit quality performance indicators for residential mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
FICO*:
780 and greater	$	116	$	973	$	638	$	984	$	996	$	969	$	4,676
720 - 779		128		496		190		265		282		285		1,646
660 - 719		6		77		43		55		65		85		331
600 - 659		1		8		7		8		7		16		47
Less than 600		-		1		1		2		3		11		18
Total residential mortgages	$	251	$	1,555	$	879	$	1,314	$	1,353	$	1,366	$	6,718

*Fair Isaac Corporation (FICO) is the credit quality indicator used to evaluate consumer credit risk for residential mortgage loan borrowers and have been updated within the last three months

Methodology Used to Estimate the Allowance for Credit Losses

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

At the time of origination or purchase, an allowance for credit losses is established for mortgage and other loan receivables and is updated each reporting period. Changes in the allowance for credit losses are recorded in realized capital losses. This allowance reflects the risk of loss, even when that risk is remote, and reflects losses expected over the remaining contractual life of the loan. The allowance for credit losses considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions. We revert to historical information when we determine that we can no longer reliably forecast future economic assumptions.

The allowances for the commercial mortgage loans and residential mortgage loans are estimated utilizing a Probability of Default /Loss Given Default model. Loss rate factors are determined based on historical data and adjusted for current and forecasted information. The loss rates are applied based on individual loan attributes and considering such data points as Loan-to-Value, FICO scores, and debt service coverage.

The estimate of credit losses also reflects management’s assumptions on certain macroeconomic factors that include, but are not limited to, gross domestic product growth, employment, inflation, housing price index, interest rates and credit spreads.

Accrued interest is excluded from the measurement of the allowance for credit losses and accrued interest is reversed through interest income once a loan is placed on nonaccrual.

When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance.

We also have off-balance sheet commitments related to our commercial mortgage loans. The liability for expected credit losses related to these commercial mortgage loan commitments is reported in Other liabilities in the Condensed Consolidated Balance Sheets. When a commitment is funded, we record a loan receivable and reclassify the liability for expected credit losses related to the commitment into loan allowance for expected credit losses. Other changes in the liability for expected credit losses on loan commitments are recorded in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

Mortgage and other loans receivable are considered impaired when collection of all amounts due under contractual terms is not probable. Impairment is measured using either i) the present value of expected future cash flows discounted at the loan’s effective interest rate, ii) the loan’s observable market price, if available, or iii) the fair value of the collateral if the loan is collateral dependent. Impairment of commercial mortgages is typically determined using the fair value of collateral while impairment of other loans is typically determined using the present value of cash flows or the loan’s observable market price. An allowance is typically established for the difference between the impaired value of the loan and its current carrying amount. Additional allowance amounts are established for incurred but not specifically identified impairments, based on statistical models primarily driven by past-due status, debt service coverage, loan-to-value ratio, property type and location, loan term, profile of the borrower and of the major property tenants, and loan seasoning. When all or a portion of a loan is deemed uncollectable, the uncollectable portion of the carrying amount of the loan is charged off against the allowance.

The following table presents a rollforward of the changes in the allowance for losses on Mortgage and other loans receivable^(a):

Three Months Ended March 31,	2020						2019
		Commercial		Other				Commercial			Other
(in millions)		Mortgages		Loans		Total		Mortgages			Loans		Total
Allowance, beginning of year	$	336	$	102	$	438	$	318		$	79	$	397
Initial allowance upon CECL adoption		311		7		318		-			-		-
Loans charged off		-		-		-		-			-		-
Recoveries of loans previously charged off		-		-		-		-			-		-
Net charge-offs		-		-		-		-			-		-
Provision for loan losses		42		(11)		31		5			20		25
Allowance, end of period	$	689	$	98	$	787	$	323	(b)	$	99	$	422

(a)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b)The March 31, 2019 total allowance was calculated prior to the adoption of ASC 326 on January 1, 2020. Of the total allowance, $3 million relates to individually assessed credit losses on $148 million of commercial mortgages at 2019.

As a result of the COVID-19 crisis, including the significant global economic slowdown and general market decline, our expectations and models used to estimate the allowance for losses on commercial and residential mortgage loans have been updated to reflect the current economic environment. The full impact of COVID-19 on real estate valuations remains uncertain and we will continue to review our valuations as further information becomes available.

During the three month period ended March 31, 2020, loans with a carrying value of $25 million were modified in troubled debt restructurings. There were no loans modified in troubled debt restructurings during the three-month period ended March 31, 2019.

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2020

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. (Validus), Western World Insurance Group, Inc. and Glatfelter Insurance Group (Glatfelter).

International — consists of regional insurance businesses in Japan, the UK, Europe, Asia Pacific, Latin America and Caribbean, Middle East and Africa, and China. This also includes the results of Talbot Holdings, Ltd.

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 consists primarily of:

Income from assets held by AIG Parent and other corporate subsidiaries.

General operating expenses not attributable to AIG reporting segments.

Certain compensation expenses attributable to Other Operations and reporting segments.

Amortization of value of distribution network acquired related to the Validus and Glatfelter acquisitions.

Interest expense attributable to AIG long-term debt as well as debt associated with consolidated investment entities.

Results also include Blackboard U.S. Holdings, Inc. — and its subsidiaries which are focused on delivering commercial insurance solutions using digital technology, data analytics and automation. At the end of March 2020, AIG decided to place Blackboard into run-off.

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, our Bermuda domiciled composite reinsurer, 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.

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. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. 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 March 31,	2020				2019
				Adjusted				Adjusted
		Total		Pre-tax		Total		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	3,414	$	409	$	4,098	$	934
International		3,253		92		3,704		334
Total General Insurance		6,667		501		7,802		1,268
Life and Retirement
Individual Retirement		1,370		306		1,351		508
Group Retirement		694		143		709		232
Life Insurance		1,091		55		1,073		116
Institutional Markets		1,017		70		1,071		68
Total Life and Retirement		4,172		574		4,204		924
Other Operations		162		(451)		139		(387)
Legacy Portfolio		264		(368)		706		112
AIG Consolidation and elimination		(145)		(84)		(97)		(70)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		11,120		172		12,754		1,847
Reconciling items from adjusted pre-tax income to pre-tax income:
Changes in fair value of securities used to hedge guaranteed living benefits		14		(7)		105		96
Changes in benefit reserves and DAC, VOBA and SIA related to net realized
capital gains (losses)		-		(538)		-		99
Changes in the fair value of equity securities		(191)		(191)		79		79
Professional fees related to regulatory or accounting changes		-		(13)		-		-
Other income (expense) - net		9		-		7		-
Gain (loss) on extinguishment of debt		-		(17)		-		2
Net realized capital gains (losses)*		3,485		3,502		(489)		(474)
Income (loss) from divested businesses		-		(216)		-		6
Non-operating litigation reserves and settlements		6		6		-		(1)
Favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		8		-		27
Net loss reserve discount charge		-		(56)		-		(473)
Integration and transaction costs associated with acquired businesses		-		(2)		-		(7)
Restructuring and other costs		-		(90)		-		(47)
Revenues and Pre-tax income	$	14,443	$	2,558	$	12,456	$	1,154

*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.

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Condensed Consolidated Statements of Equity - USD ($) $ in Millions	Total	Cumulative effect of change in accounting principle	Total AIG Shareholders' Equity	Total AIG Shareholders' Equity Cumulative effect of change in accounting principle	Preferred Stock and Additional Paid-In Capital	Preferred Stock and Additional Paid-In Capital Cumulative effect of change in accounting principle	Common Stock	Common Stock Cumulative effect of change in accounting principle	Treasury Stock	Treasury Stock Cumulative effect of change in accounting principle	Additional Paid-in Capital	Additional Paid-in Capital Cumulative effect of change in accounting principle	Retained Earnings	Retained Earnings Cumulative effect of change in accounting principle	Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss) Cumulative effect of change in accounting principle	Non redeemable Non-controlling Interests	Non redeemable Non-controlling Interests Cumulative effect of change in accounting principle
Balance at Dec. 31, 2018	$ 57,309		$ 56,361		$ 0		$ 4,766		$ (49,144)		$ 81,268		$ 20,884		$ (1,413)		$ 948
Preferred stock issued	485		485		485		0		0		0		0		0		0
Common stock issued under stock plans	(77)		(77)		0		0		145		(222)		0		0		0
Purchase of common stock	0		0		0		0		0		0		0		0		0
Net income (loss) attributable to AIG or other noncontrolling interests	937		654		0		0		0		0		654		0		283
Dividends on preferred stock	0		0		0		0		0		0		0		0		0
Dividends on common stock	(278)		(278)		0		0		0		0		(278)		0		0
Other comprehensive income (loss)	3,547		3,541		0		0		0		0		0		3,541		6
Current and deferred income taxes	(1)		(1)		0		0		0		(1)		0		0		0
Net increase (decrease) due to acquisitions and consolidations	108		0		0		0		0		0		0		0		108
Contributions from noncontrolling interests	12		0		0		0		0		0		0		0		12
Distributions to noncontrolling interests	(59)		0		0		0		0		0		0		0		(59)
Other	110		102		0		0		0		103		(1)		0		8
Balance at Mar. 31, 2019	62,093		60,787		485		4,766		(48,999)		81,148		21,259		2,128		1,306
Balance at Dec. 31, 2019	67,427	$ (487)	65,675	$ (487)	485	$ 0	4,766	$ 0	(48,987)	$ 0	81,345	$ 0	23,084	$ (487)	4,982	$ 0	1,752	$ 0
Preferred stock issued	0		0		0		0		0		0		0		0		0
Common stock issued under stock plans	(95)		(95)		0		0		160		(255)		0		0		0
Purchase of common stock	(500)		(500)		0		0		(500)		0		0		0		0
Net income (loss) attributable to AIG or other noncontrolling interests	1,654		1,749		0		0		0		0		1,749		0		(95)
Dividends on preferred stock	(7)		(7)		0		0		0		0		(7)		0		0
Dividends on common stock	(276)		(276)		0		0		0		0		(276)		0		0
Other comprehensive income (loss)	(5,990)		(5,976)		0		0		0		0		0		(5,976)		(14)
Net increase (decrease) due to acquisitions and consolidations	48		0		0		0		0		0		0		0		48
Contributions from noncontrolling interests	1		0		0		0		0		0		0		0		1
Distributions to noncontrolling interests	(22)		0		0		0		0		0		0		0		(22)
Other	90		90		0		0		(7)		98		(1)		0		0
Balance at Mar. 31, 2020	$ 61,843		$ 60,173		$ 485		$ 4,766		$ (49,334)		$ 81,188		$ 24,062		$ (994)		$ 1,670

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

March 31, 2020							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)	Collateral			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	239	$	5,450	$	-	$	-	$	-	$	5,689
Obligations of states, municipalities and political subdivisions		-		13,338		2,102		-		-		15,440
Non-U.S. governments		48		14,119		6		-		-		14,173
Corporate debt		-		143,107		1,215		-		-		144,322
RMBS		-		19,170		11,687		-		-		30,857
CMBS		-		13,080		1,146		-		-		14,226
CDO/ABS		-		8,301		8,768		-		-		17,069
Total bonds available for sale		287		216,565		24,924		-		-		241,776
Other bond securities:
U.S. government and government sponsored entities		6		2,051		-		-		-		2,057
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		16		-		-		-		16
RMBS		-		318		149		-		-		467
CMBS		-		229		42		-		-		271
CDO/ABS		-		164		2,378		-		-		2,542
Total other bond securities		6		2,778		2,569		-		-		5,353
Equity securities		582		23		19		-		-		624
Other invested assets(b)		-		80		1,467		-		-		1,547
Derivative assets:
Interest rate contracts		2		6,621		-		-		-		6,623
Foreign exchange contracts		-		2,337		1		-		-		2,338
Equity contracts		87		1,003		150		-		-		1,240
Credit contracts		-		-		133		-		-		133
Other contracts		-		-		15		-		-		15
Counterparty netting and cash collateral		-		-		-		(4,645)		(4,840)		(9,485)
Total derivative assets		89		9,961		299		(4,645)		(4,840)		864
Short-term investments		1,732		6,454		-		-		-		8,186
Other assets		176		2,180		91		-		-		2,447
Separate account assets		74,591		4,245		-		-		-		78,836
Total	$	77,463	$	242,286	$	29,369	$	(4,645)	$	(4,840)	$	339,633
Liabilities:
Policyholder contract deposits	$	-	$	-	$	8,153	$	-	$	-	$	8,153
Derivative liabilities:
Interest rate contracts		2		4,224		-		-		-		4,226
Foreign exchange contracts		-		1,028		4		-		-		1,032
Equity contracts		8		62		7		-		-		77
Credit contracts		-		24		57		-		-		81
Other contracts		-		-		13		-		-		13
Counterparty netting and cash collateral		-		-		-		(4,645)		(147)		(4,792)
Total derivative liabilities		10		5,338		81		(4,645)		(147)		637
Other liabilities		-		-		-		-		-		-
Long-term debt		-		2,276		-		-		-		2,276
Total	$	10	$	7,614	$	8,234	$	(4,645)	$	(147)	$	11,066

December 31, 2019							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)		Collateral		Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	135	$	5,245	$	-	$	-	$	-	$	5,380
Obligations of states, municipalities and political subdivisions		-		13,197		2,121		-		-		15,318
Non-U.S. governments		60		14,809		-		-		-		14,869
Corporate debt		-		147,973		1,663		-		-		149,636
RMBS		-		19,397		13,408		-		-		32,805
CMBS		-		13,377		1,053		-		-		14,430
CDO/ABS		-		10,962		7,686		-		-		18,648
Total bonds available for sale		195		224,960		25,931		-		-		251,086
Other bond securities:
U.S. government and government sponsored entities		-		2,121		-		-		-		2,121
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		18		-		-		-		18
RMBS		-		346		143		-		-		489
CMBS		-		272		50		-		-		322
CDO/ABS		-		187		3,545		-		-		3,732
Total other bond securities		-		2,944		3,738		-		-		6,682
Equity securities		756		77		8		-		-		841
Other invested assets(b)		-		86		1,192		-		-		1,278
Derivative assets:
Interest rate contracts		1		3,199		-		-		-		3,200
Foreign exchange contracts		-		1,034		6		-		-		1,040
Equity contracts		5		593		171		-		-		769
Credit contracts		-		-		3		-		-		3
Other contracts		-		-		14		-		-		14
Counterparty netting and cash collateral		-		-		-		(2,427)		(1,806)		(4,233)
Total derivative assets		6		4,826		194		(2,427)		(1,806)		793
Short-term investments		2,299		3,044		-		-		-		5,343
Other assets		57		2,212		89		-		-		2,358
Separate account assets		89,069		4,203		-		-		-		93,272
Total	$	92,382	$	242,352	$	31,152	$	(2,427)	$	(1,806)	$	361,653
Liabilities:
Policyholder contract deposits	$	-	$	-	$	6,910	$	-	$	-	$	6,910
Derivative liabilities:
Interest rate contracts		4		2,745		-		-		-		2,749
Foreign exchange contracts		-		1,025		-		-		-		1,025
Equity contracts		8		111		20		-		-		139
Credit contracts		-		24		65		-		-		89
Other contracts		-		-		7		-		-		7
Counterparty netting and cash collateral		-		-		-		(2,427)		(527)		(2,954)
Total derivative liabilities		12		3,905		92		(2,427)		(527)		1,055
Other liabilities		-		45		-		-		-		45
Long-term debt		-		2,062		-		-		-		2,062
Total	$	12	$	6,012	$	7,002	$	(2,427)	$	(527)	$	10,072

(a)Represents netting of derivative exposures covered by qualifying master netting agreements.(b)Excludes investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent), which totaled $5.0 billion and $5.5 billion as of March 31, 2020 and December 31, 2019, respectively.

Changes in Level 3 recurring fair value measurements (Assets)

																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states,
municipalities and
political subdivisions	$	2,121	$	5	$	(55)	$	137	$	27	$	(133)	$	-	$	2,102	$	-	$	(51)
Non-U.S. governments		-		-		-		-		6		-		-		6		-		-
Corporate debt		1,663		(67)		(81)		7		103		(410)		-		1,215		-		(29)
RMBS		13,408		132		(1,623)		(223)		19		(26)		-		11,687		-		(1,505)
CMBS		1,053		7		19		44		23		-		-		1,146		-		21
CDO/ABS		7,686		17		(557)		47		1,603		(28)		-		8,768		-		(536)
Total bonds available for sale(b)		25,931		94		(2,297)		12		1,781		(597)		-		24,924		-		(2,100)
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-		-
RMBS		143		(14)		-		20		-		-		-		149		(14)		-
CMBS		50		(7)		-		(1)		-		-		-		42		(8)		-
CDO/ABS		3,545		(173)		-		(994)		-		-		-		2,378		(262)		-
Total other bond securities		3,738		(194)		-		(975)		-		-		-		2,569		(284)		-
Equity securities		8		(1)		1		10		1		-		-		19		-		-
Mortgage and other loans
receivable		-		-		-		-		-		-		-		-		-		-
Other invested assets		1,192		(4)		-		129		150		-		-		1,467		14		-
Other assets		89		-		-		5		-		-		(3)		91		-		-
Total	$	30,958	$	(105)	$	(2,296)	$	(819)	$	1,932	$	(597)	$	(3)	$	29,070	$	(270)	$	(2,100)
																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	(Gains) Losses			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	6,910	$	1,171	$	-	$	72	$	-	$	-	$	-	$	8,153	$	(884)	$	-
Derivative liabilities, net:
Interest rate contracts		-		-		-		-		-		-		-		-		-		-
Foreign exchange contracts		(6)		3		-		6		-		-		-		3		1		-
Equity contracts		(151)		(26)		-		34		-		-		-		(143)		(14)		-
Credit contracts		62		(124)		-		(14)		-		-		-		(76)		118		-
Other contracts		(7)		(10)		-		15		-		-		-		(2)		10		-
Total derivative liabilities, net(c)		(102)		(157)		-		41		-		-		-		(218)		115		-
Total	$	6,808	$	1,014	$	-	$	113	$	-	$	-	$	-	$	7,935	$	(769)	$	-

				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	2,000	$	(1)	$	97	$	24	$	29	$	(13)	$	-	$	2,136	$	-
Non-U.S. governments		11		-		-		(4)		-		(4)		-		3		-
Corporate debt		864		(3)		38		34		654		(55)		-		1,532		-
RMBS		14,199		227		24		(412)		23		(16)		-		14,045		-
CMBS		917		1		17		146		-		(189)		-		892		-
CDO/ABS		9,102		4		54		(45)		92		(367)		-		8,840		-
Total bonds available for sale		27,093		228		230		(257)		798		(644)		-		27,448		-
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-
RMBS		1,290		17		-		(41)		-		-		-		1,266		-
CMBS		77		4		-		3		-		-		-		84		3
CDO/ABS		4,478		68		-		(201)		-		(96)		-		4,249		24
Total other bond securities		5,845		89		-		(239)		-		(96)		-		5,599		27
Equity securities		27		-		-		-		-		(1)		-		26		-
Mortgage and other loans receivable		-		-		-		-		-		-		-		-		-
Other invested assets		587		-		-		4		-		-		-		591		2
Other assets		58		-		-		1		-		-		-		59		-
Total	$	33,610	$	317	$	230	$	(491)	$	798	$	(741)	$	-	$	33,723	$	29
				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value		(Gains) Losses		Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	4,116	$	569	$	-	$	193	$	-	$	-	$	-	$	4,878	$	(521)
Derivative liabilities, net:
Interest rate contracts		15		1		-		(1)		-		-		-		15		(1)
Foreign exchange contracts		(5)		(5)		-		9		-		-		-		(1)		(1)
Equity contracts		(75)		(16)		-		(5)		-		-		-		(96)		19
Credit contracts		227		(3)		-		(2)		-		-		-		222		4
Other contracts		(9)		(17)		-		18		-		-		-		(8)		17
Total derivative liabilities, net(c)		153		(40)		-		19		-		-		-		132		38
Total	$	4,269	$	529	$	-	$	212	$	-	$	-	$	-	$	5,010	$	(483)

(a)Reported in Other assets in the Condensed Consolidated Balance Sheets.

(b)As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized and unrealized (gains) losses included in income.

(c)Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

Changes in Level 3 recurring fair value measurements (Liabilities)

																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states,
municipalities and
political subdivisions	$	2,121	$	5	$	(55)	$	137	$	27	$	(133)	$	-	$	2,102	$	-	$	(51)
Non-U.S. governments		-		-		-		-		6		-		-		6		-		-
Corporate debt		1,663		(67)		(81)		7		103		(410)		-		1,215		-		(29)
RMBS		13,408		132		(1,623)		(223)		19		(26)		-		11,687		-		(1,505)
CMBS		1,053		7		19		44		23		-		-		1,146		-		21
CDO/ABS		7,686		17		(557)		47		1,603		(28)		-		8,768		-		(536)
Total bonds available for sale(b)		25,931		94		(2,297)		12		1,781		(597)		-		24,924		-		(2,100)
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-		-
RMBS		143		(14)		-		20		-		-		-		149		(14)		-
CMBS		50		(7)		-		(1)		-		-		-		42		(8)		-
CDO/ABS		3,545		(173)		-		(994)		-		-		-		2,378		(262)		-
Total other bond securities		3,738		(194)		-		(975)		-		-		-		2,569		(284)		-
Equity securities		8		(1)		1		10		1		-		-		19		-		-
Mortgage and other loans
receivable		-		-		-		-		-		-		-		-		-		-
Other invested assets		1,192		(4)		-		129		150		-		-		1,467		14		-
Other assets		89		-		-		5		-		-		(3)		91		-		-
Total	$	30,958	$	(105)	$	(2,296)	$	(819)	$	1,932	$	(597)	$	(3)	$	29,070	$	(270)	$	(2,100)
																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	(Gains) Losses			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	6,910	$	1,171	$	-	$	72	$	-	$	-	$	-	$	8,153	$	(884)	$	-
Derivative liabilities, net:
Interest rate contracts		-		-		-		-		-		-		-		-		-		-
Foreign exchange contracts		(6)		3		-		6		-		-		-		3		1		-
Equity contracts		(151)		(26)		-		34		-		-		-		(143)		(14)		-
Credit contracts		62		(124)		-		(14)		-		-		-		(76)		118		-
Other contracts		(7)		(10)		-		15		-		-		-		(2)		10		-
Total derivative liabilities, net(c)		(102)		(157)		-		41		-		-		-		(218)		115		-
Total	$	6,808	$	1,014	$	-	$	113	$	-	$	-	$	-	$	7,935	$	(769)	$	-

				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	2,000	$	(1)	$	97	$	24	$	29	$	(13)	$	-	$	2,136	$	-
Non-U.S. governments		11		-		-		(4)		-		(4)		-		3		-
Corporate debt		864		(3)		38		34		654		(55)		-		1,532		-
RMBS		14,199		227		24		(412)		23		(16)		-		14,045		-
CMBS		917		1		17		146		-		(189)		-		892		-
CDO/ABS		9,102		4		54		(45)		92		(367)		-		8,840		-
Total bonds available for sale		27,093		228		230		(257)		798		(644)		-		27,448		-
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-
RMBS		1,290		17		-		(41)		-		-		-		1,266		-
CMBS		77		4		-		3		-		-		-		84		3
CDO/ABS		4,478		68		-		(201)		-		(96)		-		4,249		24
Total other bond securities		5,845		89		-		(239)		-		(96)		-		5,599		27
Equity securities		27		-		-		-		-		(1)		-		26		-
Mortgage and other loans receivable		-		-		-		-		-		-		-		-		-
Other invested assets		587		-		-		4		-		-		-		591		2
Other assets		58		-		-		1		-		-		-		59		-
Total	$	33,610	$	317	$	230	$	(491)	$	798	$	(741)	$	-	$	33,723	$	29
				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value		(Gains) Losses		Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	4,116	$	569	$	-	$	193	$	-	$	-	$	-	$	4,878	$	(521)
Derivative liabilities, net:
Interest rate contracts		15		1		-		(1)		-		-		-		15		(1)
Foreign exchange contracts		(5)		(5)		-		9		-		-		-		(1)		(1)
Equity contracts		(75)		(16)		-		(5)		-		-		-		(96)		19
Credit contracts		227		(3)		-		(2)		-		-		-		222		4
Other contracts		(9)		(17)		-		18		-		-		-		(8)		17
Total derivative liabilities, net(c)		153		(40)		-		19		-		-		-		132		38
Total	$	4,269	$	529	$	-	$	212	$	-	$	-	$	-	$	5,010	$	(483)

(a)Reported in Other assets in the Condensed Consolidated Balance Sheets.

(b)As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized and unrealized (gains) losses included in income.

(c)Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

Schedule of net realized and unrealized gains and losses related to Level 3 items

		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	Gains (Losses)			Income		Total
Three Months Ended March 31, 2020
Assets:
Bonds available for sale*	$	198	$	(104)	$	-	$	94
Other bond securities		(462)		268		-		(194)
Equity securities		-		(1)		-		(1)
Other invested assets		(4)		-		-		(4)
Three Months Ended March 31, 2019
Assets:
Bonds available for sale	$	242	$	(14)	$	-	$	228
Other bond securities		87		2		-		89
Equity securities		-		-		-		-
Other invested assets		-		-		-		-
		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	(Gains) Losses			Income		Total
Three Months Ended March 31, 2020
Liabilities:
Policyholder contract deposits	$	-	$	1,171	$	-	$	1,171
Derivative liabilities, net		-		(143)		(14)		(157)
Three Months Ended March 31, 2019
Liabilities:
Policyholder contract deposits	$	-	$	569	$	-	$	569
Derivative liabilities, net		-		(24)		(16)		(40)

*As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized capital gains (losses).

Gross components of purchases, sales, issuances and settlements, net

						Issuances		Purchases, Sales,
						and		Issuances and
(in millions)		Purchases		Sales		Settlements(a)		Settlements, Net(a)
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	145	$	(2)	$	(6)	$	137
Non-U.S. governments		-		-		-		-
Corporate debt		112		(5)		(100)		7
RMBS		336		-		(559)		(223)
CMBS		53		(2)		(7)		44
CDO/ABS		225		(22)		(156)		47
Total bonds available for sale		871		(31)		(828)		12
Other bond securities:
RMBS		25		-		(5)		20
CMBS		-		-		(1)		(1)
CDO/ABS		35		(579)		(450)		(994)
Total other bond securities		60		(579)		(456)		(975)
Equity securities		10		-		-		10
Mortgage and other loans receivable		-		-		-		-
Other invested assets		174		-		(45)		129
Other assets		-		-		5		5
Total assets	$	1,115	$	(610)	$	(1,324)	$	(819)
Liabilities:
Policyholder contract deposits	$	-	$	222	$	(150)	$	72
Derivative liabilities, net		(15)		8		48		41
Total liabilities	$	(15)	$	230	$	(102)	$	113
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	47	$	(15)	$	(8)	$	24
Non-U.S. governments		-		-		(4)		(4)
Corporate debt		49		-		(15)		34
RMBS		307		(26)		(693)		(412)
CMBS		184		-		(38)		146
CDO/ABS		198		(156)		(87)		(45)
Total bonds available for sale		785		(197)		(845)		(257)
Other bond securities:
Corporate debt		-		-		-		-
RMBS		-		-		(41)		(41)
CMBS		4		-		(1)		3
CDO/ABS		-		-		(201)		(201)
Total other bond securities		4		-		(243)		(239)
Equity securities		-		-		-		-
Mortgage and other loans receivable		-		-		-		-
Other invested assets		4		-		-		4
Other assets		-		-		1		1
Total assets	$	793	$	(197)	$	(1,087)	$	(491)
Liabilities:
Policyholder contract deposits	$	-	$	173	$	20	$	193
Derivative liabilities, net		(13)		-		32		19
Total liabilities	$	(13)	$	173	$	52	$	212

(a)There were no issuances during the three-month periods ended March 31, 2020 and 2019.

Significant unobservable inputs used for recurring fair value measurements

	Fair Value at
	March 31,		Valuation		Range
(in millions)	2020		Technique	Unobservable Input(b)	(Weighted Average)
Assets:
Obligations of states, municipalities
and political subdivisions	$	1,616	Discounted cash flow	Yield	3.37% - 4.13% (3.75%)
Corporate debt		982	Discounted cash flow	Yield	2.11% - 6.18% (4.14%)
RMBS(a)		10,762	Discounted cash flow	Constant prepayment rate	4.46% - 13.12% (8.79%)
				Loss severity	30.78% - 76.29% (53.53%)
				Constant default rate	1.41% - 5.86% (3.63%)
				Yield	4.01% - 6.89% (5.45%)
CDO/ABS(a)		6,914	Discounted cash flow	Yield	3.93% - 7.94% (5.94%)
CMBS		555	Discounted cash flow	Yield	1.06% - 6.94% (4.00%)
Liabilities:
Embedded derivatives within
Policyholder contract deposits:
Guaranteed minimum withdrawal benefits (GMWB)		3,978	Discounted cash flow	Equity volatility	7.00% - 57.00%
				Base lapse rate	0.00% - 13.00%
				Dynamic lapse multiplier	50.00% - 143.00%
				Mortality multiplier(c)	38.00% - 147.00%
				Utilization	90.00% - 100.00%
				Equity / interest rate correlation	20.00% - 40.00%
				NPA(d)	1.31% - 2.80%
Index annuities		3,719	Discounted cash flow	Lapse rate	0.31% - 50.00%
				Mortality multiplier(c)	24.00% - 180.00%
				Option budget	0.00% - 4.00%
				NPA(d)	1.31% - 2.80%
Indexed life		434	Discounted cash flow	Base lapse rate	0.00% - 37.97%
				Mortality rate	0.00% - 100.00%
				NPA(d)	1.31% - 2.80%

		Fair Value at
		December 31,	Valuation		Range
(in millions)		2019	Technique	Unobservable Input(b)	(Weighted Average)
Assets:
Obligations of states, municipalities
and political subdivisions	$	1,633	Discounted cash flow	Yield	3.35% - 3.95% (3.65%)
Corporate debt		1,087	Discounted cash flow	Yield	3.48% - 6.22% (4.85%)
RMBS(a)		11,746	Discounted cash flow	Constant prepayment rate	4.00% - 12.89% (8.44%)
				Loss severity	33.68% - 76.91% (55.29%)
				Constant default rate	1.68% - 6.17% (3.93%)
				Yield	2.52% - 4.53% (3.52%)
CDO/ABS(a)		6,025	Discounted cash flow	Yield	2.92% - 4.91% (3.91%)
CMBS		476	Discounted cash flow	Yield	2.77% - 5.18% (3.97%)
Liabilities:
Embedded derivatives within
Policyholder contract deposits:
GMWB		2,474	Discounted cash flow	Equity volatility	6.15% - 48.85%
				Base lapse rate	0.16% - 12.60%
				Dynamic lapse multiplier	50.00% - 143.00%
				Mortality multiplier(c)	38.00% - 147.00%
				Utilization	90.00% - 100.00%
				Equity / interest rate correlation	20.00% - 40.00%
				NPA(d)	0.12% - 1.53%
Index annuities		3,895	Discounted cash flow	Lapse rate	0.31% - 50.00%
				Mortality multiplier(c)	24.00% - 180.00%
				Option budget	1.00% - 4.00%
				NPA(d)	0.12% - 1.53%
Indexed life		510	Discounted cash flow	Base lapse rate	0.00% - 37.97%
				Mortality rate	0.00% - 100.00%
				NPA(d)	0.12% - 1.53%

(a)Information received from third-party valuation service providers. The ranges of the unobservable inputs for constant prepayment rate, loss severity and constant default rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CDO securitization vehicles and not necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the tranches purchased by us, because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price, position in the waterfall, senior versus subordinated position and attachment points. The weighted averaging for fixed maturity securities is based on the estimated fair value of the securities.

(b)Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.

(c)Mortality inputs are shown as multipliers of the 2012 Individual Annuity Mortality Basic table.

(d)The non-performance risk adjustment (NPA) applied as a spread over risk-free curve for discounting.

Investments in certain entities carried at fair value using net asset value per share

		March 31, 2020				December 31, 2019
			Fair Value			Fair Value
			Using NAV			Using NAV
			Per Share (or		Unfunded	Per Share (or			Unfunded
(in millions)	Investment Category Includes		its equivalent)		Commitments	its equivalent)			Commitments
Investment Category
Private equity funds:
Leveraged buyout	Debt and/or equity investments made as part of a transaction in which assets of mature companies are acquired from the current shareholders, typically with the use of financial leverage	$	1,245	$	1,454	$	1,189	$	1,543
Real Estate / Infrastructure	Investments in real estate properties and infrastructure positions, including power plants and other energy generating facilities		412		451		400		290
Venture capital	Early-stage, high-potential, growth companies expected to generate a return through an eventual realization event, such as an initial public offering or sale of the company		130		142		111		155
Growth Equity	Funds that make investments in established companies for the purpose of growing their businesses		480		87		422		57
Mezzanine	Funds that make investments in the junior debt and equity securities of leveraged companies		377		339		325		414
Other	Includes distressed funds that invest in securities of companies that are in default or under bankruptcy protection, as well as funds that have multi-strategy, and other strategies		769		135		773		206
Total private equity funds			3,413		2,608		3,220		2,665
Hedge funds:
Event-driven	Securities of companies undergoing material structural changes, including mergers, acquisitions and other reorganizations		361		-		727		-
Long-short	Securities that the manager believes are undervalued, with corresponding short positions to hedge market risk		408		-		539		-
Macro	Investments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions		697		-		894		-
Distressed	Securities of companies that are in default, under bankruptcy protection or troubled		-		-		1		-
Other	Includes investments held in funds that are less liquid, as well as other strategies which allow for broader allocation between public and private investments		150		1		168		1
Total hedge funds			1,616		1		2,329		1
Total		$	5,029	$	2,609	$	5,549	$	2,666

Gains or losses related to the eligible instruments for which AIG elected the fair value option

Three Months Ended March 31,	Gain (Loss)
(in millions)		2020		2019
Assets:
Bonds	$	(60)	$	355
Alternative investments(a)		(139)		230
Liabilities:
Long-term debt(b)		(203)		(60)
Total gain (loss)	$	(402)	$	525

(a)Includes certain hedge funds, private equity funds and other investment partnerships.

(b)Includes GIAs, notes, bonds and mortgages payable.

Difference between fair values and aggregate contractual principal amounts, fair value option

	March 31, 2020						December 31, 2019
			Outstanding						Outstanding
(in millions)	Fair Value		Principal Amount		Difference		Fair Value		Principal Amount		Difference
Liabilities:
Long-term debt*	$	2,276	$	1,543	$	733	$	2,062	$	1,502	$	560

*Includes GIAs, notes, bonds, loans and mortgages payable.

Fair value assets measured on nonrecurring basis and impairment charges

		Assets at Fair Value							Impairment Charges
		Non-Recurring Basis							Three Months Ended March 31,
(in millions)		Level 1		Level 2		Level 3		Total		2020		2019
March 31, 2020
Other investments	$	-	$	-	$	97	$	97	$	11	$	41
Other assets		-		-		-		-		12		8
Total	$	-	$	-	$	97	$	97	$	23	$	49
December 31, 2019
Other investments	$	-	$	-	$	329	$	329
Other assets		-		-		1		1
Total	$	-	$	-	$	330	$	330

Carrying values and estimated fair values of AIG's financial instruments

	Estimated Fair Value									Carrying
(in millions)		Level 1		Level 2		Level 3		Total		Value
March 31, 2020
Assets:
Mortgage and other loans receivable	$	-	$	100	$	47,508	$	47,608	$	46,844
Other invested assets		-		772		6		778		778
Short-term investments		-		11,587		-		11,587		11,587
Cash		2,738		-		-		2,738		2,738
Other assets		340		34		-		374		374
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		246		137,161		137,407		127,194
Other liabilities		14		4,333		-		4,347		4,347
Long-term debt and debt of consolidated investment entities		-		24,765		9,114		33,879		33,134
Separate account liabilities - investment contracts		-		74,711		-		74,711		74,711
December 31, 2019
Assets:
Mortgage and other loans receivable	$	-	$	101	$	48,904	$	49,005	$	46,984
Other invested assets		-		735		6		741		742
Short-term investments		-		7,887		-		7,887		7,887
Cash		2,856		-		-		2,856		2,856
Other assets		291		20		-		311		311
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		255		132,991		133,246		126,137
Other liabilities		15		3,048		-		3,063		3,063
Long-term debt and debt of consolidated investment entities		-		27,024		8,883		35,907		33,288
Separate account liabilities - investment contracts		-		88,770		-		88,770		88,770

XML

DERIVATIVES AND HEDGE ACCOUNTING (Tables)

3 Months Ended

Mar. 31, 2020

DERIVATIVES AND HEDGE ACCOUNTING

Notional amounts and fair values of derivative instruments

	March 31, 2020								December 31, 2019
	Gross Derivative Assets				Gross Derivative Liabilities				Gross Derivative Assets				Gross Derivative Liabilities
		Notional		Fair		Notional		Fair		Notional		Fair		Notional		Fair
(in millions)		Amount		Value		Amount		Value		Amount		Value		Amount		Value
Derivatives designated as
hedging instruments:(a)
Interest rate contracts	$	735	$	18	$	316	$	11	$	495	$	3	$	410	$	7
Foreign exchange contracts		7,592		843		1,929		88		4,328		342		5,230		162
Derivatives not designated
as hedging instruments:(a)
Interest rate contracts		50,409		6,605		36,573		4,215		52,437		3,197		35,231		2,742
Foreign exchange contracts		12,350		1,495		8,818		944		8,133		698		12,093		863
Equity contracts		22,291		1,240		4,313		77		18,533		769		7,539		139
Credit contracts(b)		7,617		133		923		81		8,457		3		923		89
Other contracts(c)		41,563		15		56		13		40,582		14		56		7
Total derivatives, gross	$	142,557	$	10,349	$	52,928	$	5,429	$	132,965	$	5,026	$	61,482	$	4,009
Counterparty netting(d)				(4,645)				(4,645)				(2,427)				(2,427)
Cash collateral(e)				(4,840)				(147)				(1,806)				(527)
Total derivatives on condensed
consolidated balance sheets(f)			$	864			$	637			$	793			$	1,055

(a)Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.

(b)As of March 31, 2020 and December 31, 2019, included CDSs on super senior multi-sector CDOs with a net notional amount of $146 million and $152 million (fair value liability of $56 million and $48 million), respectively. The net notional amount represents the maximum exposure to loss on the portfolio.

(c)Consists primarily of stable value wraps and contracts with multiple underlying exposures.

(d)Represents netting of derivative exposures covered by a qualifying master netting agreement.

(e)Represents cash collateral posted and received that is eligible for netting.

(f)Freestanding derivatives only, excludes embedded derivatives. Derivative instrument assets and liabilities are recorded in Other assets and liabilities, respectively. Fair value of assets related to bifurcated embedded derivatives was zero at both March 31, 2020 and December 31, 2019. Fair value of liabilities related to bifurcated embedded derivatives was $8.2 billion and $6.9 billion, respectively, at March 31, 2020 and December 31, 2019. A bifurcated embedded derivative is generally presented with the host contract in the Condensed Consolidated Balance Sheets. Embedded derivatives are primarily related to guarantee features in variable annuity products, which include equity and interest rate components.

Gain (loss) recognized in earnings on AIG's derivative instruments in fair value hedging relationships in the Consolidated Statements of Income

	Gains/(Losses) Recognized in Earnings for:
	Hedging		Excluded		Hedged
(in millions)	Derivatives(a)		Components(b)		Items		Net Impact
Three Months Ended March 31, 2020
Interest rate contracts:
Interest credited to policyholder account balances	$	17	$	-	$	(17)	$	-
Net investment income		(3)		-		3		-
Foreign exchange contracts:
Realized capital gains/(losses)		305		281		(305)		281
Three Months Ended March 31, 2019
Interest rate contracts:
Interest credited to policyholder account balances	$	5	$	-	$	(5)	$	-
Net investment income		(1)		-		1		-
Foreign exchange contracts:
Realized capital gains/(losses)		(8)		(14)		8		(14)

(a)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are included in the assessment of hedge effectiveness.

(b)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are excluded from the assessment of hedge effectiveness and recognized in earnings on a mark-to-market basis.

Effect of AIG's derivative instruments not designated as hedging instruments in the Consolidated Statements of Income

	Gains (Losses)
Three Months Ended March 31,	Recognized in Earnings
(in millions)		2020		2019
By Derivative Type:
Interest rate contracts	$	2,573	$	359
Foreign exchange contracts		1,025		(28)
Equity contracts		1,103		(208)
Credit contracts		122		(8)
Other contracts		10		16
Embedded derivatives		(1,052)		(449)
Total	$	3,781	$	(318)
By Classification:
Policy fees	$	15	$	17
Net investment income		(2)		(5)
Net realized capital gains (losses)		3,752		(334)
Policyholder benefits and claims incurred		16		4
Total	$	3,781	$	(318)

XML

EMPLOYEE BENEFITS (Tables)

3 Months Ended

Mar. 31, 2020

Defined Benefit Plan Disclosure [Line Items]

Components of net periodic benefit cost

	Pension
		U.S.		Non-U.S.
(in millions)		Plans		Plans		Total
Three Months Ended March 31, 2020
Components of net periodic benefit cost:
Service cost	$	1	$	5	$	6
Interest cost		34		3		37
Expected return on assets		(60)		(5)		(65)
Amortization of net loss		8		2		10
Net periodic benefit cost (credit)		(17)		5		(12)
Three Months Ended March 31, 2019
Components of net periodic benefit cost:
Service cost	$	2	$	6	$	8
Interest cost		44		4		48
Expected return on assets		(57)		(5)		(62)
Amortization of net loss		8		1		9
Net periodic benefit cost (credit)		(3)		6		3
Settlement (credit) charges		-		(4)		(4)
Net benefit cost (credit)	$	(3)	$	2	$	(1)

XML

FAIR VALUE MEASUREMENTS (Details - Assets measured at fair value on a non-recurring basis at the time of impairment and the related impairment charges recorded during the periods presented) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Fair Value Assets Impairment Charges Measured on Nonrecurring Basis [Domain]
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	$ 97		$ 330
Other investments
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	97		329
Other assets
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		1
Level 1 | Fair Value Assets Impairment Charges Measured on Nonrecurring Basis [Domain]
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1 | Other investments
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1 | Other assets
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | Fair Value Assets Impairment Charges Measured on Nonrecurring Basis [Domain]
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | Other investments
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | Other assets
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 3 | Fair Value Assets Impairment Charges Measured on Nonrecurring Basis [Domain]
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	97		330
Level 3 | Other investments
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	97		329
Level 3 | Other assets
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Fair Value	0		$ 1
Fair value on a non-recurring basis | Fair Value Assets Impairment Charges Measured on Nonrecurring Basis [Domain]
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Impairment Charges	23	$ 49
Fair value on a non-recurring basis | Other investments
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Impairment Charges	11	41
Fair value on a non-recurring basis | Other assets
Fair Value Assets Measured on Nonrecurring Basis [Line Items]
Impairment Charges	$ 12	$ 8

XML

FAIR VALUE MEASUREMENTS (Details - Quantitative Information about Level 3 Fair Value Measurements, Liabilities) $ in Millions	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
GMWB | Minimum | Measurement Input Equity Volatility [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0700	0.0615
GMWB | Minimum | Measurement Input Base Lapse Rates [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0000	0.0016
GMWB | Minimum | Measurement Input Dynamic Lapse Multiplier [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.5000	0.5000
GMWB | Minimum | Measurement Input Mortality Multiplier [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.3800	0.3800
GMWB | Minimum | Measurement Input Utilization Rate [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.9000	0.9000
GMWB | Minimum | Measurement Input Equity Interest Rate Correlation [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.2000	0.2000
GMWB | Minimum | Measurement Input, NPA [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0131	0.0012
GMWB | Maximum | Measurement Input Equity Volatility [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.5700	0.4885
GMWB | Maximum | Measurement Input Base Lapse Rates [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.1300	0.1260
GMWB | Maximum | Measurement Input Dynamic Lapse Multiplier [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	1.4300	1.4300
GMWB | Maximum | Measurement Input Mortality Multiplier [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	1.4700	1.4700
GMWB | Maximum | Measurement Input Utilization Rate [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	1.0000	1.0000
GMWB | Maximum | Measurement Input Equity Interest Rate Correlation [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.4000	0.4000
GMWB | Maximum | Measurement Input, NPA [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0280	0.0153
GMWB | Discounted cash flow | Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Fair value	$ 3,978	$ 2,474
Index Annuities | Minimum | Measurement Input Mortality Multiplier [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.2400	0.2400
Index Annuities | Minimum | Measurement Input Lapse Rate [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0031	0.0031
Index Annuities | Minimum | Measurement Input Options Budget [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0000	0.0100
Index Annuities | Minimum | Measurement Input, NPA [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0131	0.0012
Index Annuities | Maximum | Measurement Input Mortality Multiplier [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	1.8000	1.8000
Index Annuities | Maximum | Measurement Input Lapse Rate [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.5000	0.5000
Index Annuities | Maximum | Measurement Input Options Budget [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0400	0.0400
Index Annuities | Maximum | Measurement Input, NPA [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0280	0.0153
Index Annuities | Discounted cash flow | Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Fair value	$ 3,719	$ 3,895
Indexed Life | Minimum | Measurement Input Base Lapse Rates [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0000	0.0000
Indexed Life | Minimum | Measurement Input Mortality Rate [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0000	0.0000
Indexed Life | Minimum | Measurement Input, NPA [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0131	0.0012
Indexed Life | Maximum | Measurement Input Base Lapse Rates [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.3797	0.3797
Indexed Life | Maximum | Measurement Input Mortality Rate [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	1.0000	1.0000
Indexed Life | Maximum | Measurement Input, NPA [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Embedded derivative liability, measurement input	0.0280	0.0153
Indexed Life | Discounted cash flow | Level 3
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Fair value	$ 434	$ 510

XML

FAIR VALUE MEASUREMENTS (Details - Changes in Level 3 Recurring Fair Value Measurements) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	$ 30,958	$ 33,610
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(105)	317
Other Comprehensive Income (Loss), assets	(2,296)	230
Purchases, Sales, Issuances and Settlements, Net, assets	(819)	(491)
Gross Transfers In, assets	1,932	798
Gross Transfers Out, assets	(597)	(741)
Reclassification of Held for Sale, assets	(3)	0
Fair Value End of Period, assets	29,070	33,723
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	(270)	29
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	(2,100)
Liabilities
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	6,808	4,269
Net realized and unrealized gains (losses) included in income, liabilities	1,014	529
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	113	212
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	7,935	5,010
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	(769)	(483)
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Policyholder contract deposits
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	6,910	4,116
Net realized and unrealized gains (losses) included in income, liabilities	1,171	569
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	72	193
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	8,153	4,878
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	(884)	(521)
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Derivative liabilities, net
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	(102)	153
Net realized and unrealized gains (losses) included in income, liabilities	(157)	(40)
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	41	19
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	(218)	132
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	115	38
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Interest rate contracts
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	0	15
Net realized and unrealized gains (losses) included in income, liabilities	0	1
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	0	(1)
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	0	15
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	0	(1)
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Foreign exchange contracts
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	(6)	(5)
Net realized and unrealized gains (losses) included in income, liabilities	3	(5)
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	6	9
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	3	(1)
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	1	(1)
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Equity contracts
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	(151)	(75)
Net realized and unrealized gains (losses) included in income, liabilities	(26)	(16)
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	34	(5)
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	(143)	(96)
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	(14)	19
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Credit contracts
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	62	227
Net realized and unrealized gains (losses) included in income, liabilities	(124)	(3)
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	(14)	(2)
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	(76)	222
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	118	4
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Other contracts
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, liabilities	(7)	(9)
Net realized and unrealized gains (losses) included in income, liabilities	(10)	(17)
Other Comprehensive Income (Loss), liabilities	0	0
Purchases, Sales, Issuances and Settlements, Net, liabilities	15	18
Gross Transfers In, liabilities	0	0
Gross Transfers Out, liabilities	0	0
Reclassified to Held for Sale, liabilities	0	0
Fair Value End of Year, liabilities	(2)	(8)
Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Period, liabilities	10	17
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, liabilities	0
Bonds available for sale
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	25,931	27,093
Net Realized and Unrealized Gains (Losses) Included in Income, assets	94	228
Other Comprehensive Income (Loss), assets	(2,297)	230
Purchases, Sales, Issuances and Settlements, Net, assets	12	(257)
Gross Transfers In, assets	1,781	798
Gross Transfers Out, assets	(597)	(644)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	24,924	27,448
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	(2,100)
Bonds available for sale | Obligations of states, municipalities and political subdivisions
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	2,121	2,000
Net Realized and Unrealized Gains (Losses) Included in Income, assets	5	(1)
Other Comprehensive Income (Loss), assets	(55)	97
Purchases, Sales, Issuances and Settlements, Net, assets	137	24
Gross Transfers In, assets	27	29
Gross Transfers Out, assets	(133)	(13)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	2,102	2,136
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	(51)
Bonds available for sale | Non-U.S. governments
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	0	11
Net Realized and Unrealized Gains (Losses) Included in Income, assets	0	0
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	0	(4)
Gross Transfers In, assets	6	0
Gross Transfers Out, assets	0	(4)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	6	3
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Bonds available for sale | Corporate debt
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	1,663	864
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(67)	(3)
Other Comprehensive Income (Loss), assets	(81)	38
Purchases, Sales, Issuances and Settlements, Net, assets	7	34
Gross Transfers In, assets	103	654
Gross Transfers Out, assets	(410)	(55)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	1,215	1,532
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	(29)
Bonds available for sale | Residential mortgage-backed securities (RMBS)
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	13,408	14,199
Net Realized and Unrealized Gains (Losses) Included in Income, assets	132	227
Other Comprehensive Income (Loss), assets	(1,623)	24
Purchases, Sales, Issuances and Settlements, Net, assets	(223)	(412)
Gross Transfers In, assets	19	23
Gross Transfers Out, assets	(26)	(16)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	11,687	14,045
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	(1,505)
Bonds available for sale | Commercial mortgage-backed securities (CMBS)
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	1,053	917
Net Realized and Unrealized Gains (Losses) Included in Income, assets	7	1
Other Comprehensive Income (Loss), assets	19	17
Purchases, Sales, Issuances and Settlements, Net, assets	44	146
Gross Transfers In, assets	23	0
Gross Transfers Out, assets	0	(189)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	1,146	892
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	21
Bonds available for sale | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	7,686	9,102
Net Realized and Unrealized Gains (Losses) Included in Income, assets	17	4
Other Comprehensive Income (Loss), assets	(557)	54
Purchases, Sales, Issuances and Settlements, Net, assets	47	(45)
Gross Transfers In, assets	1,603	92
Gross Transfers Out, assets	(28)	(367)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	8,768	8,840
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	(536)
Other bond securities
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	3,738	5,845
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(194)	89
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	(975)	(239)
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	(96)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	2,569	5,599
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	(284)	27
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Other bond securities | Corporate debt
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	0	0
Net Realized and Unrealized Gains (Losses) Included in Income, assets	0	0
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	0	0
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	0
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Other bond securities | Residential mortgage-backed securities (RMBS)
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	143	1,290
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(14)	17
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	20	(41)
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	0
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	149	1,266
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	(14)	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Other bond securities | Commercial mortgage-backed securities (CMBS)
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	50	77
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(7)	4
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	(1)	3
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	0
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	42	84
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	(8)	3
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Other bond securities | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	3,545	4,478
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(173)	68
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	(994)	(201)
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	(96)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	2,378	4,249
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	(262)	24
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Equity securities
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	8	27
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(1)	0
Other Comprehensive Income (Loss), assets	1	0
Purchases, Sales, Issuances and Settlements, Net, assets	10	0
Gross Transfers In, assets	1	0
Gross Transfers Out, assets	0	(1)
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	19	26
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Mortgage and other loans receivable
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	0	0
Net Realized and Unrealized Gains (Losses) Included in Income, assets	0	0
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	0	0
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	0
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Other invested assets
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	1,192	587
Net Realized and Unrealized Gains (Losses) Included in Income, assets	(4)	0
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	129	4
Gross Transfers In, assets	150	0
Gross Transfers Out, assets	0	0
Reclassification of Held for Sale, assets	0	0
Fair Value End of Period, assets	1,467	591
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	14	2
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	0
Other assets
Fair value assets and liabilities measured on recurring basis, unobservable input reconciliation calculation
Fair Value Beginning of Period, assets	89	58
Net Realized and Unrealized Gains (Losses) Included in Income, assets	0	0
Other Comprehensive Income (Loss), assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	5	1
Gross Transfers In, assets	0	0
Gross Transfers Out, assets	0	0
Reclassification of Held for Sale, assets	(3)	0
Fair Value End of Period, assets	91	59
Changes in Unrealized Gains (Losses) Inlcuded in Income on Instruments Held at End of Period, assets	0	$ 0
Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Period, assets	$ 0

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INVESTMENTS (Details - Pledged investments) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Investments [Line Items]
Fair value of securities collateral pledged	$ 3,935	$ 2,567
Fair value of amount sold or repledged	0	121
Securities Lending Agreements, Fair Value of Collateral	2,610	2,798
Short-term investments held in escrow	430	330
Total carrying values of cash and securities deposited under requirements of regulatory authorities or other insurance-related arrangements	8,700	8,700
Overnight and continuous
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Up to 30 Days
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	1,317	1,071
31 to 90 Days
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	961	1,333
91 to 364 Days
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	332	394
365 Days or Greater
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
FHLBs
Investments [Line Items]
Fair value of fixed maturities securities available for sale	5,800	4,300
Amount owned by subsidiaries	201	194
Residential loans pledged as collateral	2,200	1,800
Secured financing
Investments [Line Items]
Amounts Borrowed Under Repurchase and Securities Lending Agreements	2,900	3,100
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	149	232
Amounts Loaned under Reverse Repurchase Agreements	3,900	2,600
Secured financing | Fixed Maturities [Member]
Investments [Line Items]
Fair value of fixed maturities securities available for sale	2,759	3,030
Secured financing | Overnight and continuous
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	23	24
Secured financing | Up to 30 Days
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	126	126
Secured financing | 31 to 90 Days
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	82
Secured financing | 91 to 364 Days
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Secured financing | 365 Days or Greater
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | Obligations of states, municipalities and political subdivisions
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	370	386
Secured financing | Bonds available for sale | Non-U.S. governments
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	26	73
Securities Lending Agreements, Fair Value of Collateral	85	0
Secured financing | Bonds available for sale | Corporate debt
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	123	159
Securities Lending Agreements, Fair Value of Collateral	1,823	2,018
Secured financing | Bonds available for sale | Residential mortgage-backed securities (RMBS)
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	332	394
Secured financing | Bonds available for sale | Overnight and continuous | Obligations of states, municipalities and political subdivisions
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | Overnight and continuous | Non-U.S. governments
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	4	2
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | Overnight and continuous | Corporate debt
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	19	22
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | Overnight and continuous | Residential mortgage-backed securities (RMBS)
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | Up to 30 Days | Obligations of states, municipalities and political subdivisions
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	234	0
Secured financing | Bonds available for sale | Up to 30 Days | Non-U.S. governments
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	22	71
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | Up to 30 Days | Corporate debt
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	104	55
Securities Lending Agreements, Fair Value of Collateral	1,083	1,071
Secured financing | Bonds available for sale | Up to 30 Days | Residential mortgage-backed securities (RMBS)
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 31 to 90 Days | Obligations of states, municipalities and political subdivisions
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	136	386
Secured financing | Bonds available for sale | 31 to 90 Days | Non-U.S. governments
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Securities Lending Agreements, Fair Value of Collateral	85	0
Secured financing | Bonds available for sale | 31 to 90 Days | Corporate debt
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	82
Securities Lending Agreements, Fair Value of Collateral	740	947
Secured financing | Bonds available for sale | 31 to 90 Days | Residential mortgage-backed securities (RMBS)
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 91 to 364 Days | Obligations of states, municipalities and political subdivisions
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 91 to 364 Days | Non-U.S. governments
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 91 to 364 Days | Corporate debt
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 91 to 364 Days | Residential mortgage-backed securities (RMBS)
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	332	394
Secured financing | Bonds available for sale | 365 Days or Greater | Obligations of states, municipalities and political subdivisions
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 365 Days or Greater | Non-U.S. governments
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 365 Days or Greater | Corporate debt
Investments [Line Items]
Securities Sold under Agreements to Repurchase, Fair Value of Collateral	0	0
Securities Lending Agreements, Fair Value of Collateral	0	0
Secured financing | Bonds available for sale | 365 Days or Greater | Residential mortgage-backed securities (RMBS)
Investments [Line Items]
Securities Lending Agreements, Fair Value of Collateral	0	0
GIAs
Investments [Line Items]
Fair value of other bond securities	$ 1,600	$ 1,500

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DERIVATIVES AND HEDGE ACCOUNTING (Details - Additional Information) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Credit Derivatives [Line Items]
Collateral posted	$ 1,900	$ 2,200
Fair value of hybrid securities	2,300	3,300
Par value of hybrid securities	5,300	7,400
Credit Risk Related Contingent Features [Member]
Credit Derivatives [Line Items]
Collateral posted	399	381
Aggregate fair value of net liability position	257	$ 336
Additional collateral postings and termination payments	$ 44

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EQUITY (Details - Preferred Stock) - USD ($) $ / shares in Units, $ in Millions					3 Months Ended
	Mar. 30, 2020	Mar. 16, 2020	Mar. 29, 2019	Mar. 14, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Class of Stock [Line Items]
Issuances (in shares)					3,452,529
Preferred stock, par value (in dollars per share)					$ 5.00		$ 5
Preferred stock liquidation preference					$ 500		$ 500
Issuance of preferred stock					$ 0	$ 485
Date dividends declared	Feb. 12, 2020		Feb. 13, 2019
Date dividends paid	Mar. 30, 2020		Mar. 29, 2019
Date of record	Mar. 16, 2020		Mar. 15, 2019
Series A Preferred Stock
Class of Stock [Line Items]
Issuances (in shares)				20,000
Preferred stock, dividend rate (as a percent)				5.85%	5.85%
Preferred stock, par value (in dollars per share)				$ 5.00
Preferred stock liquidation preference				$ 25,000
Issuance of preferred stock				$ 485
Date dividends declared		Feb. 12, 2020
Preferred Stock Dividends Per Share Cash Paid		$ 365.625
Date dividends paid		Mar. 16, 2020
Date of record		Feb. 28, 2020
Series A Preferred Stock | Rating Agency Event [Member]
Class of Stock [Line Items]
Preferred stock redemption terms					90 days
Preferred stock redemption price per share				$ 25,500
Series A Preferred Stock | Regulatory Capital Event [Member]
Class of Stock [Line Items]
Preferred stock redemption terms					90 days
Preferred stock redemption price per share				$ 25,000
Depositary Shares
Class of Stock [Line Items]
Issuances (in shares)				20,000,000
Preferred stock liquidation preference				$ 25.00
Preferred Stock Dividends Per Share Cash Paid		$ 0.365625
Depositary Shares | Rating Agency Event [Member]
Class of Stock [Line Items]
Preferred stock redemption price per share				25.50
Depositary Shares | Regulatory Capital Event [Member]
Class of Stock [Line Items]
Preferred stock redemption price per share				$ 25.00

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LENDING ACTIVITIES (Details - Credit quality of residential mortgages by year of vintage) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
2020	$ 251
2019	1,555
2018	879
2017	1,314
2016	1,353
Prior	1,366
Mortgage and other loans receivable, net	46,844	$ 46,984
Residential mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net	6,718
780 and greater
Financing Receivable, Credit Quality Indicator [Line Items]
2020	116
2019	973
2018	638
2017	984
2016	996
Prior	969
Mortgage and other loans receivable, net	4,676
720 - 779
Financing Receivable, Credit Quality Indicator [Line Items]
2020	128
2019	496
2018	190
2017	265
2016	282
Prior	285
Mortgage and other loans receivable, net	1,646
660 - 719
Financing Receivable, Credit Quality Indicator [Line Items]
2020	6
2019	77
2018	43
2017	55
2016	65
Prior	85
Mortgage and other loans receivable, net	331
600 - 659
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1
2019	8
2018	7
2017	8
2016	7
Prior	16
Mortgage and other loans receivable, net	47
Less than 600
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1
2018	1
2017	2
2016	3
Prior	11
Mortgage and other loans receivable, net	$ 18

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Rollforward of allowance for credit losses and disputes in connection with the adoption of the Financial Instruments Credit Losses Standard) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Summary of Significant Accounting Policies [Line Items]
Securities available for sale, balance, beginning of year	$ 0
Securities available for sale, purchased credit deteriorated initial allowance and purchases of available for sale debt securites accounted for as PCD assets	13
Securities available for sale, increase (decrease)	198	$ 0
Securities available for sale, balance, end of period	211
Mortgage and other loan receivables, balance, beginning of year	438	397
Mortgage and other loan receivables, increase (decrease)	31
Mortgage and other loan receivables, balance, end of period	787	$ 422
Reinsurance recoverables, balance, beginning of year	151
Reinsurance recoverables, increase (decrease)	(13)
Reinsurance recoverables, balance, end of period	362
Premiums and other receivables, balance, beginning of year	178
Premiums and other receivables, increase (decrease)	(2)
Premiums and other receivables, balance, end of period	210
Contractual deductible recoverables, balance, beginning of year	0
Contractual deductible recoverables, increase (decrease)	0
Contractual deductible recoverables, balance, end of period	14
Commercial mortgage loan commitments, balance, beginning of year	0
Commercial mortgage loan commitments, increase (decrease)	7
Commercial mortgage loan commitments, balance, end of period	58
Total, beginning of year	767
Total, increase (decrease)	221
Total, end of period	1,642
Retained earnings	(24,062)		$ (23,084)
Cumulative effect of change in accounting principle
Summary of Significant Accounting Policies [Line Items]
Securities available for sale, balance, beginning of year	0
Mortgage and other loan receivables, balance, beginning of year	318
Reinsurance recoverables, balance, beginning of year	224
Premiums and other receivables, balance, beginning of year	34
Contractual deductible recoverables, balance, beginning of year	14
Commercial mortgage loan commitments, balance, beginning of year	51
Total, beginning of year	641
Secondary impacts to certain long-duration insurance contracts	(27)
Tax impact	$ (127)
Retained earnings			$ 487

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SEGMENT INFORMATION (Details - Schedule of continuing operations by operating segment, reconciling items) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Reconciling items from adjusted pre-tax income (loss) to pre-tax income (loss):
Gain (loss) on extinguishment of debt	$ (17)	$ 2
Income (loss) from divested businesses	(216)	6
Net reserve discount benefit (charge)	(56)	(473)
Revenues	14,443	12,456
Adjusted Pre-tax Income (Loss)	2,558	1,154
Reconciling items from adjusted pre-tax income to pre-tax income | Total Revenues
Reconciling items from adjusted pre-tax income (loss) to pre-tax income (loss):
Changes in fair values of securities used to hedge guaranteed living benefits	14	105
Changes in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses)	0	0
Changes in fair value of equity securities	(191)	79
Professional fees related to regulatory or accounting changes	0	0
Other income (expense) - net	9	7
Gain (loss) on extinguishment of debt	0	0
Net realized capital gains (losses)	3,485	(489)
Income (loss) from divested businesses	0	0
Non-operating litigation reserves and settlements	6	0
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements	0	0
Net reserve discount benefit (charge)	0	0
Integration and transaction costs associated with acquired business	0	0
Restructuring and other costs	0	0
Reconciling items from adjusted pre-tax income to pre-tax income | Adjusted Pre-Tax Income (loss)
Reconciling items from adjusted pre-tax income (loss) to pre-tax income (loss):
Changes in fair values of securities used to hedge guaranteed living benefits	(7)	96
Changes in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses)	(538)	99
Changes in fair value of equity securities	(191)	79
Professional fees related to regulatory or accounting changes	(13)	0
Other income (expense) - net	0	0
Gain (loss) on extinguishment of debt	(17)	2
Net realized capital gains (losses)	3,502	(474)
Income (loss) from divested businesses	(216)	6
Non-operating litigation reserves and settlements	6	(1)
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements	8	27
Net reserve discount benefit (charge)	(56)	(473)
Integration and transaction costs associated with acquired business	(2)	(7)
Restructuring and other costs	$ (90)	$ (47)

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FAIR VALUE MEASUREMENTS (Details - Assets and Liabilities Measured at Fair Value on a Recurring Basis) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	$ 241,776	$ 251,086
Other bond securities	5,353	6,682
Equity securities	624	841
Other invested assets	6,576	6,827
Derivative Assets, Fair Value, Gross	10,349	5,026
Derivative assets, Counterparty netting	(4,645)	(2,427)
Derivative assets, Cash collateral	(4,840)	(1,806)
Derivative assets	864	793
Short-term investments, portion measured at fair value	8,186	5,343
Other assets	3,311	3,151
Separate account assets, at fair value	78,836	93,272
Fair Value, Liabilities Measured on Recurring Basis
Policyholder contract deposits, portion measured at fair value	8,153	6,910
Other policyholder funds	3,460	3,428
Derivative Liabilities, Fair Value, Gross	5,429	4,009
Derivative liabilities, Counterparty netting	(4,645)	(2,427)
Derivative liabilities, Cash collateral	(147)	(527)
Derivative liabilities	637	1,055
Other liabilities	637	1,100
Long-term debt	2,276	2,062
Fair Value Using Net Asset Value Per Share or its equivalent	5,029	5,549
Recurring Basis
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	241,776	251,086
Other bond securities	5,353	6,682
Equity securities	624	841
Other invested assets	1,547	1,278
Derivative assets, Counterparty netting	(4,645)	(2,427)
Derivative assets, Cash collateral	(4,840)	(1,806)
Derivative assets, Counterparty netting and cash collateral	(9,485)	(4,233)
Derivative assets	864	793
Short-term investments, portion measured at fair value	8,186	5,343
Other assets	2,447	2,358
Separate account assets, at fair value	78,836	93,272
Fair value assets measured on recurring basis, total	339,633	361,653
Fair Value, Liabilities Measured on Recurring Basis
Policyholder contract deposits, portion measured at fair value	8,153	6,910
Derivative liabilities, Counterparty netting	(4,645)	(2,427)
Derivative liabilities, Cash collateral	(147)	(527)
Derivative liabilities, Counterparty netting and cash collateral	(4,792)	(2,954)
Derivative liabilities	637	1,055
Other liabilities	0	45
Long-term debt	2,276	2,062
Fair value liabilities measured on recurring basis, total	11,066	10,072
Recurring Basis | Interest rate contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	6,623	3,200
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	4,226	2,749
Recurring Basis | Foreign exchange contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	2,338	1,040
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	1,032	1,025
Recurring Basis | Equity contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	1,240	769
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	77	139
Recurring Basis | Credit contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	133	3
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	81	89
Recurring Basis | Other contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	15	14
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	13	7
Recurring Basis | U.S. government and government sponsored entities
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	5,689	5,380
Other bond securities	2,057	2,121
Recurring Basis | Obligations of states, municipalities and political subdivisions
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	15,440	15,318
Recurring Basis | Non-U.S. governments
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	14,173	14,869
Other bond securities	0	0
Recurring Basis | Corporate debt
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	144,322	149,636
Other bond securities	16	18
Recurring Basis | Residential mortgage-backed securities (RMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	30,857	32,805
Other bond securities	467	489
Recurring Basis | Commercial mortgage-backed securities (CMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	14,226	14,430
Other bond securities	271	322
Recurring Basis | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	17,069	18,648
Other bond securities	2,542	3,732
Recurring Basis | Level 1
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	287	195
Other bond securities	6	0
Equity securities	582	756
Other invested assets	0	0
Derivative Assets, Fair Value, Gross	89	6
Short-term investments, portion measured at fair value	1,732	2,299
Other assets	176	57
Separate account assets, at fair value	74,591	89,069
Fair value assets measured on recurring basis, total	77,463	92,382
Fair Value, Liabilities Measured on Recurring Basis
Policyholder contract deposits, portion measured at fair value	0	0
Derivative Liabilities, Fair Value, Gross	10	12
Other liabilities	0	0
Long-term debt	0	0
Fair value liabilities measured on recurring basis, total	10	12
Recurring Basis | Level 1 | Interest rate contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	2	1
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	2	4
Recurring Basis | Level 1 | Foreign exchange contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	0	0
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	0	0
Recurring Basis | Level 1 | Equity contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	87	5
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	8	8
Recurring Basis | Level 1 | Credit contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	0	0
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	0	0
Recurring Basis | Level 1 | Other contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	0	0
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	0	0
Recurring Basis | Level 1 | U.S. government and government sponsored entities
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	239	135
Other bond securities	6	0
Recurring Basis | Level 1 | Obligations of states, municipalities and political subdivisions
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	0	0
Recurring Basis | Level 1 | Non-U.S. governments
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	48	60
Other bond securities	0	0
Recurring Basis | Level 1 | Corporate debt
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	0	0
Other bond securities	0	0
Recurring Basis | Level 1 | Residential mortgage-backed securities (RMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	0	0
Other bond securities	0	0
Recurring Basis | Level 1 | Commercial mortgage-backed securities (CMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	0	0
Other bond securities	0	0
Recurring Basis | Level 1 | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	0	0
Other bond securities	0	0
Recurring Basis | Level 2
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	216,565	224,960
Other bond securities	2,778	2,944
Equity securities	23	77
Other invested assets	80	86
Derivative Assets, Fair Value, Gross	9,961	4,826
Short-term investments, portion measured at fair value	6,454	3,044
Other assets	2,180	2,212
Separate account assets, at fair value	4,245	4,203
Fair value assets measured on recurring basis, total	242,286	242,352
Fair Value, Liabilities Measured on Recurring Basis
Policyholder contract deposits, portion measured at fair value	0	0
Derivative Liabilities, Fair Value, Gross	5,338	3,905
Other liabilities	0	45
Long-term debt	2,276	2,062
Fair value liabilities measured on recurring basis, total	7,614	6,012
Recurring Basis | Level 2 | Interest rate contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	6,621	3,199
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	4,224	2,745
Recurring Basis | Level 2 | Foreign exchange contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	2,337	1,034
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	1,028	1,025
Recurring Basis | Level 2 | Equity contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	1,003	593
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	62	111
Recurring Basis | Level 2 | Credit contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	0	0
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	24	24
Recurring Basis | Level 2 | Other contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	0	0
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	0	0
Recurring Basis | Level 2 | U.S. government and government sponsored entities
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	5,450	5,245
Other bond securities	2,051	2,121
Recurring Basis | Level 2 | Obligations of states, municipalities and political subdivisions
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	13,338	13,197
Recurring Basis | Level 2 | Non-U.S. governments
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	14,119	14,809
Other bond securities	0	0
Recurring Basis | Level 2 | Corporate debt
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	143,107	147,973
Other bond securities	16	18
Recurring Basis | Level 2 | Residential mortgage-backed securities (RMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	19,170	19,397
Other bond securities	318	346
Recurring Basis | Level 2 | Commercial mortgage-backed securities (CMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	13,080	13,377
Other bond securities	229	272
Recurring Basis | Level 2 | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	8,301	10,962
Other bond securities	164	187
Recurring Basis | Level 3
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	24,924	25,931
Other bond securities	2,569	3,738
Equity securities	19	8
Other invested assets	1,467	1,192
Derivative Assets, Fair Value, Gross	299	194
Short-term investments, portion measured at fair value	0	0
Other assets	91	89
Separate account assets, at fair value	0	0
Fair value assets measured on recurring basis, total	29,369	31,152
Fair Value, Liabilities Measured on Recurring Basis
Policyholder contract deposits, portion measured at fair value	8,153	6,910
Derivative Liabilities, Fair Value, Gross	81	92
Other liabilities	0	0
Long-term debt	0	0
Fair value liabilities measured on recurring basis, total	8,234	7,002
Recurring Basis | Level 3 | Interest rate contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	0	0
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	0	0
Recurring Basis | Level 3 | Foreign exchange contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	1	6
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	4	0
Recurring Basis | Level 3 | Equity contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	150	171
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	7	20
Recurring Basis | Level 3 | Credit contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	133	3
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	57	65
Recurring Basis | Level 3 | Other contracts
Fair Value, Assets Measured on Recurring Basis
Derivative Assets, Fair Value, Gross	15	14
Fair Value, Liabilities Measured on Recurring Basis
Derivative Liabilities, Fair Value, Gross	13	7
Recurring Basis | Level 3 | U.S. government and government sponsored entities
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	0	0
Other bond securities	0	0
Recurring Basis | Level 3 | Obligations of states, municipalities and political subdivisions
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	2,102	2,121
Recurring Basis | Level 3 | Non-U.S. governments
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	6	0
Other bond securities	0	0
Recurring Basis | Level 3 | Corporate debt
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	1,215	1,663
Other bond securities	0	0
Recurring Basis | Level 3 | Residential mortgage-backed securities (RMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	11,687	13,408
Other bond securities	149	143
Recurring Basis | Level 3 | Commercial mortgage-backed securities (CMBS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	1,146	1,053
Other bond securities	42	50
Recurring Basis | Level 3 | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair Value, Assets Measured on Recurring Basis
Bonds available for sale	8,768	7,686
Other bond securities	$ 2,378	$ 3,545

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INVESTMENTS (Details - Components of Net investment income) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net Investment Income [Line Items]
Total investment income	$ 2,656	$ 3,993
Investment expenses	148	114
Net investment income	2,508	3,879
Fixed maturity securities, including short-term investments
Net Investment Income [Line Items]
Total investment income	2,609	2,653
Other fixed maturity securities
Net Investment Income [Line Items]
Total investment income	(60)	327
Derivative Fair Value Hedge Included In Effectiveness Gain Loss	169	28
Equity securities
Net Investment Income [Line Items]
Total investment income	(191)	79
Interest on mortgage and other loans
Net Investment Income [Line Items]
Total investment income	513	498
Alternative investments
Net Investment Income [Line Items]
Total investment income	(59)	419
Real estate
Net Investment Income [Line Items]
Total investment income	59	69
Other investments
Net Investment Income [Line Items]
Total investment income	(215)	(52)
Derivative Fair Value Hedge Included In Effectiveness Gain Loss	$ (202)	$ (15)

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SUBSEQUENT EVENTS (Details) - $ / shares	May 04, 2020	Mar. 30, 2020	Mar. 29, 2019
Subsequent Event [Line Items]
Date dividends declared		Feb. 12, 2020	Feb. 13, 2019
Date dividends paid		Mar. 30, 2020	Mar. 29, 2019
Date of record		Mar. 16, 2020	Mar. 15, 2019
Subsequent event
Subsequent Event [Line Items]
Dividends declared per common share	$ 0.32
Dividends declared per preferred share	$ 365.625
Subsequent event | Common Stock
Subsequent Event [Line Items]
Date dividends declared	May 04, 2020
Date dividends paid	Jun. 29, 2020
Date of record	Jun. 15, 2020
Subsequent event | Preferred Stock
Subsequent Event [Line Items]
Date dividends declared	May 04, 2020
Date dividends paid	Jun. 15, 2020
Date of record	May 29, 2020

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EQUITY (Details - Narratives) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
EQUITY
Payments for Repurchase of Stock	$ 500	$ 0
Shares purchased	12

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INVESTMENTS (Details - Amortized cost and fair value of fixed maturity securities available for sale by contractual maturity) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Fixed Maturity Securities Available for Sale, Fair Value, Total	$ 241,776	$ 251,086
Fixed maturity securities
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, Amortized Cost Net of Allowance	10,370
Due after one year through five years, Amortized Cost Net of Allowance	42,552
Due after five years through ten years, Amortized Cost Net of Allowance	41,923
Due after ten years, Amortized Cost Net of Allowance	77,878
Mortgage-backed, asset-backed and collateralized, Amortized Cost Net of Allowance	61,652
Available for sale securities, Amortized Cost or Cost, Net of Allowance	234,375
Due in one year or less, Fair Value	10,517
Due after one year through five years, Fair Value	42,479
Due after five years through ten years, Fair Value	41,993
Due after ten years, Fair Value	84,635
Mortgage-backed, asset-backed and collateralized, Fair Value	62,152
Fixed Maturity Securities Available for Sale, Fair Value, Total	$ 241,776	$ 251,086

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Rollforward of allowance for credit losses and disputes in connection with the adoption of the Financial Instruments Credit Losses Standard

Three Months Ended March 31, 2020		Balance,		Cumulative Effect		Purchased Credit				Balance,
		Beginning		Adjustment as of		Deteriorated Initial		Increase		End of
(in millions)		of Year		January 1, 2020		Allowance		(Decrease)		Period
Securities available for sale(a)	$	-	$	-	$	13	$	198	$	211
Mortgage and other loan receivables(b)		438		318		-		31		787
Reinsurance recoverables (inclusive of
deposit accounted assets)(c)		151		224		-		(13)		362
Premiums and other receivables(d)		178		34		-		(2)		210
Contractual deductible recoverables(e)		-		14		-		-		14
Commercial mortgage loan commitments(f)		-		51		-		7		58
Total	$	767	$	641	$	13	$	221	$	1,642
Secondary impacts to certain long-duration
insurance contracts(g)				(27)
Tax impact				(127)
Total cumulative effect adjustment			$	487

(a)The allowance for credit losses is reported in Bonds available for sale in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 6 for additional information.

(b)The allowance for credit losses is reported in Mortgage and other loans receivable in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(c)The allowance for credit losses is reported for Reinsurance assets for reinsurance contracts that contain sufficient insurance risk, and reported in Other assets for insurance and reinsurance contracts that do not contain sufficient insurance risk in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred for reinsurance contracts that do contain sufficient insurance risk and Premiums for contracts that do not contain sufficient insurance risk in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(d)The allowance for credit losses is reported in Premiums and other receivables in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in General operating and other expenses in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(e)The allowance for credit losses is reported in Liability for unpaid losses and loss adjustment expenses in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income. Refer to Note 10 for additional information.

(f)The allowance for credit losses is reported in Other liabilities in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(g)This reflects adjustments to the amortization of DAC, unearned revenue reserve and sales inducement assets as well as impacts on the future policy benefits for certain universal life and variable annuity contracts.

Rollfoward of the reinsurance recoverable allowance for credit losses and disputes

Three Months Ended March 31, 2020		General		Life and
(in millions)		Insurance		Retirement		Total
Balance, beginning of year	$	111	$	40	$	151
Initial allowance upon CECL adoption		202		22		224
Current period provision for expected credit losses and disputes		(4)		2		(2)
Write-offs charged against the allowance for credit losses and disputes		(3)		(4)		(7)
Other changes		(4)		-		(4)
Balance, end of period	$	302	$	60	$	362

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INCOME TAXES

3 Months Ended

Mar. 31, 2020

INCOME TAXES

INCOME TAXES

15. Income Taxes

RECENT U.S. Tax law changes

On December 22, 2017, the U.S. enacted Public Law 115-97, known informally as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act includes provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries and for Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies. While the U.S. tax authorities issued formal guidance, including recently issued proposed and final regulations for BEAT and other provisions of the Tax Act, there are still certain aspects of the Tax Act that remain unclear and subject to substantial uncertainties. Additional guidance is expected in future periods. Such guidance may result in changes to the interpretations and assumptions we made and actions we may take, which may impact amounts recorded with respect to international provisions of the Tax Act, possibly materially. Consistent with accounting guidance, we treat BEAT as a period tax charge in the period the tax is incurred and have made an accounting policy election to treat GILTI taxes in a similar manner.

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to mitigate the economic impacts of the COVID-19 crisis. AIG does not expect the tax provisions of the CARES Act to have a material impact on AIG’s U.S. federal tax liabilities.

RECLASSIFICATION OF CERTAIN TAX EFFECTS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME

We use an item-by-item approach to release the stranded or disproportionate income tax effects in AOCI related to our available-for-sale securities. Under this approach, a portion of the disproportionate tax effects is assigned to each individual security lot at the date the amount becomes lodged. When the individual securities are sold, mature, or are otherwise impaired on an other-than-temporary basis, the assigned portion of the disproportionate tax effect is reclassified from AOCI to income from continuing operations.

Interim Tax Calculation Method

We use the estimated annual effective tax rate method in computing our interim tax provision. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, and are recorded in the period in which the change occurs. While certain impacts of the Tax Act are included in our annual effective tax rate, we continue to refine our calculations as additional information becomes available, which may result in changes to the estimated annual effective tax rate. As of March 31, 2020, the annual effective tax rate includes the tax effects of actual and projected COVID-19 related losses and market developments.

Interim Tax Expense (Benefit)

For the three-month period ended March 31, 2020, the effective tax rate on income from continuing operations was 35.3 percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 21 percent primarily due to tax charges associated with the establishment of U.S. federal valuation allowance related to certain tax attribute carryforwards, accrual of interest associated with IRS and other tax authority matters, the effect of foreign operations, state and local income taxes, excess tax charges related to share based compensation payments recorded through the income statement, and non-deductible transfer pricing charges, partially offset by tax benefits associated with tax exempt income, and reclassifications from accumulated other comprehensive income to income from continuing operations related to the disposal of available for sale securities. The effect of foreign operations is primarily related to income in our foreign operations taxed at statutory tax rates higher than 21 percent, other foreign taxes, and foreign income subject to U.S. taxation.

For the three-month period ended March 31, 2019, the effective tax rate on income from continuing operations was 18.8 percent. The effective tax rate on income from continuing operations differs from the statutory tax rate of 21 percent primarily due to tax benefits associated with tax exempt income, reclassifications from accumulated other comprehensive income to income from continuing operations related to the disposal of available for sale securities, and valuation allowance activity related to certain foreign subsidiaries, partially offset by tax charges associated with the effect of foreign operations, state and local income taxes, a net tax charge related to the accrual of IRS interest, excess tax charges related to share based compensation payments recorded through the income statement, and non-deductible transfer pricing charges. The effect of foreign operations is primarily related to income in our foreign operations taxed at statutory tax rates higher than 21 percent, other foreign taxes, and foreign income subject to U.S. taxation.

For the three-month period ended March 31, 2020, we consider our foreign earnings with respect to certain operations in Canada, South Africa, the Far East, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested. Given the uncertainties around the impact from the COVID-19 crisis, including the significant global economic slowdown and general market decline, we continue to monitor and review the impact on our reinvestment considerations, including regulatory oversight in the relevant jurisdictions.

Assessment of Deferred Tax Asset Valuation Allowance

The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.

Our framework for assessing the recoverability of the deferred tax asset requires us to consider all available evidence, including:

the nature, frequency, and amount of cumulative financial reporting income and losses in recent years;

the sustainability of recent operating profitability of our subsidiaries;

the predictability of future operating profitability of the character necessary to realize the net deferred tax asset, including forecasts of future income for each of our businesses and actual and planned business and operational changes;

the carryforward periods for the net operating loss, capital loss and foreign tax credit carryforwards, including the effect of reversing taxable temporary differences; and

prudent and feasible actions and tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax asset.

In performing our assessment of the recoverability of the deferred tax asset under this framework, we consider tax laws governing the utilization of the net operating loss, capital loss and foreign tax credit carryforwards in each applicable jurisdiction. Under U.S. tax law, a company generally must use its net operating loss carryforwards before it can use its foreign tax credit carryforwards, even though the carryforward period for the foreign tax credit is shorter than for the net operating loss. Our U.S. federal consolidated income tax group includes both life companies and non-life companies. While the U.S. taxable income of our non-life companies can be offset by our net operating loss carryforwards, only a portion (no more than 35 percent) of the U.S. taxable income of our life companies can be offset by those net operating loss carryforwards. The remaining tax liability of our life companies can be offset by the foreign tax credit carryforwards. Accordingly, we are able to utilize both the net operating loss and foreign tax credit carryforwards concurrently.

Recent events, including the COVID-19 crisis, multiple reductions in target interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, impacted actual and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the realizability of the net operating losses and foreign tax credit carryforwards, we have considered forecasts of future income for each of our businesses, including assumptions about future macro-economic and AIG-specific conditions and events, and any impact these conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of stresses of key assumptions and evaluated the effect on tax attribute utilization.

The carryforward periods of our foreign tax credit carryforwards range from tax years 2020 through 2023. Carryforward periods for our net operating losses extend from 2028 forward. However, utilization of a portion of our net operating losses is limited under separate return limitation year (SRLY) rules. Based on first quarter of 2020 events and our analysis of their potential impact on utilization of our tax attributes, we concluded that a valuation allowance should be established on a portion of our foreign tax credit carryforwards and SRLY net operating losses that are no longer more-likely-than-not to be realized. To the extent that the valuation allowance is attributed to changes in forecast of current year taxable income, the impact is included in our estimated annualized effective tax rate. The valuation allowance related to changes in forecasts of income in future periods as well as other items not related to the current year was recorded discretely in the first quarter of 2020. Accordingly, as of March 31, 2020, we have recorded a $274 million valuation allowance through continuing operations.

Notwithstanding the recent events, our forecasts of future taxable income, including prudent and feasible tax planning strategies, resulted in sufficient income to achieve realization of the U.S. federal net operating loss carryforwards prior to expiration. As of March 31, 2020, based on all available evidence, it is more likely than not that the U.S. federal net operating loss carryforwards will be utilized prior to expiration and, thus, no valuation allowance has been established.

Estimates of future taxable income, including income generated from prudent and feasible actions and tax planning strategies, impact of settlements with taxing authorities, and any changes to interpretations and assumptions related to the impact of the Tax Act could change in the near term, perhaps materially, which may require us to consider any potential impact to our assessment of the recoverability of the deferred tax asset. Additionally, estimates of future taxable income, including prudent and feasible tax planning strategies, may be further impacted by market developments arising from the COVID-19 crisis and uncertainty regarding its outcome. Such potential impact could be material to our consolidated financial condition or results of operations for an individual reporting period.

For the three-month period ended March 31, 2020, recent changes in market conditions, including interest rate fluctuations, impacted the unrealized tax gains and losses in the U.S. Life Insurance Companies’ available for sale securities portfolio, resulting in a deferred tax asset related to net unrealized tax capital losses. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of March 31, 2020, based on all available evidence, we concluded that no valuation allowance is necessary in the U.S. Life Insurance Companies’ available for sale securities portfolio.

For the three-month period ended March 31, 2020, recent changes in market conditions, including interest rate fluctuations, impacted the unrealized tax gains and losses in the U.S. non-life companies’ available for sale securities portfolio, resulting in a deferred tax asset related to net unrealized tax capital losses. The deferred tax asset relates to the unrealized losses for which the carryforward period has not yet begun, and as such, when assessing its recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of March 31, 2020, based on all available evidence, we concluded that a valuation allowance should be established on a portion of the deferred tax asset related to unrealized losses that are not more-likely-than-not to be realized. For the three-month period ended March 31, 2020, we established $115 million of valuation allowance associated with the unrealized tax losses in the U.S. non-life companies’ available for sale securities portfolio, all of which was allocated to other comprehensive income.

For the three-month period ended March 31, 2020, we recognized a net increase of $9 million, in our deferred tax asset valuation allowance associated with certain foreign subsidiaries and state jurisdictions, primarily attributable to current year activity.

Tax Examinations and Litigation

On August 1, 2012, we filed a motion for partial summary judgment related to the disallowance of foreign tax credits associated with cross border financing transactions in the Southern District of New York. The Southern District of New York denied our summary judgment motion and upon AIG’s appeal, the U.S. Court of Appeals for the Second Circuit (the Second Circuit) affirmed the denial. AIG’s petition for certiorari to the U.S. Supreme Court from the decision of the Second Circuit was denied on March 7, 2016. As a result, the case has been remanded back to the Southern District of New York for a jury trial.

In January 2018, the parties reached non-binding agreements in principle on issues presented in the dispute and are currently reviewing the computations reflecting the settlement terms. The resolution is not final and is subject to various reviews. In 2019, we agreed with the IRS to execute an agreement for the tax years at issue in which AIG would waive restrictions on the assessment of additional tax related to the settlement of the underlying issues in those tax years. The litigation has been stayed pending the outcome of the review process. We can provide no assurance regarding the outcome of any such litigation or whether binding compromised settlements with the parties will ultimately be reached. We currently believe that we have adequate reserves for the potential liabilities that may result from these matters.

Accounting for Uncertainty in Income Taxes

At March 31, 2020 and December 31, 2019, our unrecognized tax benefits, excluding interest and penalties, were $4.8 billion. At March 31, 2020 and December 31, 2019, our unrecognized tax benefits related to tax positions that, if recognized, would not affect the effective tax rate because they relate to such factors as the timing, rather than the permissibility, of the deduction were $44 million and $43 million, respectively. Accordingly, at both March 31, 2020 and December 31, 2019, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $4.7 billion.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At March 31, 2020 and December 31, 2019, we had accrued liabilities of $2.5 billion and $2.4 billion, respectively, for the payment of interest (net of the federal benefit) and penalties. For the three-month periods ended March 31, 2020 and 2019, we accrued expense (benefit) of $49 million and $58 million, respectively, for the payment of interest and penalties.

We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next 12 months by as much as $3.6 billion, principally as a result of potential resolutions or settlements of prior years’ tax items. The prior years’ tax items include unrecognized tax benefits related to the deductibility of certain expenses and matters related to cross border financing transactions.

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CONTINGENCIES, COMMITMENTS AND GUARANTEES

3 Months Ended

Mar. 31, 2020

CONTINGENCIES, COMMITMENTS AND GUARANTEES

CONTINGENCIES, COMMITMENTS AND GUARANTEES

11. Contingencies, Commitments and Guarantees

In the normal course of business, various contingent liabilities and commitments are entered into by AIG and our subsidiaries. In addition, AIG Parent guarantees various obligations of certain subsidiaries.

Although AIG cannot currently quantify its ultimate liability for unresolved litigation and investigation matters, including those referred to below, it is possible that such liability could have a material adverse effect on AIG’s consolidated financial condition or its consolidated results of operations or consolidated cash flows for an individual reporting period.

Legal Contingencies

Overview

In the normal course of business, AIG and our subsidiaries are subject to regulatory and government investigations and actions, and litigation and other forms of dispute resolution in a large number of proceedings pending in various domestic and foreign jurisdictions. Certain of these matters involve potentially significant risk of loss due to potential for significant jury awards and settlements, punitive damages or other penalties. Many of these matters are also highly complex and may seek recovery on behalf of a class or similarly large number of plaintiffs. It is therefore inherently difficult to predict the size or scope of potential future losses arising from these matters. In our insurance and reinsurance operations, litigation and arbitration concerning the scope of coverage under insurance and reinsurance contracts, and litigation and arbitration in which our subsidiaries defend or indemnify their insureds under insurance contracts, are generally considered in the establishment of our loss reserves. Separate and apart from the foregoing matters involving insurance and reinsurance coverage, AIG, our subsidiaries and their respective officers and directors are subject to a variety of additional types of legal proceedings brought by holders of AIG securities, customers, employees and others, alleging, among other things, breach of contractual or fiduciary duties, bad faith, indemnification and violations of federal and state statutes and regulations. With respect to these other categories of matters not arising out of claims for insurance or reinsurance coverage, we establish reserves for loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In many instances, we are unable to determine whether a loss is probable or to reasonably estimate the amount of such a loss and, therefore, the potential future losses arising from legal proceedings may exceed the amount of liabilities that we have recorded in our financial statements covering these matters. While such potential future charges could be material, based on information currently known to management, management does not believe, other than as may be discussed below, that any such charges are likely to have a material adverse effect on our financial position or results of operation.

Additionally, from time to time, various regulatory and governmental agencies review the transactions and practices of AIG and our subsidiaries in connection with industry-wide and other inquiries into, among other matters, the business practices of current and former operating insurance subsidiaries. Such investigations, inquiries or examinations could develop into administrative, civil or criminal proceedings or enforcement actions, in which remedies could include fines, penalties, restitution or alterations in our business practices, and could result in additional expenses, limitations on certain business activities and reputational damage. For example, among other matters, we are currently responding to governmental investigations and examinations pertaining to certain sales and compensation practices and payments and related disclosures in connection with financial planning services and the sale and distribution of related products, including 403(b) and similar retirement plans, by the Individual and Group Retirement business segments. We have cooperated, and will continue to cooperate, in producing documents and other information with respect to these matters.

Tax Litigation

We are party to pending tax litigation before the Southern District of New York. For additional information see Note 15 to the Condensed Consolidated Financial Statements.

Other Commitments

In the normal course of business, we enter into commitments to invest in limited partnerships, private equity funds and hedge funds and to purchase and develop real estate in the U.S. and abroad. These commitments totaled $6.9 billion at March 31, 2020.

Guarantees

Subsidiaries

We have issued unconditional guarantees with respect to the prompt payment, when due, of all present and future payment obligations and liabilities of AIG Financial Products Corp. and related subsidiaries (collectively AIGFP) and of AIG Markets, Inc. (AIG Markets) arising from transactions entered into by AIG Markets.

In connection with AIGFP’s business activities, AIGFP has issued, in a limited number of transactions, standby letters of credit or similar facilities to equity investors of structured leasing transactions in an amount equal to the termination value owing to the equity investor by the lessee in the event of a lessee default (the equity termination value). The total amount outstanding at March 31, 2020 was $79 million. In those transactions, AIGFP has agreed to pay such amount if the lessee fails to pay. The amount payable by AIGFP is, in certain cases, partially offset by amounts payable under other instruments typically equal to the present value of scheduled payments to be made by AIGFP. In the event that AIGFP is required to make a payment to the equity investor, the lessee is unconditionally obligated to reimburse AIGFP. To the extent that the equity investor is paid the equity termination value from the standby letter of credit and/or other sources, including payments by the lessee, AIGFP takes an assignment of the equity investor’s rights under the lease of the underlying property. Because the obligations of the lessee under the lease transactions are generally economically defeased, lessee bankruptcy is the most likely circumstance in which AIGFP would be required to pay without reimbursement.

AIG Parent files a consolidated federal income tax return with certain subsidiaries and acts as an agent for the consolidated tax group when making payments to the Internal Revenue Service (IRS). AIG Parent and its subsidiaries have adopted, pursuant to a written agreement, a method of allocating consolidated federal income taxes. Under an Amended and Restated Tax Payment Allocation Agreement dated June 6, 2011 between AIG Parent and one of its Bermuda-domiciled insurance subsidiaries, AIG Life of Bermuda, Ltd. (AIGB), AIG Parent has agreed to indemnify AIGB for any tax liability (including interest and penalties) resulting from adjustments made by the IRS or other appropriate authorities to taxable income, special deductions or credits in connection with investments made by AIGB in certain affiliated entities.

Asset Dispositions

We are subject to financial guarantees and indemnity arrangements in connection with the completed sales of businesses pursuant to our asset disposition plan. The various arrangements may be triggered by, among other things, declines in asset values, the occurrence of specified business contingencies, the realization of contingent liabilities, developments in litigation or breaches of representations, warranties or covenants provided by us. These arrangements are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or are not applicable.

We are unable to develop a reasonable estimate of the maximum potential payout under certain of these arrangements. Overall, we believe that it is unlikely we will have to make any material payments related to completed sales under these arrangements, and no material liabilities related to these arrangements have been recorded in the Condensed Consolidated Balance Sheets.

Other

For additional discussion on commitments and guarantees associated with VIEs see Note 8 herein.

For additional disclosures about derivatives see Note 9 herein.

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HELD-FOR-SALE CLASSIFICATION (Details - Narrative) - USD ($) $ in Millions			3 Months Ended		12 Months Ended
	Nov. 25, 2019	Nov. 13, 2018	Mar. 31, 2020	Mar. 31, 2018	Dec. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets			$ 510,477		$ 525,064
Incremental loss on sale of business			2,600
Fortitude Holdings | Fortitude RE
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Parent owneship interest		100.00%
American International Group, Inc. | Fortitude
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of common stock held after closing of transaction	3.50%
Carlyle FRL | Fortitude
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Voting interest in subsidiary, percent	51.60%
T&D | Fortitude
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Voting interest in subsidiary, percent	25.00%
Assets held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss accrual			98		98
Fortitude
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration in cash		$ 381
Contingent considiration receivable			95
Contingent consideration receivable, maximum			$ 100
Planned distribution term			36 months
Expected payment to affiliates			$ 1,450
Loss accrual					98
Maximum purchase price adjustment payable			500
Fortitude | TC Group Cayman
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Voting interest in subsidiary, percent		19.90%
Fortitude | American International Group, Inc.
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of common stock held after closing of transaction		80.10%
Fortitude | Assets held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets			2,700
Fortitude | Assets held-for-sale | Fortitude RE
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Prepaid insurance			2,200	$ 2,500	2,300
Dispositions			$ (400)	$ (500)	$ (400)

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BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Millions			3 Months Ended
	Nov. 25, 2019	Nov. 13, 2018 USD ($)	Mar. 31, 2020 USD ($) item $ / shares	Mar. 31, 2019 USD ($)	Dec. 31, 2019 $ / shares
Basis of Presentation [Line Items]
Common stock, par value (in dollars per share) | $ / shares			$ 2.50		$ 2.5
Income (loss) from divested businesses			$ (216)	$ 6
Fortitude Holdings | Fortitude RE
Basis of Presentation [Line Items]
Parent owneship interest		100.00%
American International Group, Inc. | Fortitude Holdings
Basis of Presentation [Line Items]
Percentage of common stock held after closing of transaction	3.50%
Carlyle FRL | Fortitude Holdings
Basis of Presentation [Line Items]
Voting interest in subsidiary, percent	51.60%
T&D | Fortitude Holdings
Basis of Presentation [Line Items]
Voting interest in subsidiary, percent	25.00%
Fortitude Holdings
Basis of Presentation [Line Items]
Consideration in cash		$ 381
Contingent considiration receivable			95
Contingent consideration receivable, maximum			$ 100
Planned distribution term			36 months
Expected payment to affiliates			$ 1,450
Maximum purchase price adjustment payable			500
Fortitude Holdings | TC Group Cayman
Basis of Presentation [Line Items]
Voting interest in subsidiary, percent		19.90%
Fortitude Holdings | American International Group, Inc.
Basis of Presentation [Line Items]
Percentage of common stock held after closing of transaction		80.10%
Blackboard U.S. Holdings, Inc
Basis of Presentation [Line Items]
Income (loss) from divested businesses			$ (210)
Minimum
Basis of Presentation [Line Items]
Number of countries in which the entity operates | item			80

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SEGMENT INFORMATION (Details - Schedule of continuing operations by operating segment) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting Information [Line Items]
Total Revenues	$ 14,443	$ 12,456
Adjusted Pre-tax Income (Loss)	2,558	1,154
AIG Consolidation and Eliminations
Segment Reporting Information [Line Items]
Total Revenues	(145)	(97)
Adjusted Pre-tax Income (Loss)	(84)	(70)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income (loss)
Segment Reporting Information [Line Items]
Total Revenues	11,120	12,754
Adjusted Pre-tax Income (Loss)	172	1,847
General Insurance | Reportable Segments
Segment Reporting Information [Line Items]
Total Revenues	6,667	7,802
Adjusted Pre-tax Income (Loss)	501	1,268
General Insurance | Reportable Segments | North America
Segment Reporting Information [Line Items]
Total Revenues	3,414	4,098
Adjusted Pre-tax Income (Loss)	409	934
General Insurance | Reportable Segments | International
Segment Reporting Information [Line Items]
Total Revenues	3,253	3,704
Adjusted Pre-tax Income (Loss)	92	334
Life and Retirement | Reportable Segments
Segment Reporting Information [Line Items]
Total Revenues	4,172	4,204
Adjusted Pre-tax Income (Loss)	574	924
Life and Retirement | Reportable Segments | Individual Retirement
Segment Reporting Information [Line Items]
Total Revenues	1,370	1,351
Adjusted Pre-tax Income (Loss)	306	508
Life and Retirement | Reportable Segments | Group Retirement
Segment Reporting Information [Line Items]
Total Revenues	694	709
Adjusted Pre-tax Income (Loss)	143	232
Life and Retirement | Reportable Segments | Life Insurance
Segment Reporting Information [Line Items]
Total Revenues	1,091	1,073
Adjusted Pre-tax Income (Loss)	55	116
Life and Retirement | Reportable Segments | Institutional Markets
Segment Reporting Information [Line Items]
Total Revenues	1,017	1,071
Adjusted Pre-tax Income (Loss)	70	68
Other Operations
Segment Reporting Information [Line Items]
Total Revenues	162	139
Adjusted Pre-tax Income (Loss)	(451)	(387)
Legacy Portfolio
Segment Reporting Information [Line Items]
Total Revenues	264	706
Adjusted Pre-tax Income (Loss)	$ (368)	$ 112

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INVESTMENTS (Details - Components of Net realized capital gains (losses)) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Gain (Loss) on Investments [Line Items]
Other-than-temporary impairments	$ 0	$ (83)
Change in intent	0	0
Change in allowance for credit losses on fixed maturity	(198)	0
Change in allowance for credit losses on loans	(38)	(24)
Foreign exchange transactions	(254)	(37)
Variable annuity embedded derivatives, net of related hedges	2,192	(261)
All other derivatives and hedge accounting	1,559	(72)
Other	44	62
Total net realized capital gains (losses)	3,519	(446)
Fixed maturity securities
Gain (Loss) on Investments [Line Items]
Sales of of fixed maturity securities	$ 214	$ (31)

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EARNINGS PER COMMON SHARE (EPS) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator for EPS:
Income from continuing operations	$ 1,654	$ 937
Less: Net income (loss) from continuing operations attributable to noncontrolling interests	(95)	283
Less: Preferred stock dividends	7	0
Income attributable to AIG common shareholders from continuing operations	1,742	654
Income from discontinued operations, net of income tax expense	0	0
Net income attributable to AIG common shareholders	$ 1,742	$ 654
Denominator for EPS:
Weighted average common shares outstanding - basic	874,213,630	875,383,084
Dilutive common shares	4,652,583	2,129,160
Weighted average common shares outstanding - diluted	878,866,213	877,512,244
Basic:
Income from continuing operations	$ 1.99	$ 0.75
Income from discontinued operations	0	0
Income attributable to AIG common shareholders	1.99	0.75
Diluted:
Income from continuing operations	1.98	0.75
Income from discontinued operations	0	0
Income attributable to AIG common shareholders	$ 1.98	$ 0.75
Number of shares excluded from diluted shares outstanding because the effect would have been anti-dilutive	67,200,000	64,300,000

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INVESTMENTS (Details - Gross realized gains and gross realized losses from sales or maturities of available for sale securities) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Aggregate fair value of available for sale securities sold	$ 7,200	$ 6,400
Net realized capital gains (losses)	214	(31)
Fixed maturity securities
Schedule of Available-for-sale Securities [Line Items]
Gross Realized Gains	380	93
Gross Realized Losses	$ 166	$ 124

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

16. Subsequent Events

Dividends Declared

On May 4, 2020, our Board of Directors declared a cash dividend on AIG Common Stock of $0.32 per share, payable on June 29, 2020 to shareholders of record on June 15, 2020. On May 4, 2020, our Board of Directors declared a cash dividend on AIG’s Series A Preferred Stock of $365.625 per share, payable on June 15, 2020 to holders of record on May 29, 2020.

LLOYD’S SYNDICATE 2019

On May 4, 2020, AIG announced the launch of Lloyd’s Syndicate 2019. This Syndicate will exclusively reinsure risks from AIG’s Private Client Group. Syndicate 2019 is managed by Talbot Underwriting Limited, the managing agency AIG acquired in 2018 as part of the Validus transaction.

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EQUITY

3 Months Ended

Mar. 31, 2020

EQUITY

EQUITY

12. Equity

Shares Outstanding

Preferred Stock

On March 14, 2019, we issued 20,000 shares of Series A 5.85% Non-Cumulative Perpetual 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 Securities Exchange Act of 1934, as amended (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.

On February 12, 2020, our Board of Directors declared a cash dividend of $365.625 per share on AIG’s Series A Preferred Stock. Holders of Depositary Shares each representing a 1/1,000th interest in a share of Series A Preferred Stock received $0.365625 per Depositary Share. The dividend was paid on March 16, 2020 to holders of record at the close of business on February 28, 2020.

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, 2020	Common	Treasury	Common Stock
	Stock Issued	Stock	Outstanding
Shares, beginning of year	1,906,671,492	(1,036,672,461)	869,999,031
Shares issued	-	3,452,529	3,452,529
Shares repurchased	-	(12,160,952)	(12,160,952)
Shares, end of period	1,906,671,492	(1,045,380,884)	861,290,608

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 common share on AIG Common Stock:

				Dividends Paid
Declaration Date	Record Date	Payment Date		Per Common Share
February 12, 2020	March 16, 2020	March 30, 2020	$	0.32
February 13, 2019	March 15, 2019	March 29, 2019		0.32

For a discussion of restrictions on payments of dividends to AIG Parent by its subsidiaries see Note 20 to the Consolidated Financial Statements in the 2019 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)		2020		2019
Aggregate repurchases of common stock	$	500	$	-
Total number of common shares repurchased		12		-
Aggregate repurchases of warrants	$	-	$	-
Total number of warrants repurchased		-		-

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, 2020, $1.5 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.

In the first quarter of 2020, we executed an accelerated stock repurchase (ASR) agreement with a third-party financial institution. The total number of shares of AIG Common Stock repurchased in the three months ended March 31, 2020, and the aggregate purchase price of those shares, reflect our payment of $500 million in the aggregate under the ASR agreement and the receipt of approximately 12 million shares of AIG Common Stock in the aggregate.

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 (LOSS)

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 Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Balance, December 31, 2019, net of tax	$	-	$	8,722	$	(2,625)	$	(1,122)	$	7	$	4,982
Change in unrealized depreciation of investments		(484)		(9,971)		-		-		-		(10,455)
Change in deferred policy acquisition costs
adjustment and other(a)		30		1,377		-		-		-		1,407
Change in future policy benefits		-		1,672		-		-		-		1,672
Change in foreign currency translation adjustments		-		-		(69)		-		-		(69)
Change in net actuarial loss		-		-		-		4		-		4
Change in prior service credit		-		-		-		(1)		-		(1)
Change in deferred tax asset (liability)		95		1,380		(16)		(10)		-		1,449
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		3		3
Total other comprehensive loss		(359)		(5,542)		(85)		(7)		3		(5,990)
Noncontrolling interests		-		(10)		(4)		-		-		(14)
Balance, March 31, 2020, net of tax	$	(359)	$	3,190	$	(2,706)	$	(1,129)	$	10	$	(994)

		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

(a)Includes net unrealized gains and losses attributable to businesses held for sale at March 31, 2020.

The following table presents the other comprehensive income (loss) reclassification adjustments for the three-month periods ended March 31, 2020 and 2019, respectively:

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
March 31, 2020
Unrealized change arising during period	$	(454)	$	(6,708)	$	(69)	$	(7)	$	3	$	(7,235)
Less: Reclassification adjustments
included in net income		-		214		-		(10)		-		204
Total other comprehensive income (loss),
before income tax expense (benefit)		(454)		(6,922)		(69)		3		3		(7,439)
Less: Income tax expense (benefit)		(95)		(1,380)		16		10		-		(1,449)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	(359)	$	(5,542)	$	(85)	$	(7)	$	3	$	(5,990)
		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

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)			2020		2019	Condensed Consolidated Statements of Income
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses were taken
Investments		$	-	$	-	Other realized capital gains
Total			-		-
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Investments			-		-	Other realized capital gains
Total			-		-
Unrealized appreciation (depreciation) of
all other investments
Investments			214		(31)	Other realized capital gains
Total			214		(31)
Change in retirement plan liabilities adjustment
Prior-service credit			-		-	*
Actuarial losses			(10)		(5)	*
Total			(10)		(5)
Total reclassifications for the period		$	204	$	(36)

*These Accumulated other comprehensive income components are included in the computation of net periodic pension cost. For additional information see Note 14 herein.

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION

Schedule of continuing operations by operating segment including reconciling items

Three Months Ended March 31,	2020				2019
				Adjusted				Adjusted
		Total		Pre-tax		Total		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	3,414	$	409	$	4,098	$	934
International		3,253		92		3,704		334
Total General Insurance		6,667		501		7,802		1,268
Life and Retirement
Individual Retirement		1,370		306		1,351		508
Group Retirement		694		143		709		232
Life Insurance		1,091		55		1,073		116
Institutional Markets		1,017		70		1,071		68
Total Life and Retirement		4,172		574		4,204		924
Other Operations		162		(451)		139		(387)
Legacy Portfolio		264		(368)		706		112
AIG Consolidation and elimination		(145)		(84)		(97)		(70)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		11,120		172		12,754		1,847
Reconciling items from adjusted pre-tax income to pre-tax income:
Changes in fair value of securities used to hedge guaranteed living benefits		14		(7)		105		96
Changes in benefit reserves and DAC, VOBA and SIA related to net realized
capital gains (losses)		-		(538)		-		99
Changes in the fair value of equity securities		(191)		(191)		79		79
Professional fees related to regulatory or accounting changes		-		(13)		-		-
Other income (expense) - net		9		-		7		-
Gain (loss) on extinguishment of debt		-		(17)		-		2
Net realized capital gains (losses)*		3,485		3,502		(489)		(474)
Income (loss) from divested businesses		-		(216)		-		6
Non-operating litigation reserves and settlements		6		6		-		(1)
Favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		8		-		27
Net loss reserve discount charge		-		(56)		-		(473)
Integration and transaction costs associated with acquired businesses		-		(2)		-		(7)
Restructuring and other costs		-		(90)		-		(47)
Revenues and Pre-tax income	$	14,443	$	2,558	$	12,456	$	1,154

*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.

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Fixed maturity securities:
Bonds available for sale, at fair value, net of allowance for credit losses of $211 in 2020 (amortized cost: 2020 - $234,586; 2019 - $233,230)	$ 241,776	$ 251,086
Other bond securities, at fair value (See Note 6)	5,353	6,682
Equity Securities, at fair value (See Note 6)	624	841
Mortgage and other loans receivable, net of allowance for credit losses of $787 in 2020 and $438 in 2019	46,844	46,984
Other invested assets (portion measured at fair value: 2020 - $6,576; 2019 - $6,827)	17,966	18,792
Short-term investments, including restricted cash of $324 in 2020 and $188 in 2019 (portion measured at fair value: 2020 - $8,186; 2019 - $5,343)	19,773	13,230
Total investments	332,336	337,615
Cash	2,738	2,856
Accrued investment income	2,312	2,334
Premiums and other receivables, net of allowance for credit losses and disputes of $210 in 2020 and $178 in 2019	12,072	10,274
Reinsurance assets, net of allowance for credit losses and disputes of $310 in 2020 and $151 in 2019	39,927	37,977
Deferred income taxes	13,975	13,146
Deferred policy acquisition costs	11,889	11,207
Other assets, net of allowance for credit losses of $52 in 2020, including restricted cash of $257 in 2020 and $243 in 2019 (portion measured at fair value: 2020 - $3,311; 2019 - $3,151)	16,392	16,383
Separate account assets, at fair value	78,836	93,272
Total assets	510,477	525,064
Liabilities:
Liability for unpaid losses and loss adjustment expenses, net of allowance for credit losses of $14 in 2020	77,747	78,328
Unearned premiums	20,128	18,269
Future policy benefits for life and accident and health insurance contracts	49,803	50,512
Policyholder contract deposits (portion measured at fair value: 2020 - $8,153; 2019 - $6,910)	154,067	151,869
Other policyholder funds	3,460	3,428
Other liabilities (portion measured at fair value: 2020 - $637; 2019 - $1,100)	29,183	26,609
Long-term debt (portion measured at fair value: 2020 - $2,276; 2019 - $2,062)	25,268	25,479
Separate account liabilities	78,836	93,272
Total liabilities	448,634	457,637
Contingencies, commitments and guarantees (see Note 11)
AIG shareholders' equity:
Series A Non-cumulative preferred stock and additional paid in capital, $5.00 par value; 100,000,000 shares authorized; shares issued: 2020 - 20,000 and 2019 - 20,000; liquidation preference $500	485	485
Common stock, $2.50 par value; 5,000,000,000 shares authorized; shares issued: 2020 - 1,906,671,492 and 2019 - 1,906,671,492	4,766	4,766
Treasury stock, at cost; 2020 - 1,045,380,884 shares; 2019 - 1,036,672,461 shares of common stock	(49,334)	(48,987)
Additional paid-in capital	81,188	81,345
Retained earnings	24,062	23,084
Accumulated other comprehensive income (loss)	(994)	4,982
Total AIG shareholders' equity	60,173	65,675
Non-redeemable noncontrolling interests	1,670	1,752
Total equity	61,843	67,427
Total liabilities and equity	510,477	525,064
Debt of consolidated investments
Liabilities:
Long-term debt (portion measured at fair value: 2020 - $2,276; 2019 - $2,062)	$ 10,142	$ 9,871

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VARIABLE INTEREST ENTITIES

3 Months Ended

Mar. 31, 2020

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

8. Variable Interest Entities

We enter into various arrangements with variable interest entities (VIEs) in the normal course of business and consolidate the VIEs when we determine we are the primary beneficiary. This analysis includes a review of the VIE’s capital structure, related contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and our involvement with the entity. When assessing the need to consolidate a VIE, we evaluate the design of the VIE as well as the related risks the entity was designed to expose the variable interest holders to.

The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of our decision-making ability and our ability to influence activities that significantly affect the economic performance of the VIE.

Balance Sheet Classification and Exposure to Loss

The following table presents the total assets and total liabilities associated with our variable interests in consolidated VIEs, as classified in the Condensed Consolidated Balance Sheets:

		Real Estate and				Affordable
		Investment		Securitization		Housing
(in millions)		Entities(d)		Vehicles(e)		Partnerships		Other		Total
March 31, 2020
Assets:
Bonds available for sale	$	256	$	6,255	$	-	$	-	$	6,511
Other bond securities		-		2,266		-		1		2,267
Mortgage and other loans receivable		-		4,025		-		-		4,025
Other invested assets		5,180		-		3,635		42		8,857
Other(a)		500		1,915		483		42		2,940
Total assets(b)	$	5,936	$	14,461	$	4,118	$	85	$	24,600
Liabilities:
Long-term debt	$	2,794	$	4,515	$	2,201	$	4	$	9,514
Other(c)		184		193		195		23		595
Total liabilities	$	2,978	$	4,708	$	2,396	$	27	$	10,109
December 31, 2019
Assets:
Bonds available for sale	$	177	$	7,239	$	-	$	-	$	7,416
Other bond securities		-		3,324		-		1		3,325
Mortgage and other loans receivable		-		3,860		-		-		3,860
Other invested assets		5,231		-		3,464		42		8,737
Other(a)		615		1,996		469		42		3,122
Total assets(b)	$	6,023	$	16,419	$	3,933	$	85	$	26,460
Liabilities:
Long-term debt	$	2,810	$	4,356	$	2,074	$	4	$	9,244
Other(c)		236		359		195		24		814
Total liabilities	$	3,046	$	4,715	$	2,269	$	28	$	10,058

(a)Comprised primarily of Short-term investments and Other assets at March 31, 2020 and December 31, 2019.

(b)The assets of each VIE can be used only to settle specific obligations of that VIE.

(c)Comprised primarily of Other liabilities at March 31, 2020 and December 31, 2019.

(d)At March 31, 2020 and December 31, 2019, off-balance sheet exposure primarily consisting of commitments to real estate and investment entities was $2.4 billion and $2.6 billion, respectively.

(e)At March 31, 2020 and December 31, 2019, the company had contributed total assets of $13.7 billion and $15.6 billion, respectively, into consolidated securitization vehicles.

We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where we have also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE. Interest holders in VIEs sponsored by us generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to us, except in limited circumstances when we have provided a guarantee to the VIE’s interest holders.

The following table presents total assets of unconsolidated VIEs in which we hold a variable interest, as well as our maximum exposure to loss associated with these VIEs:

			Maximum Exposure to Loss
		Total VIE		On-Balance		Off-Balance
(in millions)		Assets		Sheet(b)		Sheet			Total
March 31, 2020
Real estate and investment entities(a)	$	288,131	$	5,810	$	3,546		$	9,356
Affordable housing partnerships		3,064		397		-			397
Other		5,514		358		561	(c)		919
Total	$	296,709	$	6,565	$	4,107		$	10,672
December 31, 2019
Real estate and investment entities(a)	$	283,349	$	6,519	$	3,286		$	9,805
Affordable housing partnerships		3,351		453		-			453
Other		5,320		310		561	(c)		871
Total	$	292,020	$	7,282	$	3,847		$	11,129

(a)Comprised primarily of hedge funds and private equity funds.

(b)At March 31, 2020 and December 31, 2019, $6.4 billion and $7.0 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.

(c)These amounts represent our estimate of the maximum exposure to loss under certain insurance policies issued to VIEs if a hypothetical loss occurred to the extent of the full amount of the insured value. Our insurance policies cover defined risks and our estimate of liability is included in our insurance reserves on the balance sheet.

For additional information on VIEs see Note 11 to the Consolidated Financial Statements in the 2019 Annual Report.

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HELD-FOR-SALE CLASSIFICATION

3 Months Ended

Mar. 31, 2020

HELD-FOR-SALE CLASSIFICATION

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 Held-For-Sale Business are reported in Other assets and Other liabilities, respectively, in our Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale.

At March 31, 2020, the following business was reported and classified as held-for-sale:

Fortitude Holdings

Fortitude Re was established during the first quarter of 2018 in connection with a series of affiliated reinsurance transactions related to our Legacy Portfolio. Those reinsurance transactions were designed to consolidate most of our Legacy Insurance Run-Off Lines into a single legal entity. As of March 31, 2020, the affiliated transactions included the cession of approximately $30.1 billion of reserves from our Legacy Life and Retirement Run-Off Lines and approximately $3.8 billion of reserves from our Legacy General Insurance Run-Off Lines related to business written by multiple wholly-owned AIG subsidiaries. Fortitude Re has approximately $2.7 billion of total assets after elimination of intercompany balances, primarily managed by AIG, and is AIG’s main run-off reinsurer with its own dedicated management team. In the second quarter of 2018, the Company formed Fortitude Holdings as the holding company for Fortitude Re.

On November 13, 2018, AIG completed the sale of a 19.9 percent ownership interest in Fortitude Holdings to TCG, an affiliate of Carlyle. Upon completion of the 2018 Fortitude Sale, Fortitude Holdings owned 100 percent of the outstanding common shares of Fortitude Re and AIG had an 80.1 percent ownership interest in Fortitude Holdings. We received $381 million in cash and will receive up to $95 million of deferred compensation following December 31, 2023, which is subject to a purchase price adjustment wherein AIG will reimburse TCG for adverse development in property casualty related reserves, based on an agreed methodology, that occurs on or prior to December 31, 2023, up to the value of TCG’s investment in Fortitude. Any amount due to TCG in respect of this purchase price adjustment will be offset by the amount of the $95 million otherwise due from TCG to AIG. To the extent we do not receive all or a portion of the planned distributions by May 13, 2020, TCG will pay us up to an additional $100 million, which amount shall adjust in proportion with the amount of the dividend received by AIG. In connection with the 2018 Fortitude Sale, we agreed to certain investment commitment targets into various Carlyle strategies and to certain minimum investment management fee payments within thirty-six months following the closing. We also will be required to pay a proportionate amount of an agreed make-whole fee to the extent we fail to satisfy such investment commitment targets.

On November 25, 2019, AIG entered into a membership interest purchase agreement with Fortitude Holdings, Carlyle, Carlyle FRL, T&D and T&D Holdings, Inc., pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Carlyle FRL will purchase from AIG a 51.6 percent ownership interest in Fortitude Holdings and T&D will purchase from AIG a 25 percent ownership interest in Fortitude Holdings. Upon closing of the Majority Interest Fortitude Sale, AIG will have a 3.5 percent ownership interest in Fortitude Holdings. The purchase price under the Majority Interest Fortitude Sale is subject to a post-closing purchase price adjustment pursuant to which AIG will pay Fortitude Re for certain adverse development in property casualty related reserves, based on an agreed methodology, that may occur on or prior to December 31, 2023, up to a maximum payment of $500 million. In connection with the Majority Interest Fortitude Sale agreement, AIG, Fortitude Holdings and TCG have agreed that, effective as of the closing of the Majority Interest Fortitude Sale, (i) AIG’s aforementioned investment commitment targets will be assumed by Fortitude Holdings and AIG will be released therefrom, (ii) the purchase price adjustment that AIG had agreed to provide TCG in the 2018 Fortitude Sale will be terminated, and (iii) Carlyle will remain obligated to pay AIG $95 million of deferred compensation at December 31, 2023 and up to an additional $100 million to the extent AIG does not receive all or a portion of the planned distributions by May 13, 2020, which amount shall adjust in proportion with the amount of the dividend received by AIG. We expect to contribute approximately $1.45 billion of the proceeds of the Majority Interest Fortitude Sale to certain of our insurance company subsidiaries for a period of time following the closing of the transaction. There can be no guarantee that we will receive the required regulatory approvals or that closing conditions will be satisfied in order to consummate the Majority Interest Fortitude Sale.

We recorded a loss of $98 million in 2019 in respect of our interest in Fortitude Holdings, which was recorded as a contra-asset within assets held for sale line below.

The transaction is expected to close in mid-2020, subject to required regulatory approvals and other customary closing conditions.

The following table summarizes the components of assets and liabilities held-for-sale on the Consolidated Balance Sheets after elimination of intercompany balances:

		March 31,		December 31,
(in millions)		2020		2019
Assets:
Bonds available for sale	$	2,308	$	2,187
Other bond securities		13		13
Other invested assets		58		45
Short-term investments		63		107
Cash		54		63
Accrued investment income		20		19
Deferred income taxes		(11)		(22)
Other assets		152		106
Assets of business held for sale		2,657		2,518
Less: Loss accrual		(98)		(98)
Total assets held for sale	$	2,559	$	2,420
Liabilities:
Other liabilities	$	14	$	15
Total liabilities held for sale	$	14	$	15

The affiliated reinsurance transactions executed in the first quarter of 2018 with Fortitude Re resulted in prepaid insurance assets on the ceding subsidiaries’ balance sheets of approximately $2.5 billion (after-tax) and related deferred acquisition costs of $0.5 billion (after-tax) at inception of the contract. The prepaid insurance assets have been eliminated in AIG’s consolidated financial statements since the counterparties were wholly owned.

Upon closing of the Majority Interest Fortitude Sale, AIG will recognize a loss for the portion of the unamortized balance of these assets that are not recoverable, if any, when AIG is no longer a controlling shareholder in Fortitude Holdings. As of March 31, 2020, the unamortized balances of the aforementioned prepaid insurance assets and related deferred acquisition costs were $2.2 billion (after-tax) and $0.4 billion (after-tax), respectively. As of December 31, 2019, the unamortized balances of the aforementioned prepaid insurance assets and related deferred acquisition costs were $2.3 billion (after-tax) and $0.4 billion (after-tax), respectively. The combined loss of $2.6 billion for the three-month period ended March 31, 2020 would be incremental to any gain or loss recognized on the Majority Interest Fortitude Sale. The incremental gain or loss we will recognize on the Majority Interest Fortitude Sale would be impacted, perhaps significantly, by market conditions existing at the time the Majority Interest Fortitude Sale closes.

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$ 1,654	$ 937
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses were taken	(359)	0
Change in unrealized appreciation of fixed maturity securities on which other-than-temporary credit impairments were taken	0	676
Change in unrealized appreciation (depreciation) of all other investments	(5,542)	2,708
Change in foreign currency translation adjustments	(85)	164
Change in retirement plan liabilities adjustment	(7)	(1)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	3	0
Other comprehensive income (loss)	(5,990)	3,547
Comprehensive income (loss)	(4,336)	4,484
Comprehensive income (loss) attributable to noncontrolling interests	(109)	289
Comprehensive income (loss) attributable to AIG	$ (4,227)	$ 4,195

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EARNINGS PER COMMON SHARE (EPS) (Tables)

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE (EPS)

Computation of basic and diluted EPS

Three Months Ended March 31,
(dollars in millions, except per common share data)		2020		2019
Numerator for EPS:
Income from continuing operations	$	1,654	$	937
Less: Net income (loss) from continuing operations attributable to noncontrolling interests		(95)		283
Less: Preferred stock dividends		7		-
Income attributable to AIG common shareholders from continuing operations		1,742		654
Income from discontinued operations, net of income tax expense		-		-
Net income attributable to AIG common shareholders	$	1,742	$	654
Denominator for EPS:
Weighted average common shares outstanding — basic		874,213,630		875,383,084
Dilutive common shares		4,652,583		2,129,160
Weighted average common shares outstanding — diluted(a)		878,866,213		877,512,244
Income per common share attributable to AIG common shareholders:
Basic:
Income from continuing operations	$	1.99	$	0.75
Income from discontinued operations	$	-	$	-
Income attributable to AIG common shareholders	$	1.99	$	0.75
Diluted:
Income from continuing operations	$	1.98	$	0.75
Income from discontinued operations	$	-	$	-
Income attributable to AIG common shareholders	$	1.98	$	0.75

(a)Dilutive common shares included our share-based employee compensation plans and a weighted average portion of the 10-year warrants issued to AIG shareholders as part of AIG’s recapitalization in January 2011. The number of common shares excluded from diluted shares outstanding was 67.2 million and 64.3 million for the three-month periods ended March 31, 2020 and 2019, respectively, because the effect of including those common shares in the calculation would have been anti-dilutive.

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HELD-FOR-SALE CLASSIFICATION (Tables)

3 Months Ended

Mar. 31, 2020

HELD-FOR-SALE CLASSIFICATION

Summary of assets and liabilities held for sale

		March 31,		December 31,
(in millions)		2020		2019
Assets:
Bonds available for sale	$	2,308	$	2,187
Other bond securities		13		13
Other invested assets		58		45
Short-term investments		63		107
Cash		54		63
Accrued investment income		20		19
Deferred income taxes		(11)		(22)
Other assets		152		106
Assets of business held for sale		2,657		2,518
Less: Loss accrual		(98)		(98)
Total assets held for sale	$	2,559	$	2,420
Liabilities:
Other liabilities	$	14	$	15
Total liabilities held for sale	$	14	$	15

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VARIABLE INTEREST ENTITIES (Tables)

3 Months Ended

Mar. 31, 2020

Variable Interest Entity Primary Beneficiary

Variable Interest Entity [Line Items]

Schedule of Variable Interest Entities

		Real Estate and				Affordable
		Investment		Securitization		Housing
(in millions)		Entities(d)		Vehicles(e)		Partnerships		Other		Total
March 31, 2020
Assets:
Bonds available for sale	$	256	$	6,255	$	-	$	-	$	6,511
Other bond securities		-		2,266		-		1		2,267
Mortgage and other loans receivable		-		4,025		-		-		4,025
Other invested assets		5,180		-		3,635		42		8,857
Other(a)		500		1,915		483		42		2,940
Total assets(b)	$	5,936	$	14,461	$	4,118	$	85	$	24,600
Liabilities:
Long-term debt	$	2,794	$	4,515	$	2,201	$	4	$	9,514
Other(c)		184		193		195		23		595
Total liabilities	$	2,978	$	4,708	$	2,396	$	27	$	10,109
December 31, 2019
Assets:
Bonds available for sale	$	177	$	7,239	$	-	$	-	$	7,416
Other bond securities		-		3,324		-		1		3,325
Mortgage and other loans receivable		-		3,860		-		-		3,860
Other invested assets		5,231		-		3,464		42		8,737
Other(a)		615		1,996		469		42		3,122
Total assets(b)	$	6,023	$	16,419	$	3,933	$	85	$	26,460
Liabilities:
Long-term debt	$	2,810	$	4,356	$	2,074	$	4	$	9,244
Other(c)		236		359		195		24		814
Total liabilities	$	3,046	$	4,715	$	2,269	$	28	$	10,058

(a)Comprised primarily of Short-term investments and Other assets at March 31, 2020 and December 31, 2019.

(b)The assets of each VIE can be used only to settle specific obligations of that VIE.

(c)Comprised primarily of Other liabilities at March 31, 2020 and December 31, 2019.

(d)At March 31, 2020 and December 31, 2019, off-balance sheet exposure primarily consisting of commitments to real estate and investment entities was $2.4 billion and $2.6 billion, respectively.

(e)At March 31, 2020 and December 31, 2019, the company had contributed total assets of $13.7 billion and $15.6 billion, respectively, into consolidated securitization vehicles.

Variable Interest Entity Not Primary Beneficiary

Variable Interest Entity [Line Items]

Schedule of Variable Interest Entities

			Maximum Exposure to Loss
		Total VIE		On-Balance		Off-Balance
(in millions)		Assets		Sheet(b)		Sheet			Total
March 31, 2020
Real estate and investment entities(a)	$	288,131	$	5,810	$	3,546		$	9,356
Affordable housing partnerships		3,064		397		-			397
Other		5,514		358		561	(c)		919
Total	$	296,709	$	6,565	$	4,107		$	10,672
December 31, 2019
Real estate and investment entities(a)	$	283,349	$	6,519	$	3,286		$	9,805
Affordable housing partnerships		3,351		453		-			453
Other		5,320		310		561	(c)		871
Total	$	292,020	$	7,282	$	3,847		$	11,129

(a)Comprised primarily of hedge funds and private equity funds.

(b)At March 31, 2020 and December 31, 2019, $6.4 billion and $7.0 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.

(c)These amounts represent our estimate of the maximum exposure to loss under certain insurance policies issued to VIEs if a hypothetical loss occurred to the extent of the full amount of the insured value. Our insurance policies cover defined risks and our estimate of liability is included in our insurance reserves on the balance sheet.

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FAIR VALUE MEASUREMENTS (Details - Investments in certain other invested assets, including private equity funds, hedge funds and other alternative investments) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	$ 5,029	$ 5,549
Unfunded Commitments	2,609	2,666
Direct private equity
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	3,413	3,220
Unfunded Commitments	$ 2,608	2,665
Average original expected lives	10 years
Direct private equity | Maximum [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Average original expected lives, Increments	2 years
Direct private equity | Minimum [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Average original expected lives, Increments	1 year
Leveraged buyout
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	$ 1,245	1,189
Unfunded Commitments	1,454	1,543
Real Estate / Infrastructure
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	412	400
Unfunded Commitments	451	290
Venture capital
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	130	111
Unfunded Commitments	142	155
Growth equity
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	480	422
Unfunded Commitments	87	57
Mezzanine
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	377	325
Unfunded Commitments	339	414
Other
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	769	773
Unfunded Commitments	135	206
Hedge funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	1,616	2,329
Unfunded Commitments	1	1
Event-driven
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	361	727
Unfunded Commitments	0	0
Long-short
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	408	539
Unfunded Commitments	0	0
Macro
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	697	894
Unfunded Commitments	0	0
Distressed
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	0	1
Unfunded Commitments	0	0
Other
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value Using Net Asset Value Per Share or its equivalent	150	168
Unfunded Commitments	$ 1	$ 1

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FAIR VALUE MEASUREMENTS (Details - Net realized and unrealized gains and losses included in income related to Level 3 assets and liabilities) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	$ (105)	$ 317
Policyholder contract deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	1,171	569
Policyholder contract deposits | Net investment income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	0	0
Policyholder contract deposits | Net realized capital gains (losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	1,171	569
Policyholder contract deposits | Other Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	0	0
Derivative liabilities, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	(157)	(40)
Derivative liabilities, net | Net investment income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	0	0
Derivative liabilities, net | Net realized capital gains (losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	(143)	(24)
Derivative liabilities, net | Other Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains (losses) included in income, liabilities	(14)	(16)
Bonds available for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	94	228
Bonds available for sale | Net investment income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	198	242
Bonds available for sale | Net realized capital gains (losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(104)	(14)
Bonds available for sale | Other Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	0	0
Other bond securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(194)	89
Other bond securities | Net investment income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(462)	87
Other bond securities | Net realized capital gains (losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	268	2
Other bond securities | Other Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	0	0
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(1)	0
Equity securities | Net investment income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	0	0
Equity securities | Net realized capital gains (losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(1)	0
Equity securities | Other Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	0	0
Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(4)	0
Other invested assets | Net investment income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	(4)	0
Other invested assets | Net realized capital gains (losses)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	0	0
Other invested assets | Other Income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net realized and unrealized gains and losses related to Level 3 items, assets	$ 0	$ 0

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FAIR VALUE MEASUREMENTS (Details - Carrying values and estimated fair values of our financial instruments not measured at fair value) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Assets:
Mortgage and other loans receivable	$ 46,844	$ 46,984
Short-term investments	19,773	13,230
Cash	2,738	2,856	$ 2,565
Other assets	16,392	16,383
Liabilities:
Other liabilities	29,183	26,609
Long-term debt and debt of consolidated investment entities	25,268	25,479
Carrying Value
Assets:
Mortgage and other loans receivable	46,844	46,984
Other invested assets	778	742
Short-term investments	11,587	7,887
Cash	2,738	2,856
Other assets	374	311
Liabilities:
Policyholder contract deposits associated with investment-type contracts	127,194	126,137
Other liabilities	4,347	3,063
Long-term debt and debt of consolidated investment entities	33,134	33,288
Separate account liabilities - investment contracts	74,711	88,770
Total Fair Value
Assets:
Mortgage and other loans receivable	47,608	49,005
Other invested assets	778	741
Short-term investments	11,587	7,887
Cash	2,738	2,856
Other assets	374	311
Liabilities:
Policyholder contract deposits associated with investment-type contracts	137,407	133,246
Other liabilities	4,347	3,063
Long-term debt and debt of consolidated investment entities	33,879	35,907
Separate account liabilities - investment contracts	74,711	88,770
Level 1
Assets:
Mortgage and other loans receivable	0	0
Other invested assets	0	0
Short-term investments	0	0
Cash	2,738	2,856
Other assets	340	291
Liabilities:
Policyholder contract deposits associated with investment-type contracts	0	0
Other liabilities	14	15
Long-term debt and debt of consolidated investment entities	0	0
Separate account liabilities - investment contracts	0	0
Level 2
Assets:
Mortgage and other loans receivable	100	101
Other invested assets	772	735
Short-term investments	11,587	7,887
Cash	0	0
Other assets	34	20
Liabilities:
Policyholder contract deposits associated with investment-type contracts	246	255
Other liabilities	4,333	3,048
Long-term debt and debt of consolidated investment entities	24,765	27,024
Separate account liabilities - investment contracts	74,711	88,770
Level 3
Assets:
Mortgage and other loans receivable	47,508	48,904
Other invested assets	6	6
Short-term investments	0	0
Cash	0	0
Other assets	0	0
Liabilities:
Policyholder contract deposits associated with investment-type contracts	137,161	132,991
Other liabilities	0	0
Long-term debt and debt of consolidated investment entities	9,114	8,883
Separate account liabilities - investment contracts	$ 0	$ 0

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INVESTMENTS (Details - Schedule of purchased credit impaired (PCI) securities) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Amortized cost		$ 234,586	$ 233,230
Bonds available for sale, at fair value, net of allowance for credit losses of $211 in 2020 (amortized cost: 2020 - $234,586; 2019 - $233,230)		$ 241,776	251,086
Purchased Credit Impaired (PCI) Securities
Schedule of Available-for-sale Securities [Line Items]
Contractually required payments (principal and interest)			35,139
Cash flows expected to be collected			28,720
Recorded investment in acquired securities			19,382
Outstanding principal balance			10,476
Amortized cost			6,970
Bonds available for sale, at fair value, net of allowance for credit losses of $211 in 2020 (amortized cost: 2020 - $234,586; 2019 - $233,230)			$ 8,664
Available for sale securities | Purchased Credit Impaired (PCI) Securities
Changes in activity for the accretable yield on PCI securities:
Balance, beginning of year	$ 7,210
Newly purchased PCI securities	12
Accretion	(172)
Effect of changes in interest rate indices	(134)
Net reclassification from (to) non-accretable difference, including effects of prepayments	(115)
Activities related to businesses reclassified to held for sale	0
Balance, end of year	$ 6,801

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DERIVATIVES AND HEDGE ACCOUNTING (Details - Hedge Accounting) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency translation gain (loss) adjustment related to net investment hedge relationships	$ 99	$ 64
Derivatives designated as hedging instruments | Interest rate contracts | Fair value hedging | Interest credited to policyholder account balances
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	17	5
Gain (loss) recognized in earnings on hedged items	(17)	(5)
Gain (loss) recognized in earnings for amounts excluded from effectiveness testing	0	0
Net Impact	0	0
Derivatives designated as hedging instruments | Interest rate contracts | Fair value hedging | Net investment income
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	(3)	(1)
Gain (loss) recognized in earnings on hedged items	3	1
Gain (loss) recognized in earnings for amounts excluded from effectiveness testing	0	0
Net Impact	0	0
Derivatives designated as hedging instruments | Foreign exchange contracts | Fair value hedging | Net realized capital gains (losses)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	305	(8)
Gain (loss) recognized in earnings on hedged items	(305)	8
Gain (loss) recognized in earnings for amounts excluded from effectiveness testing	281	(14)
Net Impact	281	(14)
Derivatives not designated as hedging instruments
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	3,781	(318)
Derivatives not designated as hedging instruments | Net realized capital gains (losses)
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	3,752	(334)
Derivatives not designated as hedging instruments | Net investment income
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	(2)	(5)
Derivatives not designated as hedging instruments | Policy fees
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	15	17
Derivatives not designated as hedging instruments | Policyholder benefits and claims incurred
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	16	4
Derivatives not designated as hedging instruments | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	2,573	359
Derivatives not designated as hedging instruments | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	1,025	(28)
Derivatives not designated as hedging instruments | Equity contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	1,103	(208)
Derivatives not designated as hedging instruments | Credit contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	122	(8)
Derivatives not designated as hedging instruments | Other contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	10	16
Derivatives not designated as hedging instruments | Embedded derivatives
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in earnings on derivatives	$ (1,052)	$ (449)

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CONTINGENCIES, COMMITMENTS AND GUARANTEES (Details - Contingencies, Commitments and Guarantees) $ in Millions	Mar. 31, 2020 USD ($)
Future undiscounted cash flows under operating leases
Other commitments	$ 6,900
Amount outstanding under standby letters of credit at end of period	$ 79

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LENDING ACTIVITIES (Details - Credit quality performance indicators for commercial mortgages) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2020 USD ($) loan	Dec. 31, 2019 USD ($) loan	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net	$ 46,844	$ 46,984
Allowance for credit losses	$ 787	$ 438	$ 422	$ 397
Debt Coverage Ratio	2.0	2
Average Loan to Value Ratio	56.00%	56.00%
Apartments
Financing Receivable, Credit Quality Indicator [Line Items]
In good standing	$ 14,153	$ 13,698
Restructured	0	0
90 days or less delinquent	1	1
Greater than 90 days delinquent or in process of foreclosure	0	0
Mortgage and other loans receivable, net	14,154	13,699
Allowance for credit losses, Specific		0
Allowance for credit losses, General		81
Allowance for credit losses	161	81
Offices
Financing Receivable, Credit Quality Indicator [Line Items]
In good standing	10,478	10,553
Restructured	87	89
90 days or less delinquent	0	0
Greater than 90 days delinquent or in process of foreclosure	57	0
Mortgage and other loans receivable, net	10,622	10,642
Allowance for credit losses, Specific		2
Allowance for credit losses, General		153
Allowance for credit losses	315	155
Retail
Financing Receivable, Credit Quality Indicator [Line Items]
In good standing	5,221	5,332
Restructured	25	0
90 days or less delinquent	0	0
Greater than 90 days delinquent or in process of foreclosure	0	0
Mortgage and other loans receivable, net	5,246	5,332
Allowance for credit losses, Specific		1
Allowance for credit losses, General		44
Allowance for credit losses	115	45
Industrial
Financing Receivable, Credit Quality Indicator [Line Items]
In good standing	3,574	3,663
Restructured	0	0
90 days or less delinquent	0	0
Greater than 90 days delinquent or in process of foreclosure	0	0
Mortgage and other loans receivable, net	3,574	3,663
Allowance for credit losses, Specific		0
Allowance for credit losses, General		30
Allowance for credit losses	66	30
Hotel
Financing Receivable, Credit Quality Indicator [Line Items]
In good standing	2,156	2,211
Restructured	101	101
90 days or less delinquent	0	0
Greater than 90 days delinquent or in process of foreclosure	0	0
Mortgage and other loans receivable, net	2,257	2,312
Allowance for credit losses, Specific		6
Allowance for credit losses, General		14
Allowance for credit losses	24	20
Others
Financing Receivable, Credit Quality Indicator [Line Items]
In good standing	438	522
Restructured	0	0
90 days or less delinquent	0	0
Greater than 90 days delinquent or in process of foreclosure	0	0
Mortgage and other loans receivable, net	438	522
Allowance for credit losses, Specific		0
Allowance for credit losses, General		5
Allowance for credit losses	$ 8	$ 5
Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Number of loans in good standing | loan	718	736
Number of loans restructured | loan	5	3
Number of loans 90 days or less delinquent | loan	1	1
Number of loans greater than 90 days delinquent or in process of foreclosure | loan	2	0
Number of Loans | loan	726	740
In good standing	$ 36,020	$ 35,979
Restructured	213	190
90 days or less delinquent	1	1
Greater than 90 days delinquent or in process of foreclosure	57	0
Mortgage and other loans receivable, net	36,291	36,170
Allowance for credit losses, Specific		9
Allowance for credit losses, General		327
Allowance for credit losses	$ 689	$ 336
Percentage of loans that are current as to payments of principal and interest	99.00%	99.00%
Percentage restructured	1.00%	1.00%
Percentage 90 days or less delinquent	0.00%	0.00%
Percentage greater than 90 days delinquent or in foreclosure	0.00%	0.00%
Percentage Total	100.00%	100.00%
Percentage of loans with valuation allowance, Specific		0.00%
Percentage of loans with valuation allowance, Genaral		1.00%
Percentage of loans with allowance for losses	2.00%	1.00%

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INVESTMENTS (Details - Rollforward of changes in allowance for credit losses on available for sale fixed maturity securities by major ivnvestment category) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, balance, beginning of year	$ 0
Securities for which allowance for credit losses were not previously recorded	198
Purchases of available for sale debt securities accounted for as PCD assets	6
Securities sold during the period	0
Intent to sell security or more like than not will be required to sell the security before recovery of its amortized cost basis	0
Additional increases or drecreases to the allowance for credit losses on securities that had an allowance recorded in a previous period, for which there was no intention to sell before recovery amortized cost basis	0
Write-offs charged against the allowance	0
Recoveries of amounts previously written off	0
Other	0
Securities available for sale, balance, end of period	211
Adjusted balance
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, balance, beginning of year	7
Structured Finance [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities for which allowance for credit losses were not previously recorded	24
Purchases of available for sale debt securities accounted for as PCD assets	6
Securities sold during the period	0
Intent to sell security or more like than not will be required to sell the security before recovery of its amortized cost basis	0
Additional increases or drecreases to the allowance for credit losses on securities that had an allowance recorded in a previous period, for which there was no intention to sell before recovery amortized cost basis	0
Write-offs charged against the allowance	0
Recoveries of amounts previously written off	0
Other	0
Securities available for sale, balance, end of period	37
Structured Finance [Member] | Adjusted balance
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, balance, beginning of year	7
Non-structured [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities for which allowance for credit losses were not previously recorded	174
Purchases of available for sale debt securities accounted for as PCD assets	0
Securities sold during the period	0
Intent to sell security or more like than not will be required to sell the security before recovery of its amortized cost basis	0
Additional increases or drecreases to the allowance for credit losses on securities that had an allowance recorded in a previous period, for which there was no intention to sell before recovery amortized cost basis	0
Write-offs charged against the allowance	0
Recoveries of amounts previously written off	0
Other	0
Securities available for sale, balance, end of period	174
Non-structured [Member] | Adjusted balance
Schedule of Available-for-sale Securities [Line Items]
Securities available for sale, balance, beginning of year	$ 0

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INVESTMENTS (Details - Carrying amounts of other invested assets) - USD ($) $ in Millions	3 Months Ended	84 Months Ended
	Mar. 31, 2020	Dec. 31, 2027	Dec. 31, 2019
Investments [Line Items]
Other invested assets	$ 17,966		$ 18,792
Alternative investments
Investments [Line Items]
Other invested assets	8,158		8,845
Investment real estate
Investments [Line Items]
Other invested assets	8,348		8,491
Net of accumulated depreciation on investment in real estate	720		703
All other investments
Investments [Line Items]
Other invested assets	1,460		1,456
Hedge Funds
Investments [Line Items]
Other invested assets	$ 2,200		3,300
Hedge Fund Fair Value Redemption, Additional Percentage	78.00%	22.00%
Direct private equity
Investments [Line Items]
Other invested assets	$ 5,600		5,200
Affordable Housing Partnerships
Investments [Line Items]
Other invested assets	$ 282		$ 331

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Income Tax Disclosure [Line Items]
Effective tax rates on income from continuing operations (as a percent)	35.30%	18.80%
U.S. federal income tax at statutory rate (as a percent)	21.00%	21.00%
U.S. taxable income from life companies offset by those net operating loss carryforwards	35.00%
Unrecognized tax benefits, excluding interest and penalties	$ 4,800		$ 4,800
Unrecognized tax positions that if recognized would not affect the effective tax rate	44		43
Unrecognized tax benefits, interest and penalties accrued	2,500		2,400
Unrecognized tax benefits, interest net of the federal (benefit) expense and penalties	49	$ 58
Deferred tax asset valuation allowance allocated to income from continuing operations	274
Deferred tax asset valuation allowance recognized related to certain state, local and foreign jurisdictions	9
Decrease in unrecognized tax benefits is reasonably possible in the next twelve months	3,600
Unrecognized tax benefits, if recognized would favorably affect the effective tax rate	4,700		$ 4,700
Non-life companies
Income Tax Disclosure [Line Items]
Deferred tax asset valuation allowance allocated to other comprehensive income	$ 115

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EQUITY (Details - Reclassification of significant items out of Accumulated other comprehensive income) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	$ 204	$ (36)
Income from continuing operations before income tax expense	2,558	1,154
Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income from continuing operations before income tax expense	204	(36)
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses were taken
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	0
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses were taken | Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Investments	0	0
Total	0	0
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total		0
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken | Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Investments	0	0
Total	0	0
Unrealized appreciation (depreciation) of all other investments
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	214	(31)
Unrealized appreciation (depreciation) of all other investments | Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Investments	214	(31)
Total	214	(31)
Change in retirement plan liabilities adjustment
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	(10)	(5)
Change in retirement plan liabilities adjustment | Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	(10)	(5)
Prior-Service Credit | Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	0	0
Actuarial Gains (Losses) | Amount Reclassified from Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total	$ (10)	$ (5)

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INVESTMENTS (Details - Securities available for sale in a loss position) - Bonds available for sale $ in Millions	Mar. 31, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	$ 70,954	$ 24,331
Gross Unrealized Losses, Less than 12 Months	6,027	493
Fair Value, 12 Months or More	4,895	7,362
Gross Unrealized Losses, 12 Months or More	993	322
Fair Value, Total	75,849	31,693
Gross Unrealized Losses, Total	$ 7,020	$ 815
Number of securities in an unrealized loss position | security	14,067	5,695
Number of individual securities in continuous unrealized loss position for longer than twelve months | security	1,041	1,254
U.S. government and government sponsored entities
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	$ 249	$ 1,461
Gross Unrealized Losses, Less than 12 Months	17	44
Fair Value, 12 Months or More	4	63
Gross Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	253	1,524
Gross Unrealized Losses, Total	17	44
Obligations of states, municipalities and political subdivisions
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	1,274	672
Gross Unrealized Losses, Less than 12 Months	63	21
Fair Value, 12 Months or More	181	246
Gross Unrealized Losses, 12 Months or More	12	11
Fair Value, Total	1,455	918
Gross Unrealized Losses, Total	75	32
Non-U.S. governments
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	2,277	1,105
Gross Unrealized Losses, Less than 12 Months	156	12
Fair Value, 12 Months or More	197	343
Gross Unrealized Losses, 12 Months or More	62	45
Fair Value, Total	2,474	1,448
Gross Unrealized Losses, Total	218	57
Corporate debt
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	45,529	11,868
Gross Unrealized Losses, Less than 12 Months	4,213	319
Fair Value, 12 Months or More	1,171	2,405
Gross Unrealized Losses, 12 Months or More	485	181
Fair Value, Total	46,700	14,273
Gross Unrealized Losses, Total	4,698	500
Residential mortgage-backed securities (RMBS)
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	5,743	3,428
Gross Unrealized Losses, Less than 12 Months	346	28
Fair Value, 12 Months or More	504	1,367
Gross Unrealized Losses, 12 Months or More	39	36
Fair Value, Total	6,247	4,795
Gross Unrealized Losses, Total	385	64
Commercial mortgage-backed securities (CMBS)
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	4,653	1,877
Gross Unrealized Losses, Less than 12 Months	282	16
Fair Value, 12 Months or More	104	367
Gross Unrealized Losses, 12 Months or More	10	9
Fair Value, Total	4,757	2,244
Gross Unrealized Losses, Total	292	25
Collateralized Debt Obligations/Asset-Backed Securities (CDO/ABS)
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Fair Value, Less than 12 Months	11,229	3,920
Gross Unrealized Losses, Less than 12 Months	950	53
Fair Value, 12 Months or More	2,734	2,571
Gross Unrealized Losses, 12 Months or More	385	40
Fair Value, Total	13,963	6,491
Gross Unrealized Losses, Total	$ 1,335	$ 93

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Rollfoward of the reinsurance recoverable allowance for credit losses and disputes) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, balance, beginning of year	$ 151
Initial allowance upon adoption	224
Current period provision for expected credit losses and disputes	(2)
Write-offs charged against the allowance for credit losses and disputes	(7)
Other	(4)
Reinsurance recoverables, balance, end of period	362
General Insurance
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, balance, beginning of year	111
Initial allowance upon adoption	202
Current period provision for expected credit losses and disputes	(4)
Write-offs charged against the allowance for credit losses and disputes	(3)
Other	(4)
Reinsurance recoverables, balance, end of period	302
Life and Retirement
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, balance, beginning of year	40
Initial allowance upon adoption	22
Current period provision for expected credit losses and disputes	2
Write-offs charged against the allowance for credit losses and disputes	(4)
Other	0
Reinsurance recoverables, balance, end of period	$ 60

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SEGMENT INFORMATION (Details - Narrative)	3 Months Ended
	Mar. 31, 2020 segment
General Insurance
Segment Reporting Information [Line Items]
Number of operating segments	2
Life and Retirement
Segment Reporting Information [Line Items]
Number of operating segments	4

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SUMMARY OF SIGNICFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Standards Adopted

Accounting Standards Adopted During 2020

Financial Instruments - Credit Losses

In June 2016, the FASB issued an accounting standard that changed how entities account for current expected credit losses (CECL) for most financial assets, premiums receivable, trade receivables, off-balance sheet exposures and reinsurance receivables (the Financial Instruments Credit Losses Standard). The standard requires an allowance for credit losses based on the expectation of lifetime credit losses related to such financial assets subject to credit losses, including loans measured at amortized cost, reinsurance receivables and certain off-balance sheet credit exposures. Additionally, the impairment of available-for-sale debt securities, including purchased credit deteriorated securities, is subject to the new guidance and is measured in a similar manner, except that losses are recognized as allowances rather than reductions in the amortized cost of the securities. The standard allows for reversals of credit impairments in the event that the credit of an issuer improves. The standard also requires additional disclosures.

We adopted the standard on its effective date of January 1, 2020 using a modified retrospective method, which requires a cumulative effect adjustment to retained earnings. As of January 1, 2020, the impact of the adoption of the standard was a reduction in opening retained earnings of $487 million (after-tax) primarily driven by commercial mortgage loans, and, to a lesser extent, reinsurance receivables and recoverables.

The following table provides a rollforward of our allowance, including credit losses, in connection with the adoption of the Financial Instruments Credit Losses Standard as well as cross references to the applicable notes herein for additional information:

Three Months Ended March 31, 2020		Balance,		Cumulative Effect		Purchased Credit				Balance,
		Beginning		Adjustment as of		Deteriorated Initial		Increase		End of
(in millions)		of Year		January 1, 2020		Allowance		(Decrease)		Period
Securities available for sale(a)	$	-	$	-	$	13	$	198	$	211
Mortgage and other loan receivables(b)		438		318		-		31		787
Reinsurance recoverables (inclusive of
deposit accounted assets)(c)		151		224		-		(13)		362
Premiums and other receivables(d)		178		34		-		(2)		210
Contractual deductible recoverables(e)		-		14		-		-		14
Commercial mortgage loan commitments(f)		-		51		-		7		58
Total	$	767	$	641	$	13	$	221	$	1,642
Secondary impacts to certain long-duration
insurance contracts(g)				(27)
Tax impact				(127)
Total cumulative effect adjustment			$	487

(a)The allowance for credit losses is reported in Bonds available for sale in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 6 for additional information.

(b)The allowance for credit losses is reported in Mortgage and other loans receivable in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(c)The allowance for credit losses is reported for Reinsurance assets for reinsurance contracts that contain sufficient insurance risk, and reported in Other assets for insurance and reinsurance contracts that do not contain sufficient insurance risk in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred for reinsurance contracts that do contain sufficient insurance risk and Premiums for contracts that do not contain sufficient insurance risk in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(d)The allowance for credit losses is reported in Premiums and other receivables in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in General operating and other expenses in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(e)The allowance for credit losses is reported in Liability for unpaid losses and loss adjustment expenses in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income. Refer to Note 10 for additional information.

(f)The allowance for credit losses is reported in Other liabilities in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(g)This reflects adjustments to the amortization of DAC, unearned revenue reserve and sales inducement assets as well as impacts on the future policy benefits for certain universal life and variable annuity contracts.

The following presents the impact of the adoption of the standard on reinsurance recoverables and premiums and other receivables.

Reinsurance — Credit Losses

The estimation of reinsurance recoverable involves a significant amount of judgment, particularly for latent exposures, such as asbestos, due to their long-tail nature. Reinsurance assets include reinsurance recoverable on unpaid losses and loss adjustment expenses that are estimated as part of our loss reserving process and, consequently, are subject to similar judgments and uncertainties as the estimation of gross loss reserves. Similarly, Other assets include reinsurance recoverable for contracts which are accounted for as deposits.

We assess the collectability of reinsurance recoverable balances in each reporting period, through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectable reinsurance that reduces the carrying amount of reinsurance and other assets on the consolidated balance sheets (collectively, the reinsurance recoverable balances). This estimate requires significant judgment for which key considerations include:

paid and unpaid amounts recoverable;

whether the balance is in dispute or subject to legal collection;

the relative financial health of the reinsurer as determined by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based upon our financial reviews; insurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are assigned ORRs that will generate significant allowance; and

whether collateral and collateral arrangements exist.

An estimate of the reinsurance recoverable’s lifetime expected credit losses is established utilizing a probability of default and loss given default method, which reflects the reinsurer’s ORR rating. The allowance for credit losses excludes disputed amounts. An allowance for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.

The total reinsurance recoverables as of March 31, 2020 were $42.2 billion. As of that date, utilizing AIG’s ORRs, (i) approximately 87 percent of the reinsurance recoverables are investment grade, of which 82 percent relate to General Insurance and 5 percent relate to Life and Retirement; (ii) approximately 12 percent of the reinsurance recoverables are non-investment grade, the majority of which relates to General Insurance; (iii) less than one percent of the non-investment grade reinsurance recoverables related to Life and Retirement and (iv) approximately one percent of the reinsurance recoverables relate to entities that are not rated by AIG.

As of March 31, 2020, approximately 76 percent of our non-investment grade reinsurance exposure relates to captive insurers. These arrangements are typically collateralized by letters of credit, funds held or trust agreements.

Reinsurance Recoverable Allowance

The following table presents a rollforward of the reinsurance recoverable allowance:

Three Months Ended March 31, 2020		General		Life and
(in millions)		Insurance		Retirement		Total
Balance, beginning of year	$	111	$	40	$	151
Initial allowance upon CECL adoption		202		22		224
Current period provision for expected credit losses and disputes		(4)		2		(2)
Write-offs charged against the allowance for credit losses and disputes		(3)		(4)		(7)
Other changes		(4)		-		(4)
Balance, end of period	$	302	$	60	$	362

There were no recoveries of credit losses previously written off for the three-month period ended March 31, 2020.

Past-Due Status

We consider a reinsurance asset to be past due when it is 90 days past due. Past due balances were not significant for any of the periods presented.

Premiums and other receivables — Credit Losses

Premiums and other receivables, net of allowance for credit losses include premium balances receivable, amounts due from agents and brokers and policyholders, trade receivables for the Direct Investment book and Global Capital Markets (GCM) and other receivables. Trade receivables for GCM include cash collateral posted to derivative counterparties that is not eligible to be netted against derivative liabilities. The allowance for credit losses and disputes for premiums and other receivables was $210 million at March 31, 2020. Our allowance for credit losses for premium receivables considers a combination of internal and external information relating to past events, current conditions and reasonable and supportable forecasts. Our allowance contemplates our contractual provisions. Upon default or delinquency of the policyholder we may be able to cease coverage for the remaining period. In certain jurisdictions we are unable to cancel coverage even in the event of delinquency or default by the policyholder. We consider premium and other receivable balances to be past due if the payment is not received after 90 days from the contractual obligation due date and record an allowance for disputes when there is reasonable uncertainty of the collectability of a disputed amount during the reporting period.

For further information regarding the impacts of the adoption of this standard see Notes 5, 6, 7, 10 and 12 to the Condensed Consolidated Financial Statements.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued an accounting standard that eliminates the requirement to calculate the implied fair value of goodwill, through a hypothetical purchase price allocation, to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit. An entity should also consider income tax effects from tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

We adopted the standard on its effective date of January 1, 2020. The adoption of the standard did not have a material impact on our financial position, results of operations or cash flows.

Cloud Computing Arrangements

In August 2018, the FASB issued an accounting standard that aligns the requirements for capitalizing implementation costs incurred in a cloud computing (or hosting) arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Capitalized implementation costs must be amortized over the term of the hosting arrangement. The accounting for the service element is not affected by the amendments in this update.

We adopted the standard prospectively on its effective date of January 1, 2020. The adoption of the standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates

In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to simplify and streamline the disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered, and issuers’ affiliates whose securities collateralize securities registered or being registered. Currently, the SEC permits the omission of separate financial statements of subsidiary issuers and guarantors when certain conditions are met and the parent company provides summarized financial information of the subsidiary issuers and guarantors. The amendments, among other things, allow companies to cease providing summarized financial information if the subsidiary issuer’s or guarantor’s reporting obligation has been suspended.

The amendments are effective January 4, 2021, with early adoption permitted. Effective March 31, 2020, AIG early adopted the amendment and ceased providing the summarized information for the subsidiary issuers and guarantors because the subsidiaries issuer’s reporting obligations have been suspended.

Future Application of Accounting Standards

Future Application of Accounting Standards

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the 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 standard prescribes significant and comprehensive changes to recognition, measurement, presentation and disclosure as summarized below:

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 below) in the income statement.

Requires the discount rate assumption 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 and recognizes the impact of changes to discount rates in other comprehensive income.

Simplifies the amortization of deferred policy acquisition costs (DAC) to a constant level basis over the expected term of the related contracts with adjustments for unexpected terminations, but no longer requires an impairment test.

Requires the measurement of all market risk benefits associated with deposit (or account balance) contracts at fair value through the income statement with the exception of instrument-specific credit risk changes, which will be recognized in other comprehensive income.

Increased disclosures of disaggregated roll-forwards of policy benefits, account balances, market risk benefits, separate account liabilities and information about significant inputs, judgments and methods used in measurement and changes thereto and impact of those changes.

In October 2019, the FASB affirmed its decision to defer the effective date of the standard to January 1, 2022. We plan to adopt the standard on its effective date. We have started our implementation efforts and we are evaluating the method of adoption and impact of the standard on our reported consolidated financial condition, results of operations, cash flows and required disclosures. The adoption of this standard is expected to have a significant impact on our consolidated financial condition, results of operations, cash flows and required disclosures, as well as systems, processes and controls.

Income Tax

On December 18, 2019, the FASB issued an accounting standard that simplifies the accounting for income taxes by eliminating certain exceptions to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendments also simplified other areas including the accounting for franchise taxes and enacted tax laws or rates, and clarified the accounting for transactions that result in the step-up in the tax basis of goodwill. The standard is effective on January 1, 2021, with early adoption permitted. We are assessing the impact of the standard on our consolidated financial condition, results of operations and cash flows.

Reference Rate Reform

On March 12, 2020, the FASB issued an accounting standard that provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The standard allows us to account for certain contract modifications that result from the discontinuation of the London Inter-Bank Offered Rate (LIBOR) or another reference rate as a continuation of the existing contract without additional analysis.

This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. We have started our implementation efforts and we are evaluating the method of adoption and impact of the standard on our reported consolidated financial condition, results of operations, cash flows and required disclosures.

Clarification of Accounting for Certain Equity Method Investments

On January 16, 2020, the FASB issued an accounting standard to clarify how a previously issued standard regarding a company’s ability to measure the fair value of certain equity securities without a readily determinable fair value should interact with equity method investments standards. The previously issued standard provides that such equity securities could be measured at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs (measurement alternative). The new standard clarifies that a company should consider observable transactions that require the company to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with the equity method immediately before applying or upon discontinuing the equity method.

The standard further clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option.

The standard is effective for interim and annual reporting periods beginning after December 15, 2020. We are evaluating the impact adoption of this standard will have on our consolidated financial condition, results of operations, cash flows and required disclosures.

Credit Losses

Financial Instruments - Credit Losses

In June 2016, the FASB issued an accounting standard that changed how entities account for current expected credit losses (CECL) for most financial assets, premiums receivable, trade receivables, off-balance sheet exposures and reinsurance receivables (the Financial Instruments Credit Losses Standard). The standard requires an allowance for credit losses based on the expectation of lifetime credit losses related to such financial assets subject to credit losses, including loans measured at amortized cost, reinsurance receivables and certain off-balance sheet credit exposures. Additionally, the impairment of available-for-sale debt securities, including purchased credit deteriorated securities, is subject to the new guidance and is measured in a similar manner, except that losses are recognized as allowances rather than reductions in the amortized cost of the securities. The standard allows for reversals of credit impairments in the event that the credit of an issuer improves. The standard also requires additional disclosures.

We adopted the standard on its effective date of January 1, 2020 using a modified retrospective method, which requires a cumulative effect adjustment to retained earnings. As of January 1, 2020, the impact of the adoption of the standard was a reduction in opening retained earnings of $487 million (after-tax) primarily driven by commercial mortgage loans, and, to a lesser extent, reinsurance receivables and recoverables.

The following table provides a rollforward of our allowance, including credit losses, in connection with the adoption of the Financial Instruments Credit Losses Standard as well as cross references to the applicable notes herein for additional information:

Three Months Ended March 31, 2020		Balance,		Cumulative Effect		Purchased Credit				Balance,
		Beginning		Adjustment as of		Deteriorated Initial		Increase		End of
(in millions)		of Year		January 1, 2020		Allowance		(Decrease)		Period
Securities available for sale(a)	$	-	$	-	$	13	$	198	$	211
Mortgage and other loan receivables(b)		438		318		-		31		787
Reinsurance recoverables (inclusive of
deposit accounted assets)(c)		151		224		-		(13)		362
Premiums and other receivables(d)		178		34		-		(2)		210
Contractual deductible recoverables(e)		-		14		-		-		14
Commercial mortgage loan commitments(f)		-		51		-		7		58
Total	$	767	$	641	$	13	$	221	$	1,642
Secondary impacts to certain long-duration
insurance contracts(g)				(27)
Tax impact				(127)
Total cumulative effect adjustment			$	487

(a)The allowance for credit losses is reported in Bonds available for sale in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 6 for additional information.

(b)The allowance for credit losses is reported in Mortgage and other loans receivable in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(c)The allowance for credit losses is reported for Reinsurance assets for reinsurance contracts that contain sufficient insurance risk, and reported in Other assets for insurance and reinsurance contracts that do not contain sufficient insurance risk in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred for reinsurance contracts that do contain sufficient insurance risk and Premiums for contracts that do not contain sufficient insurance risk in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(d)The allowance for credit losses is reported in Premiums and other receivables in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in General operating and other expenses in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(e)The allowance for credit losses is reported in Liability for unpaid losses and loss adjustment expenses in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income. Refer to Note 10 for additional information.

(f)The allowance for credit losses is reported in Other liabilities in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(g)This reflects adjustments to the amortization of DAC, unearned revenue reserve and sales inducement assets as well as impacts on the future policy benefits for certain universal life and variable annuity contracts.

The following presents the impact of the adoption of the standard on reinsurance recoverables and premiums and other receivables.

Reinsurance — Credit Losses

The estimation of reinsurance recoverable involves a significant amount of judgment, particularly for latent exposures, such as asbestos, due to their long-tail nature. Reinsurance assets include reinsurance recoverable on unpaid losses and loss adjustment expenses that are estimated as part of our loss reserving process and, consequently, are subject to similar judgments and uncertainties as the estimation of gross loss reserves. Similarly, Other assets include reinsurance recoverable for contracts which are accounted for as deposits.

We assess the collectability of reinsurance recoverable balances in each reporting period, through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectable reinsurance that reduces the carrying amount of reinsurance and other assets on the consolidated balance sheets (collectively, the reinsurance recoverable balances). This estimate requires significant judgment for which key considerations include:

paid and unpaid amounts recoverable;

whether the balance is in dispute or subject to legal collection;

the relative financial health of the reinsurer as determined by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based upon our financial reviews; insurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are assigned ORRs that will generate significant allowance; and

whether collateral and collateral arrangements exist.

An estimate of the reinsurance recoverable’s lifetime expected credit losses is established utilizing a probability of default and loss given default method, which reflects the reinsurer’s ORR rating. The allowance for credit losses excludes disputed amounts. An allowance for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.

The total reinsurance recoverables as of March 31, 2020 were $42.2 billion. As of that date, utilizing AIG’s ORRs, (i) approximately 87 percent of the reinsurance recoverables are investment grade, of which 82 percent relate to General Insurance and 5 percent relate to Life and Retirement; (ii) approximately 12 percent of the reinsurance recoverables are non-investment grade, the majority of which relates to General Insurance; (iii) less than one percent of the non-investment grade reinsurance recoverables related to Life and Retirement and (iv) approximately one percent of the reinsurance recoverables relate to entities that are not rated by AIG.

As of March 31, 2020, approximately 76 percent of our non-investment grade reinsurance exposure relates to captive insurers. These arrangements are typically collateralized by letters of credit, funds held or trust agreements.

Reinsurance Recoverable Allowance

The following table presents a rollforward of the reinsurance recoverable allowance:

Three Months Ended March 31, 2020		General		Life and
(in millions)		Insurance		Retirement		Total
Balance, beginning of year	$	111	$	40	$	151
Initial allowance upon CECL adoption		202		22		224
Current period provision for expected credit losses and disputes		(4)		2		(2)
Write-offs charged against the allowance for credit losses and disputes		(3)		(4)		(7)
Other changes		(4)		-		(4)
Balance, end of period	$	302	$	60	$	362

There were no recoveries of credit losses previously written off for the three-month period ended March 31, 2020.

Past-Due Status

We consider a reinsurance asset to be past due when it is 90 days past due. Past due balances were not significant for any of the periods presented.

Premiums and other receivables — Credit Losses

Premiums and other receivables, net of allowance for credit losses include premium balances receivable, amounts due from agents and brokers and policyholders, trade receivables for the Direct Investment book and Global Capital Markets (GCM) and other receivables. Trade receivables for GCM include cash collateral posted to derivative counterparties that is not eligible to be netted against derivative liabilities. The allowance for credit losses and disputes for premiums and other receivables was $210 million at March 31, 2020. Our allowance for credit losses for premium receivables considers a combination of internal and external information relating to past events, current conditions and reasonable and supportable forecasts. Our allowance contemplates our contractual provisions. Upon default or delinquency of the policyholder we may be able to cease coverage for the remaining period. In certain jurisdictions we are unable to cancel coverage even in the event of delinquency or default by the policyholder. We consider premium and other receivable balances to be past due if the payment is not received after 90 days from the contractual obligation due date and record an allowance for disputes when there is reasonable uncertainty of the collectability of a disputed amount during the reporting period.

For further information regarding the impacts of the adoption of this standard see Notes 5, 6, 7, 10 and 12 to the Condensed Consolidated Financial Statements.

Investments

Fixed Maturity Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

On January 1, 2020, AIG adopted the Financial Instruments Credit Losses Standard. Prior to the adoption of this standard, AIG did not record an allowance against the amortized cost basis of held to maturity securities. Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain structured securities, recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income.

For structured securities that are not high credit quality, the structured securities yields are based on expected cash flows which take into account both expected credit losses and prepayments. An allowance for credit losses is not established upon initial recognition of the asset (unless the security is determined to be PCD which is discussed in more detail below). Subsequently, differences between actual and expected cash flows and changes in expected cash flows are recognized as adjustments to the allowance for credit losses. Changes that cannot be reflected as adjustments to the allowance for credit losses are accounted for as prospective adjustments to yield.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain RMBS, CMBS and CDO/ABS, (collectively, structured securities), recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income. For structured securities that are not high credit quality, effective yields are recalculated and adjusted prospectively based on changes in expected undiscounted future cash flows. For purchased credit impaired (PCI) securities, at acquisition, the difference between the undiscounted expected future cash flows and the recorded investment in the securities represents the initial accretable yield, which is to be accreted into net investment income over the securities’ remaining lives on an effective level-yield basis. Subsequently, effective yields recognized on PCI securities are recalculated and adjusted prospectively to reflect changes in the contractual benchmark interest rates on variable rate securities and any significant increases in undiscounted expected future cash flows arising due to reasons other than interest rate changes.

Evaluating Investments for AN ALLOWANCE FOR CREDIT LOSSES/OTHER-than-TEMPORARY IMPAIRMENTS

Fixed Maturity Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. No allowance is established in these situations. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a decline in the fair value below the amortized cost is due to credit related factors, an allowance is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to realized capital losses. The allowance for credit losses is limited to the difference between amortized cost and fair value. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not associated with credit related factors is presented in unrealized appreciation (depreciation) of fixed maturity securities on which an allowance for credit losses were recognized (a separate component of accumulated other comprehensive income). Accrued interest is excluded from the measurement of the allowance for credit losses.

When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CDO, ABS) management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs, which vary by asset class:

Current delinquency rates;

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Expected prepayment speeds.

When estimating future cash flows for corporate, municipal and sovereign fixed maturity securities determined to be credit impaired, management considers:

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Scenarios specific to the issuer and the security, which may also include estimates of outcomes of corporate restructurings, political and macroeconomic factors, stability and financial strength of the issuer, the value of any secondary sources of repayment and the disposition of assets.

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

Credit losses are reassessed each period. The allowance for credit losses and the corresponding charge to realized capital losses can be reversed if conditions change, however, the allowance for credit losses will never be reduced below zero. When we determine that all or a portion of a fixed maturity security is uncollectable, the uncollectable amortized cost amount is written off with a corresponding reduction to the allowance for credit losses. If we collect cash flows that were previously written off the recovery is recognized by decreasing realized capital losses.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an other-than-temporary impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a credit impairment has occurred, the amortized cost is written down to the estimated recoverable value with a corresponding charge to realized capital losses. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not related to a credit impairment is presented in unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were recognized (a separate component of accumulated other comprehensive income).

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

In periods subsequent to the recognition of an other-than-temporary impairment charge for available for sale fixed maturity securities that is not foreign exchange related, we prospectively accrete into earnings the difference between the new amortized cost and the expected undiscounted recoverable value over the remaining expected holding period of the security.

Purchased Credit Deteriorated/Impaired Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

We purchase certain RMBS securities that have experienced more-than-insignificant deterioration in credit quality since origination. Subsequent to the adoption of the Financial Instruments Credit Losses Standard these are referred to as PCD assets. At the time of purchase an allowance is recognized for these PCD assets by adding it to the purchase price to arrive at the initial amortized cost. There is no credit loss expense recognized upon acquisition of a PCD asset. When determining the initial allowance for credit losses, management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs:

Current delinquency rates;Expected default rates and the timing of such defaults;Loss severity and the timing of any recovery; andExpected prepayment speeds.Subsequent to the acquisition date, the PCD assets follow the same accounting as other structured securities that are not high credit quality.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

We purchase certain RMBS securities that have experienced deterioration in credit quality since their issuance. We determine whether it is probable at acquisition that we will not collect all contractually required payments for these purchased credit impaired (PCI) securities, including both principal and interest. At acquisition, the timing and amount of the undiscounted future cash flows expected to be received on each PCI security is determined based on our best estimate using key assumptions, such as interest rates, default rates and prepayment speeds. At acquisition, the difference between the undiscounted expected future cash flows of the PCI securities and the recorded investment in the securities represents the initial accretable yield, which is accreted into Net investment income over their remaining lives on an effective yield basis. Additionally, the difference between the contractually required payments on the PCI securities and the undiscounted expected future cash flows represents the non-accretable difference at acquisition. The accretable yield and the non-accretable difference will change over time, based on actual payments received and changes in estimates of undiscounted expected future cash flows, which are discussed further below.

On a quarterly basis, the undiscounted expected future cash flows associated with PCI securities are re-evaluated based on updates to key assumptions. Declines in undiscounted expected future cash flows due to further credit deterioration as well as changes in the expected timing of the cash flows can result in the recognition of an other-than-temporary impairment charge, as PCI securities are subject to our policy for evaluating investments for other-than-temporary impairment. Changes to undiscounted expected future cash flows due solely to the changes in the contractual benchmark interest rates on variable rate PCI securities will change the accretable yield prospectively. Significant increases in undiscounted expected future cash flows for reasons other than interest rate changes are recognized prospectively as adjustments to the accretable yield.

Mortgage and other loans receivable include commercial mortgages, residential mortgages, life insurance policy loans, commercial loans, and other loans and notes receivable. Commercial mortgages, residential mortgages, commercial loans, and other loans and notes receivable are carried at unpaid principal balances less allowance for credit losses and plus or minus adjustments for the accretion or amortization of discount or premium. Interest income on such loans is accrued as earned.

Direct costs of originating commercial mortgages, commercial loans, and other loans and notes receivable, net of nonrefundable points and fees, are deferred and included in the carrying amount of the related receivables. The amount deferred is amortized to income as an adjustment to earnings using the interest method. Premiums and discounts on purchased residential mortgages are also amortized to income as an adjustment to earnings using the interest method.

Life insurance policy loans are carried at unpaid principal balances. There is no allowance for policy loans because these loans serve to reduce the death benefit paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy.

Interest income is not accrued when payment of contractual principal and interest is not expected. Any cash received on impaired loans is generally recorded as a reduction of the current carrying amount of the loan. Accrual of interest income is generally resumed when delinquent contractual principal and interest is repaid or when a portion of the delinquent contractual payments are made and the ongoing required contractual payments have been made for an appropriate period. As of March 31, 2020, $4 million and $304 million of residential mortgage loans and commercial mortgage loans, respectively, were placed on nonaccrual status.

Accrued interest is presented separately and is included in Other assets on the Condensed Consolidated Balance Sheets. As of March 31, 2020, accrued interest receivable was $18 million and $130 million associated with residential mortgage loans and commercial mortgage loans, respectively.

A significant majority of commercial mortgages in the portfolio are non-recourse loans and, accordingly, the only guarantees are for specific items that are exceptions to the non-recourse provisions. It is therefore extremely rare for us to have cause to enforce the provisions of a guarantee on a commercial real estate or mortgage loan.

Methodology Used to Estimate the Allowance for Credit Losses

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

At the time of origination or purchase, an allowance for credit losses is established for mortgage and other loan receivables and is updated each reporting period. Changes in the allowance for credit losses are recorded in realized capital losses. This allowance reflects the risk of loss, even when that risk is remote, and reflects losses expected over the remaining contractual life of the loan. The allowance for credit losses considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions. We revert to historical information when we determine that we can no longer reliably forecast future economic assumptions.

The allowances for the commercial mortgage loans and residential mortgage loans are estimated utilizing a Probability of Default /Loss Given Default model. Loss rate factors are determined based on historical data and adjusted for current and forecasted information. The loss rates are applied based on individual loan attributes and considering such data points as Loan-to-Value, FICO scores, and debt service coverage.

The estimate of credit losses also reflects management’s assumptions on certain macroeconomic factors that include, but are not limited to, gross domestic product growth, employment, inflation, housing price index, interest rates and credit spreads.

Accrued interest is excluded from the measurement of the allowance for credit losses and accrued interest is reversed through interest income once a loan is placed on nonaccrual.

When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance.

We also have off-balance sheet commitments related to our commercial mortgage loans. The liability for expected credit losses related to these commercial mortgage loan commitments is reported in Other liabilities in the Condensed Consolidated Balance Sheets. When a commitment is funded, we record a loan receivable and reclassify the liability for expected credit losses related to the commitment into loan allowance for expected credit losses. Other changes in the liability for expected credit losses on loan commitments are recorded in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

Mortgage and other loans receivable are considered impaired when collection of all amounts due under contractual terms is not probable. Impairment is measured using either i) the present value of expected future cash flows discounted at the loan’s effective interest rate, ii) the loan’s observable market price, if available, or iii) the fair value of the collateral if the loan is collateral dependent. Impairment of commercial mortgages is typically determined using the fair value of collateral while impairment of other loans is typically determined using the present value of cash flows or the loan’s observable market price. An allowance is typically established for the difference between the impaired value of the loan and its current carrying amount. Additional allowance amounts are established for incurred but not specifically identified impairments, based on statistical models primarily driven by past-due status, debt service coverage, loan-to-value ratio, property type and location, loan term, profile of the borrower and of the major property tenants, and loan seasoning. When all or a portion of a loan is deemed uncollectable, the uncollectable portion of the carrying amount of the loan is charged off against the allowance.

Liability for unpaid claims and claims adjustment expense

Liability for Unpaid Losses and Loss Adjustment Expenses (Loss Reserves)

Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Given the uncertainties around the impact from the COVID-19 crisis, including the significant global economic slowdown and general market decline, the full impact of COVID-19 and how it may ultimately impact the results of our insurance operations remains uncertain. In addition, in response to the crisis, new governmental, legislative and regulatory initiatives have been put in place and continue to be developed that could result in additional restrictions and requirements relating to our policies that may have a negative impact on our business operations. However, we have recorded our estimate of the ultimate liability for claims that have occurred as of the balance sheet date associated with COVID-19 which reflects our expectations given the current facts and circumstances. We will continue to monitor and review the impact. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development.

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EMPLOYEE BENEFITS

3 Months Ended

Mar. 31, 2020

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

14. Employee Benefits

We sponsor various defined benefit plans for eligible employees and retirees in the U.S. and certain non-U.S. countries.

The following table presents the components of net periodic benefit cost (credit) with respect to pension benefits:

	Pension
		U.S.		Non-U.S.
(in millions)		Plans		Plans		Total
Three Months Ended March 31, 2020
Components of net periodic benefit cost:
Service cost	$	1	$	5	$	6
Interest cost		34		3		37
Expected return on assets		(60)		(5)		(65)
Amortization of net loss		8		2		10
Net periodic benefit cost (credit)		(17)		5		(12)
Three Months Ended March 31, 2019
Components of net periodic benefit cost:
Service cost	$	2	$	6	$	8
Interest cost		44		4		48
Expected return on assets		(57)		(5)		(62)
Amortization of net loss		8		1		9
Net periodic benefit cost (credit)		(3)		6		3
Settlement (credit) charges		-		(4)		(4)
Net benefit cost (credit)	$	(3)	$	2	$	(1)

The service cost for our U.S. defined benefit plans only reflect administrative fees as the plans are frozen and no longer accrue benefits. We recognized net expense of $2 million for our U.S. and non-U.S. postretirement benefit plans for the three-month period ended March 31, 2020.

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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2020

Investments [Line Items]

Amortized cost or cost and fair value of available for sale securities

		Amortized		Allowance		Gross		Gross
		Cost or		for Credit		Unrealized		Unrealized		Fair
(in millions)		Cost		Losses(a)		Gains		Losses		Value
March 31, 2020
Bonds available for sale:
U.S. government and government sponsored entities	$	4,664	$	-	$	1,042	$	(17)	$	5,689
Obligations of states, municipalities and political subdivisions		14,140		-		1,375		(75)		15,440
Non-U.S. governments		13,737		(7)		676		(233)		14,173
Corporate debt		140,356		(167)		9,073		(4,940)		144,322
Mortgage-backed, asset-backed and collateralized:
RMBS		29,433		(37)		2,069		(608)		30,857
CMBS		13,988		-		530		(292)		14,226
CDO/ABS		18,268		-		136		(1,335)		17,069
Total mortgage-backed, asset-backed and collateralized		61,689		(37)		2,735		(2,235)		62,152
Total bonds available for sale(c)	$	234,586	$	(211)	$	14,901	$	(7,500)	$	241,776
										Other-Than-
		Amortized		Gross		Gross				Temporary
		Cost or		Unrealized		Unrealized		Fair		Impairments
(in millions)		Cost		Gains		Losses		Value		in AOCI(b)
December 31, 2019
Bonds available for sale:
U.S. government and government sponsored entities	$	5,108	$	316	$	(44)	$	5,380	$	-
Obligations of states, municipalities and political subdivisions		13,960		1,390		(32)		15,318		-
Non-U.S. governments		14,042		884		(57)		14,869		(18)
Corporate debt		138,046		12,090		(500)		149,636		7
Mortgage-backed, asset-backed and collateralized:
RMBS		29,802		3,067		(64)		32,805		1,149
CMBS		13,879		576		(25)		14,430		34
CDO/ABS		18,393		348		(93)		18,648		14
Total mortgage-backed, asset-backed and collateralized		62,074		3,991		(182)		65,883		1,197
Total bonds available for sale(c)	$	233,230	$	18,671	$	(815)	$	251,086	$	1,186

(a)Represents the allowance for credit losses that has been recognized. Changes in the allowance for credit losses are recorded through the statements of income and are not recognized in other comprehensive income.

(b)Represents the amount of other-than-temporary impairments recognized in Accumulated other comprehensive income (loss). Amount includes unrealized gains and losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

(c)At March 31, 2020 and December 31, 2019, bonds available for sale held by us that were below investment grade or not rated totaled $25.1 billion and $27.8 billion, respectively.

Securities available for sale in a loss position

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Bonds available for sale:
U.S. government and government sponsored entities	$	249	$	17	$	4	$	-	$	253	$	17
Obligations of states, municipalities and political
subdivisions		1,274		63		181		12		1,455		75
Non-U.S. governments		2,277		156		197		62		2,474		218
Corporate debt		45,529		4,213		1,171		485		46,700		4,698
RMBS		5,743		346		504		39		6,247		385
CMBS		4,653		282		104		10		4,757		292
CDO/ABS		11,229		950		2,734		385		13,963		1,335
Total bonds available for sale	$	70,954	$	6,027	$	4,895	$	993	$	75,849	$	7,020

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
December 31, 2019
Bonds available for sale:
U.S. government and government sponsored entities	$	1,461	$	44	$	63	$	-	$	1,524	$	44
Obligations of states, municipalities and political
subdivisions		672		21		246		11		918		32
Non-U.S. governments		1,105		12		343		45		1,448		57
Corporate debt		11,868		319		2,405		181		14,273		500
RMBS		3,428		28		1,367		36		4,795		64
CMBS		1,877		16		367		9		2,244		25
CDO/ABS		3,920		53		2,571		40		6,491		93
Total bonds available for sale	$	24,331	$	493	$	7,362	$	322	$	31,693	$	815

Amortized cost and fair value of fixed maturity securities available for sale by contractual maturity

	Total Fixed Maturity Securities
	Available for Sale
		Amortized Cost,
(in millions)		Net of Allowance		Fair Value
March 31, 2020
Due in one year or less	$	10,370	$	10,517
Due after one year through five years		42,552		42,479
Due after five years through ten years		41,923		41,993
Due after ten years		77,878		84,635
Mortgage-backed, asset-backed and collateralized		61,652		62,152
Total	$	234,375	$	241,776

Gross realized gains and gross realized losses from sales or maturities of available for sale securities

Three Months Ended March 31,		2020				2019
		Gross		Gross		Gross		Gross
	Realized		Realized		Realized		Realized
(in millions)		Gains		Losses		Gains		Losses
Fixed maturity securities	$	380	$	166	$	93	$	124

Value of other securities measured at fair value based on election of the fair value option

		March 31, 2020				December 31, 2019
		Fair	Percent			Fair	Percent
(in millions)		Value	of Total			Value	of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	2,057	34	%	$	2,121	28	%
Corporate debt		16	-			18	-
Mortgage-backed, asset-backed and collateralized:
RMBS		467	8			489	7
CMBS		271	5			322	4
CDO/ABS and other collateralized		2,542	43			3,732	50
Total mortgage-backed, asset-backed and collateralized		3,280	56			4,543	61
Total fixed maturity securities		5,353	90			6,682	89
Equity securities		624	10			841	11
Total	$	5,977	100	%	$	7,523	100	%

Carrying amounts values of other invested assets

		March 31,		December 31,
(in millions)		2020		2019
Alternative investments(a) (b)	$	8,158	$	8,845
Investment real estate(c)		8,348		8,491
All other investments		1,460		1,456
Total	$	17,966	$	18,792

(a)At March 31, 2020, included hedge funds of $2.2 billion, private equity funds of $5.6 billion and affordable housing partnerships of $282 million. At December 31, 2019, included hedge funds of $3.3 billion, private equity funds of $5.2 billion and affordable housing partnerships of $331 million.

(b)At March 31, 2020, approximately 78 percent of our hedge fund portfolio is available for redemption in 2020. The remaining 22 percent will be available for redemption between 2021 and 2027.

(c)Net of accumulated depreciation of $720 million and $703 million at March 31, 2020 and December 31, 2019, respectively.

Components of net investment income

Three Months Ended March 31,
(in millions)		2020		2019
Available for sale fixed maturity securities, including short-term investments	$	2,609	$	2,653
Other fixed maturity securities(a)		(60)		327
Equity securities		(191)		79
Interest on mortgage and other loans		513		498
Alternative investments(b)		(59)		419
Real estate		59		69
Other investments(c)		(215)		(52)
Total investment income		2,656		3,993
Investment expenses		148		114
Net investment income	$	2,508	$	3,879

(a)Included in the three-month periods ended March, 31 2020 and 2019 is income of $169 million and $28 million, respectively, for fixed maturity securities measured at fair value through income that economically hedge liabilities as described in (c) below.

(b)Includes income from hedge funds, private equity funds and affordable housing partnerships. Hedge funds are recorded as of the balance sheet date. Private equity funds are generally reported on a one-quarter lag.

(c)Included in the three-month periods ended March, 31 2020 and 2019 are losses of $202 million and $15 million, respectively, related to liabilities measured at fair value that are economically hedged with fixed maturity securities as described in (a) above.

Components of net realized capital gains (losses)

Three Months Ended March 31,
(in millions)		2020		2019
Sales of fixed maturity securities	$	214	$	(31)
Other-than-temporary impairments		-		(83)
Change in intent*		-		-
Change in allowance for credit losses on fixed maturity securities		(198)		-
Change in allowance for credit losses on loans		(38)		(24)
Foreign exchange transactions		(254)		(37)
Variable annuity embedded derivatives, net of related hedges		2,192		(261)
All other derivatives and hedge accounting		1,559		(72)
Other		44		62
Net realized capital gains (losses)	$	3,519	$	(446)

*For the three months ended March 31, 2019, the change in intent was included in Other-than-temporary impairments.

Schedule of increase (decrease) in unrealized appreciation (depreciation) of available for sale securities and other investments

The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale securities and other investments:

Three Months Ended March 31,
(in millions)		2020		2019
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	(10,455)	$	5,982
Other investments		-		(69)
Total increase (decrease) in unrealized appreciation (depreciation) of investments	$	(10,455)	$	5,913

The following table summarizes the unrealized gains and losses recognized in Net Investment Income during the reporting period on equity securities still held at the reporting date:

				Other Invested
(in millions)		Equities		Assets		Total
Three Months Ended March 31, 2020
Net gains and losses recognized during the period on equity securities	$	(191)	$	(129)	$	(320)
Less: Net gains and losses recognized during the period on equity securities sold
during the period		12		2		14
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	(203)	$	(131)	$	(334)
Three Months Ended March 31, 2019
Net gains and losses recognized during the period on equity securities	$	79	$	239	$	318
Less: Net gains and losses recognized during the period on equity securities sold
during the period		19		10		29
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	60	$	229	$	289

Rollforward of changes in allowance for credit losses on available for sale fixed maturity securities by major ivnvestment category

Three Months Ended March 31, 2020				Non-
(in millions)	Structured		Structured			Total
Balance, beginning of year *	$	7	$	-	$	7
Additions:
Securities for which allowance for credit losses were not previously recorded		24		174		198
Purchases of available for sale debt securities accounted for as
purchased credit deteriorated assets		6		-		6
Reductions:
Securities sold during the period		-		-		-
Intent to sell security or more likely than not will be required to sell the security
before recovery of its amortized cost basis		-		-		-
Additional increases or decreases to the allowance for credit losses on securities
that had an allowance recorded in a previous period, for which there was no intent
to sell before recovery amortized cost basis		-		-		-
Write-offs charged against the allowance		-		-		-
Recoveries of amounts previously written off		-		-		-
Other		-		-		-
Balance, end of period	$	37	$	174	$	211

* The beginning balance incorporates the Day 1 gross up on PCD assets held as of January 1, 2020.

Rollforward of the cumulative credit losses in other-than-temporary impairments recognized in earnings

Three Months Ended March 31, 2019
(in millions)
Balance, beginning of year	$	-
Increases due to:
Credit impairments on new securities subject to impairment losses		68
Additional credit impairments on previously impaired securities		6
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell		(21)
Accretion on securities previously impaired due to credit*		-
Balance, end of period	$	53

Represents both accretion recognized due to changes in cash flows expected to be collected over the remaining expected term of the credit impaired securities and the accretion due to the passage of time.

Reconciliation of purchase price to unpaid principal balance of securities purchased with credit deterioration

(in millions)	March 31, 2020
Unpaid principal balance	$	187
Allowance for expected credit losses at acquisition		(6)
Purchase (discount) premium		(48)
Purchase price	$	133

Schedule of purchased credit impaired (PCI) securities, at acquisition date

(in millions)	At Date of Acquisition
Contractually required payments (principal and interest)	$	35,139
Cash flows expected to be collected*		28,720
Recorded investment in acquired securities		19,382

*Represents undiscounted expected cash flows, including both principal and interest.

Schedule of purchased credit impaired (PCI) securities, at reporting date

(in millions)	December 31, 2019
Outstanding principal balance	$	10,476
Amortized cost		6,970
Fair value		8,664

Activity for accretable yield on purchased credit Impaired (PCI) securities

The following table presents activity for the accretable yield on PCI securities:

Three Months Ended March 31, 2019
(in millions)
Balance, beginning of year	$	7,210
Newly purchased PCI securities		12
Accretion		(172)
Effect of changes in interest rate indices		(134)
Net reclassification from (to) non-accretable difference, including effects of prepayments		(115)
Activities related to businesses reclassified to held for sale		-
Balance, end of period	$	6,801

Schedule of fair value of securities pledged to counterparties under secured financing transactions

(in millions)		March 31, 2020		December 31, 2019
Fixed maturity securities available for sale	$	2,759	$	3,030

Schedule of fair value of securities pledged under repurchase agreements by collateral type and by remaining contractual maturity

	Remaining Contractual Maturity of the Agreements
(in millions)	Overnight and Continuous			up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2020
Bonds available for sale:
Non-U.S. governments	$	4	$	22	$	-	$	-	$	-	$	26
Corporate debt		19		104		-		-		-		123
Total	$	23	$	126	$	-	$	-	$	-	$	149
December 31, 2019
Bonds available for sale:
Non-U.S. governments	$	2	$	71	$	-	$	-	$	-	$	73
Corporate debt		22		55		82		-		-		159
Total	$	24	$	126	$	82	$	-	$	-	$	232

	Remaining Contractual Maturity of the Agreements
(in millions)		Overnight and Continuous		up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2020
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	234	$	136	$	-	$	-	$	370
Non-U.S. governments		-		-		85		-		-		85
Corporate debt		-		1,083		740		-		-		1,823
RMBS		-		-		-		332		-		332
Total	$	-	$	1,317	$	961	$	332	$	-	$	2,610
December 31, 2019
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	-	$	386	$	-	$	-	$	386
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		1,071		947		-		-		2,018
RMBS		-		-		-		394		-		394
Total	$	-	$	1,071	$	1,333	$	394	$	-	$	2,798

Schedule of fair value of securities pledged to the entity under reverse repurchase agreements

(in millions)		March 31, 2020		December 31, 2019
Securities collateral pledged to us	$	3,935	$	2,567
Amount sold or repledged by us		-		121

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INSURANCE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2020

Claims Development [Line Items]

Schedule of reconciliation of activity in the liability for unpaid claims and claims adjustment expense

The following table presents the roll-forward of activity in Loss Reserves:

	Three Months Ended
	March 31,
(in millions)		2020		2019
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	78,328	$	83,639
Reinsurance recoverable		(31,069)		(31,690)
Initial allowance upon CECL adoption		164		-
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		47,423		51,949
Losses and loss adjustment expenses incurred:
Current year		4,111		4,297
Prior years, excluding discount and amortization of deferred gain		(1)		(15)
Prior years, discount charge (benefit)		76		497
Prior years, amortization of deferred gain on retroactive reinsurance(a)		(75)		(86)
Total losses and loss adjustment expenses incurred		4,111		4,693
Losses and loss adjustment expenses paid:
Current year		(342)		(317)
Prior years		(4,351)		(5,639)
Total losses and loss adjustment expenses paid		(4,693)		(5,956)
Other changes:
Foreign exchange effect		(230)		216
Allowance for credit losses		-		-
Retroactive reinsurance adjustment (net of discount)(b)		22		(190)
Total other changes		(208)		26
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		46,633		50,712
Reinsurance recoverable		31,114		31,784
Total	$	77,747	$	82,496

(a)Includes $8 million and $9 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three-month periods ended March 31, 2020 and 2019, respectively.(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $72 million and $307 million for the three-month periods ended March 31, 2020 and 2019, respectively.

Schedule of loss reserve discount and loss reserve discount benefit (charge)

	March 31, 2020						December 31, 2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
U.S. workers' compensation	$	2,087	$	657	$	2,744	$	2,134	$	666	$	2,800
Retroactive reinsurance		(1,179)		-		(1,179)		(1,251)		-		(1,251)
Total reserve discount*	$	908	$	657	$	1,565	$	883	$	666	$	1,549

*Excludes $170 million and $172 million of discount related to certain long tail liabilities in the UK at March 31, 2020 and December 31, 2019, respectively.

Three Months Ended March 31,	2020						2019
	North						North
	America						America
	Commercial		Legacy				Commercial		Legacy
(in millions)	Insurance		Portfolio			Total	Insurance		Portfolio			Total
Current accident year	$	20	$	-	$	20	$	24	$	-	$	24
Accretion and other adjustments to prior year discount		(67)		(9)		(76)		(251)		(13)		(264)
Effect of interest rate changes		-		-		-		(167)		(66)		(233)
Net reserve discount benefit (charge)		(47)		(9)		(56)		(394)		(79)		(473)
Change in discount on loss reserves ceded under
retroactive reinsurance		72		-		72		307		-		307
Net change in total reserve discount*	$	25	$	(9)	$	16	$	(87)	$	(79)	$	(166)

*Excludes $(2) million and $35 million discount related to certain long tail liabilities in the UK for the three-month periods ended March 31, 2020 and 2019, respectively.

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INSURANCE LIABILITIES

3 Months Ended

Mar. 31, 2020

Insurance Liabilites

INSURANCE LIABILITIES

10. Insurance Liabilities

Liability for Unpaid Losses and Loss Adjustment Expenses (Loss Reserves)

Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Given the uncertainties around the impact from the COVID-19 crisis, including the significant global economic slowdown and general market decline, the full impact of COVID-19 and how it may ultimately impact the results of our insurance operations remains uncertain. In addition, in response to the crisis, new governmental, legislative and regulatory initiatives have been put in place and continue to be developed that could result in additional restrictions and requirements relating to our policies that may have a negative impact on our business operations. However, we have recorded our estimate of the ultimate liability for claims that have occurred as of the balance sheet date associated with COVID-19 which reflects our expectations given the current facts and circumstances. We will continue to monitor and review the impact. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development.

Our gross loss reserves before reinsurance and discount are net of contractual deductible recoverable amounts due from policyholders of approximately $12.3 billion and $12.2 billion at March 31, 2020 and December 31, 2019, respectively. These recoverable amounts are related to certain policies with high deductibles (in excess of high dollar amounts retained by the insured through self-insured retentions, deductibles, retrospective programs, or captive arrangements, each referred to generically as “deductibles”), primarily for U.S. commercial casualty business. With respect to the deductible portion of the claim, we manage and pay the entire claim on behalf of the insured and are reimbursed by the insured for the deductible portion of the claim. Thus, these recoverable amounts represent a credit exposure to us. At both March 31, 2020 and December 31, 2019, we held collateral of approximately $8.9 billion, for these deductible recoverable amounts, consisting primarily of letters of credit and funded trust agreements. Allowance for credit losses for the unsecured portion of these recoverable amounts was $14 million at March 31, 2020.

The following table presents the roll-forward of activity in Loss Reserves:

	Three Months Ended
	March 31,
(in millions)		2020		2019
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	78,328	$	83,639
Reinsurance recoverable		(31,069)		(31,690)
Initial allowance upon CECL adoption		164		-
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		47,423		51,949
Losses and loss adjustment expenses incurred:
Current year		4,111		4,297
Prior years, excluding discount and amortization of deferred gain		(1)		(15)
Prior years, discount charge (benefit)		76		497
Prior years, amortization of deferred gain on retroactive reinsurance(a)		(75)		(86)
Total losses and loss adjustment expenses incurred		4,111		4,693
Losses and loss adjustment expenses paid:
Current year		(342)		(317)
Prior years		(4,351)		(5,639)
Total losses and loss adjustment expenses paid		(4,693)		(5,956)
Other changes:
Foreign exchange effect		(230)		216
Allowance for credit losses		-		-
Retroactive reinsurance adjustment (net of discount)(b)		22		(190)
Total other changes		(208)		26
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		46,633		50,712
Reinsurance recoverable		31,114		31,784
Total	$	77,747	$	82,496

(a)Includes $8 million and $9 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three-month periods ended March 31, 2020 and 2019, respectively.(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $72 million and $307 million for the three-month periods ended March 31, 2020 and 2019, respectively.On January 20, 2017, we entered into an adverse development reinsurance agreement with NICO, under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent of the paid losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit of $25 billion. At NICO’s 80 percent share, NICO’s limit of liability under the contract is $20 billion. We account for this transaction as retroactive reinsurance. We paid total consideration, including interest, of $10.2 billion. The consideration was placed into a collateral trust account as security for NICO’s claim payment obligations, and Berkshire has provided a parental guarantee to secure the obligations of NICO under the agreement. The total paid claims subject to the agreement as of March 31, 2020 were below the attachment point.

Discounting of Loss Reserves

At March 31, 2020 and December 31, 2019, the loss reserves reflect a net loss reserve discount of $1.6 billion and $1.5 billion, respectively, including tabular and non-tabular calculations based upon the following assumptions:

The discount for asbestos reserves has been fully amortized.

The tabular workers’ compensation discount is calculated based on a 3.5 percent interest rate and the mortality rate used in the 2007 U.S. Life Table.

The non-tabular workers’ compensation discount is calculated separately for companies domiciled in New York and Pennsylvania, and follows the statutory regulations (prescribed or permitted) for each state. For New York companies, the discount is based on a 5 percent interest rate and the companies’ own payout patterns. For the Pennsylvania companies, the statute specifies discount factors for accident years 2001 and prior, which are based on a 6 percent interest rate and an industry payout pattern. For accident years 2002 and subsequent, the discount is based on the payout patterns and investment yields of the companies.

In 2013 and in 2014, our Pennsylvania and Delaware regulators, respectively, approved use of a consistent discount rate (U.S. Treasury rate plus a liquidity premium) to all of our workers’ compensation reserves in our Pennsylvania-domiciled and Delaware domiciled companies, as well as our use of updated payout patterns specific to our primary and excess workers compensation portfolios. In 2020, these regulators also approved that the discount rate will be updated on an annual basis, with the next update being performed in the fourth quarter of 2020.

At March 31, 2020 and December 31, 2019, the discount consists of $593 million and $582 million of tabular discount, respectively, and $972 million and $967 million of non-tabular discount for workers’ compensation, respectively. During the three-month periods ended March 31, 2020 and 2019, the benefit (charge) from changes in discount of $(56) million and $(473) million, respectively, were recorded as part of the policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income.

The following table presents the components of the loss reserve discount discussed above:

	March 31, 2020						December 31, 2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
U.S. workers' compensation	$	2,087	$	657	$	2,744	$	2,134	$	666	$	2,800
Retroactive reinsurance		(1,179)		-		(1,179)		(1,251)		-		(1,251)
Total reserve discount*	$	908	$	657	$	1,565	$	883	$	666	$	1,549

*Excludes $170 million and $172 million of discount related to certain long tail liabilities in the UK at March 31, 2020 and December 31, 2019, respectively.

The following table presents the net loss reserve discount benefit (charge):

Three Months Ended March 31,	2020						2019
	North						North
	America						America
	Commercial		Legacy				Commercial		Legacy
(in millions)	Insurance		Portfolio			Total	Insurance		Portfolio			Total
Current accident year	$	20	$	-	$	20	$	24	$	-	$	24
Accretion and other adjustments to prior year discount		(67)		(9)		(76)		(251)		(13)		(264)
Effect of interest rate changes		-		-		-		(167)		(66)		(233)
Net reserve discount benefit (charge)		(47)		(9)		(56)		(394)		(79)		(473)
Change in discount on loss reserves ceded under
retroactive reinsurance		72		-		72		307		-		307
Net change in total reserve discount*	$	25	$	(9)	$	16	$	(87)	$	(79)	$	(166)

*Excludes $(2) million and $35 million discount related to certain long tail liabilities in the UK for the three-month periods ended March 31, 2020 and 2019, respectively.

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income	$ 1,654	$ 937
(Income) loss from discontinued operations	0	0
Noncash revenues, expenses, gains and losses included in income (loss):
Net gains on sales of securities available for sale and other assets	(265)	(22)
Net (gain) loss on sale of divested businesses	216	(6)
(Gains) losses on extinguishment of debt	17	(2)
Unrealized (gains) losses in earnings - net	(2,549)	367
Equity in (income) loss from equity method investments, net of dividends or distributions	167	(83)
Depreciation and other amortization	1,878	1,299
Impairments of assets	25	125
Changes in operating assets and liabilities:
Insurance reserves	1,651	596
Premiums and other receivables and payables - net	(62)	315
Reinsurance assets and funds held under reinsurance treaties	(2,131)	(2,495)
Capitalization of deferred policy acquisition costs	(1,379)	(1,420)
Current and deferred income taxes - net	842	167
Other, net	(78)	(754)
Total adjustments	(1,668)	(1,913)
Net cash used in operating activities	(14)	(976)
Sales or distribution of:
Available for sale securities	7,040	6,370
Other securities	1,577	1,034
Other invested assets	1,447	1,118
Maturities of fixed maturity securities available for sale	6,768	4,957
Principal payments received on and sales of mortgage and other loans receivable	1,014	861
Purchases of:
Available for sale securities	(15,121)	(12,757)
Other securities	(317)	(287)
Other invested assets	(717)	(567)
Mortgage and other loans receivable	(1,733)	(1,504)
Net change in short-term investments	(6,023)	(1,221)
Other, net	5,432	17
Net cash used in investing activities	(633)	(1,979)
Proceeds from (payments for)
Policyholder contract deposits	4,979	5,629
Policyholder contract withdrawals	(4,337)	(4,195)
Issuance of long-term debt and debt of consolidated investment entities	673	1,449
Repayments of long-term debt and debt of consolidated investment entities	(884)	(589)
Borrowings under syndicated credit facility	1,300	0
Issuance of preferred stock, net of issuance costs	0	485
Purchase of common stock	(500)	0
Dividends paid on preferred stock	(7)	0
Dividends paid on common stock	(276)	(278)
Other, net	(288)	263
Net cash provided by financing activities	660	2,764
Effect of exchange rate changes on cash and restricted cash	10	12
Net increase (decrease) in cash and restricted cash	23	(179)
Cash and restricted cash at beginning of year	3,287	3,358
Change in cash of businesses held for sale	9	0
Cash and restricted cash at end of year	$ 3,319	$ 3,179

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INVESTMENTS

3 Months Ended

Mar. 31, 2020

INVESTMENTS

INVESTMENTS

6. Investments

Fixed Maturity Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

On January 1, 2020, AIG adopted the Financial Instruments Credit Losses Standard. Prior to the adoption of this standard, AIG did not record an allowance against the amortized cost basis of held to maturity securities. Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain structured securities, recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income.

For structured securities that are not high credit quality, the structured securities yields are based on expected cash flows which take into account both expected credit losses and prepayments. An allowance for credit losses is not established upon initial recognition of the asset (unless the security is determined to be PCD which is discussed in more detail below). Subsequently, differences between actual and expected cash flows and changes in expected cash flows are recognized as adjustments to the allowance for credit losses. Changes that cannot be reflected as adjustments to the allowance for credit losses are accounted for as prospective adjustments to yield.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain RMBS, CMBS and CDO/ABS, (collectively, structured securities), recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income. For structured securities that are not high credit quality, effective yields are recalculated and adjusted prospectively based on changes in expected undiscounted future cash flows. For purchased credit impaired (PCI) securities, at acquisition, the difference between the undiscounted expected future cash flows and the recorded investment in the securities represents the initial accretable yield, which is to be accreted into net investment income over the securities’ remaining lives on an effective level-yield basis. Subsequently, effective yields recognized on PCI securities are recalculated and adjusted prospectively to reflect changes in the contractual benchmark interest rates on variable rate securities and any significant increases in undiscounted expected future cash flows arising due to reasons other than interest rate changes.

Securities Available for Sale

The following table presents the amortized cost or cost and fair value of our available for sale securities:

		Amortized		Allowance		Gross		Gross
		Cost or		for Credit		Unrealized		Unrealized		Fair
(in millions)		Cost		Losses(a)		Gains		Losses		Value
March 31, 2020
Bonds available for sale:
U.S. government and government sponsored entities	$	4,664	$	-	$	1,042	$	(17)	$	5,689
Obligations of states, municipalities and political subdivisions		14,140		-		1,375		(75)		15,440
Non-U.S. governments		13,737		(7)		676		(233)		14,173
Corporate debt		140,356		(167)		9,073		(4,940)		144,322
Mortgage-backed, asset-backed and collateralized:
RMBS		29,433		(37)		2,069		(608)		30,857
CMBS		13,988		-		530		(292)		14,226
CDO/ABS		18,268		-		136		(1,335)		17,069
Total mortgage-backed, asset-backed and collateralized		61,689		(37)		2,735		(2,235)		62,152
Total bonds available for sale(c)	$	234,586	$	(211)	$	14,901	$	(7,500)	$	241,776
										Other-Than-
		Amortized		Gross		Gross				Temporary
		Cost or		Unrealized		Unrealized		Fair		Impairments
(in millions)		Cost		Gains		Losses		Value		in AOCI(b)
December 31, 2019
Bonds available for sale:
U.S. government and government sponsored entities	$	5,108	$	316	$	(44)	$	5,380	$	-
Obligations of states, municipalities and political subdivisions		13,960		1,390		(32)		15,318		-
Non-U.S. governments		14,042		884		(57)		14,869		(18)
Corporate debt		138,046		12,090		(500)		149,636		7
Mortgage-backed, asset-backed and collateralized:
RMBS		29,802		3,067		(64)		32,805		1,149
CMBS		13,879		576		(25)		14,430		34
CDO/ABS		18,393		348		(93)		18,648		14
Total mortgage-backed, asset-backed and collateralized		62,074		3,991		(182)		65,883		1,197
Total bonds available for sale(c)	$	233,230	$	18,671	$	(815)	$	251,086	$	1,186

(a)Represents the allowance for credit losses that has been recognized. Changes in the allowance for credit losses are recorded through the statements of income and are not recognized in other comprehensive income.

(b)Represents the amount of other-than-temporary impairments recognized in Accumulated other comprehensive income (loss). Amount includes unrealized gains and losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

(c)At March 31, 2020 and December 31, 2019, bonds available for sale held by us that were below investment grade or not rated totaled $25.1 billion and $27.8 billion, respectively.

Securities Available for Sale in a Loss Position for Which No Allowance for Credit Loss Has Been Recorded

The following table summarizes the fair value and gross unrealized losses on our available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position for which no allowance for credit loss has been recorded:

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Bonds available for sale:
U.S. government and government sponsored entities	$	249	$	17	$	4	$	-	$	253	$	17
Obligations of states, municipalities and political
subdivisions		1,274		63		181		12		1,455		75
Non-U.S. governments		2,277		156		197		62		2,474		218
Corporate debt		45,529		4,213		1,171		485		46,700		4,698
RMBS		5,743		346		504		39		6,247		385
CMBS		4,653		282		104		10		4,757		292
CDO/ABS		11,229		950		2,734		385		13,963		1,335
Total bonds available for sale	$	70,954	$	6,027	$	4,895	$	993	$	75,849	$	7,020

Securities Available for Sale in a Loss Position

The following table summarizes the fair value and gross unrealized losses on our available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
December 31, 2019
Bonds available for sale:
U.S. government and government sponsored entities	$	1,461	$	44	$	63	$	-	$	1,524	$	44
Obligations of states, municipalities and political
subdivisions		672		21		246		11		918		32
Non-U.S. governments		1,105		12		343		45		1,448		57
Corporate debt		11,868		319		2,405		181		14,273		500
RMBS		3,428		28		1,367		36		4,795		64
CMBS		1,877		16		367		9		2,244		25
CDO/ABS		3,920		53		2,571		40		6,491		93
Total bonds available for sale	$	24,331	$	493	$	7,362	$	322	$	31,693	$	815

At March 31, 2020, we held 14,067 individual fixed maturity securities that were in an unrealized loss position and for which no allowance for credit losses has been recorded (including 1,041 individual fixed maturity securities that were in a continuous unrealized loss position for 12 months or more). At December 31, 2019, we held 5,695 individual fixed maturity securities that were in an unrealized loss position, of which 1,254 individual fixed maturity securities were in a continuous unrealized loss position for 12 months or more. We did not recognize the unrealized losses in earnings on these fixed maturity securities at March 31, 2020 because it was determined that such losses were due to non-credit factors. Additionally, we neither intend to sell the securities nor do we believe that it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. For fixed maturity securities with significant declines, we performed fundamental credit analyses on a security-by-security basis, which included consideration of credit enhancements, liquidity position, expected defaults, industry and sector analysis, forecasts and available market data.

Contractual Maturities of Fixed Maturity Securities Available for Sale

The following table presents the amortized cost and fair value of fixed maturity securities available for sale by contractual maturity:

	Total Fixed Maturity Securities
	Available for Sale
		Amortized Cost,
(in millions)		Net of Allowance		Fair Value
March 31, 2020
Due in one year or less	$	10,370	$	10,517
Due after one year through five years		42,552		42,479
Due after five years through ten years		41,923		41,993
Due after ten years		77,878		84,635
Mortgage-backed, asset-backed and collateralized		61,652		62,152
Total	$	234,375	$	241,776

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

The following table presents the gross realized gains and gross realized losses from sales or maturities of our available for sale securities:

Three Months Ended March 31,		2020				2019
		Gross		Gross		Gross		Gross
	Realized		Realized		Realized		Realized
(in millions)		Gains		Losses		Gains		Losses
Fixed maturity securities	$	380	$	166	$	93	$	124

For the three-month periods ended March 31, 2020 and 2019, the aggregate fair value of available for sale securities sold was $7.2 billion and $6.4 billion, respectively, which resulted in net realized capital gains (losses) of $214 million and $(31) million, respectively.

Other Securities Measured at Fair Value

The following table presents the fair value of fixed maturity securities measured at fair value based on our election of the fair value option and equity securities measured at fair value:

		March 31, 2020				December 31, 2019
		Fair	Percent			Fair	Percent
(in millions)		Value	of Total			Value	of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	2,057	34	%	$	2,121	28	%
Corporate debt		16	-			18	-
Mortgage-backed, asset-backed and collateralized:
RMBS		467	8			489	7
CMBS		271	5			322	4
CDO/ABS and other collateralized		2,542	43			3,732	50
Total mortgage-backed, asset-backed and collateralized		3,280	56			4,543	61
Total fixed maturity securities		5,353	90			6,682	89
Equity securities		624	10			841	11
Total	$	5,977	100	%	$	7,523	100	%

Other Invested Assets

The following table summarizes the carrying amounts of other invested assets:

		March 31,		December 31,
(in millions)		2020		2019
Alternative investments(a) (b)	$	8,158	$	8,845
Investment real estate(c)		8,348		8,491
All other investments		1,460		1,456
Total	$	17,966	$	18,792

(a)At March 31, 2020, included hedge funds of $2.2 billion, private equity funds of $5.6 billion and affordable housing partnerships of $282 million. At December 31, 2019, included hedge funds of $3.3 billion, private equity funds of $5.2 billion and affordable housing partnerships of $331 million.

(b)At March 31, 2020, approximately 78 percent of our hedge fund portfolio is available for redemption in 2020. The remaining 22 percent will be available for redemption between 2021 and 2027.

(c)Net of accumulated depreciation of $720 million and $703 million at March 31, 2020 and December 31, 2019, respectively.

Net Investment Income

The following table presents the components of Net investment income:

Three Months Ended March 31,
(in millions)		2020		2019
Available for sale fixed maturity securities, including short-term investments	$	2,609	$	2,653
Other fixed maturity securities(a)		(60)		327
Equity securities		(191)		79
Interest on mortgage and other loans		513		498
Alternative investments(b)		(59)		419
Real estate		59		69
Other investments(c)		(215)		(52)
Total investment income		2,656		3,993
Investment expenses		148		114
Net investment income	$	2,508	$	3,879

(a)Included in the three-month periods ended March, 31 2020 and 2019 is income of $169 million and $28 million, respectively, for fixed maturity securities measured at fair value through income that economically hedge liabilities as described in (c) below.

(b)Includes income from hedge funds, private equity funds and affordable housing partnerships. Hedge funds are recorded as of the balance sheet date. Private equity funds are generally reported on a one-quarter lag.

(c)Included in the three-month periods ended March, 31 2020 and 2019 are losses of $202 million and $15 million, respectively, related to liabilities measured at fair value that are economically hedged with fixed maturity securities as described in (a) above.

Net Realized Capital Gains and Losses

Net realized capital gains and losses are determined by specific identification. The net realized capital gains and losses are generated primarily from the following sources:

Sales or full redemptions of available for sale fixed maturity securities, real estate and other alternative investments.

Reductions to the amortized cost basis of available for sale fixed maturity securities that have been written down due to our intent to sell them or it being more likely than not that we will be required to sell them.

Changes in the allowance for credit losses on bonds available for sale, mortgage and other loans receivable, and loans commitments.

Changes in fair value of derivatives except for those instruments that are designated as hedging instruments when the change in the fair value of the hedged item is not reported in Net realized capital gains (losses).

Foreign exchange gains and losses resulting from foreign currency transactions.

The following table presents the components of Net realized capital gains (losses):

Three Months Ended March 31,
(in millions)		2020		2019
Sales of fixed maturity securities	$	214	$	(31)
Other-than-temporary impairments		-		(83)
Change in intent*		-		-
Change in allowance for credit losses on fixed maturity securities		(198)		-
Change in allowance for credit losses on loans		(38)		(24)
Foreign exchange transactions		(254)		(37)
Variable annuity embedded derivatives, net of related hedges		2,192		(261)
All other derivatives and hedge accounting		1,559		(72)
Other		44		62
Net realized capital gains (losses)	$	3,519	$	(446)

*For the three months ended March 31, 2019, the change in intent was included in Other-than-temporary impairments.

Change in Unrealized Appreciation (Depreciation) of Investments

The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale securities and other investments:

Three Months Ended March 31,
(in millions)		2020		2019
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	(10,455)	$	5,982
Other investments		-		(69)
Total increase (decrease) in unrealized appreciation (depreciation) of investments	$	(10,455)	$	5,913

The following table summarizes the unrealized gains and losses recognized in Net Investment Income during the reporting period on equity securities still held at the reporting date:

				Other Invested
(in millions)		Equities		Assets		Total
Three Months Ended March 31, 2020
Net gains and losses recognized during the period on equity securities	$	(191)	$	(129)	$	(320)
Less: Net gains and losses recognized during the period on equity securities sold
during the period		12		2		14
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	(203)	$	(131)	$	(334)
Three Months Ended March 31, 2019
Net gains and losses recognized during the period on equity securities	$	79	$	239	$	318
Less: Net gains and losses recognized during the period on equity securities sold
during the period		19		10		29
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	60	$	229	$	289

Evaluating Investments for AN ALLOWANCE FOR CREDIT LOSSES/OTHER-than-TEMPORARY IMPAIRMENTS

Fixed Maturity Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. No allowance is established in these situations. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a decline in the fair value below the amortized cost is due to credit related factors, an allowance is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to realized capital losses. The allowance for credit losses is limited to the difference between amortized cost and fair value. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not associated with credit related factors is presented in unrealized appreciation (depreciation) of fixed maturity securities on which an allowance for credit losses were recognized (a separate component of accumulated other comprehensive income). Accrued interest is excluded from the measurement of the allowance for credit losses.

When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CDO, ABS) management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs, which vary by asset class:

Current delinquency rates;

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Expected prepayment speeds.

When estimating future cash flows for corporate, municipal and sovereign fixed maturity securities determined to be credit impaired, management considers:

Expected default rates and the timing of such defaults;

Loss severity and the timing of any recovery; and

Scenarios specific to the issuer and the security, which may also include estimates of outcomes of corporate restructurings, political and macroeconomic factors, stability and financial strength of the issuer, the value of any secondary sources of repayment and the disposition of assets.

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

Credit losses are reassessed each period. The allowance for credit losses and the corresponding charge to realized capital losses can be reversed if conditions change, however, the allowance for credit losses will never be reduced below zero. When we determine that all or a portion of a fixed maturity security is uncollectable, the uncollectable amortized cost amount is written off with a corresponding reduction to the allowance for credit losses. If we collect cash flows that were previously written off the recovery is recognized by decreasing realized capital losses.

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an other-than-temporary impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized capital losses. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a credit impairment has occurred, the amortized cost is written down to the estimated recoverable value with a corresponding charge to realized capital losses. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not related to a credit impairment is presented in unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were recognized (a separate component of accumulated other comprehensive income).

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

In periods subsequent to the recognition of an other-than-temporary impairment charge for available for sale fixed maturity securities that is not foreign exchange related, we prospectively accrete into earnings the difference between the new amortized cost and the expected undiscounted recoverable value over the remaining expected holding period of the security.

Credit Impairments

The following table presents a rollforward of the changes in allowance for credit losses on available for sale fixed maturity securities by major investment category:

Three Months Ended March 31, 2020				Non-
(in millions)	Structured		Structured			Total
Balance, beginning of year *	$	7	$	-	$	7
Additions:
Securities for which allowance for credit losses were not previously recorded		24		174		198
Purchases of available for sale debt securities accounted for as
purchased credit deteriorated assets		6		-		6
Reductions:
Securities sold during the period		-		-		-
Intent to sell security or more likely than not will be required to sell the security
before recovery of its amortized cost basis		-		-		-
Additional increases or decreases to the allowance for credit losses on securities
that had an allowance recorded in a previous period, for which there was no intent
to sell before recovery amortized cost basis		-		-		-
Write-offs charged against the allowance		-		-		-
Recoveries of amounts previously written off		-		-		-
Other		-		-		-
Balance, end of period	$	37	$	174	$	211

* The beginning balance incorporates the Day 1 gross up on PCD assets held as of January 1, 2020.

The following table presents a rollforward of the cumulative credit losses in other-than-temporary impairments recognized in earnings for available for sale fixed maturity securities:

Three Months Ended March 31, 2019
(in millions)
Balance, beginning of year	$	-
Increases due to:
Credit impairments on new securities subject to impairment losses		68
Additional credit impairments on previously impaired securities		6
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell		(21)
Accretion on securities previously impaired due to credit*		-
Balance, end of period	$	53

Represents both accretion recognized due to changes in cash flows expected to be collected over the remaining expected term of the credit impaired securities and the accretion due to the passage of time.

Purchased Credit Deteriorated/Impaired Securities

Subsequent to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

We purchase certain RMBS securities that have experienced more-than-insignificant deterioration in credit quality since origination. Subsequent to the adoption of the Financial Instruments Credit Losses Standard these are referred to as PCD assets. At the time of purchase an allowance is recognized for these PCD assets by adding it to the purchase price to arrive at the initial amortized cost. There is no credit loss expense recognized upon acquisition of a PCD asset. When determining the initial allowance for credit losses, management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs:

Current delinquency rates;Expected default rates and the timing of such defaults;Loss severity and the timing of any recovery; andExpected prepayment speeds.

Subsequent to the acquisition date, the PCD assets follow the same accounting as other structured securities that are not high credit quality.

During the three-month period ended March 31, 2020, we purchased certain securities which had more than insignificant credit deterioration since their origination. These PCD securities are held in the portfolio of bonds available for sale in their natural classes at March 31, 2020.

The following table presents a reconciliation of the purchase price to the unpaid principal balance at the acquisition date of the PCD securities that were purchased with credit deterioration during the three-month period ended March 31, 2020:

(in millions)	March 31, 2020
Unpaid principal balance	$	187
Allowance for expected credit losses at acquisition		(6)
Purchase (discount) premium		(48)
Purchase price	$	133

Prior to the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020

We purchase certain RMBS securities that have experienced deterioration in credit quality since their issuance. We determine whether it is probable at acquisition that we will not collect all contractually required payments for these purchased credit impaired (PCI) securities, including both principal and interest. At acquisition, the timing and amount of the undiscounted future cash flows expected to be received on each PCI security is determined based on our best estimate using key assumptions, such as interest rates, default rates and prepayment speeds. At acquisition, the difference between the undiscounted expected future cash flows of the PCI securities and the recorded investment in the securities represents the initial accretable yield, which is accreted into Net investment income over their remaining lives on an effective yield basis. Additionally, the difference between the contractually required payments on the PCI securities and the undiscounted expected future cash flows represents the non-accretable difference at acquisition. The accretable yield and the non-accretable difference will change over time, based on actual payments received and changes in estimates of undiscounted expected future cash flows, which are discussed further below.

On a quarterly basis, the undiscounted expected future cash flows associated with PCI securities are re-evaluated based on updates to key assumptions. Declines in undiscounted expected future cash flows due to further credit deterioration as well as changes in the expected timing of the cash flows can result in the recognition of an other-than-temporary impairment charge, as PCI securities are subject to our policy for evaluating investments for other-than-temporary impairment. Changes to undiscounted expected future cash flows due solely to the changes in the contractual benchmark interest rates on variable rate PCI securities will change the accretable yield prospectively. Significant increases in undiscounted expected future cash flows for reasons other than interest rate changes are recognized prospectively as adjustments to the accretable yield.

The following tables present information on our PCI securities, which are included in bonds available for sale as of December 31, 2019:

(in millions)	At Date of Acquisition
Contractually required payments (principal and interest)	$	35,139
Cash flows expected to be collected*		28,720
Recorded investment in acquired securities		19,382

*Represents undiscounted expected cash flows, including both principal and interest.

(in millions)	December 31, 2019
Outstanding principal balance	$	10,476
Amortized cost		6,970
Fair value		8,664

The following table presents activity for the accretable yield on PCI securities:

Three Months Ended March 31, 2019
(in millions)
Balance, beginning of year	$	7,210
Newly purchased PCI securities		12
Accretion		(172)
Effect of changes in interest rate indices		(134)
Net reclassification from (to) non-accretable difference, including effects of prepayments		(115)
Activities related to businesses reclassified to held for sale		-
Balance, end of period	$	6,801

Pledged Investments

Secured Financing and Similar Arrangements

We enter into secured financing transactions whereby certain securities are sold under agreements to repurchase (repurchase agreements), in which we transfer securities in exchange for cash, with an agreement by us to repurchase the same or substantially similar securities. Our secured financing transactions also include those that involve the transfer of securities to financial institutions in exchange for cash (securities lending agreements). In all of these secured financing transactions, the securities transferred by us (pledged collateral) may be sold or repledged by the counterparties. These agreements are recorded at their contracted amounts plus accrued interest, other than those that are accounted for at fair value.

Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral under these secured financing transactions, we may be required to transfer cash or additional securities as pledged collateral under these agreements. At the termination of the transactions, we and our counterparties are obligated to return the amounts borrowed and the securities transferred, respectively.

The following table presents the fair value of securities pledged to counterparties under secured financing transactions, including repurchase and securities lending agreements:

(in millions)		March 31, 2020		December 31, 2019
Fixed maturity securities available for sale	$	2,759	$	3,030

At March 31, 2020 and December 31, 2019, amounts borrowed under repurchase and securities lending agreements totaled $2.9 billion and $3.1 billion, respectively.

The following table presents the fair value of securities pledged under our repurchase agreements by collateral type and by remaining contractual maturity:

	Remaining Contractual Maturity of the Agreements
(in millions)	Overnight and Continuous			up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2020
Bonds available for sale:
Non-U.S. governments	$	4	$	22	$	-	$	-	$	-	$	26
Corporate debt		19		104		-		-		-		123
Total	$	23	$	126	$	-	$	-	$	-	$	149
December 31, 2019
Bonds available for sale:
Non-U.S. governments	$	2	$	71	$	-	$	-	$	-	$	73
Corporate debt		22		55		82		-		-		159
Total	$	24	$	126	$	82	$	-	$	-	$	232

The following table presents the fair value of securities pledged under our securities lending agreements by collateral type and by remaining contractual maturity:

	Remaining Contractual Maturity of the Agreements
(in millions)		Overnight and Continuous		up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2020
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	234	$	136	$	-	$	-	$	370
Non-U.S. governments		-		-		85		-		-		85
Corporate debt		-		1,083		740		-		-		1,823
RMBS		-		-		-		332		-		332
Total	$	-	$	1,317	$	961	$	332	$	-	$	2,610
December 31, 2019
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	-	$	386	$	-	$	-	$	386
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		1,071		947		-		-		2,018
RMBS		-		-		-		394		-		394
Total	$	-	$	1,071	$	1,333	$	394	$	-	$	2,798

We also enter into agreements in which securities are purchased by us under agreements to resell (reverse repurchase agreements), which are accounted for as secured financing transactions and reported as short-term investments or other assets, depending on their terms. These agreements are recorded at their contracted resale amounts plus accrued interest, other than those that are accounted for at fair value. In all reverse repurchase transactions, we take possession of or obtain a security interest in the related securities, and we have the right to sell or repledge this collateral received.

The following table presents information on the fair value of securities pledged to us under reverse repurchase agreements:

(in millions)		March 31, 2020		December 31, 2019
Securities collateral pledged to us	$	3,935	$	2,567
Amount sold or repledged by us		-		121

At March 31, 2020 and December 31, 2019, amounts loaned under reverse repurchase agreements totaled $3.9 billion and $2.6 billion, respectively.

We do not currently offset any secured financing transactions. All such transactions are collateralized and margined daily consistent with market standards and subject to enforceable master netting arrangements with rights of set off.

Insurance – Statutory and Other Deposits

The total carrying value of cash and securities deposited by our insurance subsidiaries under requirements of regulatory authorities or other insurance-related arrangements, including certain annuity-related obligations and certain reinsurance treaties, was $8.7 billion at both March 31, 2020 and December 31, 2019.

Other Pledges and Restrictions

Certain of our subsidiaries are members of Federal Home Loan Banks (FHLBs) and such membership requires the members to own stock in these FHLBs. We owned an aggregate of $201 million and $194 million of stock in FHLBs at March 31, 2020 and December 31, 2019, respectively. In addition, our subsidiaries have pledged securities available for sale and residential loans associated with borrowings and funding agreements from FHLBs, with a fair value of $5.8 billion and $2.2 billion, respectively, at March 31, 2020 and $4.3 billion and $1.8 billion, respectively, at December 31, 2019.

Certain GIAs have provisions that require collateral to be posted or payments to be made by us upon a downgrade of our long-term debt ratings. The actual amount of collateral required to be posted to the counterparties in the event of such downgrades, and the aggregate amount of payments that we could be required to make, depend on market conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the downgrade. The fair value of securities pledged as collateral with respect to these obligations was approximately $1.6 billion and $1.5 billion at March 31, 2020 and December 31, 2019, respectively. This collateral primarily consists of securities of the U.S. government and government sponsored entities and generally cannot be repledged or resold by the counterparties.

Investments held in escrow accounts or otherwise subject to restriction as to their use were $430 million and $330 million, comprised of bonds available for sale and short term investments at March 31, 2020 and December 31, 2019, respectively.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. Summary of Significant Accounting Policies

Accounting Standards Adopted During 2020

Financial Instruments - Credit Losses

In June 2016, the FASB issued an accounting standard that changed how entities account for current expected credit losses (CECL) for most financial assets, premiums receivable, trade receivables, off-balance sheet exposures and reinsurance receivables (the Financial Instruments Credit Losses Standard). The standard requires an allowance for credit losses based on the expectation of lifetime credit losses related to such financial assets subject to credit losses, including loans measured at amortized cost, reinsurance receivables and certain off-balance sheet credit exposures. Additionally, the impairment of available-for-sale debt securities, including purchased credit deteriorated securities, is subject to the new guidance and is measured in a similar manner, except that losses are recognized as allowances rather than reductions in the amortized cost of the securities. The standard allows for reversals of credit impairments in the event that the credit of an issuer improves. The standard also requires additional disclosures.

We adopted the standard on its effective date of January 1, 2020 using a modified retrospective method, which requires a cumulative effect adjustment to retained earnings. As of January 1, 2020, the impact of the adoption of the standard was a reduction in opening retained earnings of $487 million (after-tax) primarily driven by commercial mortgage loans, and, to a lesser extent, reinsurance receivables and recoverables.

The following table provides a rollforward of our allowance, including credit losses, in connection with the adoption of the Financial Instruments Credit Losses Standard as well as cross references to the applicable notes herein for additional information:

Three Months Ended March 31, 2020		Balance,		Cumulative Effect		Purchased Credit				Balance,
		Beginning		Adjustment as of		Deteriorated Initial		Increase		End of
(in millions)		of Year		January 1, 2020		Allowance		(Decrease)		Period
Securities available for sale(a)	$	-	$	-	$	13	$	198	$	211
Mortgage and other loan receivables(b)		438		318		-		31		787
Reinsurance recoverables (inclusive of
deposit accounted assets)(c)		151		224		-		(13)		362
Premiums and other receivables(d)		178		34		-		(2)		210
Contractual deductible recoverables(e)		-		14		-		-		14
Commercial mortgage loan commitments(f)		-		51		-		7		58
Total	$	767	$	641	$	13	$	221	$	1,642
Secondary impacts to certain long-duration
insurance contracts(g)				(27)
Tax impact				(127)
Total cumulative effect adjustment			$	487

(a)The allowance for credit losses is reported in Bonds available for sale in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 6 for additional information.

(b)The allowance for credit losses is reported in Mortgage and other loans receivable in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(c)The allowance for credit losses is reported for Reinsurance assets for reinsurance contracts that contain sufficient insurance risk, and reported in Other assets for insurance and reinsurance contracts that do not contain sufficient insurance risk in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred for reinsurance contracts that do contain sufficient insurance risk and Premiums for contracts that do not contain sufficient insurance risk in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(d)The allowance for credit losses is reported in Premiums and other receivables in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in General operating and other expenses in the Condensed Consolidated Statements of Income. Refer to Note 2 for additional information.

(e)The allowance for credit losses is reported in Liability for unpaid losses and loss adjustment expenses in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income. Refer to Note 10 for additional information.

(f)The allowance for credit losses is reported in Other liabilities in the Condensed Consolidated Balance Sheets. Changes in the allowance for credit losses are reported in Net realized capital gains (losses) in the Condensed Consolidated Statements of Income. Refer to Note 7 for additional information.

(g)This reflects adjustments to the amortization of DAC, unearned revenue reserve and sales inducement assets as well as impacts on the future policy benefits for certain universal life and variable annuity contracts.

The following presents the impact of the adoption of the standard on reinsurance recoverables and premiums and other receivables.

Reinsurance — Credit Losses

The estimation of reinsurance recoverable involves a significant amount of judgment, particularly for latent exposures, such as asbestos, due to their long-tail nature. Reinsurance assets include reinsurance recoverable on unpaid losses and loss adjustment expenses that are estimated as part of our loss reserving process and, consequently, are subject to similar judgments and uncertainties as the estimation of gross loss reserves. Similarly, Other assets include reinsurance recoverable for contracts which are accounted for as deposits.

We assess the collectability of reinsurance recoverable balances in each reporting period, through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectable reinsurance that reduces the carrying amount of reinsurance and other assets on the consolidated balance sheets (collectively, the reinsurance recoverable balances). This estimate requires significant judgment for which key considerations include:

paid and unpaid amounts recoverable;

whether the balance is in dispute or subject to legal collection;

the relative financial health of the reinsurer as determined by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based upon our financial reviews; insurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are assigned ORRs that will generate significant allowance; and

whether collateral and collateral arrangements exist.

An estimate of the reinsurance recoverable’s lifetime expected credit losses is established utilizing a probability of default and loss given default method, which reflects the reinsurer’s ORR rating. The allowance for credit losses excludes disputed amounts. An allowance for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.

The total reinsurance recoverables as of March 31, 2020 were $42.2 billion. As of that date, utilizing AIG’s ORRs, (i) approximately 87 percent of the reinsurance recoverables are investment grade, of which 82 percent relate to General Insurance and 5 percent relate to Life and Retirement; (ii) approximately 12 percent of the reinsurance recoverables are non-investment grade, the majority of which relates to General Insurance; (iii) less than one percent of the non-investment grade reinsurance recoverables related to Life and Retirement and (iv) approximately one percent of the reinsurance recoverables relate to entities that are not rated by AIG.

As of March 31, 2020, approximately 76 percent of our non-investment grade reinsurance exposure relates to captive insurers. These arrangements are typically collateralized by letters of credit, funds held or trust agreements.

Reinsurance Recoverable Allowance

The following table presents a rollforward of the reinsurance recoverable allowance:

Three Months Ended March 31, 2020		General		Life and
(in millions)		Insurance		Retirement		Total
Balance, beginning of year	$	111	$	40	$	151
Initial allowance upon CECL adoption		202		22		224
Current period provision for expected credit losses and disputes		(4)		2		(2)
Write-offs charged against the allowance for credit losses and disputes		(3)		(4)		(7)
Other changes		(4)		-		(4)
Balance, end of period	$	302	$	60	$	362

There were no recoveries of credit losses previously written off for the three-month period ended March 31, 2020.

Past-Due Status

We consider a reinsurance asset to be past due when it is 90 days past due. Past due balances were not significant for any of the periods presented.

Premiums and other receivables — Credit Losses

Premiums and other receivables, net of allowance for credit losses include premium balances receivable, amounts due from agents and brokers and policyholders, trade receivables for the Direct Investment book and Global Capital Markets (GCM) and other receivables. Trade receivables for GCM include cash collateral posted to derivative counterparties that is not eligible to be netted against derivative liabilities. The allowance for credit losses and disputes for premiums and other receivables was $210 million at March 31, 2020. Our allowance for credit losses for premium receivables considers a combination of internal and external information relating to past events, current conditions and reasonable and supportable forecasts. Our allowance contemplates our contractual provisions. Upon default or delinquency of the policyholder we may be able to cease coverage for the remaining period. In certain jurisdictions we are unable to cancel coverage even in the event of delinquency or default by the policyholder. We consider premium and other receivable balances to be past due if the payment is not received after 90 days from the contractual obligation due date and record an allowance for disputes when there is reasonable uncertainty of the collectability of a disputed amount during the reporting period.

For further information regarding the impacts of the adoption of this standard see Notes 5, 6, 7, 10 and 12 to the Condensed Consolidated Financial Statements.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued an accounting standard that eliminates the requirement to calculate the implied fair value of goodwill, through a hypothetical purchase price allocation, to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit. An entity should also consider income tax effects from tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

We adopted the standard on its effective date of January 1, 2020. The adoption of the standard did not have a material impact on our financial position, results of operations or cash flows.

Cloud Computing Arrangements

In August 2018, the FASB issued an accounting standard that aligns the requirements for capitalizing implementation costs incurred in a cloud computing (or hosting) arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Capitalized implementation costs must be amortized over the term of the hosting arrangement. The accounting for the service element is not affected by the amendments in this update.

We adopted the standard prospectively on its effective date of January 1, 2020. The adoption of the standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates

In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to simplify and streamline the disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered, and issuers’ affiliates whose securities collateralize securities registered or being registered. Currently, the SEC permits the omission of separate financial statements of subsidiary issuers and guarantors when certain conditions are met and the parent company provides summarized financial information of the subsidiary issuers and guarantors. The amendments, among other things, allow companies to cease providing summarized financial information if the subsidiary issuer’s or guarantor’s reporting obligation has been suspended.

The amendments are effective January 4, 2021, with early adoption permitted. Effective March 31, 2020, AIG early adopted the amendment and ceased providing the summarized information for the subsidiary issuers and guarantors because the subsidiaries issuer’s reporting obligations have been suspended.

Future Application of Accounting Standards

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the 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 standard prescribes significant and comprehensive changes to recognition, measurement, presentation and disclosure as summarized below:

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 below) in the income statement.

Requires the discount rate assumption 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 and recognizes the impact of changes to discount rates in other comprehensive income.

Simplifies the amortization of deferred policy acquisition costs (DAC) to a constant level basis over the expected term of the related contracts with adjustments for unexpected terminations, but no longer requires an impairment test.

Requires the measurement of all market risk benefits associated with deposit (or account balance) contracts at fair value through the income statement with the exception of instrument-specific credit risk changes, which will be recognized in other comprehensive income.

Increased disclosures of disaggregated roll-forwards of policy benefits, account balances, market risk benefits, separate account liabilities and information about significant inputs, judgments and methods used in measurement and changes thereto and impact of those changes.

In October 2019, the FASB affirmed its decision to defer the effective date of the standard to January 1, 2022. We plan to adopt the standard on its effective date. We have started our implementation efforts and we are evaluating the method of adoption and impact of the standard on our reported consolidated financial condition, results of operations, cash flows and required disclosures. The adoption of this standard is expected to have a significant impact on our consolidated financial condition, results of operations, cash flows and required disclosures, as well as systems, processes and controls.

Income Tax

On December 18, 2019, the FASB issued an accounting standard that simplifies the accounting for income taxes by eliminating certain exceptions to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendments also simplified other areas including the accounting for franchise taxes and enacted tax laws or rates, and clarified the accounting for transactions that result in the step-up in the tax basis of goodwill. The standard is effective on January 1, 2021, with early adoption permitted. We are assessing the impact of the standard on our consolidated financial condition, results of operations and cash flows.

Reference Rate Reform

On March 12, 2020, the FASB issued an accounting standard that provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The standard allows us to account for certain contract modifications that result from the discontinuation of the London Inter-Bank Offered Rate (LIBOR) or another reference rate as a continuation of the existing contract without additional analysis.

This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. We have started our implementation efforts and we are evaluating the method of adoption and impact of the standard on our reported consolidated financial condition, results of operations, cash flows and required disclosures.

Clarification of Accounting for Certain Equity Method Investments

On January 16, 2020, the FASB issued an accounting standard to clarify how a previously issued standard regarding a company’s ability to measure the fair value of certain equity securities without a readily determinable fair value should interact with equity method investments standards. The previously issued standard provides that such equity securities could be measured at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs (measurement alternative). The new standard clarifies that a company should consider observable transactions that require the company to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with the equity method immediately before applying or upon discontinuing the equity method.

The standard further clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option.

The standard is effective for interim and annual reporting periods beginning after December 15, 2020. We are evaluating the impact adoption of this standard will have on our consolidated financial condition, results of operations, cash flows and required disclosures.

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Condensed Consolidated Balance Sheets (Parenthetical - equity) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
AIG shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 5.00	$ 5
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	20,000	20,000
Preferred stock liquidation preference	$ 500	$ 500
Common stock, par value (in dollars per share)	$ 2.50	$ 2.5
Common stock, shares authorized	5,000,000,000	5,000,000,000
Common stock, shares issued	1,906,671,492	1,906,671,492
Treasury stock, shares of common stock	1,045,380,884	1,036,672,461

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INVESTMENTS (Details - Rollforward of the cumulative credit losses in other-than-temporary impairments recognized in earnings) - Fixed maturity securities $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Other Than Temporary Impairment Credit Losses Recognized in Earnings
Balance, beginning of year	$ 0
Increases due to:
Credit impairments on new securities subject to impairment losses	68
Additional credit impairments on previously impaired securities	6
Reductions due to:
Credit impaired securities fully disposed for which there was no prior intent or requirement to sell	(21)
Accretion on securities previously impaired due to credit	0
Balance, end of year	$ 53

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DERIVATIVES AND HEDGE ACCOUNTING (Details - Notional amounts and fair values of our derivative instruments) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	$ 142,557,000,000	$ 132,965,000,000
Gross Derivative Assets, Fair Value	10,349,000,000	5,026,000,000
Gross Derivative Liabilities, Notional Amount	52,928,000,000	61,482,000,000
Gross Derivative Liabilities, Fair Value	5,429,000,000	4,009,000,000
Derivative assets, Counterparty netting	(4,645,000,000)	(2,427,000,000)
Derivative assets, Cash collateral	(4,840,000,000)	(1,806,000,000)
Total derivative assets on consolidated balance sheet	864,000,000	793,000,000
Derivative liabilities, Counterparty netting	(4,645,000,000)	(2,427,000,000)
Derivative liabilities, Cash collateral	(147,000,000)	(527,000,000)
Total derivative liabilities on consolidated balance sheet	637,000,000	1,055,000,000
Bifurcated embedded derivatives
Derivative [Line Items]
Bifurcated embedded derivatives assets, fair value	0	0
Bifurcated embedded derivative liabilities, fair value	8,200,000,000	6,900,000,000
Derivatives designated as hedging instruments | Interest rate contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	735,000,000	495,000,000
Gross Derivative Assets, Fair Value	18,000,000	3,000,000
Gross Derivative Liabilities, Notional Amount	316,000,000	410,000,000
Gross Derivative Liabilities, Fair Value	11,000,000	7,000,000
Derivatives designated as hedging instruments | Foreign exchange contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	7,592,000,000	4,328,000,000
Gross Derivative Assets, Fair Value	843,000,000	342,000,000
Gross Derivative Liabilities, Notional Amount	1,929,000,000	5,230,000,000
Gross Derivative Liabilities, Fair Value	88,000,000	162,000,000
Derivatives not designated as hedging instruments | Interest rate contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	50,409,000,000	52,437,000,000
Gross Derivative Assets, Fair Value	6,605,000,000	3,197,000,000
Gross Derivative Liabilities, Notional Amount	36,573,000,000	35,231,000,000
Gross Derivative Liabilities, Fair Value	4,215,000,000	2,742,000,000
Derivatives not designated as hedging instruments | Foreign exchange contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	12,350,000,000	8,133,000,000
Gross Derivative Assets, Fair Value	1,495,000,000	698,000,000
Gross Derivative Liabilities, Notional Amount	8,818,000,000	12,093,000,000
Gross Derivative Liabilities, Fair Value	944,000,000	863,000,000
Derivatives not designated as hedging instruments | Equity contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	22,291,000,000	18,533,000,000
Gross Derivative Assets, Fair Value	1,240,000,000	769,000,000
Gross Derivative Liabilities, Notional Amount	4,313,000,000	7,539,000,000
Gross Derivative Liabilities, Fair Value	77,000,000	139,000,000
Derivatives not designated as hedging instruments | Credit contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	7,617,000,000	8,457,000,000
Gross Derivative Assets, Fair Value	133,000,000	3,000,000
Gross Derivative Liabilities, Notional Amount	923,000,000	923,000,000
Gross Derivative Liabilities, Fair Value	81,000,000	89,000,000
Derivatives not designated as hedging instruments | Credit contracts | CDS
Derivative [Line Items]
Gross Derivative Liabilities, Notional Amount	146,000,000	152,000,000
Gross Derivative Liabilities, Fair Value	56,000,000	48,000,000
Derivatives not designated as hedging instruments | Other contracts
Derivative [Line Items]
Gross Derivative Assets, Notional Amount	41,563,000,000	40,582,000,000
Gross Derivative Assets, Fair Value	15,000,000	14,000,000
Gross Derivative Liabilities, Notional Amount	56,000,000	56,000,000
Gross Derivative Liabilities, Fair Value	$ 13,000,000	$ 7,000,000

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INSURANCE LIABILITIES (Details - Liability for Unpaid Losses and Loss Adjustment Expenses) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Jan. 20, 2017
Supplementary Insurance Information, by Segment [Line Items]
Contractual deductible recoverable amount	$ 12,300		$ 12,200
Collateral Held For Deductible Recoverable Amounts	8,900		8,900
Allowance for credit losses for unsecured reinsurance recoverable	14		$ 0
Reconciliation of activity in the Liability for unpaid claims and claims adjustment expense:
Liability for unpaid loss and loss adjustment expenses, beginning of period	78,328	$ 83,639
Reinsurance recoverable, balance at the beginning of the period	(31,069)	(31,690)
Initial allowance upon adoption	164	0
Net Liability for unpaid loss and loss adjustment expenses, beginning of period	47,423	51,949
Losses and loss adjustment expenses incurred
Current year	4,111	4,297
Prior years, excluding discount and amortization of deferred gain	(1)	(15)
Prior years, discount charge (benefit)	76	497
Prior years, amortization of deferred gain on retroactive reinsurance	(75)	(86)
Total losses and loss adjustment expenses incurred	4,111	4,693
Losses and loss adjustment expenses paid
Current year	(342)	(317)
Prior years	(4,351)	(5,639)
Total losses and loss adjustment expenses paid	(4,693)	(5,956)
Other changes
Foreign exchange effect	(230)	216
Allowance for credit losses	0	0
Retroactive reinsurance adjustment (net of discount)	22	(190)
Total other changes	(208)	26
Net liability for unpaid losses and loss adjustment expenses, balance at end of period	46,633	50,712
Reinsurance recoverable, balance at the end of the period	31,114	31,784
Total, balance at the end of period	77,747	82,496
Change in discount on loss reserves ceded under retroactive reinsurance	72	307
U.S. Commercial long-tail exposures | NICO | Accident Years 2015 and Prior
Other changes
Discount on retroactive reinsurance	$ 8	$ 9
Risk Transferred - U.S. Commercial long-tail exposures for accident years 2015 and prior, percent				80.00%
Reinsurance Percent Ceded on Paid Losses Percent				80.00%
Ceded to NICO net paid losses in excess				$ 25,000
Ceded to NICO net paid losses in excess, aggregate limit				25,000
NICO's limit of liability under the contract				20,000
Consideration paid, including interest				$ 10,200

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LENDING ACTIVITIES (Details - Composition of mortgages and other loans receivable) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total mortgage and other loans receivable	$ 47,631	$ 47,422
Allowance for credit losses	(787)	(438)	$ (422)	$ (397)
Mortgage and other loans receivable, net	$ 46,844	46,984
Accrued interest receivable, balance sheet location	us-gaap:OtherAssets
Off-balance-sheet commitments	$ 58	0
Commercial mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total mortgage and other loans receivable	36,291	36,170
Allowance for credit losses	(689)	$ (336)	$ (323)	$ (318)
Loans on nonacrrual status	304
Accrued interest receivable	130
Off-balance-sheet commitments	$ 58
Commercial mortgages | California
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of mortgage loans in geographic area	11.00%	10.00%
Commercial mortgages | New York
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of mortgage loans in geographic area	23.00%	23.00%
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total mortgage and other loans receivable	$ 6,718	$ 6,683
Mortgage and other loans receivable, net	6,718
Loans on nonacrrual status	4
Accrued interest receivable	18
Life insurance policy loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total mortgage and other loans receivable	2,061	2,065
Commercial loans, other loans and notes receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total mortgage and other loans receivable	$ 2,561	$ 2,504

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LENDING ACTIVITIES (Details - Rollforward of the changes in the allowance for losses on Mortgage and other loans receivable) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Changes in the allowance for losses on Mortgage and other loans receivable
Mortgage and other loan receivables, balance, beginning of year	$ 438,000,000	$ 397,000,000
Initial allowance upon adoption	318,000,000	0
Loans charged off	0	0
Recoveries of loans previously charged off	0	0
Net charge-offs	0	0
Provision for loan losses	31,000,000	25,000,000
Mortgage and other loan receivables, balance, end of period	787,000,000	422,000,000
Loans modified in a troubled debt restructuring	25,000,000	0
Off-balance-sheet commitments	58,000,000		$ 0
Commercial mortgages
Changes in the allowance for losses on Mortgage and other loans receivable
Mortgage and other loan receivables, balance, beginning of year	336,000,000	318,000,000
Initial allowance upon adoption	311,000,000	0
Loans charged off	0	0
Recoveries of loans previously charged off	0	0
Net charge-offs	0	0
Provision for loan losses	42,000,000	5,000,000
Mortgage and other loan receivables, balance, end of period	689,000,000	323,000,000
Allowance related to individually assessed credit losses		3,000,000
Commercial mortgage loans		148,000,000
Off-balance-sheet commitments	58,000,000
Other Loans
Changes in the allowance for losses on Mortgage and other loans receivable
Mortgage and other loan receivables, balance, beginning of year	102,000,000	79,000,000
Initial allowance upon adoption	7,000,000	0
Loans charged off	0	0
Recoveries of loans previously charged off	0	0
Net charge-offs	0	0
Provision for loan losses	(11,000,000)	20,000,000
Mortgage and other loan receivables, balance, end of period	$ 98,000,000	$ 99,000,000

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EQUITY (Details - Common Stock and Dividends) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended
	Mar. 30, 2020	Mar. 29, 2019	Mar. 31, 2020	Mar. 31, 2019	Feb. 13, 2019
The following table presents a roll forward of outstanding shares:
Shares, beginning of year			(1,036,672,461)
Shares, beginning of year			1,906,671,492
Shares, beginning of year			869,999,031
Shares issued			3,452,529
Shares repurchased			(12,160,952)	0
Shares, end of period			(1,045,380,884)
Shares, end of period			1,906,671,492
Shares, end of period			861,290,608
The following table presents record date, payment date and dividends paid per share on AIG Common Stock:
Dividend paid (in dollars per share)	$ 0.32	$ 0.32
Date of Shareholders of Record	Mar. 16, 2020	Mar. 15, 2019
Date Dividends Declared	Feb. 12, 2020	Feb. 13, 2019
Date Dividends To Be Paid	Mar. 30, 2020	Mar. 29, 2019
Authorized amount of common stock share repurchase					$ 1,500
Aggregate remaining authorization amount of common Stock share repurchase			$ 1,500
Aggregate repurchases of common stock			$ 500
Shares purchased			12,000,000
Aggregate repurchases of common stock			$ 500	$ 0
Aggregate repurchases of warrants			$ 0	$ 0
Total number of warrants repurchased			0	0
Common Stock Issued
The following table presents a roll forward of outstanding shares:
Shares, beginning of year			1,906,671,492
Shares issued			0
Shares repurchased			0
Shares, end of period			1,906,671,492
Treasury Stock
The following table presents a roll forward of outstanding shares:
Shares, beginning of year			(1,036,672,461)
Shares issued			3,452,529
Shares repurchased			(12,160,952)
Shares, end of period			(1,045,380,884)

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FAIR VALUE MEASUREMENTS (Details - Difference between fair values and the aggregate contractual principal amounts of mortgage and other loans receivable and long-term borrowings for which the fair value option was elected) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage and other loans receivable, Difference	$ 47,631	$ 47,422
Long-term debt, Fair Value	2,276	2,062
Long-term debt, Outstanding Principal Amount	25,268	25,479
Fair Value Option
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, Fair Value	2,276	2,062
Long-term debt, Outstanding Principal Amount	1,543	1,502
Long-term debt, Difference	$ 733	$ 560

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FAIR VALUE MEASUREMENTS (Details - Quantitative Information about Level 3 Fair Value Measurements, Assets) $ in Millions	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Obligations of states, municipalities and political subdivisions | Minimum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0337	0.0335
Obligations of states, municipalities and political subdivisions | Maximum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0413	0.0395
Obligations of states, municipalities and political subdivisions | Weighted-average | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0375	0.0365
Obligations of states, municipalities and political subdivisions | Discounted cash flow | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 1,616	$ 1,633
Corporate debt | Minimum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0211	0.0348
Corporate debt | Maximum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0618	0.0622
Corporate debt | Weighted-average | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0414	0.0485
Corporate debt | Discounted cash flow | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 982	$ 1,087
Residential mortgage-backed securities | Minimum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0401	0.0252
Residential mortgage-backed securities | Minimum | Measurement Input Constant Prepayment Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0446	0.0400
Residential mortgage-backed securities | Minimum | Measurement Input Loss Severity [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.3078	0.3368
Residential mortgage-backed securities | Minimum | Measurement Input Constant Default Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0141	0.0168
Residential mortgage-backed securities | Maximum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0689	0.0453
Residential mortgage-backed securities | Maximum | Measurement Input Constant Prepayment Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.1312	0.1289
Residential mortgage-backed securities | Maximum | Measurement Input Loss Severity [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.7629	0.7691
Residential mortgage-backed securities | Maximum | Measurement Input Constant Default Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0586	0.0617
Residential mortgage-backed securities | Weighted-average | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0545	0.0352
Residential mortgage-backed securities | Weighted-average | Measurement Input Constant Prepayment Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0879	0.0844
Residential mortgage-backed securities | Weighted-average | Measurement Input Loss Severity [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.5353	0.5529
Residential mortgage-backed securities | Weighted-average | Measurement Input Constant Default Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0363	0.0393
Residential mortgage-backed securities | Discounted cash flow | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 10,762	$ 11,746
Certain CDO/ABS | Minimum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0393	0.0292
Certain CDO/ABS | Maximum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0794	0.0491
Certain CDO/ABS | Weighted-average | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0594	0.0391
Certain CDO/ABS | Discounted cash flow | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 6,914	$ 6,025
Commercial mortgage backed securities | Minimum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0106	0.0277
Commercial mortgage backed securities | Maximum | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0694	0.0518
Commercial mortgage backed securities | Weighted-average | Measurement Input Yield [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt instrument, measurement input	0.0400	0.0397
Commercial mortgage backed securities | Discounted cash flow | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 555	$ 476

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LENDING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2020

LENDING ACTIVITIES

Composition of Mortgages and other loans receivable

	March 31,			December 31,
(in millions)		2020		2019
Commercial mortgages(a)	$	36,291	$	36,170
Residential mortgages		6,718		6,683
Life insurance policy loans		2,061		2,065
Commercial loans, other loans and notes receivable		2,561		2,504
Total mortgage and other loans receivable		47,631		47,422
Allowance for credit losses(b)		(787)		(438)
Mortgage and other loans receivable, net	$	46,844	$	46,984

(a)Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 23 percent and 11 percent, respectively, at March 31, 2020 and 23 percent and 10 percent, respectively, at December 31, 2019).(b)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

Schedule of debt service coverage ratio and loan-to-value ratio for the commercial mortgage loans

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
>1.2X	$	701	$	5,557	$	5,963	$	4,309	$	5,165	$	10,745	$	32,440
1.00 - 1.20X		115		255		505		338		162		2,072		3,447
<1.00X		-		74		-		-		-		330		404
Total commercial mortgages	$	816	$	5,886	$	6,468	$	4,647	$	5,327	$	13,147	$	36,291

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
Less than 65%	$	567	$	4,567	$	4,508	$	3,584	$	4,032	$	10,745	$	28,003
65% to 75%		249		1,319		1,960		924		1,104		2,221		7,777
76% to 80%		-		-		-		-		191		5		196
Greater than 80%		-		-		-		139		-		176		315
Total commercial mortgages	$	816	$	5,886	$	6,468	$	4,647	$	5,327	$	13,147	$	36,291

December 31, 2019	Debt Service Coverage Ratios(a)
(in millions)		>1.20X		1.00X - 1.20X		<1.00X		Total
Loan-to-Value Ratios(b)
Less than 65%	$	23,013	$	2,440	$	245	$	25,698
65% to 75%		9,007		899		40		9,946
76% to 80%		200		6		-		206
Greater than 80%		184		2		134		320
Total commercial mortgages	$	32,404	$	3,347	$	419	$	36,170

(a)The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio was 2.0X at both March 31, 2020 and December 31, 2019. The debt service coverage ratios have been updated within the last three months.

(b)The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 56 percent at both March 31, 2020 and December 31, 2019. The loan-to-value ratios have been updated within the last three months.

Schedule of credit quality performance indicators for the commercial mortgages

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total(c)	Total $
March 31, 2020
Credit Quality Performance
Indicator:
In good standing	718	$	14,153	$	10,478	$	5,221	$	3,574	$	2,156	$	438	$	36,020	99	%
Restructured(a)	5		-		87		25		-		101		-		213	1
90 days or less delinquent	1		1		-		-		-		-		-		1	-
>90 days delinquent or in
process of foreclosure	2		-		57		-		-		-		-		57	-
Total(b)	726	$	14,154	$	10,622	$	5,246	$	3,574	$	2,257	$	438	$	36,291	100	%
Allowance for credit losses		$	161	$	315	$	115	$	66	$	24	$	8	$	689	2	%

December 31, 2019
Credit Quality Performance
Indicator:
In good standing	736	$	13,698	$	10,553	$	5,332	$	3,663	$	2,211	$	522	$	35,979	99	%
Restructured(a)	3		-		89		-		-		101		-		190	1
90 days or less delinquent	1		1		-		-		-		-		-		1	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total(b)	740	$	13,699	$	10,642	$	5,332	$	3,663	$	2,312	$	522	$	36,170	100	%
Allowance for credit losses:
Specific		$	-	$	2	$	1	$	-	$	6	$	-	$	9	-	%
General			81		153		44		30		14		5		327	1
Total allowance for credit losses		$	81	$	155	$	45	$	30	$	20	$	5	$	336	1	%

(a)Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings see Note 8 to the Consolidated Financial Statements in the 2019 Annual Report.

(b)Does not reflect allowance for credit losses.

(c)Our commercial mortgage loan portfolio is current as to payments of principal and interest, for both periods presented. There were no significant amounts of nonperforming commercial mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented.

The following table presents credit quality performance indicators for residential mortgages by year of vintage:

March 31, 2020
(in millions)		2020		2019		2018		2017		2016		Prior		Total
FICO*:
780 and greater	$	116	$	973	$	638	$	984	$	996	$	969	$	4,676
720 - 779		128		496		190		265		282		285		1,646
660 - 719		6		77		43		55		65		85		331
600 - 659		1		8		7		8		7		16		47
Less than 600		-		1		1		2		3		11		18
Total residential mortgages	$	251	$	1,555	$	879	$	1,314	$	1,353	$	1,366	$	6,718

*Fair Isaac Corporation (FICO) is the credit quality indicator used to evaluate consumer credit risk for residential mortgage loan borrowers and have been updated within the last three months

Schedule of changes in the allowance for losses on Mortgage and other loans receivable

Three Months Ended March 31,	2020						2019
		Commercial		Other				Commercial			Other
(in millions)		Mortgages		Loans		Total		Mortgages			Loans		Total
Allowance, beginning of year	$	336	$	102	$	438	$	318		$	79	$	397
Initial allowance upon CECL adoption		311		7		318		-			-		-
Loans charged off		-		-		-		-			-		-
Recoveries of loans previously charged off		-		-		-		-			-		-
Net charge-offs		-		-		-		-			-		-
Provision for loan losses		42		(11)		31		5			20		25
Allowance, end of period	$	689	$	98	$	787	$	323	(b)	$	99	$	422

(a)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b)The March 31, 2019 total allowance was calculated prior to the adoption of ASC 326 on January 1, 2020. Of the total allowance, $3 million relates to individually assessed credit losses on $148 million of commercial mortgages at 2019.

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EQUITY (Tables)

3 Months Ended

Mar. 31, 2020

EQUITY

Rollforward of common stock outstanding

Three Months Ended March 31, 2020	Common	Treasury	Common Stock
	Stock Issued	Stock	Outstanding
Shares, beginning of year	1,906,671,492	(1,036,672,461)	869,999,031
Shares issued	-	3,452,529	3,452,529
Shares repurchased	-	(12,160,952)	(12,160,952)
Shares, end of period	1,906,671,492	(1,045,380,884)	861,290,608

Dividends Paid

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

				Dividends Paid
Declaration Date	Record Date	Payment Date		Per Common Share
February 12, 2020	March 16, 2020	March 30, 2020	$	0.32
February 13, 2019	March 15, 2019	March 29, 2019		0.32

Repurchases Of Common Stock and Warrant

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)		2020		2019
Aggregate repurchases of common stock	$	500	$	-
Total number of common shares repurchased		12		-
Aggregate repurchases of warrants	$	-	$	-
Total number of warrants repurchased		-		-

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 Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Balance, December 31, 2019, net of tax	$	-	$	8,722	$	(2,625)	$	(1,122)	$	7	$	4,982
Change in unrealized depreciation of investments		(484)		(9,971)		-		-		-		(10,455)
Change in deferred policy acquisition costs
adjustment and other(a)		30		1,377		-		-		-		1,407
Change in future policy benefits		-		1,672		-		-		-		1,672
Change in foreign currency translation adjustments		-		-		(69)		-		-		(69)
Change in net actuarial loss		-		-		-		4		-		4
Change in prior service credit		-		-		-		(1)		-		(1)
Change in deferred tax asset (liability)		95		1,380		(16)		(10)		-		1,449
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		3		3
Total other comprehensive loss		(359)		(5,542)		(85)		(7)		3		(5,990)
Noncontrolling interests		-		(10)		(4)		-		-		(14)
Balance, March 31, 2020, net of tax	$	(359)	$	3,190	$	(2,706)	$	(1,129)	$	10	$	(994)

		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

(a)Includes net unrealized gains and losses attributable to businesses held for sale at March 31, 2020.

Other comprehensive income (loss) reclassification adjustments

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
March 31, 2020
Unrealized change arising during period	$	(454)	$	(6,708)	$	(69)	$	(7)	$	3	$	(7,235)
Less: Reclassification adjustments
included in net income		-		214		-		(10)		-		204
Total other comprehensive income (loss),
before income tax expense (benefit)		(454)		(6,922)		(69)		3		3		(7,439)
Less: Income tax expense (benefit)		(95)		(1,380)		16		10		-		(1,449)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	(359)	$	(5,542)	$	(85)	$	(7)	$	3	$	(5,990)
		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

Schedule of effect of the reclassification of significant items out of Accumulated other comprehensive income on the respective line items in the Consolidated Statements of Income

	Amount Reclassified
	from Accumulated Other
	Comprehensive Income
	Three Months Ended March 31,					Affected Line Item in the
(in millions)			2020		2019	Condensed Consolidated Statements of Income
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses were taken
Investments		$	-	$	-	Other realized capital gains
Total			-		-
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Investments			-		-	Other realized capital gains
Total			-		-
Unrealized appreciation (depreciation) of
all other investments
Investments			214		(31)	Other realized capital gains
Total			214		(31)
Change in retirement plan liabilities adjustment
Prior-service credit			-		-	*
Actuarial losses			(10)		(5)	*
Total			(10)		(5)
Total reclassifications for the period		$	204	$	(36)

*These Accumulated other comprehensive income components are included in the computation of net periodic pension cost. For additional information see Note 14 herein.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Entity Listings [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Registrant Name	American International Group, Inc.
Entity Central Index Key	0000005272
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		861,290,649
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity File Number	1-8787
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	13-2592361
Entity Address Address Line 1	175 Water Street
Entity Address City Or Town	New York
Entity Address State Or Province	NY
Entity Address Postal Zip Code	10038
City Area Code	212
Local Phone Number	770-7000
Document Quarterly Report	true
Document Transition Report	false
Common Stock
Entity Listings [Line Items]
Security 12b Title	Common Stock, Par Value $2.50 Per Share
Trading Symbol	AIG
Security Exchange Name	NYSE
Warrants
Entity Listings [Line Items]
Security 12b Title	Warrants (expiring January 19, 2021)
Trading Symbol	AIG WS
Security Exchange Name	NYSE
5.75% Series A-2 Junior Sebordinated Debentures
Entity Listings [Line Items]
Security 12b Title	5.75% Series A-2 Junior Subordinated Debentures
Trading Symbol	AIG 67BP
Security Exchange Name	NYSE
4.875% Series A-3 Junior Subordinated Debentures
Entity Listings [Line Items]
Security 12b Title	4.875% Series A-3 Junior Subordinated Debentures
Trading Symbol	AIG 67EU
Security Exchange Name	NYSE
Stock Purchase Rights
Entity Listings [Line Items]
Security 12b Title	Stock Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NYSE
Depository Shares Each Representing 1/1,000th Interest in a Share of Series A 5.85% Non-Cumulative Perpetual Preferred Stock
Entity Listings [Line Items]
Security 12b Title	Depositary Shares Each Representing a 1/1,000th Interest in a Share of Series A 5.85% Non-Cumulative Perpetual Preferred Stock
Trading Symbol	AIG PRA
Security Exchange Name	NYSE

XML

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

5. Fair Value Measurements

Fair Value Measurements on a Recurring Basis

Assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets are measured and classified in accordance with a fair value hierarchy consisting of three “levels” based on the observability of valuation inputs:

Level 1: Fair value measurements based on quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments.

Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions about the inputs a hypothetical market participant would use to value that asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value measurement based on the observability of the inputs used:

March 31, 2020							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)	Collateral			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	239	$	5,450	$	-	$	-	$	-	$	5,689
Obligations of states, municipalities and political subdivisions		-		13,338		2,102		-		-		15,440
Non-U.S. governments		48		14,119		6		-		-		14,173
Corporate debt		-		143,107		1,215		-		-		144,322
RMBS		-		19,170		11,687		-		-		30,857
CMBS		-		13,080		1,146		-		-		14,226
CDO/ABS		-		8,301		8,768		-		-		17,069
Total bonds available for sale		287		216,565		24,924		-		-		241,776
Other bond securities:
U.S. government and government sponsored entities		6		2,051		-		-		-		2,057
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		16		-		-		-		16
RMBS		-		318		149		-		-		467
CMBS		-		229		42		-		-		271
CDO/ABS		-		164		2,378		-		-		2,542
Total other bond securities		6		2,778		2,569		-		-		5,353
Equity securities		582		23		19		-		-		624
Other invested assets(b)		-		80		1,467		-		-		1,547
Derivative assets:
Interest rate contracts		2		6,621		-		-		-		6,623
Foreign exchange contracts		-		2,337		1		-		-		2,338
Equity contracts		87		1,003		150		-		-		1,240
Credit contracts		-		-		133		-		-		133
Other contracts		-		-		15		-		-		15
Counterparty netting and cash collateral		-		-		-		(4,645)		(4,840)		(9,485)
Total derivative assets		89		9,961		299		(4,645)		(4,840)		864
Short-term investments		1,732		6,454		-		-		-		8,186
Other assets		176		2,180		91		-		-		2,447
Separate account assets		74,591		4,245		-		-		-		78,836
Total	$	77,463	$	242,286	$	29,369	$	(4,645)	$	(4,840)	$	339,633
Liabilities:
Policyholder contract deposits	$	-	$	-	$	8,153	$	-	$	-	$	8,153
Derivative liabilities:
Interest rate contracts		2		4,224		-		-		-		4,226
Foreign exchange contracts		-		1,028		4		-		-		1,032
Equity contracts		8		62		7		-		-		77
Credit contracts		-		24		57		-		-		81
Other contracts		-		-		13		-		-		13
Counterparty netting and cash collateral		-		-		-		(4,645)		(147)		(4,792)
Total derivative liabilities		10		5,338		81		(4,645)		(147)		637
Other liabilities		-		-		-		-		-		-
Long-term debt		-		2,276		-		-		-		2,276
Total	$	10	$	7,614	$	8,234	$	(4,645)	$	(147)	$	11,066

December 31, 2019							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)		Collateral		Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	135	$	5,245	$	-	$	-	$	-	$	5,380
Obligations of states, municipalities and political subdivisions		-		13,197		2,121		-		-		15,318
Non-U.S. governments		60		14,809		-		-		-		14,869
Corporate debt		-		147,973		1,663		-		-		149,636
RMBS		-		19,397		13,408		-		-		32,805
CMBS		-		13,377		1,053		-		-		14,430
CDO/ABS		-		10,962		7,686		-		-		18,648
Total bonds available for sale		195		224,960		25,931		-		-		251,086
Other bond securities:
U.S. government and government sponsored entities		-		2,121		-		-		-		2,121
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		18		-		-		-		18
RMBS		-		346		143		-		-		489
CMBS		-		272		50		-		-		322
CDO/ABS		-		187		3,545		-		-		3,732
Total other bond securities		-		2,944		3,738		-		-		6,682
Equity securities		756		77		8		-		-		841
Other invested assets(b)		-		86		1,192		-		-		1,278
Derivative assets:
Interest rate contracts		1		3,199		-		-		-		3,200
Foreign exchange contracts		-		1,034		6		-		-		1,040
Equity contracts		5		593		171		-		-		769
Credit contracts		-		-		3		-		-		3
Other contracts		-		-		14		-		-		14
Counterparty netting and cash collateral		-		-		-		(2,427)		(1,806)		(4,233)
Total derivative assets		6		4,826		194		(2,427)		(1,806)		793
Short-term investments		2,299		3,044		-		-		-		5,343
Other assets		57		2,212		89		-		-		2,358
Separate account assets		89,069		4,203		-		-		-		93,272
Total	$	92,382	$	242,352	$	31,152	$	(2,427)	$	(1,806)	$	361,653
Liabilities:
Policyholder contract deposits	$	-	$	-	$	6,910	$	-	$	-	$	6,910
Derivative liabilities:
Interest rate contracts		4		2,745		-		-		-		2,749
Foreign exchange contracts		-		1,025		-		-		-		1,025
Equity contracts		8		111		20		-		-		139
Credit contracts		-		24		65		-		-		89
Other contracts		-		-		7		-		-		7
Counterparty netting and cash collateral		-		-		-		(2,427)		(527)		(2,954)
Total derivative liabilities		12		3,905		92		(2,427)		(527)		1,055
Other liabilities		-		45		-		-		-		45
Long-term debt		-		2,062		-		-		-		2,062
Total	$	12	$	6,012	$	7,002	$	(2,427)	$	(527)	$	10,072

(a)Represents netting of derivative exposures covered by qualifying master netting agreements.

(b)Excludes investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent), which totaled $5.0 billion and $5.5 billion as of March 31, 2020 and December 31, 2019, respectively.

Changes in Level 3 Recurring Fair Value Measurements

The following tables present changes during the three-month periods ended March 31, 2020 and 2019 in Level 3 assets and liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets and liabilities in the Condensed Consolidated Balance Sheets at March 31, 2020 and 2019:

																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states,
municipalities and
political subdivisions	$	2,121	$	5	$	(55)	$	137	$	27	$	(133)	$	-	$	2,102	$	-	$	(51)
Non-U.S. governments		-		-		-		-		6		-		-		6		-		-
Corporate debt		1,663		(67)		(81)		7		103		(410)		-		1,215		-		(29)
RMBS		13,408		132		(1,623)		(223)		19		(26)		-		11,687		-		(1,505)
CMBS		1,053		7		19		44		23		-		-		1,146		-		21
CDO/ABS		7,686		17		(557)		47		1,603		(28)		-		8,768		-		(536)
Total bonds available for sale(b)		25,931		94		(2,297)		12		1,781		(597)		-		24,924		-		(2,100)
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-		-
RMBS		143		(14)		-		20		-		-		-		149		(14)		-
CMBS		50		(7)		-		(1)		-		-		-		42		(8)		-
CDO/ABS		3,545		(173)		-		(994)		-		-		-		2,378		(262)		-
Total other bond securities		3,738		(194)		-		(975)		-		-		-		2,569		(284)		-
Equity securities		8		(1)		1		10		1		-		-		19		-		-
Mortgage and other loans
receivable		-		-		-		-		-		-		-		-		-		-
Other invested assets		1,192		(4)		-		129		150		-		-		1,467		14		-
Other assets		89		-		-		5		-		-		(3)		91		-		-
Total	$	30,958	$	(105)	$	(2,296)	$	(819)	$	1,932	$	(597)	$	(3)	$	29,070	$	(270)	$	(2,100)
																				Changes in
																				Unrealized Gains
				Net														Changes in		(Losses) Included in
				Realized and														Unrealized Gains		Other Comprehensive
				Unrealized				Purchases,										(Losses) Included		Income (Loss) for
		Fair Value	(Gains) Losses			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on		Recurring Level 3
		Beginning		Included	Comprehensive			Issuances and	Transfers		Transfers			of Held		End		Instruments Held		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	6,910	$	1,171	$	-	$	72	$	-	$	-	$	-	$	8,153	$	(884)	$	-
Derivative liabilities, net:
Interest rate contracts		-		-		-		-		-		-		-		-		-		-
Foreign exchange contracts		(6)		3		-		6		-		-		-		3		1		-
Equity contracts		(151)		(26)		-		34		-		-		-		(143)		(14)		-
Credit contracts		62		(124)		-		(14)		-		-		-		(76)		118		-
Other contracts		(7)		(10)		-		15		-		-		-		(2)		10		-
Total derivative liabilities, net(c)		(102)		(157)		-		41		-		-		-		(218)		115		-
Total	$	6,808	$	1,014	$	-	$	113	$	-	$	-	$	-	$	7,935	$	(769)	$	-

				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value	Gains (Losses)			Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	2,000	$	(1)	$	97	$	24	$	29	$	(13)	$	-	$	2,136	$	-
Non-U.S. governments		11		-		-		(4)		-		(4)		-		3		-
Corporate debt		864		(3)		38		34		654		(55)		-		1,532		-
RMBS		14,199		227		24		(412)		23		(16)		-		14,045		-
CMBS		917		1		17		146		-		(189)		-		892		-
CDO/ABS		9,102		4		54		(45)		92		(367)		-		8,840		-
Total bonds available for sale		27,093		228		230		(257)		798		(644)		-		27,448		-
Other bond securities:
Corporate debt		-		-		-		-		-		-		-		-		-
RMBS		1,290		17		-		(41)		-		-		-		1,266		-
CMBS		77		4		-		3		-		-		-		84		3
CDO/ABS		4,478		68		-		(201)		-		(96)		-		4,249		24
Total other bond securities		5,845		89		-		(239)		-		(96)		-		5,599		27
Equity securities		27		-		-		-		-		(1)		-		26		-
Mortgage and other loans receivable		-		-		-		-		-		-		-		-		-
Other invested assets		587		-		-		4		-		-		-		591		2
Other assets		58		-		-		1		-		-		-		59		-
Total	$	33,610	$	317	$	230	$	(491)	$	798	$	(741)	$	-	$	33,723	$	29
				Net														Changes in
				Realized and														Unrealized Gains
				Unrealized				Purchases,										(Losses) Included
		Fair Value		(Gains) Losses		Other		Sales,		Gross		Gross		Reclassification		Fair Value		in Income on
		Beginning		Included	Comprehensive			Issuances and		Transfers		Transfers		of Held		End		Instruments Held
(in millions)		of Period		in Income		Income (Loss)	Settlements, Net			In		Out		for Sale(a)		of Period		at End of Period
Liabilities:
Policyholder contract deposits	$	4,116	$	569	$	-	$	193	$	-	$	-	$	-	$	4,878	$	(521)
Derivative liabilities, net:
Interest rate contracts		15		1		-		(1)		-		-		-		15		(1)
Foreign exchange contracts		(5)		(5)		-		9		-		-		-		(1)		(1)
Equity contracts		(75)		(16)		-		(5)		-		-		-		(96)		19
Credit contracts		227		(3)		-		(2)		-		-		-		222		4
Other contracts		(9)		(17)		-		18		-		-		-		(8)		17
Total derivative liabilities, net(c)		153		(40)		-		19		-		-		-		132		38
Total	$	4,269	$	529	$	-	$	212	$	-	$	-	$	-	$	5,010	$	(483)

(a)Reported in Other assets in the Condensed Consolidated Balance Sheets.

(b)As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized and unrealized (gains) losses included in income.

(c)Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

Net realized and unrealized gains and losses included in income related to Level 3 assets and liabilities shown above are reported in the Condensed Consolidated Statements of Income as follows:

		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	Gains (Losses)			Income		Total
Three Months Ended March 31, 2020
Assets:
Bonds available for sale*	$	198	$	(104)	$	-	$	94
Other bond securities		(462)		268		-		(194)
Equity securities		-		(1)		-		(1)
Other invested assets		(4)		-		-		(4)
Three Months Ended March 31, 2019
Assets:
Bonds available for sale	$	242	$	(14)	$	-	$	228
Other bond securities		87		2		-		89
Equity securities		-		-		-		-
Other invested assets		-		-		-		-
		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	(Gains) Losses			Income		Total
Three Months Ended March 31, 2020
Liabilities:
Policyholder contract deposits	$	-	$	1,171	$	-	$	1,171
Derivative liabilities, net		-		(143)		(14)		(157)
Three Months Ended March 31, 2019
Liabilities:
Policyholder contract deposits	$	-	$	569	$	-	$	569
Derivative liabilities, net		-		(24)		(16)		(40)

*As a result of the adoption of the Financial Instruments Credit Losses Standard on January 1, 2020, credit losses are included in net realized capital gains (losses).

The following table presents the gross components of purchases, sales, issuances and settlements, net, shown above, for the three-month periods ended March 31, 2020 and 2019 related to Level 3 assets and liabilities in the Condensed Consolidated Balance Sheets:

						Issuances		Purchases, Sales,
						and		Issuances and
(in millions)		Purchases		Sales		Settlements(a)		Settlements, Net(a)
Three Months Ended March 31, 2020
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	145	$	(2)	$	(6)	$	137
Non-U.S. governments		-		-		-		-
Corporate debt		112		(5)		(100)		7
RMBS		336		-		(559)		(223)
CMBS		53		(2)		(7)		44
CDO/ABS		225		(22)		(156)		47
Total bonds available for sale		871		(31)		(828)		12
Other bond securities:
RMBS		25		-		(5)		20
CMBS		-		-		(1)		(1)
CDO/ABS		35		(579)		(450)		(994)
Total other bond securities		60		(579)		(456)		(975)
Equity securities		10		-		-		10
Mortgage and other loans receivable		-		-		-		-
Other invested assets		174		-		(45)		129
Other assets		-		-		5		5
Total assets	$	1,115	$	(610)	$	(1,324)	$	(819)
Liabilities:
Policyholder contract deposits	$	-	$	222	$	(150)	$	72
Derivative liabilities, net		(15)		8		48		41
Total liabilities	$	(15)	$	230	$	(102)	$	113
Three Months Ended March 31, 2019
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	47	$	(15)	$	(8)	$	24
Non-U.S. governments		-		-		(4)		(4)
Corporate debt		49		-		(15)		34
RMBS		307		(26)		(693)		(412)
CMBS		184		-		(38)		146
CDO/ABS		198		(156)		(87)		(45)
Total bonds available for sale		785		(197)		(845)		(257)
Other bond securities:
Corporate debt		-		-		-		-
RMBS		-		-		(41)		(41)
CMBS		4		-		(1)		3
CDO/ABS		-		-		(201)		(201)
Total other bond securities		4		-		(243)		(239)
Equity securities		-		-		-		-
Mortgage and other loans receivable		-		-		-		-
Other invested assets		4		-		-		4
Other assets		-		-		1		1
Total assets	$	793	$	(197)	$	(1,087)	$	(491)
Liabilities:
Policyholder contract deposits	$	-	$	173	$	20	$	193
Derivative liabilities, net		(13)		-		32		19
Total liabilities	$	(13)	$	173	$	52	$	212

(a)There were no issuances during the three-month periods ended March 31, 2020 and 2019.

Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3 in the tables above. As a result, the unrealized gains (losses) on instruments held at March 31, 2020 and 2019 may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable inputs (e.g., changes in unobservable long-dated volatilities).

Transfers of Level 3 Assets and Liabilities

The Net realized and unrealized gains (losses) included in income (loss) or Other comprehensive income (loss) as shown in the table above excludes $(156) million and $(55) million of net gains (losses) related to assets and liabilities transferred into Level 3 during the three-month periods ended March 31, 2020 and 2019, respectively, and includes $(55) million and $(1) million of net gains (losses) related to assets and liabilities transferred out of Level 3 during the three-month periods ended March 31, 2020 and 2019, respectively.

Transfers of Level 3 Assets

During the three-month periods ended March 31, 2020 and 2019, transfers into Level 3 assets primarily included certain investments in private placement corporate debt, RMBS, CMBS and CDO/ABS. Transfers of private placement corporate debt and certain ABS into Level 3 assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based on inputs that are adjusted to better reflect our own assumptions regarding the characteristics of a specific security or associated market liquidity. The transfers of investments in RMBS, CMBS and CDO and certain ABS into Level 3 assets were due to diminished market transparency and liquidity for individual security types.

During the three-month periods ended March 31, 2020 and 2019, transfers out of Level 3 assets primarily included private placement and other corporate debt, CMBS, RMBS, CDO/ABS and certain investments in municipal securities. Transfers of certain investments in municipal securities, corporate debt, RMBS, CMBS and CDO/ABS out of Level 3 assets were based on consideration of market liquidity as well as related transparency of pricing and associated observable inputs for these investments. Transfers of certain investments in private placement corporate debt and certain ABS out of Level 3 assets were primarily the result of using observable pricing information that reflects the fair value of those securities without the need for adjustment based on our own assumptions regarding the characteristics of a specific security or the current liquidity in the market.

Transfers of Level 3 Liabilities

There were no significant transfers of derivative or other liabilities into or out of Level 3 for the three-month periods ended March 31, 2020 and 2019.

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS

The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments, and includes only those instruments for which information about the inputs is reasonably available to us, such as data from independent third-party valuation service providers and from internal valuation models. Because input information from third-parties with respect to certain Level 3 instruments (primarily CDO/ABS) may not be reasonably available to us, balances shown below may not equal total amounts reported for such Level 3 assets and liabilities:

	Fair Value at
	March 31,		Valuation		Range
(in millions)	2020		Technique	Unobservable Input(b)	(Weighted Average)
Assets:
Obligations of states, municipalities
and political subdivisions	$	1,616	Discounted cash flow	Yield	3.37% - 4.13% (3.75%)
Corporate debt		982	Discounted cash flow	Yield	2.11% - 6.18% (4.14%)
RMBS(a)		10,762	Discounted cash flow	Constant prepayment rate	4.46% - 13.12% (8.79%)
				Loss severity	30.78% - 76.29% (53.53%)
				Constant default rate	1.41% - 5.86% (3.63%)
				Yield	4.01% - 6.89% (5.45%)
CDO/ABS(a)		6,914	Discounted cash flow	Yield	3.93% - 7.94% (5.94%)
CMBS		555	Discounted cash flow	Yield	1.06% - 6.94% (4.00%)
Liabilities:
Embedded derivatives within
Policyholder contract deposits:
Guaranteed minimum withdrawal benefits (GMWB)		3,978	Discounted cash flow	Equity volatility	7.00% - 57.00%
				Base lapse rate	0.00% - 13.00%
				Dynamic lapse multiplier	50.00% - 143.00%
				Mortality multiplier(c)	38.00% - 147.00%
				Utilization	90.00% - 100.00%
				Equity / interest rate correlation	20.00% - 40.00%
				NPA(d)	1.31% - 2.80%
Index annuities		3,719	Discounted cash flow	Lapse rate	0.31% - 50.00%
				Mortality multiplier(c)	24.00% - 180.00%
				Option budget	0.00% - 4.00%
				NPA(d)	1.31% - 2.80%
Indexed life		434	Discounted cash flow	Base lapse rate	0.00% - 37.97%
				Mortality rate	0.00% - 100.00%
				NPA(d)	1.31% - 2.80%

		Fair Value at
		December 31,	Valuation		Range
(in millions)		2019	Technique	Unobservable Input(b)	(Weighted Average)
Assets:
Obligations of states, municipalities
and political subdivisions	$	1,633	Discounted cash flow	Yield	3.35% - 3.95% (3.65%)
Corporate debt		1,087	Discounted cash flow	Yield	3.48% - 6.22% (4.85%)
RMBS(a)		11,746	Discounted cash flow	Constant prepayment rate	4.00% - 12.89% (8.44%)
				Loss severity	33.68% - 76.91% (55.29%)
				Constant default rate	1.68% - 6.17% (3.93%)
				Yield	2.52% - 4.53% (3.52%)
CDO/ABS(a)		6,025	Discounted cash flow	Yield	2.92% - 4.91% (3.91%)
CMBS		476	Discounted cash flow	Yield	2.77% - 5.18% (3.97%)
Liabilities:
Embedded derivatives within
Policyholder contract deposits:
GMWB		2,474	Discounted cash flow	Equity volatility	6.15% - 48.85%
				Base lapse rate	0.16% - 12.60%
				Dynamic lapse multiplier	50.00% - 143.00%
				Mortality multiplier(c)	38.00% - 147.00%
				Utilization	90.00% - 100.00%
				Equity / interest rate correlation	20.00% - 40.00%
				NPA(d)	0.12% - 1.53%
Index annuities		3,895	Discounted cash flow	Lapse rate	0.31% - 50.00%
				Mortality multiplier(c)	24.00% - 180.00%
				Option budget	1.00% - 4.00%
				NPA(d)	0.12% - 1.53%
Indexed life		510	Discounted cash flow	Base lapse rate	0.00% - 37.97%
				Mortality rate	0.00% - 100.00%
				NPA(d)	0.12% - 1.53%

(a)Information received from third-party valuation service providers. The ranges of the unobservable inputs for constant prepayment rate, loss severity and constant default rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CDO securitization vehicles and not necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the tranches purchased by us, because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price, position in the waterfall, senior versus subordinated position and attachment points. The weighted averaging for fixed maturity securities is based on the estimated fair value of the securities.

(b)Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.

(c)Mortality inputs are shown as multipliers of the 2012 Individual Annuity Mortality Basic table.

(d)The non-performance risk adjustment (NPA) applied as a spread over risk-free curve for discounting.

The ranges of reported inputs for Obligations of states, municipalities and political subdivisions, Corporate debt, RMBS, CDO/ABS, and CMBS valued using a discounted cash flow technique consist of one standard deviation in either direction from the value-weighted average. The preceding table does not give effect to our risk management practices that might offset risks inherent in these Level 3 assets and liabilities.

Interrelationships between Unobservable Inputs

We consider unobservable inputs to be those for which market data is not available and that are developed using the best information available to us about the assumptions that market participants would use when pricing the asset or liability. Relevant inputs vary depending on the nature of the instrument being measured at fair value. The following paragraphs provide a general description of significant unobservable inputs along with interrelationships between and among the significant unobservable inputs and their impact on the fair value measurements. In practice, simultaneous changes in assumptions may not always have a linear effect on the inputs discussed below. Interrelationships may also exist between observable and unobservable inputs. Such relationships have not been included in the discussion below. For each of the individual relationships described below, the inverse relationship would also generally apply.

Fixed Maturity Securities

The significant unobservable input used in the fair value measurement of fixed maturity securities is yield. The yield is affected by the market movements in credit spreads and U.S. Treasury yields. The yield may be affected by other factors including constant prepayment rates, loss severity, and constant default rates. In general, increases in the yield would decrease the fair value of investments, and conversely, decreases in the yield would increase the fair value of investments.

Embedded derivatives within Policyholder contract deposits

Embedded derivatives reported within Policyholder contract deposits include interest crediting rates based on market indices within index annuities, indexed life, and GICs as well as GMWB within variable annuity and certain index annuity products. For any given contract, assumptions for unobservable inputs vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. The following unobservable inputs are used for valuing embedded derivatives measured at fair value:

Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. Increases in assumed volatility will generally increase the fair value of both the projected cash flows from rider fees as well as the projected cash flows related to benefit payments. Therefore, the net change in the fair value of the liability may be either a decrease or an increase, depending on the relative changes in projected rider fees and projected benefit payments.

Equity / interest rate correlation estimates the relationship between changes in equity returns and interest rates in the economic scenario generator used to value our GMWB embedded derivatives. In general, a higher positive correlation assumes that equity markets and interest rates move in a more correlated fashion, which generally increases the fair value of the liability.

Base lapse rate assumptions are determined by company experience and are adjusted at the contract level using a dynamic lapse function, which reduces the base lapse rate when the contract is in-the-money (when the contract holder’s guaranteed value, as estimated by the company, is worth more than their underlying account value). Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. Increases in assumed lapse rates will generally decrease the fair value of the liability, as fewer policyholders would persist to collect guaranteed withdrawal amounts.

Mortality rate assumptions, which vary by age and gender, are based on company experience and include a mortality improvement assumption. Increases in assumed mortality rates will decrease the fair value of the liability, while lower mortality rate assumptions will generally increase the fair value of the liability, because guaranteed payments will be made for a longer period of time.

Utilization assumptions estimate the timing when policyholders with a GMWB will elect to utilize their benefit and begin taking withdrawals. The assumptions may vary by the type of guarantee, tax-qualified status, the contract’s withdrawal history and the age of the policyholder. Utilization assumptions are based on company experience, which includes partial withdrawal behavior. Increases in assumed utilization rates will generally increase the fair value of the liability.

Option budget estimates the expected long-term cost of options used to hedge exposures associated with equity price changes. The level of option budgets determines future costs of the options, which impacts the growth in account value and the valuation of embedded derivatives.

Investments in Certain Entities Carried at Fair Value Using Net Asset Value Per Share

The following table includes information related to our investments in certain other invested assets, including private equity funds, hedge funds and other alternative investments that calculate net asset value per share (or its equivalent). For these investments, which are measured at fair value on a recurring basis, we use the net asset value per share to measure fair value.

		March 31, 2020				December 31, 2019
			Fair Value			Fair Value
			Using NAV			Using NAV
			Per Share (or		Unfunded	Per Share (or			Unfunded
(in millions)	Investment Category Includes		its equivalent)		Commitments	its equivalent)			Commitments
Investment Category
Private equity funds:
Leveraged buyout	Debt and/or equity investments made as part of a transaction in which assets of mature companies are acquired from the current shareholders, typically with the use of financial leverage	$	1,245	$	1,454	$	1,189	$	1,543
Real Estate / Infrastructure	Investments in real estate properties and infrastructure positions, including power plants and other energy generating facilities		412		451		400		290
Venture capital	Early-stage, high-potential, growth companies expected to generate a return through an eventual realization event, such as an initial public offering or sale of the company		130		142		111		155
Growth Equity	Funds that make investments in established companies for the purpose of growing their businesses		480		87		422		57
Mezzanine	Funds that make investments in the junior debt and equity securities of leveraged companies		377		339		325		414
Other	Includes distressed funds that invest in securities of companies that are in default or under bankruptcy protection, as well as funds that have multi-strategy, and other strategies		769		135		773		206
Total private equity funds			3,413		2,608		3,220		2,665
Hedge funds:
Event-driven	Securities of companies undergoing material structural changes, including mergers, acquisitions and other reorganizations		361		-		727		-
Long-short	Securities that the manager believes are undervalued, with corresponding short positions to hedge market risk		408		-		539		-
Macro	Investments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions		697		-		894		-
Distressed	Securities of companies that are in default, under bankruptcy protection or troubled		-		-		1		-
Other	Includes investments held in funds that are less liquid, as well as other strategies which allow for broader allocation between public and private investments		150		1		168		1
Total hedge funds			1,616		1		2,329		1
Total		$	5,029	$	2,609	$	5,549	$	2,666

Private equity fund investments included above are not redeemable, because distributions from the funds will be received when underlying investments of the funds are liquidated. Private equity funds are generally expected to have 10-year lives at their inception, but these lives may be extended at the fund manager’s discretion, typically in one or two-year increments.

The hedge fund investments included above, which are carried at fair value, are generally redeemable subject to the redemption notices period. The majority of our hedge fund investments are redeemable monthly or quarterly.

Fair Value Option

The following table presents the gains or losses recorded related to the eligible instruments for which we elected the fair value option:

Three Months Ended March 31,	Gain (Loss)
(in millions)		2020		2019
Assets:
Bonds	$	(60)	$	355
Alternative investments(a)		(139)		230
Liabilities:
Long-term debt(b)		(203)		(60)
Total gain (loss)	$	(402)	$	525

(a)Includes certain hedge funds, private equity funds and other investment partnerships.

(b)Includes GIAs, notes, bonds and mortgages payable.

We calculate the effect of these credit spread changes using discounted cash flow techniques that incorporate current market interest rates, our observable credit spreads on these liabilities and other factors that mitigate the risk of nonperformance such as cash collateral posted.

The following table presents the difference between fair value and the aggregate contractual principal amount of long-term debt for which the fair value option was elected:

	March 31, 2020						December 31, 2019
			Outstanding						Outstanding
(in millions)	Fair Value		Principal Amount		Difference		Fair Value		Principal Amount		Difference
Liabilities:
Long-term debt*	$	2,276	$	1,543	$	733	$	2,062	$	1,502	$	560

*Includes GIAs, notes, bonds, loans and mortgages payable.

FAIR VALUE MEASUREMENTS ON A NON-RECURRING BASIS

The following table presents assets measured at fair value on a non-recurring basis at the time of impairment and the related impairment charges recorded during the periods presented:

		Assets at Fair Value							Impairment Charges
		Non-Recurring Basis							Three Months Ended March 31,
(in millions)		Level 1		Level 2		Level 3		Total		2020		2019
March 31, 2020
Other investments	$	-	$	-	$	97	$	97	$	11	$	41
Other assets		-		-		-		-		12		8
Total	$	-	$	-	$	97	$	97	$	23	$	49
December 31, 2019
Other investments	$	-	$	-	$	329	$	329
Other assets		-		-		1		1
Total	$	-	$	-	$	330	$	330

FAIR VALUE INFORMATION ABOUT FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE

The following table presents the carrying amounts and estimated fair values of our financial instruments not measured at fair value and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:

	Estimated Fair Value									Carrying
(in millions)		Level 1		Level 2		Level 3		Total		Value
March 31, 2020
Assets:
Mortgage and other loans receivable	$	-	$	100	$	47,508	$	47,608	$	46,844
Other invested assets		-		772		6		778		778
Short-term investments		-		11,587		-		11,587		11,587
Cash		2,738		-		-		2,738		2,738
Other assets		340		34		-		374		374
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		246		137,161		137,407		127,194
Other liabilities		14		4,333		-		4,347		4,347
Long-term debt and debt of consolidated investment entities		-		24,765		9,114		33,879		33,134
Separate account liabilities - investment contracts		-		74,711		-		74,711		74,711
December 31, 2019
Assets:
Mortgage and other loans receivable	$	-	$	101	$	48,904	$	49,005	$	46,984
Other invested assets		-		735		6		741		742
Short-term investments		-		7,887		-		7,887		7,887
Cash		2,856		-		-		2,856		2,856
Other assets		291		20		-		311		311
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		255		132,991		133,246		126,137
Other liabilities		15		3,048		-		3,063		3,063
Long-term debt and debt of consolidated investment entities		-		27,024		8,883		35,907		33,288
Separate account liabilities - investment contracts		-		88,770		-		88,770		88,770

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION

BASIS OF PRESENTATION

1. Basis of Presentation

American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 80 countries and jurisdictions. AIG companies serve commercial and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG Common Stock, par value $2.50 per share (AIG Common Stock), is listed on the New York Stock Exchange (NYSE: AIG). Unless the context indicates otherwise, the terms “AIG,” “we,” “us” or “our” mean American International Group, Inc. and its consolidated subsidiaries and the term “AIG Parent” means American International Group, Inc. and not any of its consolidated subsidiaries.

These unaudited Condensed Consolidated Financial Statements do not include all disclosures that are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) and should be read in conjunction with the audited Consolidated Financial Statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the 2019 Annual Report). The condensed consolidated financial information as of December 31, 2019 included herein has been derived from the audited Consolidated Financial Statements in the 2019 Annual Report.

Certain of our foreign subsidiaries included in the Condensed Consolidated Financial Statements report on the basis of fiscal period ending November 30. The effect on our consolidated financial condition and results of operations of all material events occurring at these subsidiaries through the date of each of the periods presented in these Condensed Consolidated Financial Statements has been considered for adjustment and/or disclosure. In the opinion of management, these Condensed Consolidated Financial Statements contain normal recurring adjustments, including eliminations of material intercompany accounts and transactions, necessary for a fair statement of the results presented herein. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for the year ended December 31, 2020, especially when considering the risks and uncertainties associated COVID-19 and the impact it may have on our business, results of operations and financial condition.

We evaluated the need to recognize or disclose events that occurred subsequent to March 31, 2020 and prior to the issuance of these Condensed Consolidated Financial Statements.

Sales/disposals of Businesses

Fortitude Holdings

On November 13, 2018, AIG completed the sale of a 19.9 percent ownership interest in Fortitude Group Holdings, LLC (Fortitude Holdings) to TC Group Cayman Investments Holdings, L.P. (TCG), an affiliate of The Carlyle Group L.P. (Carlyle) (2018 Fortitude Sale). Upon completion of the 2018 Fortitude Sale, Fortitude Holdings owned 100 percent of the outstanding common shares of Fortitude Reinsurance Company Ltd (Fortitude Re) and AIG had an 80.1 percent ownership interest in Fortitude Holdings. We received $381 million in cash and will receive up to $95 million of deferred compensation following December 31, 2023, which is subject to a purchase price adjustment wherein AIG will reimburse TCG for adverse development in property casualty related reserves, based on an agreed methodology, that occurs on or prior to December 31, 2023, up to the value of TCG’s investment in Fortitude. Any amount due to TCG in respect of this purchase price adjustment will be offset by the amount of the $95 million otherwise due from TCG to AIG. To the extent we do not receive all or a portion of the planned distributions by May 13, 2020, TCG will pay us up to an additional $100 million, which amount shall adjust in proportion with the amount of the dividend received by AIG. In connection with the 2018 Fortitude Sale, we agreed to certain investment commitment targets into various Carlyle strategies and to certain minimum investment management fee payments within 36 months following the closing. We also will be required to pay a proportionate amount of an agreed make-whole fee to the extent we fail to satisfy such investment commitment targets.

On November 25, 2019, AIG entered into a membership interest purchase agreement with Fortitude Holdings, Carlyle, Carlyle FRL, an investment fund advised by an affiliate of Carlyle (Carlyle FRL), T&D United Capital Co., Ltd. (T&D) and T&D Holdings, Inc., pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Carlyle FRL will purchase from AIG a 51.6 percent ownership interest in Fortitude Holdings and T&D will purchase from AIG a 25 percent ownership interest in Fortitude Holdings (Majority Interest Fortitude Sale). Upon closing of the Majority Interest Fortitude Sale, AIG will have a 3.5 percent ownership interest in Fortitude Holdings. The purchase price under the Majority Interest Fortitude Sale is subject to a post-closing purchase price adjustment pursuant to which AIG will pay Fortitude Re for certain adverse development in property casualty related reserves, based on an agreed methodology, that may occur on or prior to December 31, 2023, up to a maximum payment of $500 million. In connection with the Majority Interest Fortitude Sale agreement, AIG, Fortitude Holdings and TCG have agreed that, effective as of the closing of the Majority Interest Fortitude Sale, (i) AIG’s aforementioned investment commitment targets will be assumed by Fortitude Holdings and AIG will be released therefrom, (ii) the purchase price adjustment that AIG had agreed to provide TCG in the 2018 Fortitude Sale will be terminated, and (iii) Carlyle will remain obligated to pay AIG $95 million of deferred compensation at December 31, 2023 and up to an additional $100 million to the extent AIG does not receive all or a portion of the planned distributions by May 13, 2020, which amount shall adjust in proportion with the amount of the dividend received by AIG. We expect to contribute approximately $1.45 billion of the proceeds of the Majority Interest Fortitude Sale to certain of our insurance company subsidiaries for a period of time following the closing of the transaction. There can be no guarantee that we will receive the required regulatory approvals or that closing conditions will be satisfied in order to consummate the Majority Interest Fortitude Sale.

For further details on this transaction see Note 4 to the Condensed Consolidated Financial Statements.

Blackboard

At the end of March 2020, AIG decided to place Blackboard U.S. Holdings, Inc. (Blackboard), AIG’s technology-driven subsidiary, into run-off. As a result of this decision, AIG recognized a pre-tax loss of $210 million, primarily consisting of asset impairment charges.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of estimates and assumptions are considered our critical accounting estimates and are related to the determination of:

liability for unpaid losses and loss adjustment expenses (loss reserves);

valuation of future policy benefit liabilities and timing and extent of loss recognition;

valuation of liabilities for guaranteed benefit features of variable annuity products;

valuation of embedded derivatives for fixed index annuity and life products;

estimated gross profits to value deferred policy acquisition costs for investment-oriented products;

reinsurance assets;

impairment charges, including impairments on other invested assets and goodwill impairment;

allowances for credit losses primarily on loans, available for sale fixed maturity securities, reinsurance assets and premiums and other receivables;

liability for legal contingencies;

fair value measurements of certain financial assets and liabilities; and

income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability of future tax operating profitability of the character necessary to realize the net deferred tax asset and estimates associated with the Tax Cuts and Jobs Act (the Tax Act).

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of operations and cash flows could be materially affected.

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Condensed Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues:
Premiums	$ 7,443	$ 8,070
Policy fees	755	735
Net investment income	2,508	3,879
Net realized capital gains (losses)	3,519	(446)
Other income	218	218
Total revenues	14,443	12,456
Benefits, losses and expenses:
Policyholder benefits and losses incurred	6,325	6,679
Interest credited to policyholder account balances	957	940
Amortization of deferred policy acquisition costs	1,862	1,289
General operating and other expenses	2,153	2,053
Interest expense	355	349
(Gains) losses on extinguishment of debt	17	(2)
Net (gain) loss on sale of divested businesses	216	(6)
Total benefits, losses and expenses	11,885	11,302
Income from continuing operations before income tax expense	2,558	1,154
Income tax expense	904	217
Income from continuing operations	1,654	937
Income (loss) from discontinued operations, net of income taxes	0	0
Net income	1,654	937
Less:
Net income (loss) from continuing operations attributable to noncontrolling interests	(95)	283
Net income attributable to AIG	1,749	654
Less: Dividends on peferred stock	7	0
Net income attributable to AIG common shareholders	$ 1,742	$ 654
Basic:
Income from continuing operations	$ 1.99	$ 0.75
Income from discontinued operations	0	0
Net income attributable to AIG common shareholders	1.99	0.75
Diluted:
Income from continuing operations	1.98	0.75
Income from discontinued operations	0	0
Net income attributable to AIG common shareholders	$ 1.98	$ 0.75
Weighted average shares outstanding:
Basic	874,213,630	875,383,084
Diluted	878,866,213	877,512,244

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DERIVATIVES AND HEDGE ACCOUNTING

3 Months Ended

Mar. 31, 2020

DERIVATIVES AND HEDGE ACCOUNTING

DERIVATIVES AND HEDGE ACCOUNTING

9. Derivatives and Hedge Accounting

We use derivatives and other financial instruments as part of our financial risk management programs and as part of our investment operations.

For a discussion of our accounting policies and procedures regarding derivatives and hedge accounting see Note 12 to the Consolidated Financial Statements in the 2019 Annual Report.

Interest rate derivatives (such as interest rate swaps) are used to manage interest rate risk associated with embedded derivatives contained in insurance contract liabilities, fixed maturity securities, outstanding medium- and long-term notes as well as other interest rate sensitive assets and liabilities. Foreign exchange derivatives (principally foreign exchange forwards and swaps) are used to economically mitigate risk associated with non-U.S. dollar denominated debt, net capital exposures, foreign currency transactions, and foreign denominated investments. Equity derivatives are used to mitigate financial risk embedded in certain insurance liabilities and economically hedge certain investments. We use credit derivatives to manage our credit exposures. The derivatives are effective economic hedges of the exposures that they are meant to offset.

In addition to hedging activities, we also enter into derivative instruments with respect to investment operations, which may include, among other things, credit default swaps (CDSs) and purchases of investments with embedded derivatives, such as equity-linked notes and convertible bonds.

The following table presents the notional amounts of our derivatives and the fair value of derivative assets and liabilities in the Condensed Consolidated Balance Sheets:

	March 31, 2020								December 31, 2019
	Gross Derivative Assets				Gross Derivative Liabilities				Gross Derivative Assets				Gross Derivative Liabilities
		Notional		Fair		Notional		Fair		Notional		Fair		Notional		Fair
(in millions)		Amount		Value		Amount		Value		Amount		Value		Amount		Value
Derivatives designated as
hedging instruments:(a)
Interest rate contracts	$	735	$	18	$	316	$	11	$	495	$	3	$	410	$	7
Foreign exchange contracts		7,592		843		1,929		88		4,328		342		5,230		162
Derivatives not designated
as hedging instruments:(a)
Interest rate contracts		50,409		6,605		36,573		4,215		52,437		3,197		35,231		2,742
Foreign exchange contracts		12,350		1,495		8,818		944		8,133		698		12,093		863
Equity contracts		22,291		1,240		4,313		77		18,533		769		7,539		139
Credit contracts(b)		7,617		133		923		81		8,457		3		923		89
Other contracts(c)		41,563		15		56		13		40,582		14		56		7
Total derivatives, gross	$	142,557	$	10,349	$	52,928	$	5,429	$	132,965	$	5,026	$	61,482	$	4,009
Counterparty netting(d)				(4,645)				(4,645)				(2,427)				(2,427)
Cash collateral(e)				(4,840)				(147)				(1,806)				(527)
Total derivatives on condensed
consolidated balance sheets(f)			$	864			$	637			$	793			$	1,055

(a)Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.

(b)As of March 31, 2020 and December 31, 2019, included CDSs on super senior multi-sector CDOs with a net notional amount of $146 million and $152 million (fair value liability of $56 million and $48 million), respectively. The net notional amount represents the maximum exposure to loss on the portfolio.

(c)Consists primarily of stable value wraps and contracts with multiple underlying exposures.

(d)Represents netting of derivative exposures covered by a qualifying master netting agreement.

(e)Represents cash collateral posted and received that is eligible for netting.

(f)Freestanding derivatives only, excludes embedded derivatives. Derivative instrument assets and liabilities are recorded in Other assets and liabilities, respectively. Fair value of assets related to bifurcated embedded derivatives was zero at both March 31, 2020 and December 31, 2019. Fair value of liabilities related to bifurcated embedded derivatives was $8.2 billion and $6.9 billion, respectively, at March 31, 2020 and December 31, 2019. A bifurcated embedded derivative is generally presented with the host contract in the Condensed Consolidated Balance Sheets. Embedded derivatives are primarily related to guarantee features in variable annuity products, which include equity and interest rate components.

Collateral

We engage in derivative transactions that are not subject to a clearing requirement directly with unaffiliated third parties, in most cases, under International Swaps and Derivatives Association, Inc. (ISDA) Master Agreements. Many of the ISDA Master Agreements also include Credit Support Annex provisions, which provide for collateral postings that may vary at various ratings and threshold levels. We attempt to reduce our risk with certain counterparties by entering into agreements that enable collateral to be obtained from a counterparty on an upfront or contingent basis. We minimize the risk that counterparties might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value and generally requiring additional collateral to be posted upon the occurrence of certain events or circumstances. In addition, certain derivative transactions have provisions that require collateral to be posted upon a downgrade of our long-term debt ratings or give the counterparty the right to terminate the transaction. In the case of some of the derivative transactions, upon a downgrade of our long-term debt ratings, as an alternative to posting collateral and subject to certain conditions, we may assign the transaction to an obligor with higher debt ratings or arrange for a substitute guarantee of our obligations by an obligor with higher debt ratings or take other similar action. The actual amount of collateral required to be posted to counterparties in the event of such downgrades, or the aggregate amount of payments that we could be required to make, depends on market conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the downgrade.

Collateral posted by us to third parties for derivative transactions was $1.9 billion at March 31, 2020 and $2.2 billion at December 31, 2019. In the case of collateral posted under derivative transactions that are not subject to clearing, this collateral can generally be repledged or resold by the counterparties. Collateral provided to us from third parties for derivative transactions was $5.5 billion and $2.2 billion at March 31, 2020 and December 31, 2019, respectively. In the case of collateral provided to us under derivative transactions that are not subject to clearing, we generally can repledge or resell collateral.

Offsetting

We have elected to present all derivative receivables and derivative payables, and the related cash collateral received and paid, on a net basis on our Condensed Consolidated Balance Sheets when a legally enforceable ISDA Master Agreement exists between us and our derivative counterparty. An ISDA Master Agreement is an agreement governing multiple derivative transactions between two counterparties. The ISDA Master Agreement generally provides for the net settlement of all, or a specified group, of these derivative transactions, as well as transferred collateral, through a single payment, and in a single currency, as applicable. The net settlement provisions apply in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions governed by the ISDA Master Agreement.

Hedge Accounting

We designated certain derivatives entered into with third parties as fair value hedges of available for sale investment securities held by our insurance subsidiaries. The fair value hedges include foreign currency forwards and cross currency swaps designated as hedges of the change in fair value of foreign currency denominated available for sale securities attributable to changes in foreign exchange rates. We also designated certain interest rate swaps entered into with third parties as fair value hedges of fixed rate GICs attributable to changes in benchmark interest rates.

We use foreign currency denominated debt and cross-currency swaps as hedging instruments in net investment hedge relationships to mitigate the foreign exchange risk associated with our non-U.S. dollar functional currency foreign subsidiaries. For net investment hedge relationships where issued debt is used as a hedging instrument, we assess the hedge effectiveness and measure the amount of ineffectiveness based on changes in spot rates. For net investment hedge relationships that use derivatives as hedging instruments, we assess hedge effectiveness and measure hedge ineffectiveness using changes in forward rates. For the three-month periods ended March 31, 2020 and 2019, we recognized gains of $99 million and $64 million, respectively, included in Change in foreign currency translation adjustment in Other comprehensive income related to the net investment hedge relationships.

A qualitative methodology is utilized to assess hedge effectiveness for net investment hedges, while regression analysis is employed for all other hedges.

The following table presents the gain (loss) recognized in earnings on our derivative instruments in fair value hedging relationships in the Condensed Consolidated Statements of Income:

	Gains/(Losses) Recognized in Earnings for:
	Hedging		Excluded		Hedged
(in millions)	Derivatives(a)		Components(b)		Items		Net Impact
Three Months Ended March 31, 2020
Interest rate contracts:
Interest credited to policyholder account balances	$	17	$	-	$	(17)	$	-
Net investment income		(3)		-		3		-
Foreign exchange contracts:
Realized capital gains/(losses)		305		281		(305)		281
Three Months Ended March 31, 2019
Interest rate contracts:
Interest credited to policyholder account balances	$	5	$	-	$	(5)	$	-
Net investment income		(1)		-		1		-
Foreign exchange contracts:
Realized capital gains/(losses)		(8)		(14)		8		(14)

(a)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are included in the assessment of hedge effectiveness.

(b)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are excluded from the assessment of hedge effectiveness and recognized in earnings on a mark-to-market basis.

Derivatives Not Designated as Hedging Instruments

The following table presents the effect of derivative instruments not designated as hedging instruments in the Condensed Consolidated Statements of Income:

	Gains (Losses)
Three Months Ended March 31,	Recognized in Earnings
(in millions)		2020		2019
By Derivative Type:
Interest rate contracts	$	2,573	$	359
Foreign exchange contracts		1,025		(28)
Equity contracts		1,103		(208)
Credit contracts		122		(8)
Other contracts		10		16
Embedded derivatives		(1,052)		(449)
Total	$	3,781	$	(318)
By Classification:
Policy fees	$	15	$	17
Net investment income		(2)		(5)
Net realized capital gains (losses)		3,752		(334)
Policyholder benefits and claims incurred		16		4
Total	$	3,781	$	(318)

CREDIT RISK-RELATED CONTINGENT FEATURES

We estimate that at March 31, 2020, based on our outstanding financial derivative transactions, a downgrade of our long-term senior debt ratings to BBB or BBB– by Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and/or a downgrade to Baa2 or Baa3 by Moody’s Investors’ Service, Inc. would permit counterparties to make additional collateral calls and permit certain counterparties to elect early termination of contracts, resulting in corresponding collateral postings and termination payments in the total amount of up to approximately $44 million. The aggregate fair value of our derivatives that were in a net liability position and that contain such credit risk-related contingencies which can be triggered below our long-term senior debt ratings of BBB+ or Baa1 was approximately $257 million and $336 million at March 31, 2020 and December 31, 2019, respectively. The aggregate fair value of assets posted as collateral under these contracts at March 31, 2020 and December 31, 2019, was approximately $399 million and $381 million, respectively.

Hybrid Securities with Embedded Credit Derivatives

We invest in hybrid securities (such as credit-linked notes) with the intent of generating income, and not specifically to acquire exposure to embedded derivative risk. As is the case with our other investments in RMBS, CMBS, CDOs and ABS, our investments in these hybrid securities are exposed to losses only up to the amount of our initial investment in the hybrid security. Other than our initial investment in the hybrid securities, we have no further obligation to make payments on the embedded credit derivatives in the related hybrid securities.

We elect to account for our investments in these hybrid securities with embedded written credit derivatives at fair value, with changes in fair value recognized in Net investment income and Other income. Our investments in these hybrid securities are reported as Other bond securities in the Condensed Consolidated Balance Sheets. The fair values of these hybrid securities were $2.3 billion and $3.3 billion at March 31, 2020 and December 31, 2019, respectively. These securities have par amounts of $5.3 billion and $7.4 billion at March 31, 2020 and December 31, 2019, respectively, and have remaining stated maturity dates that extend to 2052.

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Supplementary Disclosure of Consolidated Cash Flow Information - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020		Mar. 31, 2019		Dec. 31, 2019
Cash Equivalents, Restricted Cash and Restricted Cash Equivalents:
Cash	$ 2,738		$ 2,565		$ 2,856
Total cash and restricted cash shown in the Condensed Consolidated Cash Flows	3,319		3,179		3,287
Cash paid during the period for:
Interest	323		315
Taxes	62		50
Cash Flow, Noncash Investing Activities Disclosure
Fixed maturity securities available for sale received in connection with pension risk transfer transactions	553		0
Cash Flow, Noncash Financing Activities Disclosure
Interest credited to policyholder contract deposits included in financing activities	869		878
Other assets
Cash Equivalents, Restricted Cash and Restricted Cash Equivalents:
Restricted cash	257	[1]	363	[1]	243
Short-term investments
Cash Equivalents, Restricted Cash and Restricted Cash Equivalents:
Restricted cash	$ 324	[1]	$ 251	[1]	$ 188

[1] Includes funds held for tax sharing payments to AIG Parent, security deposits, and replacement reserve deposits related to our affordable housing investments.

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VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Assets:
Bonds available for sale	$ 241,776	$ 251,086
Other bond securities	5,353	6,682
Mortgage and other loans receivable	46,844	46,984
Other invested assets	17,966	18,792
Total assets	510,477	525,064
Liabilities:
Long-term debt	25,268	25,479
Total liabilities	448,634	457,637
Assets held-for-sale
Assets:
Bonds available for sale	2,308	2,187
Other bond securities	13	13
Other invested assets	58	45
Real Estate and Investment Entities
Liabilities:
Off-balance sheet exposure	2,400	2,600
Consolidated VIE
Assets:
Bonds available for sale	6,511	7,416
Other bond securities	2,267	3,325
Mortgage and other loans receivable	4,025	3,860
Other invested assets	8,857	8,737
Other assets	2,940	3,122
Total assets	24,600	26,460
Liabilities:
Long-term debt	9,514	9,244
Other liabilities	595	814
Total liabilities	10,109	10,058
Consolidated VIE | Real Estate and Investment Entities
Assets:
Bonds available for sale	256	177
Other bond securities	0	0
Mortgage and other loans receivable	0	0
Other invested assets	5,180	5,231
Other assets	500	615
Total assets	5,936	6,023
Liabilities:
Long-term debt	2,794	2,810
Other liabilities	184	236
Total liabilities	2,978	3,046
Consolidated VIE | Securitization Vehicles
Assets:
Bonds available for sale	6,255	7,239
Other bond securities	2,266	3,324
Mortgage and other loans receivable	4,025	3,860
Other invested assets	0	0
Other assets	1,915	1,996
Total assets	14,461	16,419
Liabilities:
Long-term debt	4,515	4,356
Other liabilities	193	359
Total liabilities	4,708	4,715
Total assets of unconsolidated VIEs as well as maximum exposure to loss
Total assets contributed into consolidated securitization vehicles	13,700	15,600
Consolidated VIE | Affordable Housing Partnerships
Assets:
Bonds available for sale	0	0
Other bond securities	0	0
Mortgage and other loans receivable	0	0
Other invested assets	3,635	3,464
Other assets	483	469
Total assets	4,118	3,933
Liabilities:
Long-term debt	2,201	2,074
Other liabilities	195	195
Total liabilities	2,396	2,269
Consolidated VIE | Other
Assets:
Bonds available for sale	0	0
Other bond securities	1	1
Mortgage and other loans receivable	0	0
Other invested assets	42	42
Other assets	42	42
Total assets	85	85
Liabilities:
Long-term debt	4	4
Other liabilities	23	24
Total liabilities	27	28
Unconsolidated VIE
Assets:
Other invested assets	6,400	7,000
Total assets of unconsolidated VIEs as well as maximum exposure to loss
Total VIE Assets	296,709	292,020
Maximum Exposure to Loss, On-Balance Sheet	6,565	7,282
Maximum Exposure to Loss, Off-Balance Sheet	4,107	3,847
Total maximum exposure to loss	10,672	11,129
Unconsolidated VIE | Real Estate and Investment Entities
Total assets of unconsolidated VIEs as well as maximum exposure to loss
Total VIE Assets	288,131	283,349
Maximum Exposure to Loss, On-Balance Sheet	5,810	6,519
Maximum Exposure to Loss, Off-Balance Sheet	3,546	3,286
Total maximum exposure to loss	9,356	9,805
Unconsolidated VIE | Affordable Housing Partnerships
Total assets of unconsolidated VIEs as well as maximum exposure to loss
Total VIE Assets	3,064	3,351
Maximum Exposure to Loss, On-Balance Sheet	397	453
Maximum Exposure to Loss, Off-Balance Sheet	0	0
Total maximum exposure to loss	397	453
Unconsolidated VIE | Other
Total assets of unconsolidated VIEs as well as maximum exposure to loss
Total VIE Assets	5,514	5,320
Maximum Exposure to Loss, On-Balance Sheet	358	310
Maximum Exposure to Loss, Off-Balance Sheet	561	561
Total maximum exposure to loss	$ 919	$ 871

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EQUITY (Details - Rollforward of Accumulated other comprehensive income (loss)) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax	$ 4,982	$ (1,413)
Change in unrealized appreciation (depreciation) of investments	(10,455)	5,913
Change in deferred policy acquisition costs adjustment and other	1,407	(864)
Change in future policy benefits	1,672	(1,068)
Changes in foreign currency translation adjustments	(69)	188
Change in net actuarial loss	4	1
Change in prior service credit	(1)	(1)
Change in deferred tax asset (liability)	1,449	(622)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	3	0
Other comprehensive income (loss)	(5,990)	3,547
Noncontrolling interests	(14)	6
Balance, end of period, net of tax	(994)	2,128
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Other comprehensive income (loss)	(5,976)	3,541
Unrealized Appreciation (Depreciation) of Fixed Maturity Securities on Which Allowance for Credit Losses Were Taken
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax	0
Change in unrealized appreciation (depreciation) of investments	(484)
Change in deferred policy acquisition costs adjustment and other	30
Change in future policy benefits	0
Changes in foreign currency translation adjustments	0
Change in net actuarial loss	0
Change in prior service credit	0
Change in deferred tax asset (liability)	95
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	0
Other comprehensive income (loss)	(359)
Noncontrolling interests	0
Balance, end of period, net of tax	(359)
Unrealized Appreciation (Depreciation) of Fixed Maturity Securities on Which Other-Than-Temporary Credit Impairments Were Taken
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax		(38)
Change in unrealized appreciation (depreciation) of investments		849
Change in deferred policy acquisition costs adjustment and other		(8)
Change in future policy benefits		0
Changes in foreign currency translation adjustments		0
Change in net actuarial loss		0
Change in prior service credit		0
Change in deferred tax asset (liability)		(165)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk		0
Other comprehensive income (loss)		676
Noncontrolling interests		0
Balance, end of period, net of tax		638
Unrealized Appreciation (Depreciation) of All Other Investments
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax	8,722	2,426
Change in unrealized appreciation (depreciation) of investments	(9,971)	5,064
Change in deferred policy acquisition costs adjustment and other	1,377	(856)
Change in future policy benefits	1,672	(1,068)
Changes in foreign currency translation adjustments	0	0
Change in net actuarial loss	0	0
Change in prior service credit	0	0
Change in deferred tax asset (liability)	1,380	(432)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	0	0
Other comprehensive income (loss)	(5,542)	2,708
Noncontrolling interests	(10)	5
Balance, end of period, net of tax	3,190	5,129
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax	(2,625)	(2,725)
Change in unrealized appreciation (depreciation) of investments	0	0
Change in deferred policy acquisition costs adjustment and other	0	0
Change in future policy benefits	0	0
Changes in foreign currency translation adjustments	(69)	188
Change in net actuarial loss	0	0
Change in prior service credit	0	0
Change in deferred tax asset (liability)	(16)	(24)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	0	0
Other comprehensive income (loss)	(85)	164
Noncontrolling interests	(4)	1
Balance, end of period, net of tax	(2,706)	(2,562)
Retirement Plan Liabilities Adjustment
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax	(1,122)	(1,086)
Change in unrealized appreciation (depreciation) of investments	0	0
Change in deferred policy acquisition costs adjustment and other	0	0
Change in future policy benefits	0	0
Changes in foreign currency translation adjustments	0	0
Change in net actuarial loss	4	1
Change in prior service credit	(1)	(1)
Change in deferred tax asset (liability)	(10)	(1)
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	0	0
Other comprehensive income (loss)	(7)	(1)
Noncontrolling interests	0	0
Balance, end of period, net of tax	(1,129)	(1,087)
Fair Value of Liabilities Under Fair Value Option Attributable to Changes in Own Credit Risk
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, beginning of period, net of tax	7	10
Change in unrealized appreciation (depreciation) of investments	0	0
Change in deferred policy acquisition costs adjustment and other	0	0
Change in future policy benefits	0	0
Changes in foreign currency translation adjustments	0	0
Change in net actuarial loss	0	0
Change in prior service credit	0	0
Change in deferred tax asset (liability)	0	0
Change in fair value of liabilities under fair value option attributable to changes in own credit risk	3	0
Other comprehensive income (loss)	3	0
Noncontrolling interests	0	0
Balance, end of period, net of tax	$ 10	$ 10

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INVESTMENTS (Details - Reconciliation of purchase price to unpaid principal balance of securities purchased with credit deterioration) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
INVESTMENTS
Unpaid principal balance	$ 187
Allowance for expected credit losses at acquisition	(6)
Purchase (discount) premium	(48)
Purchase price	$ 133

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DERIVATIVES AND HEDGE ACCOUNTING (Details - Fair values of derivative assets and liabilities) - USD ($) $ in Billions	Mar. 31, 2020	Dec. 31, 2019
Collateral
Collateral posted to third parties for derivative transactions	$ 1.9	$ 2.2
Collateral obtained from third parties for derivative transactions	$ 5.5	$ 2.2

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INSURANCE LIABILITIES (Details - Discounting of Reserves) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Discounting of Reserves [Line Items]
Tabular Discount Rate	3.50%
Workers Compensation Tabular Discount Amount	$ 593		$ 582
Workers Compensation Non Tabular Discount Amount	972		967
U.S. Workers' compensation	2,744		2,800
Retroactive Reinsurance	(1,179)		(1,251)
Total reserve discount	1,565		1,549
Current accident year	20	$ 24
Accretion and other adjustments to prior year discount	(76)	(264)
Effect of interest rate changes	0	(233)
Net reserve discount benefit (charge)	(56)	(473)
Change in discount on loss reserves ceded under retroactive reinsurance	72	307
Net change in total reserve discount	16	(166)
North America Commerical Insurance
Discounting of Reserves [Line Items]
U.S. Workers' compensation	2,087		2,134
Retroactive Reinsurance	(1,179)		(1,251)
Total reserve discount	908		883
Current accident year	20	24
Accretion and other adjustments to prior year discount	(67)	(251)
Effect of interest rate changes	0	(167)
Net reserve discount benefit (charge)	(47)	(394)
Change in discount on loss reserves ceded under retroactive reinsurance	72	307
Net change in total reserve discount	25	(87)
Legacy General Insrance Run-Off Lines
Discounting of Reserves [Line Items]
U.S. Workers' compensation	657		666
Retroactive Reinsurance	0		0
Total reserve discount	657		666
Current accident year	0	0
Accretion and other adjustments to prior year discount	(9)	(13)
Effect of interest rate changes	0	(66)
Net reserve discount benefit (charge)	(9)	(79)
Change in discount on loss reserves ceded under retroactive reinsurance	0	0
Net change in total reserve discount	$ (9)	(79)
New York
Discounting of Reserves [Line Items]
Nontabular discount rate	5.00%
Pennsylvania
Discounting of Reserves [Line Items]
Nontabular discount rate	6.00%
United Kingdom
Discounting of Reserves [Line Items]
Net reserve discount benefit (charge)	$ 170		$ 172
Net change in total reserve discount	$ (2)	$ 35

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LENDING ACTIVITIES (Details - Credit quality of commercial mortgages) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
2020	$ 251
2019	1,555
2018	879
2017	1,314
2016	1,353
Prior	1,366
Mortgage and other loans receivable, net	47,631	$ 47,422
Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	816
2019	5,886
2018	6,468
2017	4,647
2016	5,327
Prior	13,147
Mortgage and other loans receivable, net	36,291	36,170
Less than 65% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	567
2019	4,567
2018	4,508
2017	3,584
2016	4,032
Prior	10,745
Mortgage and other loans receivable, net	28,003
65% to 75% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	249
2019	1,319
2018	1,960
2017	924
2016	1,104
Prior	2,221
Mortgage and other loans receivable, net	7,777
76% to 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	191
Prior	5
Mortgage and other loans receivable, net	196
Greater than 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	139
2016	0
Prior	176
Mortgage and other loans receivable, net	315
Greater than 1.2x | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	701
2019	5,557
2018	5,963
2017	4,309
2016	5,165
Prior	10,745
Mortgage and other loans receivable, net	32,440
Greater than 1.2x | Less than 65% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		23,013
Greater than 1.2x | 65% to 75% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		9,007
Greater than 1.2x | 76% to 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		200
Greater than 1.2x | Greater than 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		184
Greater than 1.2x | Total | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		32,404
1.00X - 1.20X | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	115
2019	255
2018	505
2017	338
2016	162
Prior	2,072
Mortgage and other loans receivable, net	3,447
1.00X - 1.20X | Less than 65% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		2,440
1.00X - 1.20X | 65% to 75% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		899
1.00X - 1.20X | 76% to 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		6
1.00X - 1.20X | Greater than 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		2
1.00X - 1.20X | Total | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		3,347
Less than 1.00X | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	74
2018	0
2017	0
2016	0
Prior	330
Mortgage and other loans receivable, net	$ 404
Less than 1.00X | Less than 65% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		245
Less than 1.00X | 65% to 75% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		40
Less than 1.00X | 76% to 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		0
Less than 1.00X | Greater than 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		134
Less than 1.00X | Total | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		419
Total | Less than 65% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		25,698
Total | 65% to 75% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		9,946
Total | 76% to 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		206
Total | Greater than 80% | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		320
Total | Total | Commercial mortgages
Financing Receivable, Credit Quality Indicator [Line Items]
Mortgage and other loans receivable, net		$ 36,170

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FAIR VALUE MEASUREMENTS (Details - Gains or losses recorded related to the eligible instruments for which we elected the fair value option) - Fair Value Option - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option gain (loss)	$ (402)	$ 525
Bonds
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option gain (loss)	(60)	355
Alternative investments
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option gain (loss)	(139)	230
Long-term debt
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option gain (loss)	$ (203)	$ (60)

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FAIR VALUE MEASUREMENTS (Details - Gross components of purchases, sales, issuances and settlements) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, Sales, Issuances and Settlements, Net, assets	$ (819,000,000)	$ (491,000,000)
Issuances	0	0
Transfers into Level 3 at end of reporting period, net gains (losses) not included in realized and unrealized gains and losses related to Level 3 for the period	(156,000,000)	(55,000,000)
Transfers out Level 3 at end of reporting period, net gains (losses) included in realized and unrealized gains and losses related to Level 3 for the period.	(55,000,000)	(1,000,000)
Liabilities
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, liabilities	(15,000,000)	(13,000,000)
Sales, liabilities	230,000,000	173,000,000
Issuances and Settlements, liabilities	(102,000,000)	52,000,000
Purchases, Sales, Issuances and Settlements, Net, liabilities	113,000,000	212,000,000
Policyholder contract deposits
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, liabilities	0	0
Sales, liabilities	222,000,000	173,000,000
Issuances and Settlements, liabilities	(150,000,000)	20,000,000
Purchases, Sales, Issuances and Settlements, Net, liabilities	72,000,000	193,000,000
Derivative liabilities, net
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, liabilities	(15,000,000)	(13,000,000)
Sales, liabilities	8,000,000	0
Issuances and Settlements, liabilities	48,000,000	32,000,000
Purchases, Sales, Issuances and Settlements, Net, liabilities	41,000,000	19,000,000
Assets
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	1,115,000,000	793,000,000
Sales, assets	(610,000,000)	(197,000,000)
Issuances and Settlements, assets	(1,324,000,000)	(1,087,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	(819,000,000)	(491,000,000)
Bonds available for sale
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	871,000,000	785,000,000
Sales, assets	(31,000,000)	(197,000,000)
Issuances and Settlements, assets	(828,000,000)	(845,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	12,000,000	(257,000,000)
Bonds available for sale | Obligations of states, municipalities and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	145,000,000	47,000,000
Sales, assets	(2,000,000)	(15,000,000)
Issuances and Settlements, assets	(6,000,000)	(8,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	137,000,000	24,000,000
Bonds available for sale | Non-U.S. governments
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	0	0
Sales, assets	0	0
Issuances and Settlements, assets	0	(4,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	0	(4,000,000)
Bonds available for sale | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	112,000,000	49,000,000
Sales, assets	(5,000,000)	0
Issuances and Settlements, assets	(100,000,000)	(15,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	7,000,000	34,000,000
Bonds available for sale | Residential mortgage-backed securities (RMBS)
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	336,000,000	307,000,000
Sales, assets	0	(26,000,000)
Issuances and Settlements, assets	(559,000,000)	(693,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	(223,000,000)	(412,000,000)
Bonds available for sale | Commercial mortgage-backed securities (CMBS)
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	53,000,000	184,000,000
Sales, assets	(2,000,000)	0
Issuances and Settlements, assets	(7,000,000)	(38,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	44,000,000	146,000,000
Bonds available for sale | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	225,000,000	198,000,000
Sales, assets	(22,000,000)	(156,000,000)
Issuances and Settlements, assets	(156,000,000)	(87,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	47,000,000	(45,000,000)
Other bond securities
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	60,000,000	4,000,000
Sales, assets	(579,000,000)	0
Issuances and Settlements, assets	(456,000,000)	(243,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	(975,000,000)	(239,000,000)
Other bond securities | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets		0
Sales, assets		0
Issuances and Settlements, assets		0
Purchases, Sales, Issuances and Settlements, Net, assets	0	0
Other bond securities | Residential mortgage-backed securities (RMBS)
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	25,000,000	0
Sales, assets	0	0
Issuances and Settlements, assets	(5,000,000)	(41,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	20,000,000	(41,000,000)
Other bond securities | Commercial mortgage-backed securities (CMBS)
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	0	4,000,000
Sales, assets	0	0
Issuances and Settlements, assets	(1,000,000)	(1,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	(1,000,000)	3,000,000
Other bond securities | Collateralized Debt Obligations/Asset Backed Securities (CDO/ABS)
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	35,000,000	0
Sales, assets	(579,000,000)	0
Issuances and Settlements, assets	(450,000,000)	(201,000,000)
Purchases, Sales, Issuances and Settlements, Net, assets	(994,000,000)	(201,000,000)
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	10,000,000	0
Sales, assets	0	0
Issuances and Settlements, assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	10,000,000	0
Mortgage and other loans receivable, net of allowance
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	0	0
Sales, assets	0	0
Issuances and Settlements, assets	0	0
Purchases, Sales, Issuances and Settlements, Net, assets	0	0
Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	174,000,000	4,000,000
Sales, assets	0	0
Issuances and Settlements, assets	(45,000,000)	0
Purchases, Sales, Issuances and Settlements, Net, assets	129,000,000	4,000,000
Other assets
Fair Value, Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation [Line Items]
Purchases, assets	0	0
Sales, assets	0	0
Issuances and Settlements, assets	5,000,000	1,000,000
Purchases, Sales, Issuances and Settlements, Net, assets	$ 5,000,000	$ 1,000,000

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INVESTMENTS (Details - Value of other securities measured at fair value based on election of the fair value option) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 5,977	$ 7,523
Other Securities, Percent of Total	100.00%	100.00%
Fixed maturity securities
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 5,353	$ 6,682
Other Securities, Percent of Total	90.00%	89.00%
Fixed maturity securities | U.S. government and government sponsored entities
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 2,057	$ 2,121
Other Securities, Percent of Total	34.00%	28.00%
Fixed maturity securities | Corporate debt
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 16	$ 18
Other Securities, Percent of Total	0.00%	0.00%
Fixed maturity securities | Mortgage-backed, asset-backed and collateralized
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 3,280	$ 4,543
Other Securities, Percent of Total	56.00%	61.00%
Fixed maturity securities | Residential mortgage-backed securities (RMBS)
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 467	$ 489
Other Securities, Percent of Total	8.00%	7.00%
Fixed maturity securities | Commercial mortgage-backed securities (CMBS)
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 271	$ 322
Other Securities, Percent of Total	5.00%	4.00%
Fixed maturity securities | Collateralized Debt Obligations/Asset-Backed Securities (CDO/ABS)
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 2,542	$ 3,732
Other Securities, Percent of Total	43.00%	50.00%
Equity securities
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Securities, Fair Value	$ 624	$ 841
Other Securities, Percent of Total	10.00%	11.00%

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EMPLOYEE BENEFITS (Details - Components of net periodic benefit cost with respect to pensions and other postretirement benefits) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Pensions
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 6	$ 8
Interest cost	37	48
Expected return on assets	(65)	(62)
Amortization of net loss	10	9
Net periodic benefit cost (credit)	(12)	3
Settlement (credit) charges		(4)
Net benefit cost (credit)		(1)
Pensions | U.S.
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	2
Interest cost	34	44
Expected return on assets	(60)	(57)
Amortization of net loss	8	8
Net periodic benefit cost (credit)	(17)	(3)
Settlement (credit) charges		0
Net benefit cost (credit)		(3)
Pensions | Non U.S. Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	5	6
Interest cost	3	4
Expected return on assets	(5)	(5)
Amortization of net loss	2	1
Net periodic benefit cost (credit)	5	6
Settlement (credit) charges		(4)
Net benefit cost (credit)		$ 2
Postretirement Plans
Defined Benefit Plan Disclosure [Line Items]
Net benefit cost (credit)	$ 2

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EQUITY (Details - Other comprehensive income reclassification adjustments) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period	$ (7,235)	$ 4,133
Less: Reclassification adjustments included in net income	204	(36)
Total other comprehensive income (loss), before income tax expense (benefit)	(7,439)	4,169
Less: Income tax expense (benefit)	(1,449)	622
Other comprehensive income (loss)	(5,990)	3,547
Unrealized Appreciation (Depreciation) of Fixed Maturity Securities on Which Allowance for Credit Losses Were Taken
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period	(454)
Less: Reclassification adjustments included in net income	0
Total other comprehensive income (loss), before income tax expense (benefit)	(454)
Less: Income tax expense (benefit)	(95)
Other comprehensive income (loss)	(359)
Unrealized Appreciation (Depreciation) of Fixed Maturity Securities on Which Other-Than-Temporary Credit Impairments Were Taken
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period		841
Less: Reclassification adjustments included in net income		0
Total other comprehensive income (loss), before income tax expense (benefit)		841
Less: Income tax expense (benefit)		165
Other comprehensive income (loss)		676
Unrealized Appreciation (Depreciation) of All Other Investments
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period	(6,708)	3,109
Less: Reclassification adjustments included in net income	214	(31)
Total other comprehensive income (loss), before income tax expense (benefit)	(6,922)	3,140
Less: Income tax expense (benefit)	(1,380)	432
Other comprehensive income (loss)	(5,542)	2,708
Foreign Currency Translation Adjustments
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period	(69)	188
Less: Reclassification adjustments included in net income	0	0
Total other comprehensive income (loss), before income tax expense (benefit)	(69)	188
Less: Income tax expense (benefit)	16	24
Other comprehensive income (loss)	(85)	164
Retirement Plan Liabilities Adjustment
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period	(7)	(5)
Less: Reclassification adjustments included in net income	(10)	(5)
Total other comprehensive income (loss), before income tax expense (benefit)	3	0
Less: Income tax expense (benefit)	10	1
Other comprehensive income (loss)	(7)	(1)
Fair Value of Liabilities Under Fair Value Option Attributable to Changes in Own Credit Risk
Other Comprehensive Income (Loss) Reclassification Adjustments
Unrealized change arising during period	3	0
Less: Reclassification adjustments included in net income	0	0
Total other comprehensive income (loss), before income tax expense (benefit)	3	0
Less: Income tax expense (benefit)	0	0
Other comprehensive income (loss)	$ 3	$ 0

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INVESTMENTS (Details - Amortized cost or cost and fair value of available for sale securities) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	$ 234,586	$ 233,230
Available for sale securities, Allowance for Credit Losses	(211)	0
Available for sale securities, Fair Value	241,776	251,086
Bonds available for sale
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	234,586	233,230
Available for sale securities, Allowance for Credit Losses	(211)
Available for sale securities, Gross Unrealized Gains	14,901	18,671
Available for sale securities, Gross Unrealized Losses	(7,500)	(815)
Available for sale securities, Fair Value	241,776	251,086
Other details of available for sale securities
Available for sale securities not rated or rated below investment grade	25,100	27,800
Bonds available for sale | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		1,186
Bonds available for sale | U.S. government and government sponsored entities
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	4,664	5,108
Available for sale securities, Allowance for Credit Losses	0
Available for sale securities, Gross Unrealized Gains	1,042	316
Available for sale securities, Gross Unrealized Losses	(17)	(44)
Available for sale securities, Fair Value	5,689	5,380
Bonds available for sale | U.S. government and government sponsored entities | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		0
Bonds available for sale | Obligations of states, municipalities and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	14,140	13,960
Available for sale securities, Allowance for Credit Losses	0
Available for sale securities, Gross Unrealized Gains	1,375	1,390
Available for sale securities, Gross Unrealized Losses	(75)	(32)
Available for sale securities, Fair Value	15,440	15,318
Bonds available for sale | Obligations of states, municipalities and political subdivisions | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		0
Bonds available for sale | Non-U.S. governments
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	13,737	14,042
Available for sale securities, Allowance for Credit Losses	(7)
Available for sale securities, Gross Unrealized Gains	676	884
Available for sale securities, Gross Unrealized Losses	(233)	(57)
Available for sale securities, Fair Value	14,173	14,869
Bonds available for sale | Non-U.S. governments | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		(18)
Bonds available for sale | Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	140,356	138,046
Available for sale securities, Allowance for Credit Losses	(167)
Available for sale securities, Gross Unrealized Gains	9,073	12,090
Available for sale securities, Gross Unrealized Losses	(4,940)	(500)
Available for sale securities, Fair Value	144,322	149,636
Bonds available for sale | Corporate debt | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		7
Bonds available for sale | Mortgage-backed, asset-backed and collateralized
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	61,689	62,074
Available for sale securities, Allowance for Credit Losses	(37)
Available for sale securities, Gross Unrealized Gains	2,735	3,991
Available for sale securities, Gross Unrealized Losses	(2,235)	(182)
Available for sale securities, Fair Value	62,152	65,883
Bonds available for sale | Mortgage-backed, asset-backed and collateralized | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		1,197
Bonds available for sale | Residential mortgage-backed securities (RMBS)
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	29,433	29,802
Available for sale securities, Allowance for Credit Losses	(37)
Available for sale securities, Gross Unrealized Gains	2,069	3,067
Available for sale securities, Gross Unrealized Losses	(608)	(64)
Available for sale securities, Fair Value	30,857	32,805
Bonds available for sale | Residential mortgage-backed securities (RMBS) | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		1,149
Bonds available for sale | Commercial mortgage-backed securities (CMBS)
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	13,988	13,879
Available for sale securities, Allowance for Credit Losses	0
Available for sale securities, Gross Unrealized Gains	530	576
Available for sale securities, Gross Unrealized Losses	(292)	(25)
Available for sale securities, Fair Value	14,226	14,430
Bonds available for sale | Commercial mortgage-backed securities (CMBS) | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		34
Bonds available for sale | Collateralized Debt Obligations/Asset-Backed Securities (CDO/ABS)
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Amortized Cost or Cost, Net of Allowance	18,268	18,393
Available for sale securities, Allowance for Credit Losses	0
Available for sale securities, Gross Unrealized Gains	136	348
Available for sale securities, Gross Unrealized Losses	(1,335)	(93)
Available for sale securities, Fair Value	$ 17,069	18,648
Bonds available for sale | Collateralized Debt Obligations/Asset-Backed Securities (CDO/ABS) | AOCI- OTTI
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Other-Than-Temporary Impairments in AOCI		$ 14

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INVESTMENTS (Details - Schedule of increase (decrease) in unrealized appreciation (depreciation) of available for sale securities and other investments) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Increase (decrease) in unrealized appreciation (depreciation) of investments
Net gains and losses recognized during the year on equity securities	$ (320)	$ 318
Less: Net gains and losses recognized during the year on equity securities sold during the year	14	29
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date	(334)	289
Change in unrealized appreciation (depreciation) of investments	(10,455)	5,913
Fixed maturity securities
Increase (decrease) in unrealized appreciation (depreciation) of investments
Change in unrealized appreciation (depreciation) of investments	(10,455)	5,982
Equity securities
Increase (decrease) in unrealized appreciation (depreciation) of investments
Net gains and losses recognized during the year on equity securities	(191)	79
Less: Net gains and losses recognized during the year on equity securities sold during the year	12	19
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date	(203)	60
Other investments
Increase (decrease) in unrealized appreciation (depreciation) of investments
Change in unrealized appreciation (depreciation) of investments	0	(69)
Other invested assets
Increase (decrease) in unrealized appreciation (depreciation) of investments
Net gains and losses recognized during the year on equity securities	(129)	239
Less: Net gains and losses recognized during the year on equity securities sold during the year	2	10
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date	$ (131)	$ 229

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Narratives) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Summary of Significant Accounting Policies [Line Items]
Retained earnings	$ 24,062,000,000	$ 23,084,000,000
Accounting standards update	us-gaap:AccountingStandardsUpdate201613Member
Reinsurance recoverables	$ 42,200,000,000
Recoveries of amounts previously written off	0
Premiums and other receivables, allowance for credit losses	$ 210,000,000	178,000,000
Investment Grade
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	87.00%
Investment Grade | General Insurance
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	82.00%
Investment Grade | Life and Retirement
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	5.00%
Non-Investment Grade
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	12.00%
Non-Investment Grade | Captive Insurers
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	76.00%
Non-Investment Grade | Life and Retirement | Maximum
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	1.00%
Not Rated
Summary of Significant Accounting Policies [Line Items]
Reinsurance recoverables, percent	1.00%
Cumulative effect of change in accounting principle
Summary of Significant Accounting Policies [Line Items]
Retained earnings		(487,000,000)
Premiums and other receivables, allowance for credit losses		$ 34,000,000

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HELD-FOR-SALE CLASSIFICATION (Details - Summary of assets and liabilities held for sale) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Assets:
Bonds available for sale	$ 241,776	$ 251,086
Other bond securities	5,353	6,682
Other invested assets	17,966	18,792
Short-term investments	19,773	13,230
Cash	2,738	2,856	$ 2,565
Accrued investment income	2,312	2,334
Other assets	16,392	16,383
Liabilities:
Other Liabilities	29,183	26,609
Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
Assets:
Bonds available for sale	2,308	2,187
Other bond securities	13	13
Other invested assets	58	45
Short-term investments	63	107
Cash	54	63
Accrued investment income	20	19
Deferred income taxes	(11)	(22)
Other assets	152	106
Assets of businesses held for sale	2,657	2,518
Less: Loss Accrual	(98)	(98)
Total assets held for sale	2,559	2,420
Liabilities:
Other Liabilities	14	15
Total liabilities held for sale	$ 14	$ 15

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION

Use of Estimates

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of estimates and assumptions are considered our critical accounting estimates and are related to the determination of:

liability for unpaid losses and loss adjustment expenses (loss reserves);

valuation of future policy benefit liabilities and timing and extent of loss recognition;

valuation of liabilities for guaranteed benefit features of variable annuity products;

valuation of embedded derivatives for fixed index annuity and life products;

estimated gross profits to value deferred policy acquisition costs for investment-oriented products;

reinsurance assets;

impairment charges, including impairments on other invested assets and goodwill impairment;

allowances for credit losses primarily on loans, available for sale fixed maturity securities, reinsurance assets and premiums and other receivables;

liability for legal contingencies;

fair value measurements of certain financial assets and liabilities; and

income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability of future tax operating profitability of the character necessary to realize the net deferred tax asset and estimates associated with the Tax Cuts and Jobs Act (the Tax Act).

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of operations and cash flows could be materially affected.

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EARNINGS PER COMMON SHARE (EPS)

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE (EPS)

EARNINGS PER SHARE (EPS)

13. Earnings Per Common Share (EPS)

The basic EPS computation is based on the weighted average number of common shares outstanding, adjusted to reflect all stock dividends and stock splits. The diluted EPS computation is based on those shares used in the basic EPS computation plus common shares that would have been outstanding assuming issuance of common shares for all dilutive potential common shares outstanding and adjusted to reflect all stock dividends and stock splits.

The following table presents the computation of basic and diluted EPS:

Three Months Ended March 31,
(dollars in millions, except per common share data)		2020		2019
Numerator for EPS:
Income from continuing operations	$	1,654	$	937
Less: Net income (loss) from continuing operations attributable to noncontrolling interests		(95)		283
Less: Preferred stock dividends		7		-
Income attributable to AIG common shareholders from continuing operations		1,742		654
Income from discontinued operations, net of income tax expense		-		-
Net income attributable to AIG common shareholders	$	1,742	$	654
Denominator for EPS:
Weighted average common shares outstanding — basic		874,213,630		875,383,084
Dilutive common shares		4,652,583		2,129,160
Weighted average common shares outstanding — diluted(a)		878,866,213		877,512,244
Income per common share attributable to AIG common shareholders:
Basic:
Income from continuing operations	$	1.99	$	0.75
Income from discontinued operations	$	-	$	-
Income attributable to AIG common shareholders	$	1.99	$	0.75
Diluted:
Income from continuing operations	$	1.98	$	0.75
Income from discontinued operations	$	-	$	-
Income attributable to AIG common shareholders	$	1.98	$	0.75

(a)Dilutive common shares included our share-based employee compensation plans and a weighted average portion of the 10-year warrants issued to AIG shareholders as part of AIG’s recapitalization in January 2011. The number of common shares excluded from diluted shares outstanding was 67.2 million and 64.3 million for the three-month periods ended March 31, 2020 and 2019, respectively, because the effect of including those common shares in the calculation would have been anti-dilutive.For information about our repurchases of AIG Common Stock see Note 12 herein.