INSURANCE LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2021

Claims Development [Line Items]

Schedule of reconciliation of activity in the liability for unpaid claims and claims adjustment expense

The following table presents the rollforward of activity in Loss Reserves:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)		2021		2020		2021		2020
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	78,832	$	77,747	$	77,720	$	78,328
Reinsurance recoverable		(35,271)		(31,114)		(34,431)		(31,069)
Initial allowance upon CECL adoption		-		-		-		164
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		43,561		46,633		43,289		47,423
Losses and loss adjustment expenses incurred:
Current year		3,870		4,248		7,795		8,359
Prior years, excluding discount and amortization of deferred gain		(29)		(25)		(13)		(26)
Prior years, discount charge (benefit)		34		34		16		110
Prior years, amortization of deferred gain on retroactive reinsurance(a)		(22)		(76)		(94)		(151)
Total losses and loss adjustment expenses incurred		3,853		4,181		7,704		8,292
Losses and loss adjustment expenses paid:
Current year		(895)		(910)		(1,223)		(1,252)
Prior years		(2,620)		(3,790)		(6,204)		(8,141)
Total losses and loss adjustment expenses paid		(3,515)		(4,700)		(7,427)		(9,393)
Other changes:
Foreign exchange effect		113		(39)		357		(269)
Allowance for credit losses		-		-		-		-
Retroactive reinsurance adjustment (net of discount)(b)		103		138		192		160
Fortitude sale(c)		-		(3,818)		-		(3,818)
Total other changes		216		(3,719)		549		(3,927)
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		44,115		42,395		44,115		42,395
Reinsurance recoverable		34,866		35,458		34,866		35,458
Total	$	78,981	$	77,853	$	78,981	$	77,853

(a)Includes $1 million and $11 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 June 30, 2021 and 2020, respectively, and $18 million and $19 million for the six-month periods ended June 30, 2021 and 2020, respectively.

(b) Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $17 million and $(14) million for the three-month periods ended June 30, 2021 and 2020, respectively, and $56 million and $58 million for the six-month periods ended June 30, 2021 and 2020, respectively.

(c) On June 2, 2020, AIG completed the Majority Interest Fortitude Sale. Concurrent with the Majority Interest Fortitude Sale, AIG established a reinsurance recoverable. Refer to Note 1 for additional information.

Schedule of components of the loss reserve discount

	June 30, 2021						December 31, 2020
	North						North
	America			Other			America			Other
	Commercial			Operations			Commercial			Operations
(in millions)	Insurance			Run-Off(b)		Total	Insurance			Run-Off(b)		Total
U.S. workers' compensation	$	1,646	$	-	$	1,646	$	1,636	$	-	$	1,636
Retroactive reinsurance		(855)		-		(855)		(911)		-		(911)
Total reserve discount(a)	$	791	$	-	$	791	$	725	$	-	$	725

(a)Excludes $159 million and $151 million of discount related to certain long tail liabilities in the UK at June 30, 2021 and December 31, 2020, respectively.

(b) Excludes $508 million and $493 million, respectively, of discount which was 100 percent ceded to Fortitude Re at June 30, 2021 and December 31, 2020. On June 2, 2020, we completed the Majority Interest Fortitude Sale. For additional information see Note 1 to the Condensed Consolidated Financial Statements.

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

Schedule of loss reserve discount and loss reserve discount benefit (charge)

Three Months Ended June 30,	2021						2020
	North						North
	America			Other			America			Other
	Commercial		Operations				Commercial		Operations
(in millions)	Insurance		Run-Off			Total	Insurance		Run-Off(d)			Total
Current accident year	$	12	$	-	$	12	$	18	$	-	$	18
Accretion and other adjustments to prior year discount		(34)		-		(34)		(25)		(9)		(34)
Effect of interest rate changes		-		-		-		-		-		-
Net reserve discount benefit (charge)(a)		(22)		-		(22)		(7)		(9)		(16)
Change in discount on loss reserves ceded under
retroactive reinsurance		17		-		17		(14)		-		(14)
Net change in total reserve discount(b)	$	(5)	$	-	$	(5)	$	(21)	$	(9)	$	(30)
Six Months Ended June 30,	2021						2020
	North						North
	America			Other			America			Other
	Commercial		Operations				Commercial		Operations
(in millions)	Insurance		Run-Off			Total	Insurance		Run-Off(d)			Total
Current accident year	$	26	$	-	$	26	$	38	$	-	$	38
Accretion and other adjustments to prior year discount		(16)		-		(16)		(92)		(18)		(110)
Effect of interest rate changes		-		-		-		-		-		-
Net reserve discount benefit (charge)(a)		10		-		10		(54)		(18)		(72)
Change in discount on loss reserves ceded under
retroactive reinsurance		56		-		56		58		-		58
Net change in total reserve discount(c)	$	66	$	-	$	66	$	4	$	(18)	$	(14)

(a) For the three- and six-month periods ended June 30, 2021 and June 30, 2020, the changes in net reserve discount benefit (charge) were primarily driven by accretion and changes to nominal reserves.

(b) Excludes $2 million and $(6) million discount related to certain long tail liabilities in the UK for the three-month periods ended June 30, 2021 and 2020, respectively.

(c) Excludes $9 million and $(8) million discount related to certain long tail liabilities in the UK for the six-month periods ended June 30, 2021 and 2020, respectively.

(d) On June 2, 2020, we completed the Majority Interest Fortitude Sale. Refer to Note 1 for additional information. Change in discount prior to the sale is included in the above for the three- and six-month periods ended June 30, 2020. Following the sale, 100 percent of the discount is ceded to Fortitude Re.