AMERICAN INTERNATIONAL GROUP INC
For the period ended Dec 31, 2024. Filed Feb 13, 2025.
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FY2024 · Filed Feb 13, 2025
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Discontinued Operations Presentation
- Discontinued Operations Presentation
DISCONTINUED OPERATIONS PRESENTATION
We present a business, or a component of an entity, as discontinued operations if a) it meets the held-for-sale criteria, or is disposed of by sale, or is disposed of other than by sale, and b) the disposal of the business, or component of an entity, represents a strategic shift that has (or will have) a major effect on AIG’s financial results.
Pre-Deconsolidation of Corebridge
Corebridge completed its initial public offering in September 2022 and AIG continued to sell its interest in Corebridge through secondary offerings. On May 16, 2024, AIG entered into a stock purchase agreement with Corebridge and Nippon Life Insurance Company (Nippon). On June 3, 2024, AIG closed on a secondary offering of 30 million shares of Corebridge common stock. The sale was recorded as an equity transaction as AIG controlled Corebridge as of the transaction date. The aggregate gross proceeds of the offering, before deducting underwriting discounts and commission and other expenses payable by AIG, were $876 million. As a result of the offering, AIG recorded an increase of $261 million in Total AIG shareholders' equity.
Deconsolidation of Corebridge
On June 9, 2024, AIG held 48.4 percent of Corebridge common stock, waived its right to majority representation on the Corebridge Board of Directors and one of AIG's designees resigned from the Corebridge Board of Directors as of June 9, 2024 (the Deconsolidation Date). As a result, AIG met the requirements for the deconsolidation of Corebridge.
In the second quarter of 2024, AIG recognized a loss of $4.8 billion as a result of the deconsolidation, mainly due to the recognition of an accumulated comprehensive loss of $7.2 billion. The loss is recorded as a component of discontinued operations.
The historical financial results of Corebridge, for all periods presented, are reflected in these Consolidated Financial Statements as discontinued operations. In addition, the assets and liabilities of Corebridge are classified as Assets of discontinued operations and Liabilities of discontinued operations in AIG’s Consolidated Balance Sheets as of December 31, 2023.
Post Deconsolidation of Corebridge
Subsequent to the Deconsolidation Date, AIG elected the fair value option and reflects its retained interest in Corebridge as an equity method investment in Other invested assets using Corebridge’s stock price as its fair value. Dividends received from Corebridge and changes in its stock price are recognized in Net investment income.
From August 2024 to November 2024, AIG sold approximately 43 million shares of Corebridge common stocks. The aggregate proceeds received from these transactions were approximately $1.3 billion.
On December 9, 2024, AIG completed the sale of approximately 120 million shares of its Corebridge common stock, representing a 21.6 percent ownership stake, to Nippon for $31.47 per share for an aggregate purchase price of $3.8 billion, which resulted in a $282 million gain recognized in Net investment income in the fourth quarter of 2024.
Due to share repurchases by Corebridge and sale of shares by AIG after the Deconsolidation Date, as of December 31, 2024, AIG held 22.7 percent of the outstanding common stock of Corebridge.
The following provides Corebridge's pre-tax income for the period June 10, 2024 to December 31, 2024, as well as our equity method income (representing the sum of dividends received and changes in its stock price since June 9, 2024).
| (in millions) | |
|---|---|
| Corebridge pre-tax income | $1,574 |
| Equity method income (loss) related to Corebridge (based on fair value) | $601 |
The following table summarizes the components of assets and liabilities of discontinued operations on the Consolidated Balance Sheets at December 31, 2023:
| December 31, 2023 | |
|---|---|
| Assets: | |
| Investments: | |
| Fixed maturity securities: | |
| Bonds available for sale, at fair value, net of allowance for credit losses | $166,657 |
| Other bond securities, at fair value | 4,579 |
| Equity securities, at fair value | 63 |
| Mortgage and other loans receivable, net of allowance for credit losses | 46,732 |
| Other invested assets | 9,916 |
| Short-term investments | 4,346 |
| Total investments | 232,293 |
| Cash | 618 |
| Accrued investment income | 2,011 |
| Premiums and other receivables, net of allowance for credit losses and disputes | 709 |
| Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes | 26,772 |
| Reinsurance assets - other, net of allowance for credit losses and disputes | 2,519 |
| Deferred income taxes | 8,307 |
| Deferred policy acquisition costs | 10,782 |
| Market risk benefit assets, at fair value | 912 |
| Other assets, net of allowance for credit losses(a) | 2,820 |
| Separate account assets, at fair value | 91,005 |
| Total assets held for sale/assets of discontinued operations | $378,748 |
| Liabilities: | |
| Unearned premiums | $65 |
| Future policy benefits | 57,946 |
| Policyholder contract deposits | 161,979 |
| Market risk benefit liabilities, at fair value | 5,705 |
| Other policyholder funds | 2,862 |
| Fortitude Re funds withheld payable | 25,957 |
| Other liabilities | 8,790 |
| Short-term and long-term debt | 9,420 |
| Debt of consolidated investment entities | 2,360 |
| Separate account liabilities | 91,005 |
| Total liabilities held for sale/liabilities of discontinued operations | $366,089 |
(a)Other assets, net of allowance for credit losses includes goodwill and other intangibles of $116 million and $3 million, respectively, at December 31, 2023.
The following table presents the amounts related to the operations of Corebridge that have been reflected in Net income from discontinued operations:
| Years Ended December 31, | |||
|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 |
| Revenues: | |||
| Premiums | $2,723 | $7,690 | $5,091 |
| Policy fees | 1,269 | 2,797 | 2,913 |
| Net investment income | 5,238 | 11,146 | 9,398 |
| Net realized gains (losses) | (923) | (3,530) | 6,236 |
| Other income | 372 | 761 | 816 |
| Total revenues | 8,679 | 18,864 | 24,454 |
| Benefits, losses and expenses: | |||
| Policyholder benefits and losses incurred | 3,618 | 9,362 | 6,715 |
| Change in the fair value of market risk benefits, net | (350) | 2 | (960) |
| Interest credited to policyholder account balances | 2,184 | 4,424 | 3,746 |
| Amortization of deferred policy acquisition costs | 465 | 1,037 | 1,013 |
| General operating and other expenses | 1,350 | 3,100 | 2,962 |
| Interest expense | 249 | 620 | 522 |
| Net (gain) loss on divestitures and other | (191) | (672) | (71) |
| Total benefits, losses and expenses | 7,325 | 17,873 | 13,927 |
| Income (loss) from discontinued operations before income tax expense (benefit) and loss on disposal of discontinued operations | 1,354 | 991 | 10,527 |
| Income tax expense (benefit) | 226 | (146) | 2,144 |
| Income (loss) from discontinued operations, net of income taxes before loss on disposal of discontinued operations | 1,128 | 1,137 | 8,383 |
| Loss on disposition of operations, net of tax | (4,754) | — | — |
| Income (loss) from discontinued operations, net of income taxes | (3,626) | 1,137 | 8,383 |
| Less: Net income (loss) from discontinued operations attributable to noncontrolling interests | 478 | 235 | 1,046 |
| Net income (loss) from discontinued operations attributable to AIG | $(4,104) | $902 | $7,337 |
DISCONTINUED OPERATIONS LOSS PRESENTATION
The loss recognized in the second quarter of 2024 for the deconsolidation of Corebridge includes (i) $8.5 billion of retained investment in Corebridge (Corebridge’s quoted stock price is used for fair value measurement, which is classified as level 1 in the fair value hierarchy), (ii) $817 million of certain other investments (considered level 3 in the fair value hierarchy) which are measured based on valuation techniques (i.e., third-party appraisals) that use significant inputs (i.e., terminal capital rate and discount rate), and (iii) $378 million of an unsettled receivable. For details on fair value hierarchy, see Note 5. The loss on deconsolidation of Corebridge, as of December 31, 2024, is calculated as follows:
| (in millions) | |
|---|---|
| Corebridge retained investment (294.2 million shares at $28.90 per share at June 9, 2024) | $8,502 |
| Retained interest in certain investment entities and other assets | 1,180 |
| Net fair value of assets retained | 9,682 |
| Corebridge book value | 12,409 |
| Less: Noncontrolling interests | 5,732 |
| Corebridge book value excluding noncontrolling interests | 6,677 |
| Pre-tax gain on sale | 3,005 |
| Tax expense | 545 |
| Subtotal: After tax gain on sale before reclassification adjustment | 2,460 |
| Reclassification adjustment of Accumulated other comprehensive loss | (7,214) |
| After-tax loss on sale of Corebridge | $(4,754) |
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