Investor Presentaiton
Financial Reporting Related to Fortitude Sale
On June 2, 2020, AIG completed the sale of a majority interest in Fortitude; AIG'S GAAP balance sheet and income
statement will continue to include investments retained as collateral by the AIG ceding companies as part of the funds
withheld reinsurance arrangement; the difference in carrying value and fair value is primarily reported in AOCI
Assets
A reinsurance recoverable was set up to reflect loss
reserves and policyholders benefits ceded to
Fortitude Re, which totalled $34.6B at June 30, 2020
AIG continues to reflect the FWA primarily in its
investment portfolio, at carrying value of $41.5B at
June 30, 2020
Liabilities
Loss reserves and policyholder benefits continue to
include reserves ceded to Fortitude Re
The funds withheld payable contains an embedded
derivative which is marked-to-market each period.
The carrying value of the funds withheld payable is
$42.0B as of June 30, 2020
June 30, 2020
(in millions)
Fixed maturity securities - available for sale
Fixed maturity securities - fair value option
Fair
Value of
Summary of Assets Supporting the Funds Withheld Arrangements
Carrying
Value of
Corresponding Accounting Policy
Assets
Assets
$35,380
$35,380
Fair value through other comprehensive income
190
190
Commercial mortgage loans
Real estate investments
Private equity funds / hedge funds
Policy loans
Derivative assets, net
Other
Total
3,537
3,781
385
600
978
978
431
431
640
640
$41,541
$42,000
Fair value through net investment income
Amortized cost
Amortized cost
Fair value through net investment income
Amortized cost
Fair value through realized capital gains (losses)
Amortized cost
AIG
1) The change in the net unrealized gains (losses) on available for sale securities related to the Fortitude Re FWA was $555M ($438M after-tax) during the 2Q20
post deconsolidation period (June 2, 2020-June 30, 2020).
2) The derivative assets have been presented net of collateral. The derivative assets supporting the Fortitude Re funds withheld arrangements had a fair market
value of $650M as of June 30, 2020. These derivative assets are fully collateralized.
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