APPENDIX F
ADDITIONAL INFORMATION ABOUT THE COMPANY AND FINANCIAL STATEMENTS
Description of the Business
Overview
American General Life Insurance Company (“AGL” or the “Company”) is a direct, wholly-owned subsidiary of AGC Life Insurance Company (“AGC Life” or “AGC”), which is an indirect, wholly-owned subsidiary of Corebridge Financial, Inc., a Delaware corporation (“Corebridge”). AGL is a provider in the United States of individual term and universal life insurance solutions to middle-income and high-net-worth customers, as well as a provider of fixed and variable annuities. AGL is a stock life insurance company domiciled and licensed under the laws of the State of Texas and is subject to regulation by the Texas Department of Insurance and each state insurance regulator where it conducts insurance business. AGL was incorporated on April 11, 1960. The U.S. federal employer identification number of AGL is 25-0598210. The statutory home office of AGL is 2727-A Allen Parkway, 3-D1, Houston, TX 77019. The telephone number of AGL is +1 (713) 522-1111. AGL’s indirect subsidiary, Corebridge Capital Services, Inc. (“CCS”), formerly known as AIG Capital Services, Inc., is registered as a broker-dealer under the Exchange Act and is a member of FINRA.
A simplified organizational structure summarizing AGL’s legal entity structure is below. On September 19, 2022, Corebridge completed an initial public offering (the “IPO”) in which American International Group, Inc., a Delaware corporation (“AIG”) sold 80.0 million shares of Corebridge common stock to the public. Since the IPO, AIG has sold portions of its interest in Corebridge through secondary public offerings. As of August 28, 2024, AIG owned approximately 49.0% of the outstanding Corebridge common stock.
On May 16, 2024, Corebridge entered into a stock purchase agreement (“Nippon Stock Purchase Agreement”) by and among Corebridge, AIG, Nippon Life Insurance Company, a mutual company organized under the laws of Japan (“Nippon”) pursuant to which AIG agreed to sell approximately 122.0 million shares, representing approximately 20% of the issued and outstanding common stock of Corebridge at the signing to Nippon. The transaction is expected to close by the first quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of specified regulatory approvals. On May 16, 2024, in connection with the execution of the Stock Purchase Agreement, Corebridge entered into an amendment to the Separation Agreement, dated as of September 14, 20222, by and between Corebridge and AIG (the “Separation Agreement”), pursuant to which Corebridge and AIG agreed to certain changes with respect to AIG’s board designation rights and AIG’s right to consent over certain actions by Corebridge, as set forth in the Separation Agreement.
On June 9, 2024, AIG waived its right under the Separation Agreement to include a majority of the candidates on each slate of candidates recommended by the Corebridge Board of Directions to Corebridge’s stockholders in connection with a meeting of stockholders. On June 10, 2024, AIG announced that it has met the requirements for the deconsolidation for accounting purposes of Corebridge.
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AGL’s diversified and comprehensive product portfolio includes term life insurance, universal, variable universal and whole life insurance, accident and health insurance, single- and flexible-premium deferred fixed and variable annuities, fixed index deferred annuities, single-premium immediate and deferred income annuities, private placement variable annuities, private placement variable universal life, structured settlements, corporate- and bank- owned life insurance, pension risk transfer annuities, guaranteed investment contracts (“GICs”), funding agreements, stable value wrap products and group benefits. The dotted line between AGL and the Issuer denotes that the Issuer is a special purpose statutory trust organized in a Series. See “Description of the Issuer.”
AGL distributes its products through a broad multi-channel distribution network, which includes independent marketing organizations, independent insurance agents, financial advisors, banks, broker-dealers and direct marketing. AGL generates revenues and profitability as follows:
| | • | | AGL earns revenues primarily from insurance premiums, policy fees and income from investments. |
| | • | | AGL’s operating expenses consist of policyholder benefits and losses incurred, interest credited to policyholders, commissions and other costs of selling and servicing its products, and general operating expenses. |
| | • | | AGL’s profitability is dependent on its ability to properly price and manage risk on insurance and annuity products, to manage its portfolio of investments effectively, and to control costs through expense discipline. |
AGL’s major product lines include:
| | • | | Life Insurance: AGL offers a competitive and flexible product suite that is designed to meet the needs of its specific customer segments and actively manages new product margins and in-force profitability. AGL actively participates in chosen product lines that it believes have better growth |
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| | and margin prospects for its offerings, including term life insurance (“Term”) and index universal life insurance (“IUL”), and has reduced its exposure to interest rate sensitive products, including guaranteed universal life insurance (“GUL”) and guaranteed variable universal life insurance (“VUL”), the latter of which AGL no longer offers. AGL’s dynamic product offerings and design expertise are complemented by its (i) long-term commitment to the U.S. market; (ii) robust distribution capabilities, which enable it to expand its presence in key pockets of growth, such as guaranteed issuance whole life (“GIWL”) and simplified issue whole life (“SIWL”); and (iii) disciplined underwriting profile. AGL continues to execute its multi-year strategies to enhance returns, including building state-of-the-art digital platforms and underwriting innovations, which are expected to continue to bring process improvements and cost efficiencies. |
AGL is focused on providing financial security for its policyholders and their loved ones when they need it most. AGL’s life insurance and protection products include Term, IUL and smaller face amount whole life insurance (“Whole Life
AGL’s traditional life insurance (“Traditional Life”) products include Term and Whole Life. AGL’s universal life insurance (“Universal Life”) products include IUL and GUL.
Traditional Life
| | • | | Term Life Insurance: Term provides death benefit coverage and level premiums for a specified number of years. A focus area for AGL’s business, AGL offers Term products with coverage durations and coverage tailored to serve AGL’s customers’ financial plans. AGL has key focus ages between 20 and 70 years old. |
| | • | | Whole Life Insurance: Whole Life provides permanent death benefit coverage and a tax-advantaged savings component that accumulates at a fixed rate. AGL offers a GIWL product focused on the senior final expense market at low face amounts. With the aging U.S. population, AGL sees this as an area that AGL expects to meaningfully contribute to AGL’s growth. AGL also offers a SIWL product for this market, offering flexibility for this growing senior final expense market. For both GIWL and SIWL products, AGL targets customers between the ages of 50 and 80 years old. |
| | • | | GIWL is underwritten with a 100% acceptance rate regardless of an individual’s underlying health. This underwriting methodology is typically paired with a graded death benefit product that limits death benefit proceeds during the first few years of a life insurance policy to minimize adverse mortality impacts and keep coverage affordable. SIWL underwriting requires limited applicant information relative to traditional underwriting, requiring an abbreviated application without a physical examination or laboratory testing. This streamlined structure is typically associated with simpler products and lower death benefit amounts to ensure the product offering is made available at an affordable price and meeting different client needs. |
Universal Life
| | • | | Index Universal Life Insurance: IUL provides permanent death benefit coverage and a tax- advantaged savings component that accumulates with performance tied to a chosen index. AGL provide two main IUL products, Max Accumulator+ and Value+ Protector, to meet the accumulation and protection needs of AGL’s policyholders in a wide range of target ages from younger to middle-aged. These products allow the statutory policyholder to participate in a portion of the performance of an index price movement while also protecting them from negative return risk. Both of AGL’s IUL products provide some customers with a fluid-less option up to a $2 million face amount, offering a streamlined customer experience. The Max Accumulator+ product has key focus ages between 30 and 55 years old, while the Value+ Protector product has key focus ages between 45 and 70 years old. |
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| | • | | Guaranteed Universal Life Insurance: GUL provides permanent death benefit coverage and a tax- advantaged savings component that accumulates at a crediting rate set by the insurance company. AGL issues a guaranteed death benefit product that provides low-cost permanent death benefit protection. Beginning in 2019, AGL began to diversify sales away from GUL to focus on less interest rate sensitive market segments, resulting in a steep decline in sales. AGL does not anticipate this product line to be a large contributor to AGL’s portfolio over the near term. |
| | • | | Fixed Annuities: AGL offers a range of fixed annuity products that offer principal protection and a specified rate of return over a single year or multi-year time periods. Beyond the guaranteed return periods, AGL offers renewal crediting rates that are dynamically managed in coordination with its investment team. AGL also offers optional living benefits for some of its fixed annuity products. The market risk associated with these living benefits is mitigated as the return on fixed annuities uses the guaranteed minimum interest rate as a floor, which prevents the account value from declining due to market returns. AGL bears the risk of investment performance for fixed annuity products. These products primarily generate spread-based income on the difference between the investment income earned on the assets backing the policy (which are held in AGL’s general account) and the interest credited to the policyholder. AGL’s product teams closely coordinate with its investment management function to efficiently manage this spread income. Such coordination provides AGL with the ability to quickly reprice and reposition its market offerings as new asset opportunities are sourced and as market conditions change in addition to closely managed renewal rates. |
| | • | | Variable Annuities:. AGL offers variable annuities that allow a customer to choose from a selection of investment options. AGL’s variable annuity products generate fee-based income that is typically paid as a percentage of the assets in the investment options selected by the policyholder and held in one of its separate accounts. Policyholders generally bear the risk of the investment performance of assets held in a separate account. These products typically offer, and in some cases in order to limit volatility, require a portion of the account value to be allocated to general account investment options. AGL’s variable annuity products offer guaranteed benefit features (collectively known as “GMxBs”), including GMDBs and living benefits which provide guaranteed lifetime income, such as GMWBs. |
| | • | | Index Annuities: AGL offers fixed index annuity products that provide its customers with returns linked to the underlying returns of various market indices. In recent years, AGL has primarily sold modified single premium contracts that generally allow for multiple premium payments in the first 30 contract days. Virtually all of the policies in force at December 31, 2023 are single premium contracts. AGL’s products can include a range of optional benefits including guaranteed minimum death benefits (“GMDBs”) and guaranteed minimum withdrawal benefits (“GMWBs”). The market risk associated with these guarantees is mitigated as fixed index annuity account values generally do not decrease even when the chosen index has negative performance. In addition, after a contractual holding period, policyholders generally have an option to annuitize their contract and receive annual annuity payments for a stated term or for the life of the annuitant, based upon their annuitization election. Policyholders with a GMWB rider may take annual withdrawals at a stated contractual percentage after a required holding period without the need to elect annuitization. |
| | • | | Institutional Markets: AGL’s Institutional Markets business provides sophisticated, bespoke risk management solutions to both financial and non-financial institutions. Institutional Markets complements AGL’s retail businesses by targeting large institutional clients. Institutional Markets allows AGL to opportunistically source long-term liabilities with attractive risk-adjusted return profiles that are consistent with its overall risk management philosophy. AGL’s Institutional Markets products are distributed in very specialized markets. Its product portfolio consists of annuities sold through the pension risk transfer (“PRT”) markets and annuities sold in the structured settlements markets, life insurance sold through the corporate-owned life insurance (“COLI”) and bank owned life insurance (“BOLI”) markets and capital market products, including guaranteed investment contracts (“GICs”) and synthetic products such as stable value wrap (“SVW”) contracts. Institutional Markets also offers reinsurance for pension liabilities, mainly from cedants based in the United Kingdom (“UK”). The |
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| | breadth of AGL’s Institutional Markets offering allows AGL to be selective in its liability generation and allocate capital towards the areas where it sees the greatest risk-adjusted returns. Over time, this approach has resulted in a collection of strong business lines that each contribute to Institutional Markets’ earnings. |
Regulatory Matters and Litigation
Various federal, state or other regulatory agencies may from time-to-time review, examine or inquire into the operations, practices and procedures of AGL, such as through financial examinations, subpoenas, investigations, market conduct exams or other regulatory inquiries. Based on the current status of pending regulatory examinations, investigations and inquiries involving AGL, AGL believes it is not likely that these regulatory examinations, investigations or inquiries will have a material adverse effect on the financial position, results of operations or cash flows of AGL.
Additionally, various lawsuits against AGL have arisen in the ordinary course of business. AGL continues to defend against Moriarty v. American General Life Insurance Co. (S.D. Cal.), a putative class action involving Sections 10113.71 and 10113.72 of the California Insurance Code, which was instituted against AGL on July 18, 2017. In general, those statutes require that for life-insurance policies issued and delivered in California: (1) the policy must contain a 60-day grace period following non-payment of premium during which the policy remains in force; (2) the insurer must provide a 30-day pre-lapse notice; and (3) the insurer must notify policy owners of the right to designate a secondary recipient for lapse notices. The plaintiff contends AGL did not comply with these requirements for a policy issued before these statutes went into effect. The plaintiff seeks damages and other relief. AGL asserts various defenses to the plaintiff’s claims and to class certification. In 2022, the District Court held that a trial was necessary to determine whether AGL was liable on the plaintiff’s breach of contract claim, and it denied class certification. In May 2023, the case was reassigned to a new judge. On August 14, 2023, the District Court granted the plaintiff’s motion for summary judgment on the plaintiff’s breach of contract claim. On September 26, 2023, the District Court decided that good cause exists to allow the plaintiff to file a third motion for class certification. At the same time, however, the District Court certified its August 14, 2023 order for interlocutory appeal to the Ninth Circuit and stayed trial court proceedings pending the outcome of AGL’s appeal. The Ninth Circuit granted AGL’s petition for interlocutory appeal on November 21, 2023, which remains pending. AGL filed its opening brief on April 15, 2024. The Ninth Circuit granted the plaintiff’s request for an extension of time to file an answering brief, which was due and filed on June July 22, 2024. AGL’s reply brief is due on September 11, 2024.
AGL is also defending other actions in California involving similar issues: (i) Allen v. Protective Life Insurance Co. and AGL (E.D. Cal.), which was filed in state court on September 26, 2022. After being removed to federal court, the plaintiffs filed a motion on August 11, 2023, seeking leave to amend the complaint to add class action allegations against AGL. On November 8, 2023, the District Court issued an order that plaintiffs’ motion will be held in abeyance pending resolution of the class certification issues in Moriarty. (ii) Chuck v. American General Life Insurance Co. (C.D. Cal.), which was filed in state court on September 6, 2023, as a putative class action. After being removed to federal court, the plaintiffs filed an amended complaint on January 8, 2024, dropping the class action allegation against AGL and adding a sales agent as a defendant. On April 15, 2024, the District Court entered a scheduling order setting the case for trial on February 18, 2025.
AGL has also recently been named as a defendant in other individual matters potentially implicating the CA Statutes: Koch Family Trust v. American General Life Insurance Co., Case No. 2:24-cv-5522 (C.D. Cal.), filed on May 15, 2024; and Wong v. American General Life Insurance Co., Case No. 24STCV19089 (Superior Court of Los Angeles County, California), filed on July 31, 2024.
These cases are in the early stages, and AGL expects their progress will be influenced by future developments in Moriarty and cases against other insurers involving the same insurance statutes. AGL has accrued its current estimate of probable loss with respect to these litigation matters.
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Except as discussed above and in the Statutory-Basis Financial Statements, AGL believes it is unlikely that contingent liabilities arising from such lawsuits, will have a material adverse effect on its financial position, results of operation or cash flows.
Regulation
Dodd-Frank
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), signed into law in 2010, brought about extensive changes to financial regulation in the United States and established the Financial Stability Oversight Council. Dodd-Frank also established the Federal Insurance Office (“FIO”) to serve as the central insurance authority in the federal government. While not serving a regulatory function FIO performs certain duties related to the business of insurance, represents the U.S. in international insurance forums, and has authority to collect information on the insurance industry and recommend prudential standards. Certain parts of Dodd-Frank are noted below in more detail.
Title V of Dodd-Frank authorizes the United States to enter into covered agreements with foreign governments or regulatory entities regarding the business of insurance and reinsurance. On September 22, 2017, the United States and the EU entered into such an agreement to address, among other things, reinsurance collateral and group capital requirements, and on December 18, 2018, the United States signed a covered agreement with the U.K, which is similar to the agreement with the EU. The National Association of Insurance Commissioners (“NAIC”) adopted amendments to the credit for reinsurance model law and regulation and adopted the Group Capital Calculation (“GCC”) to conform to the requirements of the covered agreements. Numerous states, including AGL’s domiciliary states, have adopted the GCC requirements in their statutes.
Title VII of Dodd-Frank provides for significantly increased regulation of, and restrictions on, swap and security-based swap markets and transactions. This regulation has affected and, as additional regulations come into effect, could further affect various activities of insurance and other financial services companies. Relevant regulatory requirements include (i) margin and collateral requirements, (ii) regulatory reporting (iii) mandated clearing through central counterparties and execution through regulated swap execution facilities for certain swaps (other than security-based swaps, which are not currently subject to mandatory execution or clearing requirements but could be in the future). The Commodities Futures Trading Commission (“CFTC”), which oversees and regulates the U.S. swap, commodities and futures markets, and the SEC, which oversees and regulates the U.S. securities and security-based swap markets, have finalized the majority of the rules to carry out their mandates under Title VII of Dodd-Frank. Increased regulation of, and restrictions on, derivatives markets and transactions, including regulations related to initial margin for swaps and securities-based swaps, could increase the cost of AGL’s trading and hedging activities, reduce liquidity and reduce the availability of customized hedging solutions and derivatives.
Dodd-Frank also mandated a study to determine whether stable value contracts should be included in the definition of “swap.” If that study concludes that stable value contracts are swaps, Dodd-Frank authorizes certain federal regulators to determine whether an exemption from the definition of a swap for stable value contracts is appropriate and in the public interest. AGL’s Institutional Markets business issues stable value contracts. AGL cannot predict what regulations might emanate from the aforementioned study or be promulgated applicable to this business in the future. In the event that the study determines that stable value contracts should be included in the definition of “swap,” Section 719(d)(1)(C) of Dodd-Frank provides that such determination would only apply to newly issued stable value contracts.
Title II of Dodd-Frank provides that a financial company whose largest United States. subsidiary is an insurer may be subject to a special orderly liquidation process outside the Bankruptcy Code. U.S. insurance subsidiaries of any such financial company, however, would be subject to rehabilitation and liquidation proceedings under state insurance law.
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Pursuant to Dodd-Frank, federal banking regulators adopted regulations that apply to certain qualified financial contracts, including many derivatives contracts, securities lending agreements and repurchase agreements, with certain banking institutions and certain of their affiliates. These regulations, which became effective on January 1, 2019, generally require the covered banking institutions and affiliates to include contractual provisions in their qualified financial contracts that limit or delay certain counterparty rights that may arise in connection with the banking institution or affiliate becoming subject to a bankruptcy or similar proceeding. Nearly all of AGL’s derivatives, securities lending agreements and repurchase agreements with certain banking institutions and certain of their affiliates are subject to these regulations, and as a result, AGL may be required to delay terminating transactions, realizing collateral posted, or otherwise mitigating exposures under these agreements. AGL is subject to greater risk and could receive a more limited or delayed recovery in the event of a default by such bank institution or the applicable affiliates.
FSB and IAIS
The Financial Stability Board (the “FSB”) consists of representatives of national financial authorities of the G20 countries. The FSB is not a regulator but is focused primarily on promoting international financial stability.
The (International Association of Insurance Supervisors (“IAIS”) represents insurance regulators and supervisors of more than 200 jurisdictions (including regions and states) in nearly 140 countries and seeks to promote globally consistent insurance industry supervision. The IAIS is not a regulator, but one of its activities is to develop insurance regulatory standards for use by local authorities across the globe. IAIS has adopted ComFrame, a Common Framework for the Supervision of Internationally Active Insurance Groups (“IAIGs”). ComFrame sets out qualitative and quantitative standards for group supervision, governance and internal controls, enterprise risk management, and recovery and resolution planning. As part of ComFrame, the IAIS is developing a risk-based global insurance capital standard (“ICS”) applicable to IAIGs, with the purpose of creating a common language for supervisory discussions of group solvency of IAIGs. Although AIG has been designated as an IAIG, Corebridge is not to date separately determined to be designated as an IAIG.
The IAIS has adopted a holistic framework (“Holistic Framework”) for the assessment and mitigation of systemic risk in the insurance sector. The Holistic Framework recognizes that systemic risk can emanate from specific activities and exposures arising from either sector-wide trends or concentrations in individual insurers.
In light of the IAIS adoption of the Holistic Framework, the FSB decided in December 2022 to discontinue the annual identification of Global Systematically Important Insurers in favor of instead applying the Holistic Framework to inform the FSB’s consideration of systemic risk in insurance.
The standards issued by the FSB and/or the IAIS are not binding on the United States or other jurisdictions around the world unless and until the appropriate local governmental bodies or regulators adopt laws and regulations implementing such standards. At this time, as these standards have been adopted only relatively recently and in some cases remain under development, it is not known how the IAIS’s frameworks and/or standards might be implemented in the United States and other jurisdictions around the world or how they might ultimately apply to Corebridge or AGL.
ERISA
AGL provides products and services to certain employee benefit plans that are subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Code. Plans subject to ERISA include certain pension and profit- sharing plans and welfare plans, including health, life and disability plans. As a result, AGL’s activities are subject to the restrictions imposed by ERISA and the Code, including the requirement under ERISA that fiduciaries must perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that fiduciaries may not cause a covered plan to engage in certain prohibited transactions. The applicable provisions of ERISA and the Code are subject to enforcement by the DOL, the IRS and the Pension Benefit Guaranty Corporation.
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Standard of Care Developments
AGL and its distributors are subject to laws and regulations regarding the standard of care applicable to sales of AGL’s products and the provision of advice to AGL’s customers. In recent years, many of these laws and regulations have been revised or reexamined while others have been newly adopted. AGL closely monitors these legislative and regulatory activities and evaluates the impact of these requirements on it and its customers, distribution partners and financial advisers. Where needed, AGL has made significant investments to implement and enhance its tools, processes and procedures, to comply with the final rules and interpretations. These efforts and enhancements have resulted in increased compliance costs and may impact sales results and increase regulatory and litigation risk. Additional changes in standard of care requirements or new standards issued by governmental authorities, such as the DOL, the SEC, the NAIC or state regulators and/or legislators, have impacted, and may impact AGL’s businesses, results of operations and financial condition.
DOL Fiduciary Rule
On April 25, 2024, the Department of Labor (“DOL”) published a final rule in the Federal Register updating the definition for when a person is an “investment advice fiduciary” for purposes of transactions with ERISA qualified plans, related plan participants and IRAs. The DOL also published changes with respect to existing prohibited transactions exemptions (“PTEs”) relating to such advice, including PTE 84-24 and PTE 2020-02. Orders staying the rule’s September 23, 2024 effective date were issued by the U.S. district Courts for the Eastern District of Texas and the Northern District of Texas on July 25, 2024 and July 26, 2024, respectively, in connection with separate lawsuits challenging the rule. We are actively monitoring the progress of the litigation while continuing to evaluate potential impact of the DOL rule to our business.
SEC Best Interest Regulation
In June 2020, the SEC’s Regulation Best Interest (“Regulation BI”) went into effect. Regulation BI established new duties of care, compliance, disclosure, and conflict mitigation that broker-dealers and their associated persons must meet when making a recommendation of a securities transaction or investment strategy involving securities to a retail customer. As part of the rulemaking package, Form CRS also went into effect, which requires enhanced disclosures by broker-dealers and investment advisers regarding retail client relationships and certain conflicts of interest. Regulation BI and Form CRS continue to be identified as examination priorities for the SEC and the Financial Industry Regulatory Authority (“FINRA”). AGL has implemented the requirements of Regulation BI and Form CRS, and continues to monitor interpretative guidance and enforcement activity from federal securities regulators.
State Standard of Care Developments
In 2020, the NAIC adopted revisions to its Suitability in Annuity Transactions Model Regulation (#275) (“NAIC Model”) implementing a best interest standard of care applicable to sales and recommendations of annuities. The new NAIC Model conforms in large part to Regulation BI, providing that all recommendations by agents and insurers must be in the best interest of the consumer under known circumstances at the time an annuity recommendation is made, without placing agents’ or insurers’ financial interests ahead of the consumer’s interest in making a recommendation. A substantial majority of states have adopted amendments to their suitability rules based on the NAIC Model revisions. In addition, certain state insurance and/or securities regulators and legislatures have adopted, or are considering adopting, their own standards of conduct, some of which are broader in scope than the NAIC Model. For example, in 2018, the NYDFS adopted the First Amendment to Insurance Regulation 187- Suitability and Best Interests in Life Insurance and Annuity Transactions (“Regulation 187”). As amended, Regulation 187 requires producers to act in their client’s best interest when making both point-of-sale and in-force recommendations and to deliver to the client the written basis for the recommendation, as well as the facts and analysis to support the recommendation. The amended regulation also imposes additional duties on life insurance companies in relation to these transactions, such as requiring insurers to establish and maintain procedures designed to prevent financial exploitation and abuse.
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Besides New York, other states have also adopted, or are considering adopting, legislative and/or regulatory proposals implementing fiduciary duty standards with applicability to insurance producers, agents, financial advisors, investment advisers, broker-dealers and/or insurance companies. The proposals vary in scope, applicability and timing of implementation. AGL cannot predict whether any such proposals will be adopted. However, changes in standards of care could impose additional costs in the areas of compliance and employee training and affect how AGL manages its business and overall costs.
Federal Retirement Legislation
On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (“SECURE”) Act was signed into law. The SECURE Act includes many provisions affecting qualified contracts, some of which became effective upon enactment on January 1, 2020, or later, and some of which were retroactively effective.
In December 2022, Congress enacted comprehensive retirement legislation known as “SECURE 2.0.” SECURE 2.0 included many provisions affecting qualified contracts, many of which became effective in 2023, and additional ones that become effective in 2024 or subsequent years. Some of the SECURE 2.0 provisions that became effective in 2023 include, without limitation: an increase in the age at which required minimum distributions generally must commence, to age 73 from the previous age of 72; elimination of the first day of the month requirement for governmental Section 457(b) plans; and optional treatment of employer contributions as Roth sources. AGL is implementing new processes and procedures, where needed, designed to comply with the new requirements.
Securities, Investment Adviser, Broker-Dealer and Investment Company Regulations
AGL’s investment products and services are subject to applicable federal and state securities, investment advisory, fiduciary, and other laws and regulations. The principal U.S. regulators of these operations include the SEC, FINRA, CFTC, Municipal Securities Rulemaking Board, state securities commissions, state insurance departments and the DOL.
AGL’s variable life insurance, variable annuity and mutual fund products generally are subject to regulation as “securities” under applicable federal securities laws, except where exempt. Such regulation includes registration of the offerings of these products with the SEC, unless exempt from such registration, and requirements of distribution participants to be registered as broker-dealers, as well as recordkeeping, reporting and other requirements. This regulation also involves the registration of mutual funds and other investment products offered by AGL’s businesses, and the separate accounts through which AGL’s variable life insurance and variable annuity products are issued, as investment companies under the Investment Company Act of 1940, as amended (the “Investment Company Act”), except where exempt. The Investment Company Act imposes requirements relating to compliance, corporate governance, disclosure, recordkeeping, registration and other matters. In addition, the offering of these products may involve filing and other requirements under the securities, corporate, or other laws of the states and other jurisdictions where offered or organized, including the District of Columbia and U.S. territories. AGL’s separate account investment products are also subject to applicable state insurance regulation.
AGL’s indirect subsidiary, Corebridge Capital Services, Inc. (“CCS”), is registered as a broker-dealer under the Exchange Act and is a member of FINRA. This broker-dealer is involved in AGL’s life and annuity product sales, including participating in their distribution. AGL’s direct subsidiary, SunAmerica Asset Management, LLC (“SAAMCo”), is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”), serves as an investment adviser with respect to mutual funds that underlie variable products offered by AGL and oversees sub-advisers managing the assets of such mutual funds. In addition to registration requirements, the Exchange Act, the Advisers Act and the regulations thereunder impose various compliance, disclosure, qualification, recordkeeping, reporting and other requirements on SAAMCo and its
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operations. State securities laws also impose filing and other requirements on CCS and SAAMCo, except where exempt. The SEC, FINRA and other regulatory bodies also have the authority to examine regulated entities, such as CCS, and to institute administrative or judicial proceedings that may result in censure, fines, prohibitions or restrictions on activities, or other administrative sanctions.
Further, AGL’s licensed sales professionals appointed with CCS and its other employees, insofar as they sell products that are securities, including wholesale and retail activity, are subject to the Exchange Act and to examination requirements and regulation by the SEC, FINRA and state securities commissioners. Regulation and examination requirements also extend to CCS, insofar as it employs or controls those individuals.
The business of SAAMCo will be impacted by SEC regulatory initiatives with respect to the investment management business. The SEC is engaged in various initiatives and reviews that seek to modernize the regulatory structure governing the investment management industry, including investment advisers registered under the Advisers Act and investment companies registered under the Investment Company Act. The SEC has also adopted comprehensive rules changing the regulation of investment advisers to private funds, and has proposed rules that prohibit investment advisers from outsourcing certain services or functions without meeting minimum requirements, address investment adviser custody of client assets and require investment advisers (and broker-dealers) to neutralize or eliminate conflicts of interests associated with advisers’ use of predictive data analytics in connection with certain investor interactions. In November 2022, the SEC proposed a rule and related amendments that, among other things, change how open-end funds, other than money market funds and exchange-traded funds, manage their liquidity risk. The proposed rule requires these funds to use a liquidity management tool called “swing pricing” and to implement a “hard close,” and compelling funds to provide timelier and more detailed public reporting of fund information. If adopted as proposed, the regulatory, compliance, and operational burdens associated with these proposals will be costly and may impede the growth of SAAMCo and the hard close and swing pricing proposal in particular raises significant operational challenges for mutual funds and intermediaries that offer fund shares, including AGL.
State Insurance Regulation
AGL is licensed to transact insurance business, and is subject to extensive regulation and supervision by insurance regulators. AGL is licensed in all states other than New York. The primary regulator of an insurance company, however, is located in its state of domicile. AGL is domiciled in Texas and is primarily regulated by the Texas Department of Insurance.
AGL is subject to regulation under the insurance holding company laws of Texas, which require registration and periodic reporting by insurance companies that are domiciled in the state and are controlled by other entities.
As noted above, AGL is subject to regulation and supervision in the states and other jurisdictions by which it does business. The method of such regulation varies but generally has its source in statutes that delegate regulatory and supervisory powers to a state insurance official. Such regulation and supervision relate primarily to the financial condition of the insurers and their corporate conduct and market conduct activities, investments and operational security and resiliency, including data security and privacy. In general, such regulation is for the protection of AGL’s policyholders rather than its creditors or equity owners.
Unclaimed Property
AGL is subject to the laws and regulations of states and other jurisdictions concerning identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements.
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NAIC Activities and Model Laws
In the United States, the NAIC is a standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and U.S. territories. Among other things, the NAIC develops and recommends adoption of model insurance laws and regulations. With assistance from the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews and coordinate regulatory oversight. Model laws and regulations promulgated by the NAIC become effective in a state once formally adopted and are subject to modification by each state. NAIC
The NAIC’s Insurance Holding Company System Regulatory Act and the Insurance Holding Company System Model Regulation (together, the “Holding Company Models”), versions of which have been enacted by all of the states in which Corebridge has domestic insurers, generally require registration and periodic reporting by insurance companies that are licensed in such jurisdictions and are controlled by other entities. They also require periodic disclosure concerning the entity that controls the registered insurer and the other companies in the holding company system and prior approval of intercompany transactions, including transfers of assets. Insurance holding company laws also generally provide that no person, corporation or other entity may acquire control of an insurance company, or a controlling interest in any direct or indirect parent company of an insurance company, without the prior approval of such insurance company’s domiciliary state insurance regulator. Under the laws of Texas, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company, which may consider voting securities held at both the parent company and subsidiaries collectively. This statutory presumption of control may be rebutted by a showing that control does not exist in fact. State insurance regulators, however, may find that “control” exists even in certain circumstances in which a person owns or controls less than 10% of the voting securities of an insurance company.
In December 2020, the NAIC amended the Holding Company Models to incorporate a liquidity stress test (“LST”) requirement for large life insurers based on a set of scope criteria and a Group Capital Calculation (“GCC”). LST is intended to support macroprudential surveillance by the NAIC regulators, including to assess the potential impact on broader financial markets of aggregate asset sales within a liquidity stress scenario. The NAIC encouraged states to implement the GCC provisions by November 7, 2022, to satisfy group capital assessment requirements of covered agreements the United States reached with the EU and UK. Further, in December 2023, the NAIC adopted the GCC and LST amendments to the Holding Company Models accreditation standards, effective January 1, 2026. Texas has adopted the GCC requirements.
The NAIC’s Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”) requires that insurers maintain a risk management framework and conduct an internal own risk and solvency assessment of the insurer’s material risks in normal and stressed environments and submit annual ORSA summary reports to the insurance group’s lead U.S.-state regulator. The NAIC has also adopted a Corporate Governance Annual Disclosure Model Act that requires insurers to submit an annual filing regarding their corporate governance structure, policies and practices. Further, the NAIC has had an increased focus on private equity-owned life insurers following sizeable increases in the number of private equity-owned life insurers, as noted by its Capital Markets Bureau and the Federal Insurance Office in 2021. The NAIC adopted Regulatory Considerations Applicable (But Not Exclusive) to Private Equity (“PE”) Owned Insurers (the “Regulatory Considerations”) in 2022, intended to identify areas where existing disclosures, policies, control and affiliation requirements, and other procedures should be modified, or new ones created, to address any gaps based on the increase in the number of private equity-owned insurers, the role of asset managers in insurance and the potential for control via asset management arrangements, and the increase of private investments in insurers’ portfolios, among other potential gaps. Many of the Regulatory Considerations have been referred to NAIC working groups and task forces, including analysis of the definition and evaluation of control and review of the insurance industry’s reliance on rating agency ratings, while others such as new reporting on investment schedules relative to investment transactions with related parties and additional disclosures relative to private equity and complex
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assets, are already effective. As part of these efforts, the NAIC recently exposed a Framework for Regulation of Insurer Investments. Their stated goal is to provide a holistic review of the NAIC groups and initiatives, which are focused on investments, and determine the most effective use of regulatory resources. Changes to model laws and regulations or NAIC handbooks resulting from an analysis for the Regulatory Considerations may impact AGL’s insurance company subsidiaries’ affiliate relationships and pursuit of strategic transactions, investment portfolios and financial condition.
Every state has adopted, in substantial part, the Risk-Based Capital (“RBC”) Model Law promulgated by the NAIC that allows states to act upon the results of RBC ratio calculations, and provides four incremental levels of regulatory action regarding insurers whose RBC ratio calculations fall below specific thresholds. Those levels of action range from the requirement to submit a plan describing how an insurer would regain a specified RBC ratio to a mandatory regulatory takeover of the company. The RBC ratio formula is designed to measure the adequacy of an insurer’s statutory surplus in relation to the risks inherent in its business. The RBC formula computes a risk-adjusted surplus level by applying discrete factors to various asset, premium, reserve and other financial statement items, or in the case of interest rate and equity return (C-3) market risk, applying stochastic scenario analyses. These factors are developed to be risk-sensitive so that higher RBC requirements are applied to items exposed to greater risk. Further, state insurance regulators have discretion in interpreting their reserving and valuation laws and regulations, which may impact the RBC ratio calculation. Certain such regulators have, from time to time, taken more stringent positions than other state insurance regulators on matters affecting, among other things, statutory capital and reserves as applied to their licensed insurance companies. The RBC ratio of AGL, determined in accordance with NAIC instructions, exceeded minimum required levels as of December 31, 2023. Additionally, the NAIC has adopted, or is considering, several changes impacting how RBC is calculated, including initiatives aimed at a comprehensive review of RBC investment framework as well as using modeling methodology to determine RBC charges for structured securities, potentially replacing the use of rating agency ratings in certain cases. There are also efforts in progress to implement a new Generator of Economic Scenarios for the RBC C-3 stochastic scenario analyses mentioned above, and the Principle-Based Reserves (“PBR”) mentioned below. AGL will continue to monitor these developments and evaluate their potential impact to its business, financial condition and legal entities.
The NAIC also provides standardized insurance industry accounting and reporting guidance through the NAIC Accounting Practices and Procedures Manual. Statutory accounting principles promulgated by the NAIC, including for AGL, have been, or may be, modified by Texas laws, regulations and permitted practices granted by Texas insurance regulators. Changes to the NAIC Accounting Practices and Procedures Manual or modifications by the Texas state insurance departments may impact the investment portfolios and the statutory capital and surplus of AGL.
The NAIC has adopted a proposal to allow some portion of net negative interest maintenance reserve to be an admitted asset, for the first time. The treatment expires in 2026 unless extended and the NAIC is working toward a long-term plan. A limit of 10% of an insurer’s capital and surplus applies, subject to certain adjustments and a minimum RBC ratio of 300% following such adjustments.
The NAIC Valuation Manual contains a PBR approach. PBR is designed to tailor the reserving process to more closely reflect the risks of specific products, rather than the factor-based approach employed historically. Subsection 20 of the Valuation Manual (“VM-20”) applies to individual life insurance reserves, most notably term insurance and universal life policies with secondary guarantees (“ULSGs”), and Subsection 21 (“VM-21”) applies to variable annuities. The NAIC’s work to update the Valuation Manual and address issues relating to the PBR framework, including VM-20, VM-21, and Subsection 22 of the Valuation Manual related to PBR for non-variable annuities, is ongoing, and AGL will continue to monitor such developments as they evolve. See also Notes 8, 11, and 13 to the 2023 Audited Annual Statutory-Basis Financial Statements for additional information related to these statutory reserving requirements.
In addition to the NAIC’s model laws and regulations, state insurance and consumer protection laws and regulations also include numerous provisions governing the marketplace activities of life and annuity insurers,
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including provisions governing the form and content of disclosure to consumers, illustrations, advertising, sales practices, customer privacy protection, permissible use of data in insurance practices, and complaint handling. The regulatory landscape is developing with respect to the use of external data and artificial intelligence in insurance practices, including underwriting, marketing and claims practices. The NAIC adopted Artificial Intelligence Principles in August 2020, and a number of states have had legislative or regulatory initiatives relating to the use of external data and artificial intelligence in the insurance industry, including Colorado’s algorithmic and external data accountability law. The NAIC has adopted a model bulletin with regulatory guidance on the use of big data and artificial intelligence. AGL continues to engage through industry trade groups with its regulators with the intention of maximizing optimal customer outcomes.
Insurance regulators have also shown interest in climate change risk and disclosure. In 2022, the NAIC adopted revisions to its Climate Risk Disclosure Survey, which numerous states mandate for insurers with premiums exceeding certain thresholds. The NAIC Climate and Resiliency (EX) Task Force Solvency Workstream is also considering potential enhancements to existing regulatory tools relative to the solvency effects of climate change (e.g., on underwriting and investments) which may be incorporated into the NAIC’s Financial Analysis Handbook, the Financial Condition Examiners Handbook and the ORSA Guidance Manual, and recently adopted the NAIC National Climate Resilience Strategy for Insurance, a forward-looking climate strategy document. In addition, in 2021, the NYDFS issued final Guidance for New York Domestic Insurers on Managing the Financial Risks from Climate Change, detailing the NYDFS’s expectations related to insurers’ management of the financial risks from climate change and integration into their governance frameworks, risk management frameworks, and business and investment strategies. See “Environmental, Social and Governance Regulation” for further information.
State regulatory authorities generally enforce provisions relating to marketplace activities through periodic market conduct inquiries, data calls, investigations and examinations. Further, as part of their regulatory oversight process, state insurance departments conduct periodic financial examinations, generally once every three to five years, of the books, records, accounts and business practices of insurers domiciled in their states. Examinations are generally carried out under guidelines promulgated by the NAIC and, in the case of financial exams, in cooperation with the insurance regulators of other domiciliary states of an insurance holding company group.
State Guaranty Associations
U.S. states have state insurance guaranty associations in which insurers doing business in the state are required by law to be members. Member insurers may be assessed by the associations for certain obligations of insolvent insurance companies to policyholders and claimants. Typically, states assess member insurers in amounts related to the member’s proportionate share of the relevant type of business written by all members in the state. Some jurisdictions permit member insurers to recover assessments that they paid through full or partial premium tax offsets, usually over a period of years. The protection afforded by a state’s guaranty association to policyholders of insolvent insurers varies from state to state. The aggregate assessments levied against AGL have not been material to its financial condition in any of the past three years.
Privacy, Data Protection and Cybersecurity
AGL is subject to U.S. federal and state laws and regulations that require financial institutions and other businesses to implement and maintain technical, organizational and physical measures designed to protect the confidentiality, availability and integrity of personal, information and sensitive non-public information and the information systems used to process this information and conduct important business operations. These laws and regulations impose a broad range of obligations including collecting, disclosing, using, transferring, retaining, deleting, and otherwise processing (collectively, “Processing”) personal information in compliance with certain restrictions; notifying data subjects regarding its personal information processing practices; and maintaining a security program designed to protect the confidentiality, availability and integrity of personal information,
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sensitive non-public information and AGL’s information systems. Some of these laws and regulations require AGL to notify affected individuals, regulators and self-regulatory bodies of certain events involving the unauthorized access to, use of or loss of, personal information , sensitive non-public information and information systems.
On November 1, 2023, the NYDFS published an amendment to its Part 500 Cybersecurity Regulation (“NYDFS Cybersecurity Regulation”). The amended NYDFS Cybersecurity Regulation went into effect upon publication and compliance with the amended requirements occurs in phases starting December 1, 2023 and continuing through December 2025 and includes additional certification obligations, enhanced governance requirements, new audit requirements, additional technology and business continuity requirements, enhanced security control and training requirements, and new notification obligations. Requirements under the NYDFS Cybersecurity Regulation are similar in certain respects to those under the NAIC Insurance Data Security Model Law , which requires insurers, insurance producers and other entities required to be licensed under state insurance laws to develop and maintain a written information security program, conduct risk assessments, oversee the data security practices of third-party service providers and other related requirements. Approximately 22 U.S. states have adopted a version of the Model Law as of the end of 2023.
The SEC continues to focus on cybersecurity for a range of regulated entities, including public companies, registered investment companies, broker-dealers, investment advisers and funds and has published periodic guidance on the topic, recommending periodic assessments of information, how it is stored and how vulnerable it is, as well as strategies to prevent, detect and respond to cyber threats, including as it relates to risks faced by the advisers’ third-party service providers. In July 2023, the U.S. Securities and Exchange Commission adopted the Risk Management, Strategy, Governance, and Incident Disclosure Final Rule (the “Cybersecurity Final Rule”) that enhances the disclosure requirements for registered companies covering cybersecurity risk and management and requires registrants to disclose material cybersecurity incidents on Form 8-K within four business days of a determination that the impact of a cybersecurity incident is material. These disclosure requirements under the Cybersecurity Final Rule became effective in December 2023.
On January 1, 2023, the California Privacy Rights Act (“CPRA”), which amends the California Consumer Privacy Act of 2018 (“CCPA”) became effective. The CCPA imposes a number of requirements on businesses that collect the personal information of California consumers, including requirements that provide individuals with certain rights to their personal information and make mandatory disclosures regarding how the businesses use and disclose consumers’ personal information, establishes a private right of action in some cases if consumers’ personal information is subject to a data breach as a result of the business’s violation of the duty to implement and maintain reasonable security practices and creates the California Privacy Protection Agency which is charged with drafting and adopting regulations in furtherance of the CCPA and enforcing the CCPA, as amended by the CPRA. Similar consumer privacy legislation has been enacted in other states and became effective in 2023, such as Virginia, Colorado, Connecticut and Utah.
U.S. federal and state legislatures and government agencies and self-regulatory bodies are expected to continue to consider additional laws, regulations and guidelines relating to privacy and other aspects of customer information and to protecting the ongoing confidentiality, availability and integrity of personal information, sensitive non-public information and information systems. These continued changes in the U.S. privacy and cybersecurity regulatory landscape will require additional compliance investment, including changes to policies, procedures, information systems and operations.
Environmental, Social and Governance Regulation
Federal and state laws and regulations regarding ESG issues may be applicable to AGL’s operations. At the federal level, the SEC has instituted a comprehensive regulatory agenda focusing on ESG issues. The SEC commissioners and staff announced a number of actions, including forming an enforcement task force designed to harmonize the efforts of the SEC’s divisions and offices, proposed comprehensive rulemakings for ESG disclosure for investment advisers and funds registered under the Investment Company Act and climate-specific
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disclosure for public issuers and addressing stockholder rights and creating accountability in statements and conduct. The SEC’s Division of Examinations issued a risk alert in 2021 highlighting ESG deficiencies, internal control weaknesses and effective practices identified during recent examinations of investment advisers, registered investment companies and private funds. The SEC’s Division of Examinations has continued to focus on ESG-related advisory services and investment products and the SEC has continued to pursue ESG related enforcement actions. The increased regulatory and compliance burdens that AGL expects would result from the implementation of any of these initiatives could be costly.
On March 6, 2024, the SEC adopted final rules that require registrants, including Corebridge, to disclose certain climate- related information in registration statements and annual reports. The final rules require registrants to disclose, among other things: the impacts of material climate-related risks; the processes for identifying, assessing and managing such risks; information about the oversight of climate-related risks by the board of directors and management’s role in managing material climate-related risks; and information about any climate-related targets or goals that are material to a registrant’s business, results of operations, or financial condition. The final rules also require, if material, disclosure of registrants’ Scope 1 and/or Scope 2 greenhouse gas emissions. In addition, registrants must disclose certain information in their audited financial statements, including aggregate expenditures expensed and losses as well as capitalized costs and charges, in each case as a result of severe weather events and other natural conditions, subject to de minimis disclosure thresholds.
The final rules include a phased-in compliance period beginning in fiscal year 2025 for large accelerated filers such as Corebridge. Numerous legal challenges were filed after the rule’s adoption, which lawsuits have been consolidated in the Eighth Circuit. On April 4, 2024, the SEC exercised its discretion to stay the final rules pending completion of judicial review in the U.S. Court of Appeals for the Eighth Circuit. Corebridge is evaluating the potential impacts of these new requirements. However, if these requirements are implemented following completion of judicial review, they may increase the complexity of Corebridge’s periodic reporting as a U.S. public company and are expected to result in additional compliance and reporting costs.
At the state level, California adopted climate disclosure and financial reporting legislation, the Climate Corporate Data Accountability Act, and the Climate Related Financial Risk Act, in 2023, which will require, beginning in 2026, reporting from large U.S. public and private companies doing business in California on greenhouse gas emissions and biennial climate-related financial risk reports. States continue to adopt laws and regulations governing corporate ESG activity and there is increasing scrutiny and evolving expectations from investors, customers, regulators and other stakeholders on ESG practices and disclosures, including those related to environmental stewardship, climate change, diversity, equity and inclusion, racial justice, workplace conduct and other social and political mandates.
Legal Proceedings
We are regularly a party to litigation, arbitration proceedings and governmental examinations in the ordinary course of our business. While we cannot predict the outcome of any pending or future litigation or examination, we do not believe that any pending matter, individually or in the aggregate, will have a material adverse effect on our business.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Market Risks
Overview
Market risk is the risk of adverse impact due to systemic movements in one or more of the following market risk drivers: interest rates, credit spreads, equity and commodity prices, residential and commercial real estate values, foreign exchange, inflation, and their respective levels of volatility.
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AGL is exposed to market risks primarily within its insurance and capital markets activities, on both the asset and the liability sides of its balance sheet through on- and off-balance sheet exposures. Many of the market risk exposures, including exposures to changes in levels of interest rates and equity prices, are generally long-term in nature. Examples of liability-related market risk exposures include interest rate sensitive surrenders in the fixed annuity and universal life product portfolios. Also, AGL has equity market risk sensitive surrenders in the variable annuity product portfolio. These interactive asset-liability types of risk exposures are regularly monitored in accordance with the risk governance framework.
The scope and magnitude of market risk exposures are managed under a robust framework that contains defined risk limits and minimum standards for managing market risk. The market risk management framework focuses on quantifying the financial repercussions to AGL of changes in the above-mentioned market risk drivers.
Key Risks
Mortality risk – represents the risk of loss arising from actual mortality rates being higher than expected mortality rates. This risk could arise from pandemics or other events, including longer-term societal changes that cause higher-than-expected mortality. This risk exists in a number of AGL’s product lines but is most significant for AGL’s life insurance products.
Longevity risk – represents the risk of a change in value of a policy or benefit as a result of actual mortality rates being lower than the expected mortality rates. This risk could arise from longer-term societal health changes as well as other factors. This risk exists in a number of AGL’s product lines but is most significant for AGL’s pension risk transfer, structured settlement and annuity products.
Policyholder behavior risk including full and partial surrender/lapse risk – represents the risk that actual policyholder behavior differs from expected behavior in a manner that has an adverse effect on AGL’s operating results. There are many related assumptions made when products are sold, including how long the contracts will persist and other assumptions which impact the expected utilization of contract benefits and features. Actual experience can vary significantly from these assumptions. This risk is impacted by a number of factors including changes in market conditions, especially changes in the levels of interest rate and equity markets, tax law, regulations, competitive landscape and policyholder preferences. This risk exists in the majority of AGL’s product lines.
Morbidity risk – represents the risk arising from actual morbidity (i.e., illness, disability or disease) incidence being higher than expected or the length of the claims extending longer than expected resulting in a higher overall benefit payout. This risk could arise from longer-term medical advances in detection and treatment for various diseases and medical conditions, as well as other factors. This risk exists in certain product lines of AGL such as group benefits, health and long-term care businesses.
Interest rate risk – represents the potential for loss due to a change in interest rates. Interest rate risk is measured with respect to assets, liabilities (both insurance-related and financial), and derivatives. This risk manifests itself when interest rates move significantly in a short period of time. Rapidly rising interest rates create the potential for increased surrenders. Interest rate risk can also manifest itself over a longer period of time, such as in a persistent low interest rate environment. Low long-term interest rates put pressure on investment returns, which may negatively affect sales of interest rate sensitive products and reduce or eliminate future profits on certain existing fixed rate products.
Equity price risk – represents the potential for loss due to changes in equity prices. It affects equity-linked insurance products, including but not limited to index annuities, variable annuities (and associated guaranteed living and death benefits), universal life insurance and variable universal life insurance. In addition, changes in the volatility of equity prices can affect the valuation of derivatives that are economic hedges of equity risk in variable guaranteed living benefits.
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Credit risk – represents the risk that AGL’s customers or counterparties are unable or unwilling to repay their contractual obligations when they become due, but also may result from a downgrade of a counterparty’s credit ratings or a widening of its credit spreads. The risk exists across AGL’s product lines as counterparty exposure can be related to, but not limited to, investments, derivatives, premiums receivable and reinsurance recoverables.
Risk Management and Mitigation
In addition to an established governance framework, AGL relies on a variety of tools and techniques to manage market risk-exposures. The market risk mitigation framework incorporates the following primary elements:
Product design: Product design is the first step in managing insurance liability exposure to market risks.
Asset/liability management: AGL manages assets using an approach that is liability driven. Asset portfolios are managed to target durations based on liability characteristics and the investment objectives of that portfolio within defined ranges. Where liability cash flows exceed the maturity of available assets, AGL may support such liabilities with derivatives, interest rate curve mismatch strategies or equity and alternative investments.
Hedging: AGL’s hedging strategies include the use of derivatives to offset certain changes in the economic value of MRBs and embedded derivatives associated with the variable annuity, fixed index annuity and index universal life liabilities, within established thresholds. These hedging programs are designed to provide additional protection against large and consolidated movements in levels of interest rates, equity prices, credit spreads and market volatility under multiple scenarios.
Currency matching: AGL manages its foreign currency exchange rate exposures within risk tolerance levels. In general, investments backing specific liabilities are currency matched. This is achieved through investments in currency matching assets or the use of derivatives.
Management of portfolio concentration risk: AGL performs regular monitoring and management of key rate, foreign exchange, equity prices and other risk concentrations to support efforts to improve portfolio diversification to mitigate exposures to individual markets and sources of risk.
Sensitivities
In accordance with statutory accounting principles, the significant majority of AGL’s assets and liabilities are carried at amortized cost and not at fair value. As a result, the elements of market risk discussed above do not generally have a significant direct impact on the financial position or results of operations of AGL.
Directors and Executive Officers of American General Life Insurance Company (“AGL”)
Set forth below is a list of AGL’s directors and executive officers and a description of the business experience of each of the respective individuals.
| | | | |
Name | | Age | | Director and/or Executive Officer Positions |
| Christopher B. Smith | | 55 | | Chairman of the Board of Directors and President |
| David Ditillo | | 49 | | Director and Executive Vice President and Chief Information Officer |
| Terri N. Fiedler | | 61 | | Director |
| Christopher P. Filiaggi | | 42 | | Director and Senior Vice President and Chief Financial Officer |
| Timothy M. Heslin | | 49 | | Director and President, Life US |
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| | | | |
Name | | Age | | Director and/or Executive Officer Positions |
| Lisa M. Longino | | 57 | | Director and Executive Vice President and Chief Investment Officer |
| Jonathan J. Novak | | 52 | | Director and President, Institutional Markets |
| Bryan A. Pinsky | | 49 | | Director and President, Individual Retirement |
| Elizabeth B. Cropper | | 58 | | Director and Executive Vice President and Chief Human Resources Officer |
| John P. Byrne | | 53 | | President, Financial Distributor |
| Steven D. (“Doug”) Caldwell, Jr. | | 54 | | Executive Vice President and Chief Risk Officer |
| Emily W. Gingrich | | 43 | | Senior Vice President, Chief Actuary and Corporate Illustration Actuary |
| Frank A. Kophamel | | 59 | | Senior Vice President, Deputy Chief Actuary and Appointed Actuary |
| Brigitte K. Lenz | | 49 | | Vice President and Controller |
| Justin J.W. Caulfield | | 52 | | Vice President and Treasurer |
| Julie Cotton Hearne | | 63 | | Vice President and Corporate Secretary |
Christopher B. Smith
Chris Smith has served as Chief Operating Officer of Corebridge Financial since July 2023. Prior to joining Corebridge, Mr. Smith was Head of Group Benefits for Guardian Life, and previously served as Head of Global Operations for MetLife. He has held the Chartered Financial Analyst (CFS) designation since 2003.
David Ditillo
David Ditillo has served as Chief Information Officer of Corebridge Financial since 2020. Prior to joining AIG, Mr. Ditillo served in various technology executive management roles at MetLife, Inc., including Senior Vice President and Chief Information Officer for its U.S. business and Senior Vice President of U.S. Application Development.
Terri N. Fielder
Terri Fiedler has served as President, Retirement Services since October 2022. Previously, she was President of AIG Financial Distributors since May 2019. Ms. Fiedler served as Executive Vice President, Strategic Accounts for AIG Financial Distributors, responsible for working closely with the organization’s business teams to fully meet the product and services needs of AIG Life & Retirement’s largest clients from May 2012 through April 2019. Prior to joining AIG, Ms. Fiedler was the Senior Director of National Account Management at Invesco U.S. from September 2007 to May 2012 and, prior to that, spent 12 years at AIM Distributors. She currently serves as a director of Archer Holdco, LLC. and Immediate Past Chair of the Insured Retirement Institute and a Board Director for the Foundation for Financial Planning.
Christopher P. Filiaggi
Chris Filiaggi oversees all aspects of financial reporting, including GAAP, statutory accounting and SOX compliance. Prior to his current role, he was in AIG’s Office of Accounting Policy, where he led a number of key strategic initiatives from a finance perspective, including the sale of Fortitude Re. Prior to joining AIG in 2019, Chris was a director in PricewaterhouseCoopers’ audit practice which included two years in PricewaterhouseCoopers’ National Office.
Timothy M. Heslin
Tim Heslin has served as President of Life Insurance at Corebridge Financial since August 2021. Prior to his current role, Mr. Heslin served in a number of senior roles for AIG, most recently as Chief Life Product, Pricing
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and Underwriting Officer for AIG Life US. He also served as Head of Risk Selection for AIG’s Global Life Businesses and Head of Life, Health and Disability for Europe, the Middle East and Africa. Mr. Heslin is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries.
Lisa M. Longino
Lisa Longino has served as Chief Investment Officer of Corebridge Financial since February 2023. Prior to joining Corebridge, Ms. Longino was Head of Global Investment Strategy for Prudential Financial. Previously, she held several investment roles over more than 20 years at MetLife, including Head of Insurance Asset Management, Head of Portfolio Management and Head of Investment Grade Trading. Ms. Longino has been investing for insurance companies for over three decades with a focus on fixed income portfolios matched to insurance liabilities.
Jonathan J. Novak
Jonathan Novak has served as President of Institutional Markets since April 2012 and Executive Vice President since February 2022. Mr. Novak also serves as Head of Life & Retirement Strategy, Corporate Development and Reinsurance of AIG. Mr. Novak joined AIG in April 2012. Prior to joining AIG, Mr. Novak served as Managing Director in the Financial Institutions Risk Management business at Goldman Sachs for 12 years. Prior to that, Mr. Novak served as an Associate in the Reinsurance Underwriting division at Berkshire Hathaway for four years. Mr. Novak holds the Chartered Financial Analyst professional designation.
Bryan A. Pinsky
Bryan Pinsky has served as President of Individual Retirement since August 2021. Prior to his current role, Mr. Pinsky was Senior Vice President of Individual Retirement Pricing and Product Development. Prior to joining AIG in 2014, he led the Annuity Product team at Prudential, and, before that, held various life insurance and annuity product development positions with Allstate. Mr. Pinsky is a Chartered Financial Analyst and Fellow of the Society of Actuaries.
Elizabeth B. Cropper
Liz Cropper has served a Chief Human Resources Officer since January 2024. Prior to her current role, Ms. Cropper served in a number of senior human resources roles for AIG, most recently as Global Head of Talent and Inclusion. She also served as Head of HR for General Insurance and Life and Retirement, Head of Human Resources for the Asia-Pacific region and HR Head for the UK businesses. Prior to AIG, Ms. Cropper held senior human resources positions at Banco Santander and Sainsbury’s. She is a fellow and graduate of the Chartered Institute of Personnel and Development.
John P. Byrne
John Byrne has served as President of Financial Distributors since October 2023. Prior to his current role, John served as Senior Vice President, National Sales Manager, Annuity Direct Distribution. He has a Chartered Retirement Planning Counselor designation from the College for Financial Planning.
Doug Caldwell
Doug Caldwell has served as Chief Risk Officer since July 2023. Prior to joining the Company, Mr. Caldwell held senior risk roles with MetLife, Transamerica, NN Group and ING Insurance. He has worked in actuarial, finance and risk roles in the insurance industry for more than 30 years. Mr. Caldwell is a Fellow of the Society of Actuaries and a Chartered Enterprise Risk Analyst.
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Emily W. Gingrich
Emily Gingrich is the Chief Actuary. In this role, she is responsible for overseeing the Actuarial staff supporting valuation, projection modeling, experience studies, asset-liability management, and actuarial controls. Previously, Ms. Gingrich held the role of Head of Insurance Company Capital and Asset-Liability Management (ICALM) for AIG Life & Retirement. In this role, Ms. Gingrich oversaw a global projection modeling team supporting all actuarial projection applications, including forecasting, asset-liability management, capital management, and asset adequacy testing. Ms. Gingrich’s team also focused on actuarial modernization activities, in particular through major actuarial modeling conversion efforts. Ms. Gingrich has previously served as Head of Value-Based Management and Life Actuarial Practices, where she was responsible for aligning strategic decisions with value creation across the organization and providing corporate governance for life actuarial processes.
Prior to joining AIG, Ms. Gingrich was a Vice President at JPMorgan’s Pension Advisory Group, where she focused on developing asset allocation and immunization strategies for pension plans based on stochastic asset-liability modeling. Ms. Gingrich began her career in the Retirement Practice of Watson Wyatt Worldwide.
Ms. Gingrich graduated summa cum laude from Yale University with a B.S. in Mathematics and is a Fellow of the Society of Actuaries, a Member of the American Academy of Actuaries, an Enrolled Actuary, and a CFA Charterholder.
Frank A. Kophamel
Frank Kophamel serves as Senior Vice President, Deputy Chief Actuary and Appointed Actuary. In this role, he is responsible for all actuarial aspects of valuation and financial reporting for the organization. Mr. Kophamel assumed his current role in July of 2007 and was named the Appointed Actuary of AIG’s L&R insurance companies. He was also named the Approved Actuary of AIG’s Life of Bermuda in 2013 but no longer serves in that role. Previously, he served as Chief Financial Officer for AIG Benefit Solutions in March of 2005. Before that time, Mr. Kophamel was Vice President and Appointed Actuary for American General Life Companies from 1997 to 2005. Earlier, he was an Assistant Actuary for The United States Life Insurance Company in the City of New York from 1993 to 1997.
Prior to joining Corebridge Financial (and AIG), Mr. Kophamel worked for Mutual Benefit Life where he focused on asset-liability management. Overall, he has 37 years of actuarial, insurance and financial experience. More specifically, Mr. Kophamel has significant experience in the valuation and modeling of multiple products including traditional and universal life, fixed and variable deferred annuities, payout annuities (including terminal funding and structured settlements), stable value wraps, and group and individual health products. Mr. Kophamel earned a bachelor’s degree in actuarial science from the New Jersey Institute of Technology. Additionally, he holds a Fellow of the Society of Actuaries designation and is a Member of the American Academy of Actuaries.
Brigitte K. Lenz
As controller, Brigitte Lenz oversees the business unit controllers, statutory reporting, reinsurance accounting and separate account reporting. Prior to joining Corebridge in 2023, Brigitte was Chief Accounting Officer for Everlake Life (spin-off of Allstate Life) and VP-Finance for Allstate Life Insurance Company. She also was a Senior Manager at Deloitte in the audit practice, focused on insurance clients.
Justin J.W. Caulfield
Justin Caulfield is the Treasurer. He joined AIG in 2012 as the General Insurance Americas Treasurer and became the AIG General Insurance Global Treasurer in June 2013. In May 2016, he was named Life & Retirement Treasurer and in August 2021 he became AIG Treasurer. Prior to AIG, Justin held Treasury senior
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leadership positions at Societe Generale CIB, Morgan Stanley, and Bear Sterns. Justin has a Bachelor of Science degree in Mathematics from the University of Notre Dame and an MBA with a Concentration in Finance from Columbia University. He is also a Financial Industry Regulatory Authority, Inc. (FINRA) registered Financial and Operations Principal (Series 27).
Julie Cotton Hearne
Julie Cotton Hearne is Vice President, Deputy General Counsel and Secretary of the Corebridge subsidiary life insurance company. Julie is responsible for the corporate governance and a full range of corporate matters, including legal entity management, organizations, dispositions, mergers, restructuring transactions, and licensing. As Corporate Secretary for the L&R U.S.-domiciled companies, she is also responsible for their day-to-day corporate secretarial duties, with oversight of such matters for the L&R international entities. Julie also provides support to L&R-related M&A transactions, complex transactions and regulatory matters.
Prior to Corebridge, Julie was in private practice with the law firms of Locke Lord (formerly, Liddell Sapp Zivley and LaBoon) and Webster and Sheffield practicing in the areas of banking and corporate law. Julie holds a Bachelor of Arts from The University of Texas at Austin and Juris Doctor Degree from Harvard Law School.
Committees of the Board of Directors of AGL
The Executive Committee of the Board is comprised of three Board members (Christopher B. Smith, as Chairman; Christopher P. Filiaggi, and Lisa M. Longino). The Executive Committee has all the powers of the Board in the interim periods between Board meetings, except where action of the full Board is required by law. All Executive Committee actions are reviewed and ratified by the Board.
The Investment Committee of the Board is comprised of three board members (Christopher B. Smith, as Chairman; Christopher P. Filiaggi; and Lisa M. Longino). The Investment Committee reviews and approves investment-related items, as necessary between Board meetings. Investment Committee actions are also reviewed and ratified by the Board.
The Compensation Committee is comprised of two members (Christopher B. Smith and Elizabeth B. Cropper). Its purpose is to review and approve compensation paid to employees in excess of $150,000 over a calendar year, as required under Texas law.
Corebridge Financial
AGL is an indirect, wholly-owned subsidiary of Corebridge Financial, Inc. (“Corebridge). Corebridge’s directors and officers perform the policy making functions of AGL and serve in named executive officer capacities for AGL. As such, the following sections primarily provide information pertaining to Corebridge.
Directors and Executive Officers of Corebridge
Set forth below is a list of Corebridge’s directors and named executive officers and a description of the business experience of each of the respective individuals.
| | | | |
Name | | Age | | Director and/or Named Executive Officer Positions |
Peter Zaffino | | 57 | | Director and Chairman of the Board |
Chris Banthin | | 54 | | Director |
Edward Bousa | | 65 | | Director |
Adam Burk | | 47 | | Director |
Alan Colberg | | 63 | | Director |
Rose Marie Glazer | | 57 | | Director |
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| | | | |
Name | | Age | | Director and/or Named Executive Officer Positions |
Jonathan Gray | | 54 | | Director |
Kevin Hogan | | 61 | | Director, President and Chief Executive Officer |
Deborah Leone | | 60 | | Director |
Christopher Lynch | | 66 | | Director |
Sabra Purtill | | 61 | | Director |
Amy Schioldager | | 61 | | Director |
Mia Tarpey | | 51 | | Director |
Elias Habayeb | | 52 | | Executive Vice President and Chief Financial Officer |
Lisa Longino | | 57 | | Executive Vice President and Chief Investment Officer |
Terri Fiedler | | 62 | | Executive Vice President and President of Retirement Services |
Jonathan Novak | | 52 | | Executive Vice President and President of Institutional Markets |
Peter Zaffino
Peter Zaffino has served as Chairman of the Board of Corebridge Financial since November 2021. Mr. Zaffino has served as Chief Executive Officer of AIG since March 2021 and President since January 2020. He joined AIG in July 2017 as Executive Vice President, Global Chief Operating Officer of AIG and was also appointed Chief Executive Officer, General Insurance in November 2017. Prior to joining AIG, Mr. Zaffino served in various executive roles at Marsh McLennan, a global professional services firm, including as Chief Executive Officer of Marsh, LLC from 2011 to 2017 and as Chairman for the Risk and Insurance Services segment from 2015 to 2017. Prior to that, Mr. Zaffino served as President and Chief Executive Officer of Guy Carpenter, a subsidiary of Marsh McLennan, from 2008 to 2011, a company he first joined in 2001. Prior to joining Guy Carpenter, Mr. Zaffino served in executive roles in several market-leading companies, including a portfolio company of GE Capital that specialized in alternative risk insurance and reinsurance. Mr. Zaffino has served as a director on the board of AIG since October 2020 and Chairman of the board of AIG since January 2022.
Christina Banthin
Christina Banthin has served as a director of Corebridge Financial since April 2024 and is Corporate Secretary of AIG. Ms. Banthin joined AIG in 2021 as Associate General Counsel, Separation Initiatives and subsequently served as Chief Corporate Counsel and Corporate Secretary of Corebridge Financial before returning to AIG in January 2024. Prior to AIG, she held several senior roles in the legal team at Equitable Holdings, including Head of the Corporate Practice Group from 2010 to 2021. Ms. Banthin began her legal career at Coopers & Lybrand.
Edward Bousa
Edward Bousa has served as a director of Corebridge Financial since August 2024. Mr. Bousa is a former partner at Wellington Management. From 2000 to 2020, he held many responsibilities at Wellington, including team leader for the Quality Value Equity Investment Strategies team and member of the executive committee. Prior to that, Mr. Bousa worked in portfolio manager roles with Putnam Investments and Fidelity Investments. He began his career as a commodity merchandiser at Louis Dreyfus Corporation. Mr. Bousa also currently serves as a director on the boards of Omnicell and Azenta, Inc.
Adam Burk
Adam Burk has served as a director of Corebridge Financial since November 2021. As AIG’s Global Treasurer and Head of Corporate Development, Mr. Burk is responsible for AIG’s global treasury activities in addition to his role leading corporate development, strategy and mergers & acquisitions for AIG, which he held since June
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2021. His previous leadership positions at the company include Chief Financial Officer of Global Operations and senior roles in capital strategy and planning. Prior to joining AIG, Mr. Burk was an investment banker at Citigroup, Nomura and Morgan Stanley, focused on financial institutions, specializing in insurance. Prior to his investment banking experience, Mr. Burk practiced corporate law at Latham & Watkins focusing on mergers & acquisitions and corporate finance. Mr. Burk also serves on the boards of Private Client Select and K2 Integrity.
Alan Colberg
Alan Colberg has served as a director of Corebridge Financial since September 2022. Mr. Colberg previously served as the Chief Executive Officer and Director of Assurant, Inc. from January 2015 until his retirement in January 2022. Prior to this role, he served as Executive Vice President of Marketing and Business Development and then President. Before joining Assurant in March 2011, Mr. Colberg was a consultant for Bain & Company, Inc. for 22 years, leading the firm’s global financial services practice. Mr. Colberg serves on the board of directors of U.S. Bancorp, where he is on the Audit Committee and Public Responsibility Committee, and previously served on the board for CarMax, Inc. from 2015 until 2018, where he was chair of the Nominating and Governance Committee.
Rose Marie Glazer
Rose Marie Glazer has served as a director of Corebridge Financial since April 2024 and is General Counsel and Interim Chief Human Resources & Diversity Officer at AIG. Ms. Glazer joined AIG in 2017 as Corporate Secretary and Deputy General Counsel. Prior to AIG, she served in multiple leadership roles in the legal affairs team at Siemens AG, including as Senior Vice President and General Counsel – Americas. Previously, Ms. Glazer was Vice President and General Counsel at Telvista and held in-house counsel positions at Allied Riser Communications and American Airlines. She began her legal career at Jones Day.
Jonathan Gray
Jonathan Gray has served as a director of Corebridge Financial since November 2021, having been appointed by Blackstone pursuant to the Blackstone Stockholders’ Agreement. Mr. Gray is the President and Chief Operating Officer of Blackstone Inc., having joined Blackstone Inc. in 1992. Mr. Gray is a member of Blackstone Inc.’s Management Committee and previously served as its Global Head of Real Estate. Mr. Gray previously served as a board member of Nevada Property 1 (The Cosmopolitan of Las Vegas), Invitation Homes, Brixmor Property Group and La Quinta Holdings. Mr. Gray has served as a board member of Blackstone Inc. since February 2012, and as Chair of the Hilton Worldwide Holdings Board of Directors where he currently serves as a director. Mr. Gray also serves on the Board of Harlem Village Academies.
Kevin Hogan
Kevin Hogan has served as Chief Executive Officer of Corebridge Financial since December 2014. Mr. Hogan also has served as a director of Corebridge since June 2021. Mr. Hogan serves on the board of the American Council of Life Insurers. He was also a founding board member of Alliance for Lifetime Income, where he currently serves as a director. Mr. Hogan started his career in 1984 at AIG in New York, and subsequently held management positions in AIG Property Casualty in Chicago, Tokyo, Hong Kong, Singapore and China and AIG Life & Retirement in China, Taiwan and New York. From 2009 until rejoining AIG in 2013, he was Chief Executive Officer, Global Life for the Zurich Insurance Group, Ltd. Prior to his current role, he served as Chief Executive Officer of AIG’s Consumer organization and senior officer for Japan.
Deborah Leone
Ms. Leone is a retired partner of the Goldman Sachs Group, Inc., having served in a number of senior roles, including Chief Operating Officer for its then Investment Management Division and Global Head of Internal
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Audit. She serves as a director on the Goldman Sachs Bank USA board, where Ms. Leone chairs the Audit Committee, and the board of Organon, where she is on the Audit Committee. Ms. Leone is also a member of the board of trustees for Syracuse University.
Christopher Lynch
Christopher Lynch has served as a director of Corebridge Financial since November 2021. Mr. Lynch has been an independent consultant since 2007, providing a variety of services to public and privately held companies. Prior to that, Mr. Lynch was the former National Partner in Charge of KPMG LLP’s Financial Services Line of Business. He held a variety of positions with KPMG over his 29-year career, including chairing KPMG’s Americas Financial Services Leadership team and being a member of the Global Financial Services Leadership and the U.S. Industries Leadership teams. Mr. Lynch also served as a Partner in KPMG’s National Department of Professional Practice and as a Practice Fellow at the Financial Accounting Standards Board. Mr. Lynch is a member of the Audit Committee Chair Advisory Council of the National Association of Corporate Directors and a former member of the Advisory Board of the Stanford Institute for Economic Policy Research. Until May 2022, Mr. Lynch served as director on the board, Chair of the Nominating and Corporate Governance committee and member of the Risk and Capital committee of AIG. He also currently serves as director on the board of Tenet Healthcare Corporation and as a member of its Audit Committee and the Human Resources Committee.
Sabra Purtill
Sabra Purtill has served as a director of Corebridge Financial since January 2023 and is Chief Financial Officer of AIG. She joined AIG in 2019 as Deputy Chief Financial Officer and Treasurer and then served as AIG’s Chief Risk Officer from 2021-2022. From April 2022 Ms. Purtill served as Chief Investment Officer of Corebridge Financial before returning to AIG in January 2023. Prior to AIG, Ms. Purtill was with The Hartford Financial Services Group, Inc., where she served as Senior Vice President, Investor Relations & Treasurer. Previously, Ms. Purtill was Managing Director, Investor Relations & Communications, at Assured Guaranty Ltd. from 2004 to 2011, and prior to that, was a Corporate Finance Officer at ACE Limited, now known as Chubb Limited.
Amy Schioldager
Amy Schioldager has served as a director of Corebridge Financial since November 2021. Ms. Schioldager is the former Senior Managing Director and Global Head of Beta Strategies at BlackRock, Inc. a global investment management corporation. In this role, which she held from 2006 to 2017, Ms. Schioldager was responsible for managing the Index Equity business across seven global offices. During her more than 25 years at BlackRock, Ms. Schioldager held various other leadership positions and also served as a member of the Global Executive Committee from 2012 to 2017 and Vice Chair of the Corporate Governance Committee from 2008 to 2015. She also founded and led BlackRock’s Women’s Initiative. Ms. Schioldager began her career as a fund accountant at Wells Fargo Investment Advisors. Until May 2022, Ms. Schioldager served as director on the board, and a member of the Audit and Nominating and Corporate Governance board committees of AIG.
Mia Tarpey
Mia Tarpey has served as a director of Corebridge Financial since July 2023 and is Head of Corporate Administration and Strategic Divestitures for AIG. She previously served as Chief Operating Officer of Corebridge. Ms. Tarpey was Head of the Separation Management Office at AIG. Prior to joining AIG in 2021, Ms. Tarpey served in various roles at Equitable Financial Life Insurance Company from 2015 to 2021, most recently as Managing Director and Head of Operations and Strategy for Individual Retirement. Previously, she served as Chief Administrative Officer of Chase Wealth Management, a division of JPMorgan Chase, and held various roles at E*TRADE Financial Corporation in corporate development, innovation and risk management. Ms. Tarpey also worked for CIBC World Markets Corp. in its investment banking and venture capital investing business.
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Elias Habayeb
Elias Habayeb has served as Executive Vice President of Corebridge since October 2021 and Chief Financial Officer of Corebridge since November 2021. Prior to his current role, Mr. Habayeb served in a number of senior financial roles for AIG, most recently as Chief Financial Officer for General Insurance where he oversaw all finance activities supporting the General Insurance business. He also served as AIG’s Deputy Chief Financial Officer and AIG’s Chief Accounting Officer. His previous roles included Chief Financial Officer of International Lease Finance Corporation, a wholly-owned subsidiary of AIG, where he led efforts for its ultimate sale in 2014. Prior to AIG, Mr. Habayeb was a partner at Deloitte & Touche LLP and has more than 25 years of financial services experience in banking and insurance.
Lisa Longino
Lisa Longino has served as Chief Investment Officer of Corebridge Financial since February 2023. Prior to joining Corebridge, Ms. Longino was Head of Global Investment Strategy for Prudential Financial. Previously, she held several investment roles over more than 20 years at MetLife, including Head of Insurance Asset Management, Head of Portfolio Management and Head of Investment Grade Trading. Ms. Longino has been investing for insurance companies for over three decades with a focus on fixed income portfolios matched to insurance liabilities.
Terri Fiedler
Terri Fiedler has served as President, Retirement Services since October 2022. Previously, she was President of AIG Financial Distributors since May 2019. Ms. Fiedler served as Executive Vice President, Strategic Accounts for AIG Financial Distributors, responsible for working closely with the organization’s business teams to fully meet the product and services needs of AIG Life & Retirement’s largest clients from May 2012 through April 2019. Prior to joining AIG, Ms. Fiedler was the Senior Director of National Account Management at Invesco U.S. from September 2007 to May 2012 and, prior to that, spent 12 years at AIM Distributors. She currently serves as a director of Archer Holdco, LLC. and Immediate Past Chair of the Insured Retirement Institute and a Board Director for the Foundation for Financial Planning.
Jonathan Novak
Jonathan Novak has served as President of Institutional Markets since April 2012 and Executive Vice President since February 2022. Mr. Novak also serves as Head of Life & Retirement Strategy, Corporate Development and Reinsurance of AIG. Mr. Novak joined AIG in April 2012. Prior to joining AIG, Mr. Novak served as Managing Director in the Financial Institutions Risk Management business at Goldman Sachs for 12 years. Prior to that, Mr. Novak served as an Associate in the Reinsurance Underwriting division at Berkshire Hathaway for four years. Mr. Novak holds the Chartered Financial Analyst professional designation.
Committees of the Board of Directors of Corebridge
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of Corebridge’s independent registered public accounting firm. Other key responsibilities include assisting the Board in overseeing:
| | • | | the integrity of Corebridge’s financial statements and accounting and financial reporting processes (including internal control over financial reporting); |
| | • | | the qualifications, independence and performance of the independent registered public accounting firm; |
| | • | | compliance with legal and regulatory requirements; and |
| | • | | the performance of Corebridge’s internal audit function. |
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The members of the Audit Committee are Mr. Lynch (Chair), Ms. Bousa, Ms. Leone and Ms. Schioldager. Each member has been determined to be independent and “financially literate” under applicable Exchange Act and NYSE rules, and the Board has designated each of Mr. Lynch, Mr. Bousa and Ms. Leone as “audit committee financial experts,” as that term is defined under SEC rules. The Audit Committee operates under a written charter, which is available on the Investors—Leadership and Governance—Governance Documents section of Corebridge’s website at www.corebridgefinancial.com.
The Compensation and Management Development Committee is directly responsible for overseeing Corebridge’s compensation programs and policies and determining and recommending to the Board for approval the compensation of the Chief Executive Officer. Other key responsibilities include:
| | • | | reviewing and approving the compensation of the corporate officers subject to Section 16 of the Exchange Act; |
| | • | | reviewing and recommending to the Board for approval, the compensation-related disclosures to be included in Corebridge’s annual proxy statement; |
| | • | | overseeing human capital management; and |
| | • | | overseeing the administration of any Corebridge policies regarding the recoupment, repayment, or forfeiture of compensation. |
The members of the Compensation and Management Development Committee are Mr. Lynch (Chair), Ms. Glazer and Ms. Leone. Each of Mr. Lynch and Ms. Leone have been determined to be independent under applicable Exchange Act and NYSE rules. The Compensation and Management Development Committee operates under a written charter, which is available on the Investors—Leadership and Governance—Governance Documents section of Corebridge’s website at www.corebridgefinancial.com.
The Nominating and Corporate Governance Committee is directly responsible for identifying and recommending qualified candidates for election to the Corebridge Board, recommending committee and committee chair assignments and evaluating and recommending appropriate corporate governance practices. Other key responsibilities include:
| | • | | overseeing succession planning for Corebridge’s Chief Executive Officer; |
| | • | | overseeing performance evaluations of the Board and its committees; and |
| | • | | overseeing Corebridge’s positions on public policy issues of significance to Corebridge, charitable spending, and political contributions. |
The members of the Nominating and Corporate Governance Committee are Mr. Colberg (Chair), Ms. Glazer and Ms. Schioldager. Each of Mr. Colberg and Ms.��Schioldager have been determined to be independent under applicable Exchange Act and NYSE rules. The Nominating and Corporate Governance Committee operates under a written charter, which is available on the Investors—Leadership and Governance—Governance Documents section of Corebridge’s website at www.corebridgefinancial.com.
Executive Compensation
Compensation Glossary
| | |
Term | | Meaning |
| AIG CMRC | | Compensation and Management Resources Committee of the AIG Board |
| |
| AIG Option | | A stock option granted by AIG, Inc. and linked to the performance of its common stock |
| |
| AIG PSU | | A PSU granted by AIG, Inc. and linked to the performance of its common stock |
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| | |
Term | | Meaning |
| |
| Cash Dividend Equivalents | | An unfunded and unsecured promise to pay cash to the holder of PSUs or RSUs in an amount equal to the dividends the holder would have received if the PSUs or RSUs had been actual shares. Cash Dividend Equivalents vest and are paid at the same time, and are subject to the same terms and conditions (including, for PSUs, increase or decrease based on achievement of performance criteria), as the PSUs or RSUs on which they are accrued |
| |
| Corebridge Board | | Board of Directors of Corebridge Financial, Inc. |
| |
| Corebridge Forward | | Our expense savings and modernization initiative |
| |
| Corebridge Option | | A stock option granted by Corebridge and linked to the performance of its common stock |
| |
| Corebridge RSU or CRBG RSU | | A RSU granted or assumed by Corebridge and linked to the performance of Corebridge’s common stock |
| |
| Corebridge SPC | | Special Purpose Committee of the Corebridge Board |
| |
| Delayed Draw Term Facility | | Three-Year Delayed Draw Term Loan Agreement, dated February 25, 2022, among Corebridge, as borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as amended by the Amendment Letter, dated May 11, 2022, and the Amendment Letter, dated August 24, 2022 |
| |
| ESP | | Corebridge Financial, Inc. Executive Severance Plan |
| |
| Laya | | Laya Healthcare Limited, an Irish insurance intermediary, and its subsidiary, former subsidiaries of Corebridge purchased by AXA S.A. in October 2023 |
| |
| Life Fleet | | American General Life Insurance Company (“AGL”), The United States Life Insurance Company in the City of New York and The Variable Annuity Life Insurance Company, our primary risk-bearing entities |
| |
| LTI | | Long-term incentive |
| |
| Non-Qualified Retirement Plan | | American International Group, Inc. Non-Qualified Retirement Income Plan |
| |
| Qualified Retirement Plan | | American International Group, Inc. Retirement Plan |
| |
| RSU | | A restricted stock unit which is an unfunded and unsecured promise to deliver one share of stock, subject to time-based vesting conditions |
| |
| STI | | Short-term incentive |
| |
| Stock option | | An option to buy a specific number of shares of stock at a pre-set price |
| |
| TSR | | Total Shareholder Return which is a measure of financial performance indicating the total amount an investor reaps from an investment |
| |
| UK Life | | AIG Life |
Compensation Highlights
Corebridge’s named executive officers perform the named executive officer roles for AGL. Accordingly, the following compensation disclosure pertains to the compensation of the named executive officers by Corebridge. In 2023, the executives participated in Corebridge’s direct compensation program, including the Corebridge Long Term Incentive Plan, as well as Corebridge own retirement, health and welfare plans. Accordingly, this section discusses highlights of the Corebridge (and, where applicable, AIG) compensation programs and practices as applied to our executives.
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Compensation Plan Design
The components of Corebridge’s executives’ compensation in 2023 included direct compensation, indirect compensation and termination benefits as described in the following table. In addition, the Corebridge CEO received AIG PSUs pursuant to AIG’s Long-Term Incentive Program.
| | | | |
Component | | Description | | Purpose |
| Direct Compensation | | | | |
| | |
| Base Salary | | Fixed cash compensation | | To fairly compensate executives for the responsibilities of their positions, achieve an appropriate balance of fixed and variable pay and provide sufficient liquidity to discourage excessive risk-taking |
| | |
| STI Awards | | Variable annual cash incentive award determined based on performance relative to corporate and individual goals | | To drive business objectives and strategies and reward performance delivered during the year |
| | |
| LTI Awards | | Equity-based compensation in the form of RSUs and stock options | | To reward long-term value creation, stock price appreciation, and align executive interests with those of Corebridge shareholders |
| | |
| Indirect Compensation | | | | |
| | |
| Retirement, Health and Welfare Programs | | Retirement savings, financial protection and other compensation and benefits providing long-term financial support and security for employees | | To assist with long-term financial support and security, including retirement savings |
| | |
| Termination Benefits | | | | |
| | |
| Severance Benefits | | Lump sum payment and other benefits for certain terminations of employment | | To offer competitive total compensation packages and enable Corebridge to obtain a release of employment-related claims |
| | |
| Change-in-Control Benefits | | Benefits in the event of termination related to a change in control | | To help ensure ongoing retention of executives when considering potential transactions that may create uncertainty as to their future employment and enable Corebridge to obtain a release of employment-related claims |
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Corporate Governance Practices
We maintain strong corporate governance practices related to our compensation programs as described below.
| | |
What We Do | | What We Don’t Do |
✓ Pay for performance ✓ Align performance objectives with company strategy ✓ Maintain meaningful Corebridge stock ownership guidelines ✓ Cap payout opportunities under incentive plans applicable to Corebridge named executive officers ✓ Maintain robust clawback policies ✓ Maintain double-trigger change-in-control benefits ✓ Conduct annual risk review of incentive plans | | × No tax gross-ups other than for tax equalization and relocation benefits × No excessive perquisites, benefits or pension payments × No reloading or repricing of stock options × No equity grants below 100% of fair market value × No Cash Dividend Equivalents vest unless and until related LTI awards vest |
2023 Target Total Direct Compensation
Corebridge’s executives’ direct compensation is designed to give appropriate weighting to fixed and variable pay, short-term and long-term performance. The following charts show the breakdown between the various components of Corebridge’s named executive officers’ 2023 target total direct compensation. These charts do not reflect any compensation that was paid or granted to the named executive officers in the form of one-time special awards that are not part of annual compensation.
2023 CEO Annual Target Total Direct Compensation
| | | | | | | | |
| | | 83% At Risk Pay, Subject to Clawback |
17% Base Salary | | 30% Short-Term Cash Incentive | | 53%
Long-Term
Equity Incentive |
| | | | 50%
PSUs | | 25%
Options | | 25%
RSUs |
| | | |
| | Long-Term Equity Incentive Award Allocation | | 75%
Performance Based | | 25%
Time Based |
| * | PSUs are issued in AIG Stock. |
2023 Average Annual Target Direct Compensation of Other Current Named Executives
| | | | | | |
| | | 75% At Risk Pay, Subject to Clawback |
25% Base Salary | | 34% Short-Term Cash Incentive | | 41%
Long-Term
Equity Incentive |
| | | | 75%
RSUs | | 25%
Options |
| | | |
| | Long-Term Equity Incentive Award Allocation | | 75%
Time Based | | 25%
Performance Based |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides an overview of the philosophy, goals and principal components of Corebridge’s 2023 direct compensation program as applied to Corebridge’s named executive officers (or “NEOs”) and an overview of Corebridge’s retirement and welfare plans and compensation policies.
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2023 Named Executive Officers
| | |
Named Executive Officer | | Title as of December 31, 2023 |
| Kevin Hogan | | Chief Executive Officer |
| |
| Elias Habayeb | | Executive Vice President and Chief Financial Officer |
| |
| Lisa Longino(1) | | Executive Vice President and Chief Investment Officer |
| |
| Terri Fiedler | | Executive Vice President and President of Retirement Services |
| |
| Jonathan Novak | | Executive Vice President and President of Institutional Markets |
| |
| Former Officer | | |
| |
| Constance Hunter(2) | | Former Executive Vice President and Head of Strategy |
| (1) | Ms. Longino commenced employment with Corebridge on February 13, 2023. |
| (2) | Ms. Hunter’s employment with Corebridge terminated on September 8, 2023. |
Direct Compensation Program Design
Philosophy
Corebridge’s compensation philosophy is based on a set of foundational principles that guide how Corebridge structures its compensation program and how it reaches compensation decisions. It is intended to be long-term oriented and risk-balanced, enabling Corebridge to deploy the best talent for its various business needs.
Consistent with this philosophy, the Corebridge SPC (or where applicable, the AIG CMRC) evaluated and adjusted the programs for Corebridge’s executives, balancing Corebridge’s strategic priorities, talent needs, stakeholder feedback and market considerations to ensure the programs continue to meet their intended purpose.
The following table provides each foundational principle, the components of each principle and the application of each principle in practice.
| | | | |
Principle | | Component | | Application |
| Attract and retain the best talent | | • Offer market-competitive compensation opportunities to attract and retain the best employees and leaders for business needs | | ✓ Compensation levels set considering market data for talent peers with relevant experience and skillsets in the insurance and financial services industries where the Company competes for talent ✓ Employ special, one-time awards to promote retention |
| | |
| Pay for performance | | • Create a pay-for-performance culture by offering STI and LTI compensation opportunities that reward employees for individual contributions and business performance • Provide a market-competitive, performance-driven compensation structure through a four-part program that consists of base salary, STI, LTI and benefits | | ✓ Majority of compensation is variable and at-risk ✓ Incentives tied to company performance, business / function performance and individual contributions ✓ Objective performance measures and goals used, clearly disclosed herein ✓ Compensation provides significant upside and downside potential for superior performance and under performance |
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| | | | |
| Align interests with shareholders | | • Align the long-term economic interests of key employees with those of shareholders by ensuring that a meaningful component of their compensation is provided in equity • Motivate all employees to deliver long-term, sustainable and profitable growth, while balancing risk to create long-term, sustainable value for shareholders • Avoid incentives that encourage employees to take unnecessary or excessive risks that could threaten the value or reputation of the Company by rewarding both annual and long-term performance • Maintain strong compensation best practices by meeting evolving standards of compensation governance and complying with regulations applicable to employee compensation | | ✓ Majority of compensation is equity-based ✓ Executives are subject to risk management policies, including clawback, anti-hedging and pledging policies ✓ Performance goals are set with rigorous standards commensurate with both the opportunity and company risk guidelines ✓ Annual risk assessments evaluate compensation plans to ensure they appropriately balance risk and reward ✓ Follow evolving compensation best practices through engagement with outside consultants and peer groups |
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Framework
Corebridge’s direct compensation program is designed to give appropriate weighting to fixed and variable pay, short- and long- term performance, and business unit / function and enterprise-wide contributions. Corebridge provides three elements of annual direct compensation: (i) base salary, (ii) an STI award and (iii) an LTI award as described in the table below. Corebridge’s target total direct compensation and mix of components are set with reference to market data for comparable positions at business and talent competitors.
| | |
Direct Compensation Framework |
| Base Salary | | Base salary is fixed compensation for services that is intended to fairly compensate executives for the responsibilities of their position, achieve an appropriate balance of fixed and variable pay and provide sufficient liquidity to discourage excessive risk-taking. |
| |
| STI Awards | | STI awards are variable annual cash incentive awards determined based on performance relative to corporate and individual goals. STI awards are designed to drive business objectives and strategies and reward performance delivered during the year. The fundamental structure of the STI program provides an opportunity to incentivize and reward both leading and lagging indicators of performance, with a focus on guiding the organization towards balancing profitability, growth and risk. |
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| | |
Direct Compensation Framework |
| |
| LTI Awards | | LTI awards are equity-based compensation in the form of AIG PSUs (for CEO only) and CRBG RSUs and stock options. LTI awards are designed to reward long-term value creation, performance achievements and stock price appreciation. |
Direct Compensation Program Decision-Making Process
Roles and Responsibilities
The following table describes various roles and responsibilities related to the AIG and Corebridge 2023 direct compensation program decision-making process.
| | |
Individual/Entity | | Responsibilities |
| AIG CMRC | | The AIG CMRC consisted solely of independent AIG, Inc. directors and approved Mr. Hogan’s compensation for 2023. |
| |
| Corebridge SPC | | The Corebridge SPC consisted of two AIG Directors and two independent directors and met as necessary to review and approve various compensation-related items, including: • incentive program design, including metrics • total direct compensation for executives, including STI awards, LTI grant dollar values and base salary • compensation plans • performance goals for the Corebridge CEO |
| |
| Section 16 Sub-Committee | | The Section 16 Sub-Committee consisted of two non-employee directors and had the authority to grant equity awards under the Corebridge Long Term Incentive Plan |
| |
| Corebridge CEO | | The Corebridge CEO presented recommendations for NEO compensation to the Corebridge SPC; no other NEO played a decision-making role in determining the compensation of any other NEO |
| |
| Corebridge Human Resources Department | | The Corebridge Human Resources Department performed many of the organizational and administrative tasks underlying Corebridge’s compensation practices |
Use of Market Data
AIG uses data for its relevant peer groups to support the key principles of its compensation philosophy, including attracting and retaining the best talent and paying for performance. For Mr. Hogan, AIG used a compensation peer group for executive compensation in 2023 to inform his compensation level and design. This group is comprised of:
| | | | |
| 1. The Allstate Corporation | | 7. CIGNA Corporation | | 13. The Progressive Corporation |
| | |
| 2. American Express Company | | 8. Citigroup Inc. | | 14. Prudential Financial, Inc. |
| | |
| 3. Bank of America Corporation | | 9. JPMorgan Chase & Co. | | 15. The Travelers Companies Inc. |
| | |
| 4. BlackRock, Inc. | | 10. Manulife Financial Corporation | | 16. U.S. Bancorp |
| | |
| 5. Capital One Financial Corp. | | 11. Marsh & McLennan Company, Inc. | | 17. Wells Fargo & Company |
| | |
| 6. Chubb Limited | | 12. MetLife Inc. | | |
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Moreover, for Mr. Hogan, AIG engaged Johnson Associates to prepare a report presenting market comparisons of the total compensation level.
The Decision-Making Process
In the first quarter of 2023, 2023 target total direct compensation and 2023 target LTI awards were approved for Mr. Hogan by the AIG CMRC and for all NEOs by the Corebridge SPC. They also approved the performance metrics and goals for 2023 STI awards. These metrics and goals were set based on the budgeting and strategic planning process.
In the first quarter of 2024, the AIG CMRC reviewed and approved compensation decisions for Mr. Hogan and the Corebridge SPC reviewed and approved compensation decisions for all NEOs. These reviews were performed against a backdrop of the business and individual performance evaluations for the prior year, in addition to compensation relative to peers with relevant experience and skillsets in the insurance and financial services industries where we compete for talent.
Total Direct Compensation Components
2023 Target Total Direct Compensation
2023 Target Total Direct Compensation for Corebridge’s NEOs was as follows:
| | | | | | | | | | | | | | | | |
NEO | | Base
Salary ($) | | | 2023 Target
STI Award ($) | | | 2023 Target
LTI Award ($) | | | Total ($) | |
Kevin Hogan | | | 1,250,000 | | | | 2,250,000 | | | | 4,000,000 | | | | 7,500,000 | |
Elias Habayeb | | | 800,000 | | | | 1,200,000 | | | | 1,700,000 | | | | 3,700,000 | |
Lisa Longino | | | 800,000 | | | | 1,240,000 | | | | 1,360,000 | | | | 3,400,000 | |
Terri Fiedler | | | 650,000 | | | | 820,000 | | | | 980,000 | | | | 2,450,000 | |
Jonathan Novak | | | 600,000 | | | | 750,000 | | | | 900,000 | | | | 2,250,000 | |
Constance Hunter | | | 700,000 | | | | 800,000 | | | | 1,000,000 | | | | 2,500,000 | |
Base Salary
The 2023 base salary for each of Corebridge’s NEOs is listed in the table above. Salaries are reviewed to determine whether they should be adjusted based on a broad range of factors including role scope, experience, skillset, performance, and salaries for comparable positions at competitors, as well as internal parity among similarly situated officers.
STI Awards
2023 STI awards for Corebridge’s NEOs who did not terminate employment during 2023 (Corebridge’s “Active NEOs”) were based on a combination of a quantitative business performance score (the “Business Performance Score”) and an assessment of individual performance (the “Individual Performance Score”) as described below. The calculation was as follows, subject to an overall cap of 200% of the relevant Active NEO’s 2023 Target STI award:
| | | | | | | | | | | | |
| | | | | | | |
| 2023 Target | | | | Business | | | | Individual | | | | 2023 |
| | | | | | | |
| STI Award | | X | | Performance | | X | | Performance | | = | | Actual STI |
| | | | | | | |
| | | | | Score | | | | Score | | | | Award |
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2023 performance resulted in the following STI awards for the Active NEOs:
| | | | | | | | | | | | | | | | |
NEO | | 2023 Target
STI Award ($) | | | Business
Performance Score | | | Individual
Performance Score | | | 2023 Actual
STI Award ($) | |
Kevin Hogan | | | 2,250,000 | | | | 139 | % | | | 104 | % | | | 3,250,000 | |
Elias Habayeb | | | 1,200,000 | | | | 139 | % | | | 100 | % | | | 1,670,000 | |
Lisa Longino | | | 1,240,000 | | | | 139 | % | | | 100 | % | | | 1,720,000 | |
Terri Fiedler | | | 820,000 | | | | 139 | % | | | 100 | % | | | 1,140,000 | |
Jonathan Novak | | | 750,000 | | | | 139 | % | | | 100 | % | | | 1,040,000 | |
Ms. Hunter’s employment with Corebridge terminated on September 8, 2023, and she received a pro-rated STI award for 2023 in accordance with the ESP, as detailed under “Potential Payments upon Termination or Change in Control.”
Business Performance Score
The Business Performance Score was determined by measuring corporate performance with respect to certain key metrics approved by the AIG CMRC based on Corebridge’s strategy and focus at the time of the program’s design. Three metrics were chosen to incent performance across a range of activities and balance the different types of metrics. The 2023 metrics and their relative weightings were:
| | • | | Normalized Adjusted Return on Average Equity (“Normalized ROAE”) – 40% |
| | • | | Normalized General Operating Expense (“Normalized GOE”) – 30% |
| | • | | Normalized Reported Adjusted After-tax Operating Income (AATOI) Per Share (“Normalized AATOI Per Share”) – 30% |
Note: Normalized ROAE, Normalized GOE and Normalized AATOI Per Share are non-GAAP financial measures used by Corebridge. For more information on these measures, see Appendix A.
To determine the Business Performance Score, the AIG CMRC approved targets, thresholds and caps for each metric. Performance at target for a metric would result in a contribution to the Business Performance Score equal to that metric’s weighting. Accordingly, performance at target for all of the metrics would result in a Business Performance Score of 100%.
Performance at threshold for a metric would result in a contribution to the Business Performance Score equal to 50% of the metric’s weighting. Performance below threshold would result in no contribution to the Business Performance Score. Performance at the cap or higher for a metric would result in an increased contribution to the Business Performance Score of 150% of the metric’s weighting. Accordingly, the Business Performance Score could range from 0% to 150%.
The 2023 Business Performance Score was 139%. The following table presents the target and actual results for each of the metrics, along with their threshold, cap, relative weightings and ultimate contribution to the Business Performance Score.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Metric | | Threshold
(50%) | | | Target
(100%) | | | Stretch
(125%) | | | Maximum
(150%) | | | Actual | | | Percent
Achieved | | | Weighting | | | Percent
Achieved
(Weighted) | |
Normalized ROAE | | | 8 | % | | | 10 | % | | | 11 | % | | | 12 | % | | | 12 | % | | | 149 | % | | | 40 | % | | | 59.6 | % |
Normalized GOE | | $ | 1.82 | | | $ | 1.77 | | | $ | 1.72 | | | $ | 1.67 | | | $ | 1.74 | | | | 116 | % | | | 30 | % | | | 34.8 | % |
Normalized AATOI Per Share | | $ | 2.75 | | | $ | 3.50 | | | $ | 4.00 | | | $ | 4.25 | | | $ | 4.41 | | | | 150 | % | | | 30 | % | | | 45 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 139 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Individual Performance Score
The Individual Performance Score for Mr. Hogan (assessed by the AIG CMRC) and for each Active NEO other than the CEO (assessed by the Corebridge SPC) was based on individual performance with respect to each NEO’s objectives and could range from 0% to 150%. All Active NEOs’ objectives were structured to reward actions under four key pillars: Financial, Strategic, Operational and Organizational. The objectives reflect areas of importance for each Active NEO.
| | | | | | |
Financial (25%) | | Strategic (25%) | | Operational (25%) | | Organizational (25%) |
| Assessed against relevant financial objectives based on the Active NEO’s role, such as: | | Goals vary by Active NEO and cover areas such as: | | Goals vary by Active NEO and cover areas such as: | | Goals vary by Active NEO and cover areas such as: |
| | | |
• Revenue • Growth • Profitability • Budget Control • Cost Reduction • Risk Adjusted Profitability / Value of New Business | | • Business Development and Growth • Customer Satisfaction and Quality | | • Compliance • Risk • Productivity Measures • Operational Efficiencies • Demonstration of Accountability and Ownership for Risk-Taking | | • Transformation • Tech Improvement • Diversity, Equity, Inclusion and Belonging • Talent Retention and Development |
In making its determination, the AIG CMRC and Corebridge SPC took into account the factors it deemed relevant, including the following achievements of the Active NEOs.
| | |
Kevin Hogan, Chief Executive Officer |
| Financial | | • Delivered strong 2023 financial results: • Pre-Tax Income was $940 million; Adjusted Pre-Tax Operating Income* was $3.2 billion, an increase of $339 million year-over-year • Delivered ROAE of 10.7 percent; Achieved Adjusted ROAE* of 11.3 percent, an improvement of 90 basis points year-over-year • Achieved Operating Earnings* of $4.10 per share, exceeding consensus and target • Oversaw proactive balance sheet management supportive of significant growth and capital management objectives • Returned over $2.2 billion to shareholders, through $589 million in regular dividends, $1.1 billion in special dividends and $498 million in share repurchases • Opportunistically paid off $1.25 billion of remaining outstanding $1.5 billion Delayed Draw Term Facility balance using proceeds from senior note issuances, reducing interest expense • Maintained strong Corebridge parent company liquidity, ending the year with $1.6 billion |
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| | |
Kevin Hogan, Chief Executive Officer |
| Strategic | | • Successfully completed outsourcing strategies, representing approximately $86 million in expense savings • Completed integration of third-party asset managers (BlackRock and Blackstone) into Corebridge’s Investments data environment • Established relationships with key stakeholders, including investors, analysts, rating agencies and regulators |
| |
| Operational | | • Facilitated simplification of operating model via completed sale of Laya in October 2023 and entry into a definitive agreement to sell UK Life business • Reorganized business operations, including Legal, Compliance and Regulatory and Enterprise Risk Management functions • Oversaw substantial operational and physical separation from AIG and further implemented standalone infrastructure • Executed or contracted for over 85 percent of targeted savings via Corebridge Forward • Substantially progressed implementation of BlackRock’s Aladdin platform within Investments |
| |
| Organizational | | • Engaged employees through various internal events, including Corebridge’s second annual Diversity, Equity, Inclusion and Belonging Month • Recruited diverse, industry leading talent to executive and senior leadership roles throughout Corebridge • Initiated company-wide, multi-year governance and controls projects with respect to financial controls, risk management and compliance functions |
| | |
Elias Habayeb, Executive Vice President and Chief Financial Officer |
| Financial | | • Provided financial leadership towards the execution of business and capital plans resulting in the delivery of strong financial results for 2023 • Proactively managed the insurance company balance sheets to allow for highest levels of new business generation in recent years, distribution of $2 billion in dividends from the US insurance companies, mitigating market volatility implications while maintaining the Life Fleet RBC ratio above target • Prudently managed Corebridge parent and insurance company liquidity enabling Corebridge to return $2.2 billion in capital to shareholders • Led efforts for the sale of the international life operations which generated over $1 billion in additional shareholder value • Reduced interest expense by opportunistically refinancing $1.25 billion of the Delayed Draw Term Facility |
| |
| Strategic | | • Actively supported execution of the Corebridge Forward initiative achieving 88% of the exit run rate target by the end of 2023 • Increased delivery of actionable financial information and analyses to support more effective decision making • Expanded external stakeholder engagement and continued to educate investors on Corebridge; met with approximately 160 buyside firms and participated in 4 industry conferences |
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| | |
Elias Habayeb, Executive Vice President and Chief Financial Officer |
| | • Completed successful roll-out of long duration targeted improvements |
| |
| Operational | | • Successful implementation of Sarbanes Oxley controls under the first year subject to an independent attestation with no material weaknesses or significant deficiencies identified • Successfully migrated all identified work to outsourcing partner • Migration of finance/actuarial systems to the cloud and creation of new accounts payable function • Actively supported the Aladdin implementation |
| |
| Organizational | | • Established a plan for finance to improve employee engagement • Executive Sponsor of the Houston Rising Leaders employee resource group • Upgraded talent in key positions • Promoted gender and ethnic diversity among new hires |
| | |
Lisa Longino, Executive Vice President and Chief Investment Officer |
| Financial | | • Delivered strong Net Investment Income results, exceeding budget and prior year • Enabled strong credit performance • Expanded portfolio trading and hedging tools • Successfully concluded numerous loan modifications, resulting in payoffs, credit enhancements and maturity extensions |
| |
| Strategic | | • Strong credit performance for portfolio, credit migration positive, CML/CMBS (commercial mortgage loan/commercial mortgage-based securities) flat to slightly down with all sectors outperforming market experience • Successfully established a Manager of Manager organization overseeing Blackstone and BlackRock, and partnered with Blackstone on new asset classes and new products • Further developed and expanded partnerships with both BlackRock and Blackstone |
| |
| Operational | | • Drove a focus on risk management by incorporating operational risk into the first line of defense • Established enhanced risk governance model, with monthly reporting and escalation process |
| |
| Organizational | | • Continued to execute on target operating model for Investments, coupled with a rebuild of CIO team • Focused on building bench strength and developing future leaders by providing executive presence and presentation coaching for leaders on CIO team • Established a communications plan to further engage colleagues, including monthly and quarterly business reviews and townhalls |
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| | |
Terri Fiedler, Executive Vice President and President of Retirement Services |
| Financial | | • Drove strong results across Retirement Services, delivering Adjusted Pre-Tax Operating Income* excluding Variable Investment Income, exceeding target and prior year • Increased prior year total deposits and delivered strong Annuity sales, exceeding prior year • Delivered periodic deposits above target, providing predictable and consistent in-flows • Improved overall operating expenditure |
| |
| Strategic | | • Successfully restructured the distribution organization to align with growth objectives • Executed on key initiatives to improve the plan sponsor experience including enhancements in branding, communication and the relationship management model • Enhanced customer experience through delivery of transformation initiatives, including enhanced digital capabilities |
| |
| Operational | | • Contributed to Corebridge Forward with additional savings relative to target • Implemented operational changes to support regulatory changes • Continued focus on reinforcing a culture of compliance with enhanced controls and oversight |
| |
| Organizational | | • Led the Women in Distribution Network as Executive Sponsor, delivering multiple virtual and in-person development events • Served as Executive Sponsor of the Houston Women & Allies ERG and a co-Executive Sponsor of the new National Women & Allies ERG • Represented Corebridge as the Chair of the Insured Retirement Institute and a Board Trustee for the Foundation of Financial Planning |
| | |
Jonathan Novak, Executive Vice President and President of Institutional Markets |
| Financial | | • Delivered strong results in Adjusted Pre-Tax Operating Income* excluding Variable Investment Income, exceeding target by 15% • Significantly surpassed target for new business volumes while achieving profit margins in excess of target • Improved overall operating expenditure |
| |
| Strategic | | • Successful execution of reinsurance strategies across the enterprise supporting Individual Retirement, Life Insurance and Group Retirement reducing risk and increasing capital efficiency • Implemented new product and service strategies across Institutional Markets, further enhancing Corebridge’s market position • Successful initial implementation of Corebridge’s Bermuda strategy including conversion of the legal entity to Corebridge subsidiary |
| |
| Operational | | • Led Institutional Markets with discipline while optimizing capital deployment • Worked closely with external partners to enhance the range of assets available to support the business and enhance competitive position |
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| | |
Jonathan Novak, Executive Vice President and President of Institutional Markets |
| |
| Organizational | | • Demonstrated strong active leadership focused on advancing collaboration and connections throughout and across teams • Exhibited strong risk management practices and drove a risk and control culture |
| * | Measures marked with an asterisk are non-GAAP financial measures used by Corebridge. For more information on these measures, see Appendix A. |
LTI Awards
Annual 2023 LTI Awards
In February 2023, the Corebridge SPC granted annual LTI awards to Corebridge’s NEOs and for Mr. Hogan, the AIG CMRC granted the AIG PSU portion of his annual LTI award. When determining the amount of an annual LTI award for an executive, the Corebridge SPC (or AIG CMRC, for Mr. Hogan) considered whether to modify the executive’s Target LTI Award. The actual LTI award granted can reflect a modifier of up to 150% of the executive’s Target LTI Award, based on the assessment by the Corebridge SPC (or AIG CMRC, for Mr. Hogan) of a range of factors, including consideration of prior year performance and contributions, the complexity of expected contributions and the desire to enhance retention and/or provide incremental incentive for future success over the applicable performance period.
In February 2023, the Corebridge SPC (or AIG CMRC, for Mr. Hogan) approved the following LTI awards for the NEOs:
| | | | | | | | | | | | |
NEO | | 2023 Target LTI
Award | | | Modifier | | | 2023 Actual LTI
Award | |
Kevin Hogan | | $ | 4,000,000 | | | | 100 | % | | $ | 4,000,000 | |
Elias Habayeb | | $ | 1,700,000 | | | | 100 | % | | $ | 1,700,000 | |
Terri Fiedler | | $ | 980,000 | | | | 100 | % | | $ | 980,000 | |
Jonathan Novak | | $ | 900,000 | | | | 100 | % | | $ | 900,000 | |
2023 LTI awards consisted of 50% AIG PSUs, 25% Corebridge RSUs and 25% Corebridge Options for Mr. Hogan and 75% Corebridge RSUs and 25% Corebridge Options for Mr. Habayeb, Ms. Fiedler, and Mr. Novak.
The amounts granted were determined as follows:
| | |
Type of Award | | How Amount Granted Was Determined |
| AIG PSUs | | 50% of Mr. Hogan’s total award value was divided by the average closing price of AIG common stock over the five trading days preceding the grant date, rounded down to the nearest whole unit |
| |
| Corebridge RSUs | | 75% of the total award value (25% for Mr. Hogan) was divided by the average closing price of Corebridge common stock over the five trading days preceding the grant date, rounded down to the nearest whole unit |
| |
| Corebridge Options | | 25% of the total award value was divided by the value of a Corebridge Option on the grant date which was determined using a Black-Scholes pricing methodology based on assumptions which may differ from the assumptions used in determining the option’s grant date fair value based on FASB ASC Topic 718 |
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2023 Annual Corebridge RSUs
One-third of the annual 2023 Corebridge RSUs will vest on each of the first, second and third anniversaries of the grant date (February 21, 2023), subject to continued service on each vesting date. The 2023 Corebridge RSUs accrue Cash Dividend Equivalents.
2023 Annual Corebridge Options
Annual 2023 Corebridge Options have a term of ten years and one-third of the options will vest on each of the first, second and third anniversaries of the grant date (February 21, 2023), subject to continued service on each vesting date. The exercise price for the options is $20.30, which was the closing price for Corebridge’s common stock on the grant date.
Other 2023 LTI Awards
Ms. Longino and Ms. Hunter each received the following awards in connection with the commencement of their employment with Corebridge, which were granted in consideration for equity foregone from each executive’s previous employer:
| | | | | | | | |
NEO | | Grant Date | | Award Type | | Amount | |
Lisa Longino | | February 21, 2023 | | Equity Buy-Out | | $ | 1,223,215 | |
Constance Hunter | | June 20, 2023 | | Equity Buy-Out | | $ | 1,000,000 | |
Ms. Longino’s grant consisted 100% of Corebridge RSUs which will vest 50% on February 21, 2024, 30% on February 21, 2025 and 20% on February 21, 2026, subject to continued service on each vesting date. The amount was later adjusted in May 2023 to conform to the final terms of the equity buy-out. The Corebridge RSUs accrue Cash Dividend Equivalents.
Ms. Hunter’s grant consisted of 75% Corebridge RSUs and 25% Corebridge Options. One-third of each of the Corebridge RSUs and Corebridge Options were scheduled to vest on each of February 21, 2024, February 21, 2025 and February 21, 2026, subject to continued service on each vesting date. Upon termination of Ms. Hunter’s employment on September 8, 2023, all of her outstanding unvested equity awards vested in full on her last day of employment, pursuant to the terms of such equity awards.
2023 Annual AIG PSUs
Mr. Hogan’s annual 2023 AIG PSUs can be earned based on AIG performance over a period of three years and accrue Cash Dividend Equivalents.
The performance metrics applicable to his award include:
| | • | | Annual Improvement to Accident Year Combined Ratio, as Adjusted (“AYCR, ex-CAT”) calculated as a consecutive average annual improvement against each year in the performance period (weighted 25%) |
| | • | | Achievement of AIG parent company expense targets (weighted 25%) |
| | • | | Cumulative Diluted Normalized Adjusted After-Tax Income (“AATI”) attributable to AIG Common Shareholders Per Share annual improvement over the three-year performance period (weighted 30%) |
| | • | | TSR over the three-year performance period relative to a group of General Insurance peer companies (weighted 20%) |
All of these metrics include clearly defined goals associated with the achievement of “threshold,” “target,” “stretch” and “maximum” and are aligned to AIG’s strategic objectives.
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Note: AYCR, ex-CAT and Diluted Normalized AATI attributable to AIG Common Shareholders Per Share are non-GAAP financial measures used by AIG. For more information on these measures, see Appendix B.
2020 AIG PSU Payout
Mr. Hogan received AIG PSUs in 2020. The three-year performance period for these AIG PSUs ended on December 31, 2022 and the AIG PSUs were settled in 2023. This award was subject to three performance metrics, including a relative TSR modifier:
| | • | | Relative Tangible Book Value Per Share Growth (weighted 80%) |
| | • | | AIG 200 Net GOE Savings (weighted 20%) |
| | • | | Relative TSR Modifier - a modifier is applied if AIG ranks in the top quartile (10%) and in the bottom quartile (-10%) |
In the first quarter of 2023, AIG’s CMRC assessed performance over the three-year performance period and certified the results as set forth below in the following table. In addition, the CMRC determined AIG’s Relative TSR over the performance period ranked in the top quartile of its peers, resulting in a +10 percent performance adjustment. The AIG PSU performance based on the core metrics yielded a score of 179%.
The threshold, target and maximum performance goals for each metric and their actual and earned performance are included in the following table.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Performance Goal (% Payout) | | | Actual Performance | | | Earned Performance (% Payout) | |
Performance Metric | | Threshold
(50%) | | | Target
(100%) | | | Stretch
(150%) | | | Maximum
(200%) | | | FY’20A | | | FY’21A | | | FY’22A | | | FY’20A | | | FY’21A | | | FY’22A | | | Payout
(Weighted) | |
Relative TBVPS* (Annual and Cumulative Three-Year Growth Relative to Peers) | | | 7th place | | |
| 4th or 5th
Place |
| | | 3rd place | | | | 1st place | | |
| General
Insurance:
7th place
(50%) L&R: 5th place (100%) |
| |
| General
Insurance:
5th place
(100%) L&R:
2nd place (175%) |
| |
| General
Insurance:
2nd place
(175%) L&R:
3rd place (150%) |
| | | 70 | % | | | 130 | % | | | 165 | % | | | 165 | % |
|
AIG 200 Cumulative Run-rate Net GOE Savings* (Annual and Three-Year Cumulative Run-rate Savings) | | $ | 2020 150M | | | $ | 2020 200M | | | $ | 2020 300M | | | | 2020 N/A | | | | FY’20A $400M | | | | FY’21A ~$810M | | | | FY’22A ~$1,055M | | | | 150 | % | | | 150 | % | | | 164 | % | | | 155 | % |
| | $ | 2021 350M | | | $ | 2021 450M | | | $ | 2021 600M | | | | 2021 N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 2022 700M | | | $ | 2022 850M | | | $ | 2022 1.0B | | | $ | 2022 1.2B | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 163 | % |
PSU awards subject to +10 percent
modifier based on first quartile TSR
performance relative to peers, resulting
in an adjusted score of 179 percent
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Corebridge’s Indirect Compensation Plans and Termination Benefits
All employees, including our executives, are offered a benefits program that includes retirement, health and welfare and termination benefits.
| | |
Indirect Compensation |
| Retirement Benefits | | We offer a tax-qualified 401(k) plan to Corebridge employees. All participants in the plan receive employer matching contributions of up to 100% of the first 6% of the eligible compensation that they contribute to the plan, up to the qualified plan compensation limit ($330,000 in 2023). We also provide an employer contribution of 3% of eligible compensation to all employees eligible to participate in the 401(k) plan, subject to tax law limits. |
| |
| Health and Welfare Benefits | | Corebridge’s executives generally participate in the same broad-based health, life insurance and disability benefit programs as Corebridge’s other employees. |
| |
| Perquisites | | We provide executives with a limited number of benefits and perquisites that are generally aligned with those available to other employees. |
| | |
Termination Benefits |
| Severance Benefits | | Corebridge’s executives are eligible for benefits under the ESP upon termination by the Company without “Cause” or resignation by the executive for “Good Reason.” To receive benefits under the ESP, the executives must execute a release of employment-related claims including restrictive covenants. Benefits include a lump sum payment equal to 1 or 1.5 (depending on job grade) times the sum of the executive’s salary and three-year average of actual STI payments. |
| |
Change-in-Control Benefits | | In the event that an executive experiences a covered termination under the ESP within 24 months following a change in control, the lump sum payment under the plan will equal 1.5 or 2 (depending on job grade) times the sum of the executive’s salary and three-year average of actual STI payments. |
Corebridge’s Compensation Policies
Corebridge Clawback Policy (amended in 2023)
The Corebridge Clawback Policy was adopted by the Corebridge Board to encourage sound risk management and increase individual accountability and applies to all executive officers. The policy was amended to extend its coverage to all employees who receive equity awards and all employees at Grade Level 27 and above as well as other minor technical changes. The policy provides that the Board or a designated committee thereof (the “administrator”) has broad discretionary authority to determine the existence and date of a covered event and the amount of any forfeiture, recoupment and/or repayment of all or any portion of:
| | • | | any outstanding and unpaid incentive compensation (i.e., any bonus, equity or equity-based award or other incentive compensation granted by Corebridge or any Corebridge affiliate), whether vested or unvested, that was awarded to the applicable executive and |
| | • | | any incentive compensation that was paid to and received by the applicable executive during the 12-month period preceding the date of the covered event. |
For this purpose, a “covered event” includes:
| | • | | a material financial restatement; |
| | • | | an award or receipt of covered compensation by an executive based on materially inaccurate financial statements or performance metrics that are materially inaccurately determined; |
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| | • | | a failure by an executive to properly identify, assess or sufficiently raise concerns about risk, including a supervisory role, that results in a material adverse impact on Corebridge or any of its affiliates and |
| | • | | an action or omission by an executive that results in material financial or reputational harm to Corebridge or a Corebridge affiliate or constitutes a material violation of Corebridge’s risk policies. |
Financial Restatement Clawback Policy (adopted in 2023)
In June 2023, the SEC approved the New York Stock Exchange’s proposed rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers and to satisfy related disclosure obligations.
On November 21, 2023, the Corebridge Board approved a new Financial Restatement Clawback Policy effective December 1, 2023, that is fully compliant with these new SEC and NYSE requirements, and resolved that it remained appropriate to maintain the existing Clawback Policy with minor amendments.
Generally, the new Corebridge Financial Restatement Clawback Policy does not change the existing provisions regarding covered events in the Existing Clawback Policy. However, the new clawback policy provides that, if there is an accounting restatement, the Company is required to recoup any erroneously awarded compensation received by executive officers on or after October 2, 2023. The amount of the “erroneously awarded compensation” equals the amount of incentive-based compensation received by the executive that exceeds the amount that would have been received had it been determined based on the restated amounts. Only limited exceptions apply to the requirement that the Company recoup the erroneously awarded compensation.
A full copy of the Financial Restatement Clawback Policy is included in Corebridge’s Annual Report on Form 10-K for the year ended December 31, 2023.
No clawback actions were required in 2023 based on a review of material risk events as part of the annual risk review process.
Anti-Hedging and Anti-Pledging Policies
Corebridge’s Insider Trading Policy prohibits all employees and directors from engaging in hedging transactions with respect to any Corebridge securities, including by trading in any derivative security relating to Corebridge securities. In particular, other than pursuant to a compensation or benefit plan or dividend distribution, no employee or director may acquire, write or otherwise enter into an instrument that has a value determined by reference to Corebridge securities, whether or not the instrument is issued by Corebridge. Examples include put and call options, forward contracts, collars and equity swaps relating to Corebridge securities. The policy also prohibits pledging of Corebridge securities.
Executive Stock Ownership Guidelines
Corebridge’s stock ownership guidelines provide that the value of the beneficial ownership of Corebridge common stock to be achieved under the guidelines is five times salary for Corebridge’s CEO and three times salary for Corebridge’s other executives. All executives are required to retain 50% of the net shares of Corebridge common stock received as a result of the exercise, vesting or payment of any stock option, restricted stock, RSU or other equity-based award granted by Corebridge until the applicable guideline is achieved.
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Additional Information
Compensation Risk Review
Enterprise Risk Management (“ERM”) conducts a risk assessment of newly created or modified compensation plans as required by the risk framework for incentive compensation to ensure the plans appropriately balance risk and reward. In connection with the review, ERM assigns a risk rating of low, medium or high to each active incentive plan, taking into account:
| | • | | whether the plan design or administration may encourage excessive or unnecessary risk-taking; |
| | • | | whether the plan has appropriate safeguards in place to discourage fraudulent behavior; |
| | • | | whether the plan incorporates appropriate risk mitigants to lower risk (including deferrals, clawback conditions, time-based vesting for equity awards and capped payouts) and |
| | • | | whether payments are based on pre-established performance goals, including risk-adjusted metrics and compliance goals. |
Corebridge’s risk review was incorporated into AIG’s annual risk review that was presented to the AIG CMRC in September 2023. ERM conducted a review of Corebridge’s compensation plans (including Corebridge’s sales incentive plans) in 2023 and concluded that Corebridge’s plans do not encourage unnecessary or excessive
risk-taking and have the appropriate safeguards in place to discourage fraudulent behavior. This review included feedback from the Business, HR, ERM, Legal and Compliance. The risk assessment process includes a review of plan documentation, financial targets, scorecards and supporting records.
Use of Non-GAAP Financial Metrics
Certain non-GAAP financial measures are used as performance measures in the incentive compensation programs as discussed herein.
Tax and Accounting Considerations
In reaching decisions on executive compensation, the Corebridge SPC considered the tax and accounting consequences.
Compensation Committee Interlocks and Insider Participation
In 2023, the following directors served as Corebridge SPC members: Mr. Zaffino, Mr. Lynch, and Ms. Schioldager. Ms. Schioldager and Mr. Lynch also served as Section 16 Sub-Committee members. During 2023, none of Corebridge’s executive officers served as: (a) a member of the compensation committee of any entity for which a member of Corebridge’s Board served as an executive officer or (b) a director of another entity, an executive officer of which serves as a member of Corebridge’s Board. No member of the Corebridge SPC was, at any time during fiscal 2023 or at any other time, an officer or employee of Corebridge, or had any relationship with Corebridge requiring disclosure under Item 404 of Regulation S-K.
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Compensation Tables
2023 Summary Compensation Table
The following table presents the total compensation of the NEOs for services performed in the years indicated. The total compensation reported in the following table includes items such as salary and STI awards as well as the grant date fair value of LTI awards. The LTI awards may never become payable or may end up with a value that is substantially different from the value reported here. The amounts in the Total column do not represent “direct compensation” as described in the Compensation Discussion and Analysis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position(1) | | Year | | | Salary
($) | | | Bonus
($)(2) | | | Stock
Awards
($)(3) | | | Option
Awards
($)(4) | | | Non-Equity
Incentive Plan
Compensation
($)(5) | | | Change in
pension value
and
nonqualified
deferred
compensation
earnings($)(6) | | | All Other
Compensation
($)(7) | | | Total ($) | |
Kevin Hogan Chief Executive Officer | | | 2023 | | | | 1,250,000 | | | | — | | | | 2,927,993 | | | | 999,997 | | | | 3,250,000 | | | | 131,915 | | | | 72,192 | | | | 8,632,097 | |
| | | 2022 | | | | 1,250,000 | | | | — | | | | 5,141,177 | | | | — | | | | 2,400,000 | | | | 0 | | | | 90,420 | | | | 8,881,597 | |
| | | 2021 | | | | 1,250,000 | | | | — | | | | 3,262,558 | | | | 999,999 | | | | 2,407,500 | | | | 0 | | | | 85,188 | | | | 8,005,245 | |
Elias Habayeb Executive Vice President and Chief Financial Officer | | | 2023 | | | | 800,000 | | | | — | | | | 1,217,411 | | | | 424,996 | | | | 1,670,000 | | | | 58,652 | | | | 29,973 | | | | 4,201,032 | |
| | | 2022 | | | | 800,000 | | | | 600,000 | | | | 1,729,454 | | | | — | | | | 1,140,000 | | | | 0 | | | | 27,723 | | | | 4,297,177 | |
| | | 2021 | | | | 758,655 | | | | — | | | | 1,168,373 | | | | 374,989 | | | | 1,600,000 | | | | 0 | | | | 26,373 | | | | 3,928,390 | |
Lisa Longino Executive Vice President and Chief Investment Officer | | | 2023 | | | | 676,924 | | | | 2,181,265 | | | | 1,225,613 | | | | — | | | | 1,720,000 | | | | — | | | | 29,931 | | | | 5,833,733 | |
Terri Fiedler Executive Vice President and President of Retirement Services | | | 2023 | | | | 650,000 | | | | — | | | | 701,791 | | | | 244,998 | | | | 1,140,000 | | | | 14,014 | | | | 29,973 | | | | 2,780,776 | |
| | | 2022 | | | | 582,770 | | | | 225,000 | | | | 1,549,216 | | | | — | | | | 779,000 | | | | 0 | | | | 27,723 | | | | 3,163,709 | |
Jonathan Novak Executive Vice President and President of Institutional Markets | | | 2023 | | | | 600,000 | | | | — | | | | 644,505 | | | | 224,995 | | | | 1,040,000 | | | | 29,703 | | | | 30,098 | | | | 2,569,301 | |
Constance Hunter Former Executive Vice President and Head of Strategy | | | 2023 | | | | 498,077 | | | | — | | | | 583,129 | | | | 249,997 | | | | 533,333 | | | | — | | | | 2,656,031 | | | | 4,520,567 | |
| (1) | Ms. Longino commenced employment with Corebridge on February 13, 2023. Ms. Hunter’s employment with Corebridge terminated on September 8, 2023. |
| (2) | For Mr. Habayeb and Ms. Fiedler, this column reflects leadership continuity awards which vested and were paid in June 2022 and May 2022, respectively. For Ms. Longino, this column reflects sign-on payments for compensation foregone from her prior employer paid in a lump-sum in March 2023. |
| (3) | The amounts in this column for 2023 represent the grant date fair value of Corebridge RSUs granted to each NEO and AIG PSUs granted to Mr. Hogan in 2023, determined in accordance with FASB ASC Topic 718. The assumptions made in calculating these amounts can be found in Note 22 of the consolidated financial statements in Corebridge’s Annual Report on Form 10-K for the year ended December 31, 2023. The grant date fair value of the RSUs was based on the closing price of Corebridge’s common stock on the date of grant. Mr. Hogan’s AIG PSUs are valued at $1,973,162 based on target performance, which represents the probable outcome of the performance conditions on the grant date. The grant date fair value of the AIG PSUs at the maximum level of performance is $3,946,307. The AIG PSUs and Corebridge RSUs are described in more detail in “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards.” |
| (4) | The amounts in this column for 2023 represent the grant date fair value of Corebridge Options granted to each NEO (other than Ms. Longino) in 2023, determined in accordance with FASB ASC Topic 718. The assumptions made in calculating these amounts can be found in Note 22 of the consolidated financial statements in Corebridge’s Annual Report on Form 10-K for the year ended December 31, 2023. The grant date fair value of the options was determined |
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| | using the Black-Scholes option pricing model based on the fair market value on the date of grant. The Corebridge Options are described in more detail in “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards.” |
| (5) | For 2023, this column represents the STI awards for 2023 performance as determined in the first quarter of 2024. 100% of each award was vested and paid in February 2024. |
| (6) | The amounts in this column represent the total change of the actuarial present value of the accumulated benefit, including any payments made during the year, under AIG’s defined benefit pension plans, including the Qualified Retirement Plan and the Non-Qualified Retirement Plan, as applicable. Negative amounts for the aggregate change in pension value for 2022 include: ($539,302) for Mr. Hogan, ($150,505) for Mr. Habayeb and ($1,849) for Ms. Fiedler. Negative amounts for the aggregate change in pension value for 2021 include: ($140,647) for Mr. Hogan and ($36,291) for Mr. Habayeb. The pension plans are described in “2023 Pension Benefits.” Present values include benefits payable from the Retirement Plan and Non-Qualified Retirement Income Plan, if applicable. To determine the change in pension values, the retirement age assumption is the normal retirement age of 65, or current age if older. The discount rate assumption is 4.98% for the Qualified Retirement Plan. The discount rate assumption is 4.94% for the Non-Qualified Retirement Plan. The mortality assumptions are based on the Pri-2012 annuitant white collar mortality table projected using the AIG improvement scale. Ms. Longino and Ms. Hunter did not participate in the Qualified Retirement Plan and the Non-Qualified Retirement Plan. |
| (7) | This column includes the following incremental costs of 2023 perquisites and other benefits: |
| | |
Item | | Description |
| Tax Preparation Services | | Mr. Hogan - $27,585 Reflects cost of tax preparation services related to a prior international assignment |
| |
| Company-paid life insurance premiums | | Ms. Longino - $231 Ms. Hunter - $210 All other NEOs - $273 |
| |
| 401(k) Plan | | Ms. Hunter - $30,325 All Other NEOs - $29,700 Reflects employer matching and non-elective contributions |
| |
| Internet Stipend | | Mr. Novak - $125 State-mandated internet stipend paid to all active employees in California and Illinois. |
| |
| Separation-related payments | | Ms. Hunter - $2,475,000 cash lump-sum severance payment, $40,000 medical and life insurance, $107,693 payout of unused paid time off |
| |
| Financial Planning Services | | Ms. Hunter - $2,803 |
| |
| Personal Use of Company Pool Cars | | Mr. Hogan - $14,634 Reflects incremental costs of driver overtime compensation, fuel and maintenance attributable to personal use of company pool cars. |
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2023 Grants of Plan-Based Awards
The following table details all equity and non-equity plan-based awards granted to each of the NEOs in 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1) | | | Estimated Future Payouts
UnderEquity Incentive Plan
Awards(2) | | | All
Other
Stock
Awards:
Number
of
Shares
of
Stock or
Units
(#)(3) | | | All Other
Option
Awards:
Number of
Securities
underlying
Options
(#)(4) | | | Exercise
or Base
Price of
Option
Awards
($/Sh)(4) | | | Grant
Date
Fair
Value
of Stock
and Option
Awards
($)(5) | |
Name | | Grant
Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | |
Kevin Hogan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 STI | | | | | | | 0 | | | | 2,250,000 | | | | 4,500,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2023 AIG PSUs | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | 16,217 | | | | 32,435 | | | | 64,870 | | | | — | | | | — | | | | — | | | | 1,973,162 | |
2023 CRBG RSUs | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 47,036 | | | | — | | | | — | | | | 954,831 | |
2023 CRBG Options | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 162,074 | | | | 20.30 | | | | 999,997 | |
| | | | | | | | | | | |
Elias Habayeb | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 STI | | | | | | | 0 | | | | 1,200,000 | | | | 2,400,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2023 CRBG RSUs | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 59,971 | | | | — | | | | — | | | | 1,217,411 | |
2023 CRBG Options | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 68,881 | | | | 20.30 | | | | 424,996 | |
| | | | | | | | | | | |
Lisa Longino | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 STI | | | 2/21/2023 | | | | 0 | | | | 1,240,000 | | | | 2,480,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2023 CRBG RSUs | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 60,375 | | | | — | | | | — | | | | 1,225,613 | |
| | | | | | | | | | | |
Terri Fiedler | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 STI | | | | | | | 0 | | | | 820,000 | | | | 1,640,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2023 CRBG RSUs | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 34,571 | | | | — | | | | — | | | | 701,791 | |
2023 CRBG Options | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 39,708 | | | | 20.30 | | | | 244,998 | |
| | | | | | | | | | | |
Jonathan Novak | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 STI | | | | | | | 0 | | | | 750,000 | | | | 1,500,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2023 CRBG RSUs | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31,749 | | | | — | | | | — | | | | 644,505 | |
2023 CRBG Options | | | 2/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 36,466 | | | | 20.30 | | | | 224,995 | |
| | | | | | | | | | | |
Constance Hunter | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 STI | | | | | | | 0 | | | | 800,000 | | | | 1,600,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2023 CRBG RSUs | | | 6/20/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 35,277 | | | | — | | | | — | | | | 583,129 | |
2023 CRBG Options | | | 6/20/2023 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | 63,451 | | | | 16.53 | | | | 249,997 | |
| (1) | Amounts shown reflect the range of possible STI awards for 2023 performance. Actual amounts earned are reflected in the 2023 Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. For more information on the 2023 STI awards, including the applicable performance metrics, please see “Compensation Discussion and Analysis—Total Direct Compensation Components—STI Awards.” |
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| (2) | Amounts shown reflect the potential range of 2023 AIG PSUs granted to Mr. Hogan that can be earned based on AIG performance over a period of three years and accrue Cash Dividend Equivalents. Actual amounts earned are based on achieving pre-established goals across three financial objectives over the 2023-2025 performance period. Results will be certified by the AIG CMRC in the first quarter of 2026. As a holder of AIG PSUs, Mr. Hogan is also entitled to dividend equivalent rights beginning with the first dividend record date following the AIG PSU grant date, which are subject to the same vesting and performance conditions as the related AIG PSUs and are paid in cash if and when such related earned shares of AIG common stock are delivered. For more information on the AIG PSUs granted to Mr. Hogan, including the applicable performance metrics, please see “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards—2023 Annual AIG PSUs.” |
| (3) | Amounts shown reflect the grant of 2023 Corebridge RSUs made to the NEOs. Holders of 2023 Corebridge RSUs are also entitled to dividend equivalent rights in the form of cash beginning with the first dividend record date following the applicable grant date, which cash amount is subject to the same vesting conditions as the related RSUs and is paid if and when such related shares are delivered. For more information on these awards, please see “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards—2023 Annual Corebridge RSUs” and “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards—Other 2023 LTI Awards.” |
| (4) | Amounts shown reflect the grant of 2023 Corebridge Options made to the NEOs (other than Ms. Longino). Stock options granted in 2023 have an exercise price equal to the closing price of the underlying shares of Corebridge common stock on the NYSE on the date of grant. For more information on these awards, please see “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards—2023 Annual Corebridge Options” and “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards—Other 2023 LTI Awards,” and Note 22 of the consolidated financial statements in Corebridge’s Annual Report on Form 10-K for the year ended December 31, 2023. |
| (5) | Amounts shown represent the grant date fair value of the awards determined in accordance with FASB ASC Topic 718. The AIG PSUs were valued at target which represents the probable outcome of the performance conditions on the grant date. The assumptions made in calculating these amounts can be found in Note 22 of the consolidated financial statements in Corebridge’s Annual Report on Form 10-K for the year ended December 31, 2023. |
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Outstanding Equity Awards as of December 31, 2023
The following table sets forth outstanding equity-based awards held by each NEO as of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards(1) | | | Stock Awards | |
| | | | | | | | Number of
Securities
underlying
Unexercised
Options
(Exercisable)
(#) | | | Number of
Securities
underlying
Unexercised
Options
(Unexercisable)
(#) | | | | | | | | | | | | Unvested
(Not Subject to
Performance
Conditions)(2) | | | Equity
Incentive Plan
Awards
(Unearned
and Unvested)(4) | |
| | | Year
Granted | | | Award
Type | | Exercise
Price
($) | | | Expiration
Date | | | Award
Type | | | Number
(#) | | | Market
Value
($)(3) | | | Number
(#) | | | Market
Value
($)(5) | |
Kevin Hogan | | | 2023 | | | 2023 CRBG Options | | | — | | | | 162,074 | | | | 20.30 | | | | 2/21/2033 | | | | 2023 AIG PSUs | | | | — | | | | — | | | | 48,652 | | | | 3,296,173 | |
| | | 2021 | | | 2021 AIG Options | | | — | | | | 85,470 | | | | 44.10 | | | | 2/22/2031 | | | | 2023 CRBG RSUs | | | | 47,036 | | | | 1,018,800 | | | | — | | | | — | |
| | | 2020 | | | 2020 AIG Options | | | 116,959 | | | | — | | | | 32.43 | | | | 3/11/2030 | | | | 2022 AIG PSUs | | | | — | | | | — | | | | 49,537 | | | | 3,356,132 | |
| | | 2019 | | | 2019 AIG Options | | | 122,850 | | | | — | | | | 44.28 | | | | 3/18/2029 | | | | 2022 CRBG RSUs | | | | 85,235 | | | | 1,846,190 | | | | — | | | | — | |
| | | 2018 | | | 2018 AIG Options | | | 125,418 | | | | — | | | | 55.94 | | | | 3/13/2028 | | | | 2021 AIG PSUs | | | | 85,124 | | | | 5,767,151 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | 2021 CRBG RSUs | | | | 61,013 | | | | 1,321,542 | | | | — | | | | — | |
Elias Habayeb | | | 2023 | | | 2023 CRBG Options | | | — | | | | 68,881 | | | | 20.30 | | | | 2/21/2033 | | | | 2023 CRBG RSUs | | | | 59,971 | | | | 1,298,972 | | | | — | | | | — | |
| | | 2021 | | | 2021 AIG Options | | | — | | | | 6,355 | | | | 46.27 | | | | 3/4/2031 | | | | 2022 CRBG RSUs | | | | 48,300 | | | | 1,046,178 | | | | — | | | | — | |
| | | 2021 | | | 2021 AIG Options | | | — | | | | 25,641 | | | | 44.10 | | | | 2/22/2031 | | | | 2021 CRBG RSUs | | | | 67,747 | | | | 1,467,400 | | | | — | | | | — | |
| | | 2020 | | | 2020 AIG Options | | | 35,087 | | | | — | | | | 32.43 | | | | 3/11/2030 | | | | | | | | | | | | | | | | | | | | | |
| | | 2019 | | | 2019 AIG Options | | | 36,855 | | | | — | | | | 44.28 | | | | 3/18/2029 | | | | | | | | | | | | | | | | | | | | | |
| | | 2018 | | | 2018 AIG Options | | | 25,083 | | | | — | | | | 55.94 | | | | 3/13/2028 | | | | | | | | | | | | | | | | | | | | | |
Lisa Longino | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 2023 CRBG RSUs | | | | 57,661 | | | | 1,248,937 | | | | — | | | | — | |
Terri Fiedler | | | 2023 | | | 2023 CRBG Options | | | — | | | | 39,708 | | | | 20.30 | | | | 2/21/2033 | | | | 2023 CRBG RSUs | | | | 34,571 | | | | 748,808 | | | | — | | | | — | |
| | | 2021 | | | 2021 AIG Options | | | — | | | | 15,384 | | | | 44.10 | | | | 2/22/2031 | | | | 2022 CRBG RSUs | | | | 42,590 | | | | 922,499 | | | | — | | | | — | |
| | | 2020 | | | 2020 AIG Options | | | 21,052 | | | | — | | | | 32.43 | | | | 3/11/2030 | | | | 2021 CRBG RSUs | | | | 32,945 | | | | 713,589 | | | | — | | | | — | |
| | | 2019 | | | 2019 AIG Options | | | 10,265 | | | | — | | | | 46.96 | | | | 5/8/2029 | | | | | | | | | | | | | | | | | | | | | |
Jonathan Novak | | | 2023 | | | 2023 CRBG Options | | | — | | | | 36,466 | | | | 20.30 | | | | 2/21/2033 | | | | 2023 CRBG RSUs | | | | 31,749 | | | | 687,683 | | | | — | | | | — | |
| | | 2021 | | | 2021 AIG Options | | | — | | | | 19,230 | | | | 44.10 | | | | 2/22/2031 | | | | 2022 CRBG RSUs | | | | 25,570 | | | | 553,846 | | | | — | | | | — | |
| | | 2020 | | | 2020 AIG Options | | | 23,391 | | | | — | | | | 32.43 | | | | 3/11/2030 | | | | 2021 CRBG RSUs | | | | 47,285 | | | | 1,024,193 | | | | — | | | | — | |
| | | 2019 | | | 2019 AIG Options | | | 24,570 | | | | — | | | | 44.28 | | | | 3/18/2029 | | | | | | | | | | | | | | | | | | | | | |
| | | 2018 | | | 2018 AIG Options | | | 14,632 | | | | — | | | | 55.94 | | | | 3/13/2028 | | | | | | | | | | | | | | | | | | | | | |
Constance Hunter | | | 2023 | | | 2023 CRBG Options | | | 63,451 | | | | — | | | | 16.53 | | | | 9/8/2026 | | | | | | | | | | | | | | | | | | | | | |
| | | 2022 | | | 2022 AIG Options | | | 15,197 | | | | — | | | | 61.61 | | | | 9/8/2026 | | | | | | | | | | | | | | | | | | | | | |
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| (1) | AIG Options. All of the stock options granted prior to 2023 were granted and linked to the performance of AIG common stock. The AIG Options have an exercise price equal to the closing price of the underlying shares of AIG common stock on the NYSE on the date of grant and have a 10-year term from the date of grant. All of the AIG Options granted in 2021 had a three-year vesting period, subject to continued service, and vested in full in January 2024. All of the AIG Options granted in 2020 had a three-year vesting period, subject to continued service, and vested in full in January 2023. |
Corebridge Options. All of the stock options granted in 2023 were granted by Corebridge and linked to the performance of Corebridge common stock. The 2023 Corebridge Options have an exercise price equal to the closing price of the underlying shares of Corebridge common stock on the NYSE on the date of grant and have a 10-year term from the date of grant. The 2023 Corebridge Options will vest on each of February 21, 2024, February 21, 2025 and February 21, 2026, subject to continued service on each vesting date.
| (2) | Corebridge Restricted Stock Units. The 2023 Corebridge RSUs held by each of the NEOs (other than Ms. Longino) will vest in three equal installments on the first, second and third anniversaries of the grant date (February 21, 2023), subject to continued service on each vesting date. The 2023 Corebridge RSUs held by Ms. Longino vest 50% on February 21, 2024, 30% on February 21, 2025 and 20% on February 21, 2026, subject to continued service on each vesting date. Amount reflects an adjustment to the number of RSUs granted on February 21, 2023 to conform to the final terms of the executive’s equity buy-out. All 2022 Corebridge RSUs vest in three equal installments on the first, second and third anniversaries of the grant date (March 30, 2022 for Ms. Fiedler’s retention LTI award and February 22, 2022 in all other cases). All 2021 Corebridge RSUs had a three-year vesting period, subject to continued service, and vested in full on January 1, 2024. All 2020 Corebridge RSUs had a three-year vesting period, subject to continued service, and vested in full on January 1, 2023. |
| (3) | Values for Corebridge RSUs are based on the closing sale price of Corebridge common stock on the NYSE on December 29, 2023 of $21.66. |
| (4) | AIG Performance Share Units. The 2023 AIG PSUs can be earned based on AIG performance over a three-year period, based on the following performance metrics: annual improvement to AYCR, ex-CAT (weighted 25%), achievement of AIG parent company expense targets (weighted 25%), cumulative diluted normalized AATI (weighted 30%), and TSR relative to a group of General Insurance peer companies (weighted 20%). For the 2023 AIG PSUs, as of December 31, 2023, the aggregate achievement of the performance metrics was trending above the target payout level and, as a result, the number of shares and the payout value are reported assuming payout at stretch award levels. The 2022 AIG PSUs can be earned based on AIG performance over a three-year period, based on the following performance metrics: annual improvement to AYCR, ex-CAT (weighted 50%), cumulative diluted normalized AATI (weighted 40%), and TSR relative to a group of General Insurance peer companies (weighted 10%). For the 2022 AIG PSUs, as of December 31, 2023, the aggregate achievement of the performance metrics was trending above the target payout level and, as a result, the number of shares and the payout value are reported assuming payout at stretch award levels. Whether the 2023 or 2022 AIG PSUs will be earned at the level shown or a different level, or at all, depends on AIG performance against metrics over the three-year performance period, as determined by the AIG CMRC. Once earned, the 2023 and 2022 AIG PSUs will vest on January 1, 2026 and January 1, 2025, respectively, subject to Mr. Hogan’s continued service on the vesting date. |
For the 2021 AIG PSUs, the amount represents the number of 2021 AIG PSUs that were earned based on actual achievement against pre-established performance goals over a three-year performance period: 67% is tied to tangible book value per share (annual and three-year growth relative to peers) and 33% is tied to separation of life and retirement (achievement by the end of 2023), plus a TSR modifier of +/- 25%. The AIG CMRC certified the level of achievement on February 20, 2024, and 200% of the PSUs were earned and vested on January 1, 2024, subject to Mr. Hogan’s continued service on the vesting date.
| (5) | For more information on the AIG PSUs granted to Mr. Hogan, please see “Compensation Discussion and Analysis—Total Direct Compensation Components—LTI Awards.” Values for AIG PSUs are based on the closing sale price of AIG common stock on the NYSE on December 29, 2023 of $67.75 per share. |
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2023 Option Exercises and Vesting of Stock-based Awards
The following table sets forth the amounts realized by each NEO as a result of stock option exercises and the vesting of stock-based awards in 2023. None of Corebridge’s NEOs exercised options in 2023.
| | | | | | | | |
| | | Stock Awards(1) | |
Name | | Number of Shares
Acquired on Vesting (#) | | | Value Realized
on Vesting ($) | |
Kevin Hogan | | | 231,716 | | | | 9,672,231 | |
Elias Habayeb | | | 102,315 | | | | 2,063,039 | |
Lisa Longino | | | — | | | | — | |
Terri Fiedler | | | 68,192 | | | | 1,327,596 | |
Jonathan Novak | | | 83,433 | | | | 1,681,619 | |
Former Executive Officer | | | | | | | | |
Constance Hunter | | | 75,547 | | | | 3,058,892 | |
| (1) | Represents 2020 Corebridge RSUs (and related dividend equivalent rights) that vested in January 2023 and the first tranche of the 2022 Corebridge RSUs that vested in February 2023, based on the value of the underlying shares of Corebridge common stock on the vesting date. In the case of Mr. Hogan, this column also represents the 2020 AIG PSUs that vested in January 2023, based on the value of the underlying shares of AIG common stock on the vesting date. For Ms. Fiedler, this column also includes the first tranche of her 2022 retention RSUs that vested in March 2023. For Ms. Hunter, amounts represent the first tranche of her 2022 sign-on AIG RSUs that vested on February 14, 2023, and the rest of her outstanding equity awards including the last three installments of her sign-on RSUs, 2022 AIG RSUs, 2022 AIG PSUs and 2023 Corebridge RSUs which vested immediately upon her termination of employment on September 8, 2023, pursuant to the terms of these equity awards, based on the value of the underlying shares of AIG and Corebridge common stock on the vesting date. |
2023 Pension Benefits
The following table details the accumulated benefits under the pension plans in which certain of Corebridge’s NEOs participate. These accumulated benefits are presented as if they were payable upon the NEO’s normal retirement at age 65 or current age if older. However, it is important to note that the Non-Qualified Retirement Plan benefits shown for the NEOs may be at least partially unvested and could be received at lower levels due to reduced benefits or forfeited entirely. Ms. Longino and Ms. Hunter have not participated in the Retirement Plans. No payments were made under the plans in 2023.
| | | | | | | | | | |
Name | | Plan Name | | Years of Credited
Service (#)(1) | | | Present Value of
Accumulated
Benefit ($)(2) | |
Kevin Hogan | | Qualified Retirement Plan | | | 25.917 | | | | 734,245 | |
| | Non-Qualified Retirement Plan | | | 25.917 | | | | 893,505 | |
Elias Habayeb | | Qualified Retirement Plan | | | 7.917 | | | | 174,129 | |
| | Non-Qualified Retirement Plan | | | 6.917 | | | | 238,529 | |
Lisa Longino | | Qualified Retirement Plan | | | 0 | | | | 0 | |
| | Non-Qualified Retirement Plan | | | 0 | | | | 0 | |
Terri Fiedler | | Qualified Retirement Plan | | | 2.583 | | | | 55,761 | |
| | Non-Qualified Retirement Plan | | | 2.583 | | | | 88,623 | |
Jonathan Novak | | Qualified Retirement Plan | | | 2.667 | | | | 60,789 | |
| | Non-Qualified Retirement Plan | | | 2.667 | | | | 105,759 | |
Constance Hunter | | Qualified Retirement Plan | | | 0 | | | | 0 | |
| | Non-Qualified Retirement Plan | | | 0 | | | | 0 | |
| (1) | The NEOs had the following years of service as of December 31, 2023: Mr. Hogan – 34.50; Mr. Habayeb – 17.33; Ms. Fiedler –11.63; Mr. Novak – 11.71. |
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Mr. Hogan. Mr. Hogan has 8.583 fewer years of credited service under the Retirement Plans than actual service with AIG and Corebridge because the Retirement Plans were frozen on January 1, 2016 and because at the time he was initially hired, employees were required to wait one year after commencing employment with AIG before becoming participants in these Retirement Plans and received credit for service retroactive to six months of employment. Mr. Hogan was employed by AIG from September 1984 to November 2008 and accrued pension benefits under the Retirement Plans during this employment. Mr. Hogan did not receive a distribution from the Retirement Plans at the time of his initial resignation. Upon his rehire in October 2013, benefit accruals commenced immediately under the Retirement Plans calculated under the cash balance formula, and prior service, pursuant to the terms of the plans, was recognized for vesting and eligibility purposes. The Retirement Plans were frozen effective January 1, 2016 and credited service accruals ceased under these plans as of December 31, 2015.
Mr. Habayeb. Mr. Habayeb has 9.413 fewer years of credited service under the Qualified Retirement Plan than actual service with AIG and Corebridge because the Retirement Plans were frozen on January 1, 2016 and because at the time he was initially hired, employees were required to wait on year after commencing employment with AIG before becoming participants in these Retirement Plans and received credit for service retroactive to six months of employment. Mr. Habayeb was employed by AIG from September 2005 to May 2009. Upon his rehire in June 2010, benefit accruals commenced immediately under the Retirement Plans and prior service, pursuant to the terms of the plans, was recognized for vesting and eligibility purposes, His actual service under the Non-Qualified Retirement Plan reflects the one-year freeze period in the Non-Qualified Plan pursuant to rules established by US Treasury Special Pay Master (1/1/2012-12/14/2012).
Ms. Fiedler. Ms. Fiedler has 9.04 fewer years of credited service under the Retirement Plans than actual service with AIG and Corebridge because the Retirement Plans were frozen on January 1, 2016 and because at the time she was initially hired, employees were required to wait one year after commencing employment with AIG before becoming participants in these Retirement Plans.
Mr. Novak. Mr. Novak has 9.05 fewer years of credited service under the Retirement Plans than actual service with AIG and Corebridge because the Retirement Plans were frozen on January 1, 2016 and because at the time he was initially hired, employees were required to wait one year after commencing employment with AIG before becoming participants in these Retirement Plans.
| (2) | For Ms. Longino and Ms. Hunter, the amount shown in this column is zero because they do not participate in the Retirement Plans. All present values of accumulated benefits are based on service and earnings as of December 31, 2023 (the pension plan measurement date for purposes of AIG’s financial statement reporting). The actuarial present values of the accumulated benefits under the Retirement Plans are calculated based on payment of a life annuity beginning at age 65, or current age if older, consistent with the assumptions described in Note 23 to the consolidated financial statements included in AIG’s 2023 Annual Report on Form 10-K. The actuarial present value of the benefit payable to Mr. Hogan would be $61,143 higher than the amounts in the table above if Mr. Hogan’s benefit commenced as of December 31, 2023 as a result of his employment termination for any reason other than disability or death. The discount rate assumption is 4.98% for the Qualified Retirement Plan. The discount rate assumption is 4.94% for the Non-Qualified Retirement Plan. The mortality assumptions are based on the Pri-2012 annuitant white collar mortality table projected using the AIG improvement scale. |
Pension Plans
Corebridge does not maintain any active or frozen pension plans. However certain of Corebridge’s NEOs have balances in the Qualified Retirement Plan and the Non-Qualified Retirement Plan (collectively, the “Retirement Plans”).
The Qualified Retirement Plan is a tax-qualified defined benefit plan and the Non-Qualified Retirement Plan provides for retirement benefits in excess of those permitted under the Qualified Retirement Plan. Effective
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January 1, 2016, benefit accruals under the Retirement Plans were frozen. At that time, the Retirement Plans were closed to new participants and existing participants ceased to accrue additional benefits after December 31, 2015.
In the case of the Qualified Retirement Plan, all participants (including the participating NEOs) are vested in their benefits and, in the case of the Non-Qualified Retirement Plan, participants vest once they attain either (1) age 60 with five or more years of service or (2) age 55 with ten or more years of service.
Corebridge employees (including the participating NEOs) were deemed to terminate employment for purposes of the Qualified Retirement Plan on September 19, 2022, the date of the closing of the IPO. For purposes of the Non-Qualified Retirement Plan, however, Corebridge employees (including the participating NEOs) continue to be treated as active employees so long as they continue to be employed by Corebridge.
Form and Timing of Payments
Under the Qualified Retirement Plan, all participants have the option to elect to commence their benefit at the time of termination of their employment, either in the form of a monthly taxable annuity or lump sum payment. Alternatively, they may defer commencement until age 65.
Benefits accrued prior to March 31, 2012 under the Non-Qualified Retirement Plan are paid out as an annuity and benefits accrued after that date are paid as a lump sum. Vested participants must commence benefits when they terminate employment.
Benefit Formulas
The Retirement Plans originally provided for a final average pay formula. The Retirement Plans’ final average pay formula ranges from 0.925% to 1.425% times average final salary for each year of credited service accrued since April 1, 1985 up to 44 years through December 31, 2015 and 1.25% to 1.75% times average final pay for each year of credited service accrued prior to April 1, 1985 up to 40 years. For participants who retire after the normal retirement age of 65, the retirement benefit is actuarially increased to reflect the later benefit commencement date.
The benefit formula under the Retirement Plans was converted from the final average pay formula to a cash balance formula, effective April 1, 2012. The cash balance formula was comprised of pay credits, calculated based on 6% of a Plan participant’s annual pensionable compensation, and annual interest credits. Pensionable compensation under the cash balance formula included base salary, commissions, overtime and annual STI awards, with the Qualified Retirement Plan subject to IRC compensation limits and the
Non-Qualified Retirement Plan subject to an annual compensation limit of $1,050,000 in 2015. Pay credits ceased under the Retirement Plans on December 31, 2015, but annual interest credits continue 4.02% in 2023, based upon the 30-year long-term Treasury rate. This rate is adjusted annually on January 1.
The NEOs other than Ms. Fiedler and Mr. Novak have a final average pay formula benefit and a cash balance benefit. Ms. Fiedler and Mr. Novak have a cash balance benefit.
Early Retirement Benefits
Each of the Retirement Plans provides for reduced early retirement benefits. In the case of early retirement, participants in the Retirement Plans under the final average pay formula will receive the plan formula benefit projected to normal retirement at age 65 (using average final salary as of the date of early retirement), but prorated based on years of actual service, then reduced by 3, 4 or 5% (depending on age and years of credited service at retirement) for each year that retirement precedes age 65. In the case of early retirement under the cash balance formula, participants in the Retirement Plans will receive the value of their cash balance account as of the date of early retirement.
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In connection with the Corebridge IPO, Mr. Hogan became a terminated vested participant in the Qualified Plan and ceased receiving service credit for purposes of early retirement at that time. Mr. Hogan is eligible for early retirement benefits on his final average pay benefit accrual under the Retirement Plans reflecting the five percent reduction.
Death and Disability Benefits
Each of the Retirement Plans also provide for death and disability benefits. The death benefit payable to a participant’s designated beneficiary under the Retirement Plans will generally equal the participant’s lump sum benefit or cash balance account. Under the Retirement Plans, participants who become disabled and receive payments under AIG’s long-term disability plan on and after the freeze date continue to receive service credit in determining age and length of service for early retirement subsidies and vesting purposes for a maximum of three additional years, and participants whose benefit is determined under the cash balance formula continue to receive interest credits to their cash balance account up to the date they commence their benefit.
Mr. Novak’s benefit under the cash balance formula would have been $180 higher than the amount reflected in the table above if his benefit commenced as of December 31, 2023 as a result of his death.
In connection with the Corebridge IPO, the participating NEOs became terminated vested participants in the Qualified Plan and ceased receiving service credit for purposes of death and disability benefits at that time.
Nonqualified Deferred Compensation
None of the NEOs participate in a nonqualified deferred compensation plan.
Potential Payments Upon Termination or Change in Control
Severance Benefits
Effective January 1, 2023, Corebridge established the Corebridge Executive Severance Plan. The ESP provides for severance benefits in the case of termination other than due to death, disability, resignation or Cause (as defined below) and also in the case of voluntary termination for Good Reason (as defined below).
The ESP provides for severance payments and benefits upon qualifying terminations as follows, subject to the participant’s execution of a release of claims and agreement to abide by certain restrictive covenants:
| | • | | For qualifying terminations not in connection with a Corebridge CIC (as defined below), severance in an amount equal to the product of a multiplier times the sum of base salary and the average amount of STI paid for the preceding three completed calendar years. On December 31, 2023, for Mr. Hogan and Ms. Hunter, the multiplier was 1.5 and, for all other NEOs, the multiplier was 1. |
| | • | | For qualifying terminations within two years following a Corebridge CIC, severance in an amount equal to the product of a multiplier times the sum of base salary and the greater of (a) the average amount of STI awards paid to the executive for the preceding three completed calendar years and (b) the executive’s target STI award for the most recently completed calendar year preceding the termination year. On December 31, 2023, for Mr. Hogan and Ms. Hunter, the multiplier was 2 and, for all other NEOs, the multiplier was 1.5. |
| | • | | For qualifying terminations on and after April 1 of the termination year not in connection with a Corebridge CIC, a pro-rata annual STI award for the year of termination based on the participant’s target STI award, adjusted for actual company (and/or, if applicable, business unit or function) performance, paid at the same time as such STI awards are regularly paid to similarly situated active employees. |
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| | • | | For qualifying terminations on and after January 1 within two years following a Corebridge CIC, a pro-rata annual STI award for the year of termination based on the greater of (a) a participant’s target STI award and (b) a participant’s target STI award adjusted for actual company performance, paid at the same time as such STI awards are regularly paid to similarly situated active employees. |
Participants are also entitled to continued health coverage under the Consolidated Omnibus Budget Reconciliation Act, a $40,000 payment that may be applied towards continued health coverage and life insurance and one year of additional age and service solely for the purpose of determining eligibility to enroll in retiree medical coverage.
Restrictive Covenants
Pursuant to the release of claims that each participant must execute to receive benefits under the ESP, each participant is generally prohibited from:
| | • | | engaging in, being employed by, rendering services to or acquiring financial interests in certain competitive businesses for a period of six months after termination; |
| | • | | interfering with Corebridge’s business relationships with customers, suppliers or consultants for a period of six months after termination; |
| | • | | soliciting or hiring Corebridge employees for a period of one year after termination; |
| | • | | making false or disparaging comments about us; and |
| | • | | disclosing Corebridge’s confidential information at any time following termination. |
Definitions
| | |
Term | | Generally Means: |
| Cause | | • The participant’s conviction, whether following trial or by plea of guilty or nolo contendere (or similar plea), in a criminal proceeding (1) on a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion, (2) on a felony charge or (3) on an equivalent charge to those in clauses (1) and (2) in jurisdictions which do not use those designations; • the participant’s engagement in any conduct which constitutes an employment disqualification under applicable law (including statutory disqualification as defined under the Exchange Act); • the participant’s violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which the Company or any of its subsidiaries or affiliates is a member; or • the participant’s material violation of the Company’s codes of conduct or any other Company policy as in effect from time to time. |
| |
| Corebridge CIC | | • Individuals who, on the effective date of the Corebridge Executive Severance Plan, constituted the Board (or subsequent directors whose election or nomination was approved by a vote of at least two-thirds of such directors, including by approval of the proxy statement in which such person is named as a nominee for director) cease for any reason to constitute at least a majority of the Board; • any person is or becomes a beneficial owner of 50% or more of Corebridge’s voting securities, other than AIG; |
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| | |
Term | | Generally Means: |
| | • consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving Corebridge that results in any person becoming the beneficial owner of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the entity resulting from such transaction; • a sale of all or substantially all of Corebridge’s assets; or • Corebridge’s stockholders approve a plan of complete liquidation or dissolution. Neither the IPO nor any subsequent public offering of Corebridge voting securities by AIG or Argon that does not otherwise qualify as a Corebridge CIC as described above will be a Corebridge CIC. |
| |
| Good Reason | | A reduction of more than 20% in the participant’s annual target direct compensation. In the event of an Corebridge CIC, the definition of Good Reason also means: (1) a greater than 20% decrease in total direct compensation, (2) a material diminution in the participant’s authority, duties or responsibilities or (3) relocation of greater than 50 miles. |
Severance Arrangement with Constance Hunter
Ms. Hunter’s employment with Corebridge as Executive Vice President and Head of Strategy terminated on September 8, 2023. Pursuant to her Release Agreement and Restrictive Covenant Agreement (the “Release Agreement”), Ms. Hunter received no additional benefits other than those to which she was already entitled under the ESP, as described above, in addition to accelerated vesting of her equity awards pursuant to the terms of such awards. In the Release Agreement, she agreed to the restrictive covenants described above and a release of claims. The amount of severance payments and benefits for Ms. Hunter, is included in the “All Other Compensation” column of the Summary Compensation Table. Upon Ms. Hunter’s termination date, her outstanding PSUs and RSUs immediately vested and the shares corresponding to the earned PSUs and RSUs, as applicable, will be delivered to her on the dates that the applicable award would otherwise have been delivered if she had continued to remain employed. In addition, Ms. Hunter’s outstanding options vested upon termination and will remain exercisable for three years after her date of termination.
Treatment of LTI Awards Upon Termination
Corebridge RSUs
LTI participants hired prior to April 1, 2022: all Corebridge RSUs will immediately vest upon the termination scenarios listed in the table below and will be forfeited in the case of termination for any other reason.
LTI participants hired on or after April 1, 2022: in the case of Involuntary Termination without Cause, no Corebridge CIC, outstanding unvested Corebridge RSUs will be forfeited (excluding any award granted pursuant to a buy-out).
| | |
Reason for Termination | | When are underlying shares delivered? |
| Involuntary Termination without Cause – no Corebridge CIC | | The date the applicable award would otherwise have been delivered if employment had continued |
| |
| Retirement | | The date the applicable award would otherwise have been delivered if employment had continued |
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| | |
Reason for Termination | | When are underlying shares delivered? |
| |
| Disability | | The date the applicable award would otherwise have been delivered if employment had continued |
| |
| Death | | Immediate delivery of shares |
| | |
Reason for Termination | | When are underlying shares delivered? |
| Involuntary Termination without Cause or resignation for Good Reason within 24 months of a Corebridge CIC | | Immediate delivery of shares |
For purposes of the Corebridge RSUs, the following definitions apply:
| | |
Term | | Generally Means: |
| Cause | | Generally defined the same as for the ESP above |
| |
| Corebridge CIC | | Generally defined the same as for the ESP above |
| |
| Good Reason | | “Good Reason” generally means (i) a greater than 20% decrease in total direct compensation, (ii) a material diminution in the participant’s authority, duties or responsibilities or (iii) relocation of greater than 50 miles |
| |
| Retirement | | A voluntary termination: (i) on or after age 60 with 5 years of service or (ii) on or after age 55 with 10 years of service. |
AIG PSUs
All AIG PSUs will immediately vest upon the termination scenarios listed in the table below and will be forfeited in the case of termination for any other reason.
| | |
Reason for Termination | | What will the participant receive? |
| Involuntary Termination without Cause – no AIG CIC | | Delivery of shares corresponding to the earned amount of PSUs on the date the applicable award would otherwise have been delivered if employment had continued |
| |
| Retirement | | Delivery of shares corresponding to the earned amount of PSUs on the date the applicable award would otherwise have been delivered if employment had continued |
| |
| Disability | | Delivery of shares corresponding to the earned amount of PSUs on the date the applicable award would otherwise have been delivered if employment had continued |
| |
| Death | | Prior to Adjudication of Performance Immediate delivery of shares corresponding to the target amount of PSUs initially granted Following Adjudication of Performance Immediate delivery of shares corresponding to the earned amount of PSUs |
| |
| Involuntary Termination without Cause or resignation for Good Reason within 24 months of an AIG CIC | | During Performance Period Immediate delivery of shares corresponding to the target amount of PSUs initially granted, unless the AIG CMRC determines to use performance through the date of the AIG CIC Following Performance Period Immediate delivery of shares corresponding to the earned amount of PSUs |
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For purposes of the AIG PSUs:
| | • | | AIG CIC and Cause are generally defined the same as for the ESP above |
| | • | | Good Reason and Retirement are generally defined the same as for the Corebridge RSUs above |
Corebridge Options and AIG Options
LTI participants hired prior to April 1, 2022: all Corebridge Options and AIG Options will immediately vest upon the termination scenarios listed in the table below and will be forfeited in the case of termination for any other reason.
LTI participants hired on or after April 1, 2022: in the case of Involuntary Termination without Cause, no Corebridge CIC, outstanding unvested Corebridge Options will be forfeited (excluding any award granted pursuant to a buy-out).
| | |
Reason for Termination | | For how long can the vested Corebridge Options and AIG Options be exercised? |
| Involuntary Termination without Cause – no AIG CIC or Corebridge CIC | | For three years from date of termination (or until expiration date if earlier) |
| |
| Retirement | | For the remainder of the term of the options |
| |
| Disability | | For three years from date of disability (or until expiration date if earlier) |
| |
| Death | | For three years from date of death (or until expiration date if earlier) |
| |
| Involuntary Termination without Cause or resignation for Good Reason within 24 months of an AIG CIC or Corebridge CIC | | For the remainder of the term of the options |
For purposes of the Corebridge Options and AIG Options:
| | • | | CIC and Cause are generally defined the same as Cause and Corebridge CIC for the ESP above (with reference to AIG rather than Corebridge, as applicable) |
| | • | | Good Reason and Retirement are generally defined the same as for the Corebridge RSUs above |
All LTI Awards
In the case of Retirement, involuntary termination without Cause or resignation for Good Reason within 24 months of an AIG or Corebridge CIC (as applicable), participants must execute a release containing restrictive covenants as a condition to vesting of stock options and delivery of shares pursuant to RSUs or PSUs.
Termination Payments Table
The following table sets forth the compensation and benefits that would have been provided to Corebridge’s NEOs if they had been terminated on December 31, 2023 under the circumstances indicated, except with respect to Ms. Hunter who received the benefits set forth below upon her termination on September 8, 2023. The amounts shown below are not necessarily indicative of what we will pay under similar circumstances because a wide variety of factors can affect payment amounts, which can be determined with certainty only when an actual change in control or termination event occurs. In the event of an involuntary termination for Cause or a voluntary
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termination other than by retirement, no benefits would have been provided. In all cases included in the table, the NEOs would have been entitled to the benefits described in the 2023 Pension Benefits Table above.
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | | 2023 STI
Award
($)(1) | | | Severance
($) | | | Medical
and Life
Insurance
($)(2) | | | Unvested
Options
($)(3) | | | Unvested
Stock
Awards
($)(4) | | | Total ($) | |
Kevin Hogan | | | | | | | | | | | | | | | | | | | | | | | | |
Involuntary Termination w/o “Cause” | | | 3,127,500 | | | | 5,437,500 | | | | 40,000 | | | | 2,241,786 | | | | 15,515,270 | | | | 26,362,056 | |
By Executive with “Good Reason” | | | 3,127,500 | | | | 5,437,500 | | | | 40,000 | | | | — | | | | 8,605,000 | | | | | |
Qualifying CIC(5) | | | 3,127,500 | | | | 7,250,000 | | | | 40,000 | | | | 2,241,786 | | | | 15,515,270 | | | | 28,174,556 | |
Death | | | 2,250,000 | | | | — | | | | — | | | | 2,241,786 | | | | 12,463,149 | | | | 16,954,935 | |
Disability | | | 3,127,500 | | | | — | | | | — | | | | 2,241,786 | | | | 15,515,270 | | | | 20,884,556 | |
Retirement | | | 3,127,500 | | | | — | | | | — | | | | 2,241,786 | | | | 15,515,270 | | | | 20,884,556 | |
| | | | | | |
Elias Habayeb | | | | | | | | | | | | | | | | | | | | | | | | |
Involuntary Termination w/o “Cause” | | | 1,668,000 | | | | 2,146,667 | | | | 40,000 | | | | 836,593 | | | | 4,403,555 | | | | 9,094,815 | |
By Executive with “Good Reason” | | | 1,668,000 | | | | 2,146,667 | | | | 40,000 | | | | — | | | | — | | | | 3,854,667 | |
Qualifying CIC(5) | | | 1,668,000 | | | | 3,220,000 | | | | 40,000 | | | | 836,593 | | | | 4,403,555 | | | | 10,168,148 | |
Death | | | 1,200,000 | | | | — | | | | — | | | | 836,593 | | | | 4,403,555 | | | | 6,440,148 | |
Disability | | | 1,668,000 | | | | — | | | | — | | | | 836,593 | | | | 4,403,555 | | | | 6,908,148 | |
Retirement | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | |
Lisa Longino | | | | | | | | | | | | | | | | | | | | | | | | |
Involuntary Termination w/o “Cause” | | | 1,723,600 | | | | 2,040,000 | | | | 40,000 | | | | — | | | | 1,407,553 | | | | 5,211,153 | |
By Executive with “Good Reason” | | | 1,723,600 | | | | 2,040,000 | | | | 40,000 | | | | — | | | | — | | | | 3,803,600 | |
Qualifying CIC(5) | | | 1,723,600 | | | | 3,060,000 | | | | 40,000 | | | | — | | | | 1,407,553 | | | | 6,231,153 | |
Death | | | 1,240,000 | | | | — | | | | — | | | | — | | | | 1,407,553 | | | | 2,647,553 | |
Disability | | | 1,723,600 | | | | — | | | | — | | | | — | | | | 1,407,553 | | | | 3,131,153 | |
Retirement | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | |
Terri Fiedler | | | | | | | | | | | | | | | | | | | | | | | | |
Involuntary Termination w/o “Cause” | | | 1,139,800 | | | | 1,319,667 | | | | 40,000 | | | | 417,834 | | | | 2,749,254 | | | | 5,666,555 | |
By Executive with “Good Reason” | | | 1,139,800 | | | | 1,319,667 | | | | 40,000 | | | | — | | | | — | | | | 2,499,467 | |
Qualifying CIC(5) | | | 1,139,800 | | | | 2,205,000 | | | | 40,000 | | | | 417,834 | | | | 2,749,254 | | | | 6,551,888 | |
Death | | | 820,000 | | | | — | | | | — | | | | 417,834 | | | | 2,749,254 | | | | 3,987,088 | |
Disability | | | 1,139,800 | | | | — | | | | — | | | | 417,834 | | | | 2,749,254 | | | | 4,306,888 | |
Retirement | | | 1,139,800 | | | | — | | | | — | | | | 417,834 | | | | 2,749,254 | | | | 4,306,888 | |
| | | | | | |
Jonathan Novak | | | | | | | | | | | | | | | | | | | | | | | | |
Involuntary Termination w/o “Cause” | | | 1,042,500 | | | | 1,408,333 | | | | 40,000 | | | | 504,383 | | | | 2,623,183 | | | | 5,618,399 | |
By Executive with “Good Reason” | | | 1,042,500 | | | | 1,408,333 | | | | 40,000 | | | | — | | | | — | | | | 2,490,833 | |
Qualifying CIC(5) | | | 1,042,500 | | | | 2,112,500 | | | | 40,000 | | | | 504,383 | | | | 2,623,183 | | | | 6,322,566 | |
Death | | | 750,000 | | | | — | | | | — | | | | 504,383 | | | | 2,623,183 | | | | 3,877,566 | |
Disability | | | 1,042,500 | | | | — | | | | — | | | | 504,383 | | | | 2,623,183 | | | | 4,170,066 | |
Retirement | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | |
Constance Hunter | | | | | | | | | | | | | | | | | | | | | | | | |
Involuntary Termination w/o “Cause” | | | 533,333 | | | | 2,475,000 | | | | 40,000 | | | | 325,504 | | | | 2,323,793 | | | | 5,697,630 | |
| (1) | In the case of death, an NEO’s STI award is based on the NEO’s target amount and paid as soon as administratively possible after the date of death (but in no event later than March 15th of the following year). |
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| (2) | This column reflects a lump sum payment of $40,000 that can be used to pay for continued healthcare and life insurance coverage following a qualifying termination. The amounts do not include medical and life insurance benefits upon permanent disability or death to the extent that they are generally available to all salaried employees. |
| (3) | The amounts in this column represent the total market value of unvested AIG Options and Corebridge Options as of December 31, 2023 for which vesting would be accelerated, based on the difference between the exercise price of the AIG options and the closing sale price of shares of AIG common stock on the NYSE of $67.75 and the difference between the exercise price of the Corebridge Options and the closing sale price of shares of Corebridge common stock on the NYSE of $21.66 on December 29, 2023. |
| (4) | The amounts in this column include: (i) the total market value (based on the AIG closing sale price on the NYSE of $67.75 on December 29, 2023) of shares of AIG common stock underlying unvested AIG PSU awards as of December 31, 2023 and (ii) the total market value (based on the Corebridge closing sale price on the NYSE of $21.66 on December 29, 2023) of shares of Corebridge common stock underlying unvested Corebridge RSU awards as of December 31, 2023. For the 2021 AIG PSU awards, actual earned AIG PSUs are reflected except in the case of death in which target PSUs are reflected. For 2022 and 2023 AIG PSUs, target PSUs are reflected. Amounts also reflect all Cash Dividend Equivalents associated with AIG PSU and Corebridge RSU awards. |
| (5) | “Qualifying CIC” assumes that an event has occurred that constitutes both an AIG CIC and Corebridge CIC and that the NEO is entitled to change in control benefits under the ESP and the terms of the NEO’s equity awards. The amount of AIG PSUs vesting is shown (i) at the actual amounts earned for the 2021 AIG PSUs and (ii) at target for the 2022 and 2023 AIG PSUs. |
Security Ownership of 5% Beneficial Owners, Directors and Executive Officers
AGL is a direct, wholly-owned subsidiary of AGC which is an indirect, majority-owned subsidiary of Corebridge. As a result, other than AGC, there are no beneficial owners of more than five percent of any class of AGL’s voting securities and AGL management, directors, and executive officers do not hold any of AGL’s shares of common stock. The following table sets forth information as of August 28, 2024 with respect to the ownership of Corebridge common stock by each person known to own beneficially more than five percent of Corebridge common stock and Corebridge’s directors and executive officers.
The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under these regulations, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. The beneficial owners listed below have sole voting and investment power with respect to shares beneficially owned, except as to the interests of spouses or as otherwise indicated.
Percentage computations are based on 579,180,891 shares of Corebridge common stock outstanding as of August 28, 2024. The address for each of the Corebridge directors and executive officers is c/o Corporate Secretary, 2919 Allen Parkway L4-01, Woodson Tower, Houston, Texas 77019.
Ownership of Corebridge Common Stock by 5% Beneficial Owners
| | | | | | | | |
Name and Address of Beneficial Owner | | Number of Shares Owned | | | Percent of Class | |
AIG(1) | | | 284,238,898 | | | | 49.08 | % |
Argon(2) | | | 61,962,123 | | | | 10.07 | |
| (1) | Represents shares of common stock held by AIG. AIG’s address is c/o American International Group, Inc., 1271 Avenue of the Americas, 41st Floor, New York, New York 10020. |
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| (2) | Based on information contained in a Schedule 13G filed by Argon Holdco LLC with the SEC on February 9, 2024. Argon Holdco LLC directly holds 61,962,123 shares of common stock. The sole member of Argon Holdco LLC is Blackstone Holdings II L.P. The general partner of Blackstone Holdings II L.P. is Blackstone Holdings I/II GP L.L.C. The sole member of Blackstone Holdings I/II GP L.L.C. is Blackstone Inc. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of such entities and Mr. Schwarzman may be deemed to beneficially own the shares of common stock beneficially owned by Argon Holdco LLC, and each of such entities and Mr. Schwarzman expressly disclaims beneficial ownership of such shares. Argon’s address is c/o Blackstone Inc., 345 Park Ave., New York, New York 10154. |
From time to time, Corebridge engages in ordinary course, arm’s-length transactions with entities or affiliates of entities that are the beneficial owners of more than five percent of Corebridge’s outstanding common stock.
Ownership of Corebridge Common Stock by Directors and Executive Officers
| | | | | | | | |
Directors and Named Executive Officers | | Number of
Shares Owned(1) | | | Percent of
Class | |
Peter Zaffino | | | — | | | | | * |
Chris Banthin | | | 18,933 | | | | | * |
Edward Bousa | | | 5,292 | | | | | * |
Adam Burk | | | — | | | | | * |
Alan Colberg | | | 53,402 | | | | | * |
Rose Marie Glazer | | | — | | | | | * |
Jonathan Gray | | | — | | | | | * |
Deborah Leone | | | 7,576 | | | | | * |
Christopher Lynch | | | 23,402 | | | | | * |
Sabra Purtill | | | 87,707 | | | | | * |
Amy Schioldager | | | 23,402 | | | | | * |
Mia Tarpey | | | 43,371 | | | | | * |
Kevin Hogan | | | 184,206 | | | | | * |
Elias Habayeb | | | 142,659 | | | | | * |
Terri Fiedler | | | 105,981 | | | | | * |
Lisa Longino | | | 18,308 | | | | | * |
Jonathan Novak | | | 102,138 | | | | | * |
All current directors and executive officers as a group (28 persons) | | | 1,118,741 | | | | | * |
| * | Represents less than 1%. |
| (1) | Number of shares shown includes (i) shares of Corebridge common stock subject to options which may be exercised within 60 days as follows: for Ms. Tarpey, 9,656 shares; for Mr. Hogan, 54,024 shares; for Mr. Habayeb, 22,960 shares; for Ms. Fiedler, 13,236 shares; for Mr. Novak, 12,155 shares; and for all of our current directors and executive officers as a group, 146,254 shares; (ii) for Mr. Bousa,5,292 fully vested DSUs with delivery of the underlying shares of Corebridge common stock deferred until the director ceases to be a Board member (iii) for Ms. Leone 7,576 fully vested DSUs with delivery of the underlying shares of Corebridge common stock deferred until the director ceases to be a Board member and (iv) for each of Mr. Colberg, Mr. Lynch and Ms. Schioldager, 23,402 fully vested DSUs with delivery of the underlying shares of Corebridge common stock deferred until the director ceases to be a Board member. |
Related Party Transactions
Policies and Procedures for Related Party Transactions
Corebridge’s Board of Directors (“Board”) has approved the Corebridge Financial, Inc. Related Party Transactions Approval Policy (the “Related Party Transaction Policy”), which sets forth policies and procedures with respect to
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the review and approval of certain transactions between Corebridge and a “Related Person,” or a “Related Party Transaction.” Pursuant to the terms of the Related Party Transaction Policy, Corebridge’s Board, acting through its Audit Committee, will review and decide whether to approve or ratify any Related Party Transaction. Any Related Party Transaction is required to be reported to Corebridge’s legal department, which will then determine whether it should be submitted to Corebridge’s Audit Committee for consideration. The disinterested members of the Audit Committee must then review and decide whether to approve any Related Party Transaction.
For the purposes of the Related Party Transaction Policy, a “Related Party Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect interest.
A “Related Person,” as defined in the Related Party Transaction Policy, means any person who is, or at any time since the beginning of Corebridge’s last fiscal year was, a director or executive officer of Corebridge or a nominee to become a director of Corebridge; any person who is known to be the beneficial owner of more than five percent of Corebridge’s common stock; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, executive officer, nominee or more than five percent beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than five percent beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owner in which such person has a beneficial ownership interest of 10% or more.
Relationship and Transactions with AIG
On September 19, 2022, Corebridge completed its IPO in which AIG sold 80.0 million shares of Corebridge Parent common stock to the public. Since Corebridge’s IPO, AIG Parent has sold portions of its interest in Corebridge through secondary public offerings. As of August 28, 2024, AIG owned approximately 49.0% of the outstanding Corebridge Parent common stock. AIG has announced its intention to sell all of its interest in Corebridge with intended sales of shares of Corebridge’s common stock over time, subject to any lock-up agreement and market conditions. AIG is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of Corebridge’s common stock.
Separation Agreement
The Separation Agreement governs the relationship between AIG and Corebridge following the IPO, including matters related to the allocation of assets and liabilities to Corebridge and to AIG, indemnification obligations of Corebridge and AIG, Corebridge’s corporate governance, including the composition of Corebridge’s Board and its committees, Board nomination rights, information rights, participation rights with respect to equity issuances by Corebridge, and consent rights of AIG with respect to certain business activities that Corebridge may undertake, among other matters.
On May 16, 2024, in connection with the execution of the Nippon Purchase Agreement with AIG and Nippon as further described below, Corebridge entered into an Amendment to the Separation Agreement, by and between Corebridge and AIG, pursuant to which the Corebridge and AIG agreed to certain changes with respect to AIG’s board designation rights and AIG’s right to consent over certain actions by the Corebridge, as set forth in the original Separation Agreement.
On June 9, 2024, AIG waived its right under the Separation Agreement to include a majority of the candidates on each slate of candidates recommended by the Corebridge Board of Directors to Corebridge’s stockholders in connection with a meeting of stockholders. On June 10, 2024, AIG announced that it has met the requirements for the deconsolidation for accounting purposes of Corebridge.
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AIG Rights with Respect to Corebridge’s Board of Directors
The Separation Agreement entitles AIG to have Corebridge’s Board include in the candidates it designates for election a specified number of directors designated by AIG based on its beneficial ownership of Corebridge’s common stock, as follows:
| | • | | until AIG ceases to beneficially own at least 5% of Corebridge’s outstanding common stock, AIG will be entitled to designate a number of the total number of directors entitled to serve on the Board proportionate to the percentage of Corebridge’s outstanding common stock beneficially owned by AIG, rounded up to the nearest whole number; and |
| | • | | thereafter, AIG will no longer have any right to designate directors to serve on the Board under the Separation Agreement. |
The Separation Agreement also provides that:
| | • | | at the option of AIG, the Board will appoint a director designated by AIG to the audit committee of the Board, who, from and after September 13, 2023, must be an independent director; |
| | • | | at any time during which the Board includes a director designated by AIG who is also an independent director, at least one member of the audit committee of the Board will be a director designated by AIG, so long as the director meets certain standards for membership on the committee; |
| | • | | until AIG ceases to beneficially own at least 25% of Corebridge’s outstanding common stock, if the Board has a compensation committee, AIG will be entitled to designate a number of the total number of directors entitled to serve on the compensation committee proportionate to the percentage of our outstanding common stock beneficially owned by AIG, rounded up to the nearest whole number, provided that , such directors must be independent directors; |
| | • | | until AIG ceases to beneficially own at least 25% of Corebridge’s outstanding common stock, if the Board has a nominating and governance committee, AIG will be entitled to designate a number of the total number of directors entitled to serve on the nominating and governance committee proportionate to the percentage of Corebridge’s outstanding common stock beneficially owned by AIG, rounded up to the nearest whole number, provided that , such directors must be independent directors |
AIG Consent Rights
The Separation Agreement provides that, until AIG ceases to beneficially own at least 25% of Corebridge’s outstanding common stock, the prior written consent of AIG will be required before Corebridge may take any of the following actions:
| | • | | any merger, consolidation or similar transaction (or any amendment to or termination of an agreement to enter into such a transaction) involving Corebridge or any of Corebridge’s subsidiaries, on the one hand, and any other person, on the other hand; other than (i) an acquisition of 100% of the capital stock of such other person or (ii) a disposition of 100% of the capital stock of a subsidiary of us, in each case involving consideration not exceeding a specified threshold; |
| | • | | any acquisition or disposition of securities, assets or liabilities (including through reinsurance on a proportional or non-proportional basis whether involving full or partial risk transfer or for other purposes of surplus or capital relief) involving consideration or book value exceeding a specified threshold, other than transactions involving assets invested in Corebridge’s consolidated general account and approved in accordance with Corebridge’s established policies and procedures to monitor invested assets; |
| | • | | any increase or decrease in Corebridge’s authorized capital stock, or the creation of any new class or series of Corebridge’s capital stock; |
| | • | | any issuance or acquisition (including buy-back programs and other reductions of capital) of capital stock, or securities convertible into or exchangeable or exercisable for capital stock or equity-linked securities, subject to certain exceptions; |
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| | • | | any issuance or acquisition (including redemptions, prepayments, open-market or negotiated repurchases or other transactions reducing the outstanding debt) of any debt security of, to or from a third party, in each case involving an aggregate principal amount exceeding a specified threshold; |
| | • | | any other incurrence or guarantee of a debt obligation to or of a third party having a principal amount exceeding a specified threshold, subject to certain exceptions; |
| | • | | entry into or termination of any joint venture, cooperation or similar arrangements involving assets having a book value exceeding a specified threshold; |
| | • | | the listing or delisting of securities on a securities exchange, other than the listing or delisting of debt securities on the NYSE or any other securities exchange located solely in the United States; |
| | • | | (A) the formation of, or delegation of authority to, any new committee, or subcommittee thereof, of Corebridge’s Board, (B) the delegation of authority to any existing committee or subcommittee of Corebridge’s Board not set forth in the committee’s charter or authorized by Corebridge’s Board prior to the completion of the IPO or (C) any amendments to the charter (or equivalent authorizing document) of any committee, including any action to increase or decrease the size of any committee (whether by amendment or otherwise), except in each case as required by applicable law; |
| | • | | the amendment (or approval or recommendation of the amendment) of Corebridge’s Certificate of Incorporation or By-laws; |
| | • | | any filing or the making of any petition under bankruptcy laws, any general assignment for the benefit of creditors, any admission of an inability to meet obligations generally as they become due or any other act the consequence of which is to subject Corebridge or any subsidiary to a proceeding under bankruptcy laws; |
| | • | | any commencement or settlement of material litigation or any regulatory proceedings if such litigation or regulatory proceeding could be material to AIG or could have an adverse effect on AIG’s reputation or relationship with any governmental authority; |
| | • | | entry into any material written agreement or settlement with, or any material written commitment to, a regulatory agency or other governmental authority, or any settlement of a material enforcement action if such agreement, settlement or commitment could be material to AIG or could have an adverse effect on AIG’s reputation or relationship with any governmental authority; |
| | • | | any dissolution or winding-up of Corebridge; |
| | • | | the election, appointment, hiring, dismissal or removal (other than for cause) of Corebridge’s chief executive officer or chief financial officer; |
| | • | | the entry into, termination of or material amendment of any material contract with a third party, subject to certain exceptions; |
| | • | | any action that could result in AIG being required to make regulatory filings with or seek approval or consent from a governmental authority, other than any as contemplated by the Registration Rights Agreement; |
| | • | | any material change to the nature or scope of Corebridge’s business immediately prior to the completion of the IPO; or |
| | • | | any material change in any hedging strategy. |
Information Rights; Accounting and Financial Disclosure Matters; Rights with Respect to Policies
The Separation Agreement provides, in addition to other information and access rights, that:
| | • | | Corebridge is required to continue to provide AIG with information and data relating to Corebridge’s business and financial results and access to Corebridge’s personnel, data and systems, and to maintain |
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| | disclosure controls and procedures and internal control over financial reporting, as further provided therein during certain periods until the date on which AIG ceases to beneficially own at least 20% of Corebridge’s outstanding common stock; |
| | • | | until the date on which AIG ceases to beneficially own at least 20% of Corebridge’s outstanding common stock, Corebridge will consult and coordinate with AIG with respect to public disclosures and filings, including in connection with Corebridge’s quarterly and annual financial results; and |
| | • | | during any period in which AIG is or may be deemed to control Corebridge for applicable regulatory purposes, and in any case at all times prior to the date on which AIG ceases to beneficially own at least 10% of Corebridge’s outstanding common stock, Corebridge will provide AIG with information, records and documents requested or demanded by regulatory authorities or relating to regulatory filings, reports, responses or communications, and provide access to Corebridge’s offices, employees and management to regulatory authorities having jurisdiction or oversight authority over AIG. |
In addition, during any period in which AIG is deemed to control Corebridge for applicable regulatory purposes, and in any case at all times prior to the date on which AIG ceases to beneficially own at least 10% of Corebridge’s outstanding common stock, Corebridge (i) may not adopt or implement any policies or procedures, and at AIG’s reasonable request, must refrain from taking any actions, that would cause AIG to violate any applicable laws to which AIG is subject, (ii) must, prior to implementing, amending or rescinding any policy referred to in the preceding paragraph, consult with AIG and, to the extent consistent with its fiduciary duties, Corebridge’s Board must take into account the interests of AIG with respect thereto and (iii) must maintain and observe the policies of AIG to the extent necessary for AIG to comply with its legal or regulatory obligations.
Participation Rights
The Separation Agreement provides that, subject to certain exceptions, until the date on which AIG ceases to beneficially own at least 20% of Corebridge’s outstanding common stock, as soon as practicable after determining to issue any shares of common stock or securities convertible or exchangeable for common stock, but in any event no fewer than ten business days prior to entering into a binding agreement to issue such shares or securities, Corebridge will be required to offer to sell to AIG a number of such shares or securities equal to the number of shares or securities to be sold multiplied by a fraction representing AIG’s beneficial ownership of Corebridge’s outstanding common stock at the lowest purchase price to be paid by the transferees of such shares or securities. Any such purchase by AIG of shares or securities will take place concurrently with the closing of the sale of shares or securities giving rise to AIG’s participation right or, if a concurrent closing is not practicable, as promptly as practicable thereafter.
Provisions Relating to Director and Officer Indemnification and Liability Insurance
The Separation Agreement provides that, until at least the day after the last date on which any director, officer, employee or certain designees of AIG (an “AIG Individual”) is a director, officer or employee of us, Corebridge must indemnify (including advancement of expenses) each such director, officer or employee to the greatest extent permitted under Section 145 of the Delaware General Corporation Law and other applicable laws. Such indemnification must continue as to any AIG Individual who becomes entitled to indemnification notwithstanding any subsequent change in Corebridge’s indemnification policies or, with respect to liabilities existing or arising from events that have occurred on or prior to such date, that such AIG Individual ceases to be a director, officer or employee of us.
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Transfer of Assets and Assumption of Liabilities; Releases; Indemnification
The Separation Agreement identifies the assets to be transferred, the liabilities to be assumed and the contracts to be transferred to or retained by each of Corebridge and AIG as part of Corebridge’s separation from AIG. The Separation Agreement provides that, among other things, subject to the terms and conditions contained therein, including certain exceptions:
| | • | | assets used primarily in or primarily related to the Corebridge Business (defined as the life and retirement and primarily related investment management businesses, operations and activities conducted by AIG or the Company immediately prior to 12:01 a.m. Eastern Time on September 14, 2022 (the “Separation Time”)) were retained by or transferred to us, including: |
| | • | | equity interests of specified entities; |
| | • | | assets reflected on the pro forma condensed balance sheet of the Company, including any notes thereto, as of June 30, 2022 (the “Corebridge Balance Sheet”), other than any such assets disposed of subsequent to the date thereof; |
| | • | | assets of a nature or type that would have been included as assets on a pro forma combined balance sheet of the Company prepared immediately prior to the Separation Time; |
| | • | | assets expressly provided by the Separation Agreement or certain other agreements to be transferred to or owned by Corebridge (the “Specified Assets”); and |
| | • | | certain contracts, books and records, intellectual property, technology, information technology, permits and real and personal property; |
| | • | | certain liabilities were assumed or retained by the Company, including: |
| | • | | liabilities included or reflected as liabilities on the Corebridge Balance Sheet, other than any such liabilities discharged subsequent to the date thereto; |
| | • | | liabilities of a nature or type that would have been included as liabilities on a pro forma combined balance sheet of the Company prepared immediately prior to the Separation Time; |
| | • | | certain liabilities expressly provided by the Separation Agreement or certain other agreements as liabilities to be retained or assumed by the Company; |
| | • | | liabilities relating to or arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Separation Time to the extent relating to, arising out of or resulting from the Corebridge Business or the Specified Assets; |
| | • | | liabilities relating to or arising out of contracts, intellectual property, technology, information technology, permits, real or personal property allocated to Corebridge as provided above or products and services supplied, sold, provided or distributed, as the case may be, at any time, by Corebridge under a Company trademark; and |
| | • | | liabilities arising out of claims made by any third party against AIG or Corebridge to the extent relating to, arising out of or resulting from the Corebridge Business or the Specified Assets; and |
| | • | | all assets and liabilities, other than the assets and liabilities allocated to the Company as provided above, were transferred to, assumed by or retained by AIG. |
Except as expressly set forth in the Separation Agreement or certain ancillary agreements, neither Corebridge nor AIG make any representation or warranty as to:
| | • | | the assets, business or liabilities transferred or assumed as part of the separation; |
| | • | | any approvals or notifications required in connection with the transfers or assumptions; |
| | • | | the value or freedom from security interests of, or any other matter concerning, any assets; or |
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| | • | | the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other asset. |
All assets were transferred on an “as is,” “where is” basis, and the respective transferees bear the economic and legal risks that: (i) any conveyance will prove to be insufficient to vest in the transferee good and marketable title, free and clear of all security interests, (ii) any necessary approvals or notifications are not obtained or made, or (iii) any requirements of laws or judgments are not complied with.
The Separation Agreement provides that in the event that the transfer of certain assets and liabilities to Corebridge or AIG, as applicable, did not occur prior to the separation, then until such assets or liabilities are able to be transferred, the applicable party will hold such assets for the use and benefit, or such liabilities for the performance or obligation, of the other party at the other party’s expense.
The Separation Agreement provides that each party will release and discharge the other party from: (i) all liabilities assumed by the party as part of the separation, (ii) all liabilities arising from or in connection with the transactions and other activities to implement the separation and the IPO and (iii) all liabilities arising from or in connection with actions, in inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Separation Time to the extent relating to, arising out of or resulting from the party’s business or assets or liabilities allocated to the party as provided above, except as expressly set forth in the Separation Agreement. These releases are subject to certain exceptions, including for any right to enforce the Separation Agreement or certain other agreements between the parties, in each case in accordance with their terms.
In the Separation Agreement, each party agrees, subject to certain exceptions, to indemnify, defend and hold harmless the other party, and each of its directors, officers, employees and agents, from and against:
| | • | | all liabilities relating to, arising out of or resulting from any liability allocated to the party as described above; |
| | • | | any failure of the party to pay, perform or otherwise promptly discharge any such liabilities in accordance with their terms, whether prior to, on or after the Separation Time; |
| | • | | any breach by the party of the Separation Agreement or certain ancillary agreements; |
| | • | | any guarantee, indemnification or contribution obligation, surety or other credit support agreement, arrangement, commitment or understanding for the benefit of the party by the other party that survives following the separation; and |
| | • | | any untrue statement or alleged untrue statement in any public filings made by Corebridge with the SEC following the date of the IPO. |
The Separation Agreement also establishes procedures with respect to claims subject to indemnification and related matters.
Dispute Resolution
The Separation Agreement contains provisions that govern the resolution of disputes or claims arising out of, relating to or in connection with the Separation Agreement. These provisions contemplate that if a dispute or claim cannot be resolved by senior officers of the parties, either party may submit the dispute or claim to non-binding mediation or, at any time before, during or following such non-binding mediation, binding arbitration, subject to the provisions of the Separation Agreement.
Term
The Separation Agreement terminates on the date that is one year following the date on which AIG ceases to beneficially own at least 5% of Corebridge’s outstanding common stock, except for certain provisions, including provisions relating to confidentiality, dispute resolution, allocation of assets and liabilities, and indemnification.
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Registration Rights Agreement
The Registration Rights Agreement provides AIG and permitted transferees certain registration rights relating to shares of Corebridge’s common stock beneficially owned by AIG whereby, at any time after the IPO and the expiration of any related lock-up period, AIG and permitted transferees may require Corebridge to register under the Securities Act, all or any portion of such shares, a so-called “demand request.” AIG and permitted transferees also have “piggyback” registration rights, such that AIG and permitted transferees may include their respective shares in any future registrations of Corebridge’s equity securities, whether or not that registration relates to a primary offering by Corebridge or a secondary offering by or on behalf of any of Corebridge’s stockholders.
The Registration Rights Agreement sets forth customary registration procedures, including an agreement by Corebridge to make Corebridge’s management reasonably available to participate in roadshow presentations in connection with any underwritten offerings.
Corebridge also agrees to indemnify AIG and permitted transferees with respect to liabilities resulting from untrue statements or omissions in any registration statement used in any such registration, other than untrue statements or omissions resulting from information furnished to Corebridge for use in a registration statement by AIG or any permitted transferee.
Transition Services Agreement
Corebridge and AIG have historically provided certain services to the other, shared certain services and relied on certain third-party service providers to provide services pursuant to shared services contracts. Corebridge and AIG generally ceased to provide services to one another following the IPO and Corebridge has, subject to certain limited exceptions, (i) ceased to rely on the contracts, systems and other resources that Corebridge has historically shared with AIG and (ii) replaced those contracts with new contracts between Corebridge and third-party service providers, and procured other systems and resources, to the extent necessary. The Transition Services Agreement (i) governs Corebridge’s migration away from most shared services, systems and resources with AIG on an agreed schedule and (ii) provides for the continued provision (directly or through a third-party provider) of certain services between Corebridge and AIG. Certain contracts and services between Corebridge and AIG are not covered by the Transition Services Agreement and continue to be provided pursuant to the terms of such contracts.
The services subject to the Transition Services Agreement include:
| | • | | information technology services, |
| | • | | certain finance and tax capabilities, |
| | • | | risk management and internal audit functions, |
| | • | | services related to real estate, |
| | • | | marketing services, and |
| | • | | various other miscellaneous services. |
The charges for the services provided under the Transition Services Agreement generally are intended to allow the transition services provider to fully recover the costs associated with providing the services plus a percentage of such costs. Although Corebridge believes the Transition Services Agreement contains commercially reasonable terms
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(including fees for the services provided) that could have been negotiated with an independent third party, the terms of the agreement may later prove to be more or less favorable than arrangements Corebridge could make to provide these services internally or to obtain them from unaffiliated service providers in the future.
The Transition Services Agreement terminates on the last date on which either party thereto is obligated to provide or cause the provision of any service to or for the other party in accordance with the terms of the Transition Services Agreement and the schedules thereto. The services provided under the Transition Services Agreement will terminate at various times specified in the agreement and the schedules thereto, but the party receiving services may also elect to terminate a service, by giving a specified amount of advance written notice to the provider of the service. While the majority of services under the Transition Services Agreement were completed by the end of 2023, Corebridge is working to replicate or replace certain services that Corebridge will continue to need in the operation of Corebridge’s business that are provided currently by or through AIG, including those Corebridge receives through shared service contracts AIG has with various third-party providers or through the Transition Services Agreement. In the event of elective early termination of a particular service, the service recipient will be obligated to reimburse the service provider for all or a portion of the actual breakage fees paid by the provider to an unaffiliated third party in connection with such termination. In addition, subject to consent rights or requirements under third-party agreements and except as otherwise specified therein, the Transition Services Agreement provides that a service recipient may request an extension of any service term, on terms to be agreed between the parties.
Subject to certain exceptions and limitations set forth in the Transition Services Agreement, each party agrees to indemnify and hold harmless the other party from and against losses arising out of or resulting from the party’s breach of the confidentiality provisions of the Transition Services Agreement, third-party claims resulting from the party’s provision of services, the party’s bad faith, fraud, gross negligence or willful misconduct and losses from certain infringements or violations of intellectual property rights of a third party in connection with the services.
Except for certain exceptions, including with respect to bad acts and liability to an unaffiliated third party, the aggregate liability of each party to the Transition Services Agreement is limited (x) in respect of any service, to an amount equal to 12 times the amount of service fees paid for the first full calendar month in respect of such service and (y) in the aggregate, to an amount equal to three times the total service fees paid and payable to such party pursuant to the Transition Services Agreement during the 12 months prior to the occurrence of the event giving rise to the liability.
Trademark License Agreement and Related Agreements
Corebridge entered into an Intellectual Property Assignment Agreement (the “IP Agreement”), a Trademark License Agreement and a Grantback License Agreement (the “Grantback Agreement”) with AIG, Inc. on September 14, 2022. Under the IP Agreement, AIG, Inc. assigned certain trademarks and other intellectual property that are used in connection with Corebridge’s business to Corebridge for a de minimis fee.
Under the Trademark License Agreement, AIG, Inc. grants Corebridge a nonexclusive, nontransferable license to use the trademark “AIG” (the “Licensed Mark”) in connection with insurance and financial services, regulatory filings and financial reporting (the “Licensed Services”) at no cost. The license is in effect in the United States, UK, Ireland and Bermuda and includes use of the Licensed Mark on the internet (collectively, the “Territory”), provided that such online use is not specifically targeted to computer users located outside of the Territory. Corebridge is able to use the Licensed Mark for a period of 18 months from the effective date of the Separation Agreement (the “Initial Term”). If it is not feasible for Corebridge to cease use of the Licensed Mark within the Initial Term, Corebridge may notify AIG, Inc. of Corebridge’s need to continue the license for an additional 12-month period (the “Additional Term” and, together with the Initial Term, the “Term”). Two extension requests were made and granted by AIG for use of AIG UK Life in the UK and other operating jurisdictions and AIG Direct in the United States. Additional extension requests will be considered by AIG, Inc. in good faith, and consent may not be unreasonably withheld. The Trademark License Agreement contains reciprocal indemnification obligations which are uncapped and subject to the indemnified party’s prompt notification of all claims of which it becomes aware. Specifically, AIG, Inc. indemnifies Corebridge against trademark-related third-party claims arising from Corebridge’s use of the Licensed Marks for the Licensed Services
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during the Term in the Territory while Corebridge indemnifies AIG, Inc. against non-trademark-related claims arising from Corebridge’s use of the Licensed Marks for the Licensed Services during the Term in the Territory.
Under the Grantback Agreement, Corebridge grants AIG, Inc. a nonexclusive, nontransferable license to use the trademarks that it sells to Corebridge under the IP Agreement in connection with the Licensed Services subject to the similar terms and conditions applicable to Corebridge’s use of the Licensed Mark under the Trademark License Agreement.
Employee Matters Agreement
On September 14, 2022, Corebridge entered into an employee matters agreement with AIG. The employee matters agreement allocates liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs, and other related matters between Corebridge and AIG.
The employee matters agreement addresses certain compensation and employee benefit obligations with respect to Corebridge’s current and former employees and generally provides that, unless otherwise specified, each party will be responsible for liabilities associated with the current and former employees of such party and its subsidiaries for purposes of compensation and benefit matters following the IPO.
The employee matters agreement also governs the terms of certain equity-based awards granted by AIG prior to the IPO to Corebridge employees.
Tax Matters Agreement
Corebridge previously entered into a state and local tax payment allocation agreement (the “SALT PAA”) and the Tax Matters Agreement with AIG. These agreements govern the parties’ respective rights, responsibilities and obligations with respect to taxes, including the allocation of current and historic tax liabilities (whether income or non-income consolidated or stand-alone). The Tax Matters Agreement governs, among other things, procedural matters, such as filing of tax returns, tax elections, control and settlement of tax controversies and entitlement to tax refunds and tax attributes.
Under the Tax Matters Agreement, Corebridge and AIG agreed to make payments to each other in respect of historic tax periods and tax periods prior to Corebridge’s deconsolidation from AIG for purposes of the applicable tax, determined in a manner consistent with Corebridge’s pre-existing tax sharing agreements with AIG (including the SALT PAA). Under these arrangements, Corebridge generally bears Corebridge’s own taxes determined on a standalone basis. Each party agreed to indemnify the other against any amounts for which such other party is not responsible, such as taxes arising from the breach of any obligations or covenants under the Tax Matters Agreement and any taxes of the other party’s consolidated or affiliated group members arising in taxable periods following Corebridge’s deconsolidation from AIG for purposes of the relevant tax. The Tax Matters Agreement allocates control of tax audits and proceedings between the parties, with AIG generally having the right to control audits and proceedings for pre-deconsolidation tax periods subject to Corebridge’s participation and consent rights, and it generally requires the parties to cooperate with one another in relation to the preparation and filing of tax returns and in connection with tax audits and proceedings.
The Tax Matters Agreement also provides special rules relating to elections to protect Corebridge’s tax attributes from reduction or reallocation pursuant to the “unified loss rule.”
Guarantee Reimbursement Agreement
On September 4, 2022, Corebridge and CRBGLH entered into a guarantee reimbursement agreement with AIG, Inc., related to AIG, Inc.’s guarantee of:
| | • | | junior subordinated debentures of CRBGLH, which as of December 31, 2023 consisted of: (i) $54 million of 8.500% junior subordinated debentures due July 2030, (ii) $142 million of 8.125% junior subordinated debentures due March 2046 and (iii) $31 million of 7.570% junior subordinated debentures due December 2045 (the “CRBGLH Junior Subordinated Debt”) and |
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| | • | | certain notes due and bonds payable by CRBGLH with $200 million aggregate principal amount as of December 31, 2023 (together with the CRBGLH Junior Subordinated Debt, the “CRBGLH Debt”). |
Pursuant to the guarantee reimbursement agreement, Corebridge and CRBGLH agree to (i) pay and reimburse AIG, Inc. for the full amount of any payment made by or on behalf of AIG, Inc. pursuant to the indentures governing the CRBGLH Debt and/or the related guarantees by AIG, Inc. and (ii) pay, indemnify and reimburse AIG, Inc. and its affiliates, and their respective officers, directors, employees, shareholders, members, attorneys and other advisors, agents and controlling persons for, and hold each indemnitee harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements.
Collateral Agreement
On September 4, 2022, Corebridge and CRBGLH entered into a collateral agreement with AIG, Inc., related to AIG, Inc.’s guarantee of the CRBGLH Debt (the “Collateral Agreement”). Pursuant to the Collateral Agreement:
| | • | | in the event of (i) a ratings downgrade of Corebridge or CRBGLH senior debt below Baa3 (Moody’s)/ BBB- (S&P) or (ii) failure by CRBGLH to pay principal and interest on the CRBGLH Debt and applicable grace periods have lapsed (each, a “Collateralization Trigger Event”), Corebridge and CRBGLH must collateralize with Eligible Collateral (as defined in the Collateral Agreement) an amount equal to the sum of: (i) 100% of the principal amount outstanding under the CRBGLH Debt at any given time, (ii) accrued and unpaid interest, and (iii) 100% of the net present value of scheduled interest payments (the “Trigger Collateral Amount”); and |
| | • | | if at any time after Corebridge and CRBGLH deposit funds in connection with a Collateralization Trigger Event AIG reasonably determines the fair market value of the collateral is less than the Trigger Collateral Amount, Corebridge and CRBGLH must deposit additional collateral such that the fair market value of the collateral equals at least the Trigger Collateral Amount. |
Nippon Transaction
On May 16, 2024, Corebridge entered into the Nippon Purchase Agreement with AIG and Nippon, pursuant to which, and upon the terms and subject to the conditions set forth therein, AIG will sell 121,956,256 shares of Corebridge’s common stock representing approximately 20% of the issued and outstanding common stock at signing, to Nippon for aggregate consideration of $3,838,012,158.82 billion in cash. The Nippon Purchase Agreement provides for, among other things, certain limitations on the transfer of Common Stock by each of AIG and Nippon and an agreement that each of AIG and Nippon will vote in favor of the other’s nominees to the Company’s board of directors. The closing of the transaction is subject to certain closing conditions, including the receipt of specified regulatory approvals.
Pursuant to the Nippon Purchase Agreement, the Company has agreed to enter into a stockholder’s agreement (the “Nippon Stockholder’s Agreement”) by and between the Company and Nippon at the closing of the Transaction. The Nippon Stockholder’s Agreement will provide for, among other things, the grant to Nippon of certain board, board observer and committee designation rights and a standstill restriction on Nippon.
Other Transactions
On February 2, 2023, Corebridge purchased from AIG for €7.8 million a participation in a euro-denominated syndicated senior secured NAV facility.
On February 15, 2023, Corebridge entered into a purchase and sale agreement with AIG to purchase a senior secured private placement note asset for approximately $10.6 million. The transaction closed on March 2, 2023.
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On April 20, 2023, American General Life Insurance Company (“AGL”), a Corebridge subsidiary, purchased from an AIG subsidiary a senior secured private placement note for approximately $41.4 million.
On June 21, 2023, Corebridge repurchased from AIG 10,981,108 shares of Corebridge’s common stock for approximately $180.2 million.
On December 14, 2023, Corebridge repurchased from AIG 6,210,256 shares of Corebridge’s common stock for approximately $135.1 million.
On April 1, 2024, Corebridge purchased from AIG subsidiaries two residential mortgage-backed securities for approximately $600,000.
On August 7, 2024, Corebridge purchased from AIG eight revolving credit facilities, including unfunded commitments, for approximately $2.8 million.
On August 7, 2024, Corebridge repurchased from AIG 8,032,129 shares of Corebridge’s common stock for approximately $200 million.
On August 9, 2024, Corebridge purchased from AIG three classes of AAA/AA/A rated private Collateralized Loan Obligation securities for approximately $468 million.
Partnership and Transactions with Blackstone
Blackstone Stockholders’ Agreement
The Blackstone Stockholders’ Agreement governs the relationship among the parties, including matters related to corporate governance, restrictions on the transfer of Corebridge’s common stock owned by Blackstone, and certain consent and information rights.
On March 11, 2024, Corebridge entered into an Amendment and Waiver of Consent and Voting Rights with AIG, Argon, Blackstone and certain affiliates of Argon and Blackstone (the “Amendment and Waiver”) that amended the Blackstone Stockholders’ Agreement such that Argon will have no right to consent to any repurchase of shares of Corebridge’s common stock if such repurchase would result in Argon owning, of record, more than 9.9% of Corebridge’s then-outstanding common stock, provided that, no such repurchase will be permitted if it would result in Argon owning, of record, more than 14.9% of Corebridge’s then-outstanding common stock.
Additionally, Argon, Blackstone and certain of their affiliates waived their right to vote or act by written consent with respect to any shares of Corebridge’s common stock owned by them from time to time. The following terms of the Blackstone Stockholders’ Agreement remain in place following the Amendment and Waiver.
Pursuant to the agreement, until Blackstone no longer owns at least 50% of its initial investment in 9.9% of Corebridge’s outstanding common stock (a “Fall-Away Event”), it will have the right to designate for nomination for election one member of Corebridge’s Board, so long as the nominee will not represent more than 9.9% of Corebridge’s entire Board. This designee is entitled to serve on each committee of Corebridge’s Board, subject to applicable stock exchange requirements and federal securities laws and regulations. If Corebridge’s Board consists of fewer than 11 members at any time, Blackstone’s designee will no longer be a member of Corebridge’s Board and will instead become a board observer.
Until a Fall-Away Event, Corebridge will not, without the prior written consent of Blackstone:
| | • | | amend the organizational documents of Corebridge or any of Corebridge’s material subsidiaries, in either case so as to include provisions that would disproportionately adversely affect Blackstone in any material respect relative to AIG, in each case in their capacities as holders of Corebridge’s common stock, after taking into account differences in their respective ownership levels; |
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| | • | | effect a voluntary liquidation, dissolution or winding up of Corebridge; |
| | • | | other than (x) with respect to documentation relating to Corebridge’s separation from AIG, (y) any modification, amendment, termination of, or entry into any material contract between Corebridge and AIG (an “Affiliate Contract”) that is on arm’s-length terms, fair and reasonable to Corebridge in all material respects or in the ordinary course of business consistent with historical practice or (z) any modification, amendment or termination of, or entry into, any Affiliate Contracts in connection with Corebridge’s separation from AIG, (A) modify, amend (in any material respect) or terminate (other than as a result of the expiration of the term thereof) any Affiliate Contract, or waive, release or assign any material rights or claims thereunder or (B) enter into any Affiliate Contract, in each of cases (A) and (B) on terms that are adverse in any material respect to Blackstone; provided that the consent of Blackstone shall not be unreasonably withheld, delayed or conditioned; and |
| | • | | following the completion of the IPO, effect a voluntary deregistration or delisting of Corebridge’s common stock. |
The Blackstone Stockholders’ Agreement also provides Blackstone with certain registration rights relating to shares of Corebridge’s common stock held by Blackstone whereby, at any time following the first anniversary of the IPO, Blackstone may require Corebridge (subject to certain restrictions) to register under the Securities Act, all or any portion of these shares, a so-called “demand request.” Blackstone also has “piggyback” registration rights, such that Corebridge will use Corebridge’s reasonable best efforts to include the shares of common stock held by Blackstone in any future registrations of Corebridge’s equity securities. The Blackstone Stockholders’ Agreement sets forth customary registration procedures, including an agreement by Corebridge to participate in customary road show presentations in connection with any underwritten offerings. Corebridge has also agreed to pay all expenses related to any registration other than underwriting discounts and commissions and to indemnify Blackstone with respect to liabilities resulting from untrue statements or omissions in any registration statement used in any such registration, other than untrue statements or omissions resulting from written information furnished to Corebridge for use in a registration statement by Blackstone, and liabilities resulting from a violation by Corebridge of the Securities Act or state securities laws in connection with an offering covered by such registration. Blackstone’s registration rights under the Blackstone Stockholders’ Agreement will terminate when Blackstone no longer owns at least 75% of its initial investment in 9.9% of Corebridge’s outstanding common stock.
Further, the Blackstone Stockholders’ Agreement requires Corebridge, until a Fall-Away Event, to provide Blackstone upon reasonable request with information relating to Corebridge’s business and financial results, including with respect to information required for regulatory or compliance purposes.
Under the Blackstone Stockholders’ Agreement, Blackstone may not sell its shares of Corebridge’s common stock, subject to certain exceptions, including:
| | • | | if the purchaser of such shares is an affiliate of Blackstone and agrees to become bound by the Blackstone Stockholders’ Agreement; |
| | • | | after the first, second and third anniversary of the closing of the IPO, Blackstone may sell up to 25%, 67% and 75%, respectively, of its initial investment in 9.9% of Corebridge’s outstanding common stock; |
| | • | | after the fifth anniversary of the closing of the IPO, Blackstone may sell any shares of Corebridge’s common stock; |
| | • | | in connection with any share repurchase by Corebridge or AIG, to cause Blackstone’s ownership not to exceed 9.9% of Corebridge’s then-outstanding common stock; |
| | • | | in connection with a change of control of Corebridge that is approved and recommended to Corebridge’s stockholders by Corebridge’s Board; and |
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| | • | | with Corebridge’s consent). |
Further, under the Blackstone Stockholders’ Agreement, Blackstone may not, directly or indirectly, acquire any shares of, or rights in relation to, Corebridge’s common stock that would cause it to beneficially own more than 9.9% of Corebridge’s outstanding common stock before the fifth anniversary of the closing of the IPO, without Corebridge’s prior written approval.
Investment Management Relationships
Pursuant to Corebridge’s Commitment Letter with Blackstone IM and the SMAs, Blackstone IM serves as the exclusive external investment manager for portions of certain of Corebridge’s life insurance company subsidiaries’ investment portfolios. In 2021, Corebridge transferred management of $50 billion of our existing investment portfolio to Blackstone IM. As of December 31, 2023, Blackstone IM managed $55.4 billion in book value of assets in Corebridge’s investment portfolio. The amount managed by Blackstone IM will increase to $92.5 billion by the third quarter of 2027.
Blackstone IM earns an investment management fee of 0.30% per annum on all assets with respect to the initial $50 billion of assets delivered by Corebridge insurance company subsidiaries to Blackstone IM for investment management. That fee will increase to 0.45% per annum with respect to additional assets delivered for investment management by Blackstone IM, and with respect to the initial $50 billion of assets as such amount is re-invested over time. Such fee does not apply in the case of investments made in funds or structures where Blackstone IM or one of its affiliates is the sponsor or is otherwise entitled to other fees. To the extent that Corebridge insurance company subsidiaries fail to deliver to Blackstone IM for investment management applicable amounts by the specified quarterly deadlines, Corebridge would still owe investment management fees on the full amount of assets expected to be managed by Blackstone IM.
In furtherance of the arrangements under the Commitment Letter, Corebridge relies on Blackstone IM to provide Corebridge with investment management and advisory services pursuant to SMAs. Under each SMA, Blackstone IM may delegate any or all of its discretionary investment and advisory rights and powers to one or more affiliate investment advisers, in which case the applicable sub-manager and the applicable insurance company subsidiary and/or Blackstone IM may enter into a Sub-Manager Agreement.
The Commitment Letter provides that each SMA and Sub-Manager Agreement will have an initial term of six years, with two-year automatic extensions unless earlier terminated in accordance with the Commitment Letter, and that Corebridge insurance company subsidiaries will not exercise their termination rights under the Sub-Manager Agreements or, so long as any Sub-Manager Agreement to which an insurance company is a party is in effect, any SMA, except as specified in the Commitment Letter. Specifically, at any time, an insurance company subsidiary may terminate an SMA or Sub-Manager Agreement by providing at least 30 days’ advance written notice to Blackstone IM that Corebridge has determined that (a) a cause event has occurred, which includes (i) Blackstone IM no longer being able to carry on its investment advisory business as a going concern or (ii) Blackstone IM performing its obligations under any SMA with gross negligence, willful misconduct or reckless disregard of any such obligations, (b) Blackstone IM having materially breached a material covenant of an SMA and (subject to certain exceptions) such breach remaining uncured for thirty days or (c) a material adverse change occurring at Blackstone IM such that Blackstone IM or its sub-managers are unable to manage the applicable asset classes as provided in the applicable SMA due to a complete loss of capability with respect to that asset class, and such event remaining uncured for three months. During the initial six-year term of the SMA arrangements, an insurance company subsidiary may also terminate, with 30 days’ prior written notice, a Sub-Manager Agreement or SMA for breach of Blackstone IM’s contractual obligation pursuant to the stock purchase agreement between AIG and Blackstone to hold its ownership interest in Corebridge for five years following the IPO, subject to certain exceptions. Termination of a Sub-Manager Agreement or SMA generally requires the affirmative approval of at least a majority of the directors of Corebridge’s Board, excluding any Blackstone IM representative.
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Following the initial six-year term, an insurance company subsidiary may terminate a Sub-Manager Agreement to which it is a party for unsatisfactory long-term performance, as measured relative to objective benchmarks agreed between the parties, which underperformance remains uncured for at least one year. Termination for underperformance requires a majority vote of the independent members of Corebridge’s Board.
Notwithstanding Corebridge’s obligations under the Commitment Letter, any of Corebridge insurance company subsidiaries may terminate any individual SMA at any time upon 30 days’ advance written notice. Corebridge, but not any of the Corebridge insurance company subsidiaries, may be required to pay damages for termination in certain circumstances where termination is not expressly permitted by the terms of the Commitment Letter. Corebridge’s investment expense incurred related to Blackstone IM’s services was $175 million for the year ended December 31, 2023.
Sale of CLO Manager
On February 24, 2023, Corebridge completed the sale of 100% of the limited liability company interests of Clover Credit Management, LLC (“CCM”) to Blackstone. The base purchase price for the sale of CCM was approximately $34.8 million, net of the financings described below. Additional consideration in the form of management fee and incentive fee revenue sharing may be payable to Corebridge through December 31, 2029.
In connection with the closing of this transaction, Corebridge maintained an existing $20 million term loan to CCM secured by notes CCM owns in a CLO it originated. This term loan will be paid in full no later than January 2035 and will pay interest at a per annum rate equal to (i) 3.7156% through January 2024 and (ii) after January 2024, a benchmark rate (determined by the underlying CLO indenture) expected to be 3-month term SOFR, plus a credit spread adjustment, plus 2.05%. In addition, Corebridge provided a second $20 million term loan to CCM secured by notes CCM owns in a CLO it originated. This term loan will be paid in full no later than October 2033 and will pay interest at a per annum rate equal to a benchmark rate (determined by the underlying CLO indenture) of 3-month term LIBOR plus 2.05%. The current benchmark rate for this term loan is 3-month LIBOR.
Purchase of Tax Credits
In connection with an existing SMA, AGL and an affiliate of Blackstone IM entered into an LLC Agreement on November 15, 2023, creating Freshwater RTC Holdings LLC (“Freshwater”). Pursuant to such agreement, as amended and restated on April 5, 2024, the affiliate of Blackstone IM is the non-member manager and has agreed to diligence and present tax credit purchase opportunities to AGL as the sole member. If AGL approves the purchase of any such credits, a tax credit purchase agreement will be entered into between Freshwater and the seller, and the purchased tax credits distributed to AGL. Freshwater will pay the affiliate of Blackstone IM a market level arranger fee based on the par value of any tax credits purchased. As of April 11, 2024, Freshwater has purchased $107.5 million of tax credits.
Other Transactions
On June 21, 2023, Corebridge repurchased from Blackstone 1,206,582 shares of Corebridge’s common stock for approximately $19.8 million.
On December 14, 2023, Corebridge repurchased from Blackstone 686,295 shares of Corebridge’s common stock for approximately $14.9 million.
Transfer of AIG Technologies, Inc. (“AIGT”) and Eastgreen, Inc. (“Eastgreen”)
Prior to the IPO, Corebridge underwent a reorganization (the “Reorganization”) to ensure that Corebridge held all of AIG’s life and retirement business and substantially all of its investment management operations. In connection with the Reorganization, among other things, Corebridge and AIG entered into agreements under
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which Corebridge purchased AIGT and Eastgreen from AIG on February 28, 2022 for total consideration of $106.5 million. During 2023, AIGT provided data processing, technology and infrastructure services to AIG entities in the United States, including management of AIG hardware and networks. AIGT utilizes two data centers to provide its services. The real estate related to the two data centers is owned by Eastgreen.
Historical Related Party Transactions
Guarantees
AIG has guaranteed Corebridge’s obligations under various debt instruments and agreements, including:
| | • | | AIG provides guarantees with respect to all obligations arising from certain insurance policies issued by us. Corebridge paid no fees with respect to these guarantees for the year ended December 31, 2023. For further information with respect to these guarantees, see Note 25 to Corebridge’s audited consolidated financial statements. |
| | • | | AIG provides a full and unconditional guarantee of the CRBGLH Debt and prior to August 1, 2023, provided a guarantee of an aggregate amount of $350 million promissory notes issued by CRBGLH to one of Corebridge’s subsidiaries pursuant to a sale-leaseback transaction in 2020, consisting of promissory notes of $150,000,000 and $200,000,000, which at such time had maturity dates of up to four and five years, respectively, and interest rates of 2.52% and 2.40%, respectively. For the year ended December 31, 2023, Corebridge paid no fees for the guarantees and no payments were made under these guarantees. On August 1, 2023, the guarantee of these promissory notes was novated from AIG, Inc. to Corebridge. |
Intercompany Funding Arrangements
Prior to the IPO, Corebridge participated in intercompany funding arrangements, whereby each of Corebridge’s participating subsidiaries placed excess funds on deposit with AIG in exchange for a stated rate of interest. These funding arrangements terminated on September 19, 2022. As of December 31, 2023, Corebridge held $0 million, relating to these balances in short-term investments. Interest earned on these deposits was $8 million for the year ended December 31, 2023.
Derivative Agreements
Corebridge pays a fee to AIGM for a suite of capital markets services, including derivatives execution and support. In addition, in the ordinary course of business, Corebridge enter into over-the-counter derivative transactions with AIGM under standard ISDA agreements. The total expenses incurred for services provided by AIGM were $0 million for the year ended December 31, 2023. Corebridge’s derivative assets, net of gross assets and gross liabilities after collateral, were $13 million as of December 31, 2023. Corebridge’s derivative liabilities, net of gross assets and gross liabilities after collateral, were $0 million as of December 31, 2023. The collateral posted to AIGM was $0 million as of December 31, 2023. The collateral held by Corebridge was $377 million as of December 31, 2023.
The suite of capital markets services previously provided by AIGM are now provided by Corebridge’s consolidated subsidiary CRBGM. The majority of transactions previously outstanding with AIGM have been legally transferred to CRBGM as of December 31, 2023.
In addition, Corebridge entered into certain unsecured derivative transactions with AIG prior to 2018. On May 4, 2023, these previously unsecured derivative transactions became fully collateralized. These derivative assets, net of gross assets and gross liabilities after collateral, were $0 million as of December 31, 2023. There were no derivative net liabilities as of December 31, 2023. There was no collateral posted to AIG or held by Corebridge as of December 31, 2023.
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Capital Maintenance Agreement
Pursuant to a capital maintenance agreement between AGC and AIG (the “CMA”), AIG is obligated to maintain the total adjusted capital of AGC at or above a specified minimum percentage of AGC’s projected company action level RBC. AIG did not make capital contributions to AGC under the CMA during the year ended December 31, 2023. As of December 31, 2023, the specified minimum capital percentage in the CMA was 250%. On December 31, 2023, the CMA was terminated.
Tax Sharing Agreements
Prior to the IPO, Corebridge was included in the consolidated federal income tax return of AIG as well as certain state tax returns where AIG files on a combined or unitary basis. As described above, under the Tax Matters Agreement, Corebridge and AIG agreed to make payments to each other in respect of historic tax periods and tax periods prior to Corebridge’s deconsolidation from AIG for purposes of the applicable tax, determined in a manner consistent with Corebridge’s pre-existing tax sharing agreements with AIG.
For the year ended December 31, 2023, Corebridge received a net amount of $494 million in tax sharing payments in cash from AIG. The tax sharing payments may be subject to further adjustment in future periods. Amounts payable to AIG pursuant to the tax sharing agreements were $371 million as of December 31, 2023.
General Operating Services
Pursuant to the provisions of a service and expense agreement (the “AIG Service and Expense Agreement”) effective February 1, 1974 and the Transition Services Agreement, AIG provides operational services to us. For further information regarding these services, see Note 25 to Corebridge’s audited consolidated financial statements. The total service expenses incurred by Corebridge pursuant to these agreements were $161 million for the year ended December 31, 2023.
Historically, Corebridge has provided policy administration services to, and have received policy administration services from, previously affiliated AIG entities in connection with policies subject to the Fortitude Re transactions. For additional information with respect to these transactions, see Notes 1, 8 and 25 to Corebridge’s audited consolidated financial statements.
Advisory Transactions
Several of Corebridge’s asset management subsidiaries have served as investment managers or sub-managers, investment advisors or sub-advisors and portfolio managers or sub-managers for various funds pertaining to the asset management subsidiaries of AIG. The amount of fees Corebridge receives depends, in part, on the performance of the funds or the returns earned on the accounts which Corebridge’s subsidiaries are advising.
Certain of Corebridge’s investment management subsidiaries provide advisory, management, allocation, structuring, planning, oversight, administration and similar services (collectively, “Investment Services”) with respect to the investment portfolios of related party clients, including both insurance companies and non-insurance company subsidiaries of AIG. For additional information with respect to these Investment Services, see Note 25 to Corebridge’s audited consolidated financial statements. Management and advisory fee income for these Investment Services and related services was $34 million for the year ended December 31, 2023.
Reinsurance Agreements
In 2018, AIG Life ceded to AIRCO risks relating to the payment of obligations of life-contingent annuity claims in the annuitization phase of the contracts on or after June 30, 2018. In 2019 and 2020, AIG Life ceded to AIRCO risks relating to certain whole life policies. Reinsurance assets related to these treaties were $67 million as of December 31, 2023. Amounts payable by AIG Life to AIRCO pursuant to these treaties were $13 million as
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of December 31, 2023. Ceded premiums related to these treaties were $37 million for the year ended December 31, 2023. These treaties were cancelled in connection with the closing of the sale of AIG Life to Aviva plc on April 9, 2024.
For additional information with respect to these transactions, see Notes 1, 8 and 25 to Corebridge’s audited consolidated financial statements.
Compensation Concerning Employees
Corebridge participated in certain of AIG’s long-term incentive compensation programs prior to the IPO. Corebridge’s total share-based compensation expense after tax for these programs was $2 million for the year ended December 31, 2023. For further information regarding these plans, see Note 22 to the audited consolidated financial statements.
Revenues and Expenses Associated with AIG Agreements
The table below summarizes Corebridge’s material revenues and expenses in connection with agreements with AIG for the year ended December 31, 2023.
| | | | |
($ in millions) | | Year Ended December 31,
2023 | |
Transaction | | | | |
Intercompany Funding Arrangements | | $ | 8 | |
Derivative Agreements | | | 0 | |
Tax Sharing Agreements | | | 494 | |
General Operating Services | | | (161 | ) |
Advisory Services | | | 34 | |
Compensation Concerning Employees | | | (2 | ) |
Total | | $ | 373 | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Information in this Management’s Discussion and Analysis as of and for the years ended December 31, 2023 and 2022 is derived from and should be read in conjunction with the 2023 audited statutory-basis financial statements included elsewhere in this filing. Similarly, information in this Management’s Discussion and Analysis as of June 30, 2024 and for the six months ended June 30, 2024 and 2023 is derived from and should be read in conjunction with the unaudited Second-Quarter 2024 statutory-basis financial statements included elsewhere in this filing. All information in this Management’s Discussion and Analysis was prepared on the basis of statutory accounting principles as prescribed or permitted by the Texas Department of Insurance. SAP differs from U.S. GAAP, with such differences presumed to be material. For the summary of significant differences between statutory accounting principles and U.S. GAAP, see Note 2 “Summary of Significant Accounting Policies” in the audited statutory-basis financial statements included elsewhere in this filing.
This analysis may contain certain forward-looking statements, some of which may be identified by the use of terms such as “expect,” “believe,” “anticipate,” “intend,” “plan,” “view,” “target,” “estimate,” “will,” “focused on achieving” or other similar expressions. These statements are subject to various uncertainties and contingencies, which could cause actual results to differ materially from those expressed in such forward-looking statements. See “Forward-Looking Statements” in this filing.
2024 and 2023 Financial Position Comparison
Variances described are as of June 30, 2024 compared to December 31, 2023.
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Refer to “Investments” section below for discussion of invested assets.
Separate Account Assets and Separate Account Liabilities
Separate account assets and the associated liabilities each aggregated $72.4 billion at June 30, 2024 compared to
$68.8 billion at December 31, 2023. The increase primarily resulted from $2.1 billion in net deposit activity from pension risk transfer annuities, as well as market appreciation of $1.2 billion.
Life and Annuity Reserves
Life and annuity reserves increased $5.5 billion to $119.2 billion at June 30, 2024, compared to $113.7 billion at December 31, 2023. The increase is primarily driven by the annuity lines of business. Deferred annuity sales increased reserves, which were partially offset by higher surrenders across all annuity products.
Liability for Deposit-Type Contracts
Liability for deposit-type contracts increased $1.9 billion to $15.9 billion at June 30, 2024 from $14.0 billion at December 31, 2023. The increase is primarily due to new funding agreement backed note issuances.
2024 and 2023 Results of Operations Comparison
Variances described in this section refer to results for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Net Loss
Net loss was $836 million for the six months ended June 30, 2024 compared to a net loss of $573 million for the six months ended June 30, 2023. This increase in loss was primarily due to higher surrender benefits, income tax expense and realized capital losses, partially offset by higher premiums and annuity considerations and net investment income.
Premiums and Annuity Considerations
Premiums and annuity considerations increased $881 million for the six months ended June 30, 2024 compared to the same period in the prior year due to higher sales of fixed annuities, partially offset by lower pension risk transfer, fixed index and variable annuity sales.
Net Investment Income
Net investment income for the six months ended June 30, 2024 increased $551 million compared to the same period in the prior year primarily due to higher bond, derivative and mortgage loan income, partially offset by higher investment expenses.
Reserve Adjustments on Reinsurance Ceded
Reserve adjustments on reinsurance ceded primarily represents the change in ceded reserves under modified coinsurance agreements, in which AGL as the ceding entity retains the entire reserve on the reinsured policies. The net reserve adjustment on reinsurance ceded decreased $645 million the six months ended June 30, 2024 compared to the same period in the prior year, primarily due to the one time adjustment in 2023 for the recapture of certain term insurance from AGC Life which was then ceded to Hannover Re under the existing coinsurance agreement.
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Surrender Benefits
Surrender benefits increased $990 million in the six months ended June 30, 2024 compared to the same period in the prior year. The increase was primarily due to higher surrenders on fixed deferred, fixed index and variable annuities.
Change in Reserves
Change in reserves increased $2.7 billion for the six months ended June 30, 2024 compared to the same period in the prior year. The increase primarily resulted from higher deferred annuity sales, and the 2023 recapture of the term insurance AGC treaty and cession of the business to Hannover, which were partially offset by higher surrenders across all deferred annuity products.
Federal Income Tax Expense
Federal income tax expense for the six months ended June 30, 2024 was $301 million compared to $17 million in the same period in the prior year. The increase was primarily due to the current year movement of investment related temporary differences that resulted in an increase in taxable income.
2023 and 2022 Financial Position Comparison
Variances described are as of December 31, 2023 compared to December 31, 2022.
Refer to “Investments” below for discussion of invested assets.
Separate Account Assets and Separate Account Liabilities
Separate account assets and the associated liabilities each aggregated $68.8 billion at December 31, 2023 compared to $59.7 billion at December 31, 2022. The increase in 2023 primarily resulted from $6.5 billion in net deposit activity from CRT and pension risk transfer annuities and market appreciation of $2.6 billion.
Life and Annuity Reserves
Life and annuity reserves increased $4.8 billion to $113.7 billion at December 31, 2023, compared to $108.9 billion at December 31, 2022. The increase is primarily driven by the annuity lines of business. Fixed indexed annuity sales and positive equity returns both increased reserves on fixed indexed annuities, which were partially offset by surrenders across all annuity products.
Liability for Deposit-Type Contracts
Liability for deposit-type contracts increased $1.7 billion to $14.0 billion at December 31, 2023 from $12.3 billion at December 31, 2022. The increase is primarily due to new funding agreement backed note issuances.
2023 and 2022 Results of Operations Comparison
Variances described in this section refer to results for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Net Income
Net income in 2023 decreased $647 million compared to 2022. The decrease was primarily driven by market value adjustments on fixed indexed annuities, new business growth in fixed indexed annuities and fixed
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annuities, lower net investment income on derivatives and lower separate account gains. This was partially offset by lower commissions and expense allowances on reinsurance assumed due to the large initial ceding commission for The Variable Annuity Life Insurance Company (“VALIC”) reinsurance agreement in 2022 and lower federal income tax expense.
Premiums and Annuity Considerations
Premiums and annuity considerations for 2023 decreased $16.8 billion compared to prior year. The decrease was primarily due to the one-time initial premium of $22.4 billion in assumed premiums related to the VALIC reinsurance transaction in 2022, partially offset from higher sales of fixed and pension risk transfer annuities.
Reserve Adjustments on Reinsurance Ceded
Reserve adjustments on reinsurance ceded primarily represents the change in ceded reserves under modified coinsurance agreements, in which AGL as the ceding entity retains the entire reserve on the reinsured policies. The net reserve adjustment on reinsurance ceded increased $2.2 billion for 2023 compared to the prior year, primarily due to the recapture of certain term and universal insurance from AGC Life which were then ceded to Hannover Re under the existing coinsurance agreement.
Surrender Benefits
Surrender benefits increased $6.6 billion in 2023 compared to 2022. The increase was primarily due to higher surrenders on fixed deferred and fixed indexed annuities driven by higher interest rates as well as higher surrenders from having a full year of activity for the VALIC modco reinsurance agreement.
Commissions
Commissions decreased $1.2 billion in 2023 compared to 2022 due to the change in commissions and expense allowances on reinsurance assumed that included the large initial ceding commission for the VALIC modco reinsurance agreement in 2022.
Net Transfers to (from) Separate Accounts
Net transfers to separate accounts were $2.1 billion for 2023 compared to $1.1 billion in 2022. The increase was primarily due to higher variable premium transferred from the General Account to the Separate Account.
Federal Income Tax Expense
Federal income tax (benefit) expense for 2023 was $(52) million compared to $518 million in 2022. The change was primarily driven by a decrease in pre-tax income from operations.
Investments
Investment Strategy
AGL’s investment strategy is to provide net investment income to support liabilities that result in stable distributable earnings and enhance portfolio value, subject to asset-liability management, capital, liquidity, regulatory, legal and rating agency constraints, overall market and economic conditions and risk appetite. Insurance liabilities are supported by mainly investment grade fixed maturity securities that meet AGL’s duration, risk-return, tax, liquidity, credit quality and diversification objectives. AGL assesses fixed maturity asset classes, including credit (public and private), commercial real estate and residential real estate, based on their fundamental underlying risk factors.
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AGL maintains a diversified, high 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 currency and duration characteristics of the liabilities. As part of AGL’s Risk Management framework, AGL seeks to diversify the portfolio across asset classes, sectors and issuers to mitigate idiosyncratic portfolio risks. 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. AGL also utilizes derivatives to manage AGL’s asset and liability duration as well as currency exposures.
The composition of AGL’s cash and investments was as follows at the dates indicated:
| | | | | | | | | | | | |
| | | At June 30, | | | At December 31, | |
| (in millions) | | 2024 | | | 2023 | | | 2022 | |
Cash and investments: | | | | | | | | | | | | |
Bonds – unaffiliated | | $ | 114,722 | | | $ | 111,766 | | | $ | 108,095 | |
Bonds – affiliated | | | 440 | | | | 366 | | | | 360 | |
Preferred stocks | | | 148 | | | | 80 | | | | 93 | |
Common stocks | | | 225 | | | | 266 | | | | 927 | |
Cash, cash equivalents and short-term investments | | | 959 | | | | 900 | | | | 951 | |
Mortgage loans | | | 31,454 | | | | 29,652 | | | | 25,131 | |
Real estate | | | 75 | | | | 75 | | | | 9 | |
Contract loans | | | 1,165 | | | | 1,157 | | | | 1,138 | |
Derivatives | | | 2,075 | | | | 1,884 | | | | 466 | |
Derivative cash collateral and deferred asset for SSAP 108 | | | 1,440 | | | | 1,985 | | | | 1,660 | |
Other invested assets | | | 6,671 | | | | 6,556 | | | | 7,940 | |
| | | | | | | | | | | | |
Total cash and investments | | $ | 159,374 | | | $ | 154,687 | | | $ | 146,770 | |
| | | | | | | | | | | | |
Net Investment Income
Net investment income by asset category was as follows for the periods indicated:
| | | | | | | | | | | | | | | | |
| | | For the
Six Months Ended
June 30, | | | For the
Years Ended
December 31, | |
| (in millions) | | 2024 | | | 2023 | | | 2023 | | | 2022 | |
Bonds | | $ | 2,965 | | | $ | 2,688 | | | $ | 5,259 | | | $ | 4,608 | |
Preferred stocks | | | 5 | | | | 1 | | | | 2 | | | | 10 | |
Common stocks | | | 6 | | | | 6 | | | | 11 | | | | 2 | |
Cash, cash equivalents and short-term investments | | | 47 | | | | 25 | | | | 57 | | | | 44 | |
Mortgage loans | | | 848 | | | | 674 | | | | 1,437 | | | | 1,038 | |
Real estate | | | 10 | | | | 2 | | | | 4 | | | | 4 | |
Contract loans | | | 36 | | | | 41 | | | | 78 | | | | 68 | |
Derivatives | | | (127 | ) | | | (366 | ) | | | (283 | ) | | | 994 | |
Investment income from affiliates | | | 58 | | | | 82 | | | | 148 | | | | 399 | |
Other invested assets | | | 88 | | | | 135 | | | | 246 | | | | 320 | |
| | | | | | | | | | | | | | | | |
Gross investment income | | | 3,936 | | | | 3,288 | | | | 6,959 | | | | 7,487 | |
Investment expenses | | | (299 | ) | | | (202 | ) | | | (385 | ) | | | (315 | ) |
| | | | | | | | | | | | | | | | |
Net investment income | | $ | 3,637 | | | $ | 3,086 | | | $ | 6,574 | | | $ | 7,172 | |
| | | | | | | | | | | | | | | | |
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Bonds
AGL’s bond portfolio is primarily comprised of fixed maturity securities issued by corporations, municipalities and other governmental agencies; and structured securities collateralized by, among other assets, residential and commercial real estate.
The fair value of bonds subject to repurchase agreements was $979 million at June 30, 2024, $1.7 billion at December 31, 2023 and $1.7 billion at December 31, 2022.
The composition of AGL’s bond portfolio by major security type was as follows at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | At June 30, 2024 | | | At December 31, 2023 | | | At December 31, 2022 | |
| (in millions) | | Statement
Value | | | Fair
Value | | | Statement
Value | | | Fair
Value | | | Statement
Value | | | Fair
Value | |
U.S. government obligations | | $ | 1,518 | | | $ | 1,251 | | | $ | 1,321 | | | $ | 1,112 | | | $ | 1,314 | | | $ | 1,120 | |
All other government | | | 1,737 | | | | 1,497 | | | | 2,041 | | | | 1,813 | | | | 2,629 | | | | 2,264 | |
State, territories and possessions | | | 191 | | | | 166 | | | | 239 | | | | 218 | | | | 268 | | | | 240 | |
Political subdivisions of states, territories and possessions | | | 173 | | | | 159 | | | | 210 | | | | 202 | | | | 332 | | | | 319 | |
Special revenue | | | 5,099 | | | | 4,484 | | | | 5,392 | | | | 4,899 | | | | 6,159 | | | | 5,484 | |
Industrial and miscellaneous | | | 101,081 | | | | 92,324 | | | | 98,249 | | | | 89,866 | | | | 93,378 | | | | 81,162 | |
Hybrid securities | | | 341 | | | | 342 | | | | 377 | | | | 372 | | | | 435 | | | | 417 | |
Bank loans | | | 4,672 | | | | 4,639 | | | | 3,937 | | | | 3,857 | | | | 3,580 | | | | 3,468 | |
Parent, subsidiaries and affiliates | | | 350 | | | | 350 | | | | 366 | | | | 366 | | | | 360 | | | | 360 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total bonds | | $ | 115,162 | | | $ | 105,212 | | | $ | 112,132 | | | $ | 102,705 | | | $ | 108,455 | | | $ | 94,834 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage Loans
AGL’s investment in mortgage loans increased $1.8 billion at June 30, 2024 compared to December 31, 2023 due to an increase in both residential and commercial mortgage loans.
Mortgage loans increased $4.5 billion at December 31, 2023 compared to December 31, 2022 due to an increase in both residential and commercial mortgage loans.
Derivatives
AGL uses derivatives in conjunction with financial risk management programs and as a part of investment operations. AGL has an economic hedging program designed to manage market risk related to guaranteed living benefit features of variable annuities, including exposures to changes in interest rates, equity prices, credit spreads and volatilities. The hedging program utilizes derivative instruments, including but not limited to equity options, futures contracts and interest rate swap contracts, as well as corporate bonds.
Interest rate derivatives, including interest rate swaps, futures and options, are used to manage interest rate risk associated with guaranteed benefit features of insurance contract liabilities, as well as with bonds and other interest rate-sensitive assets and liabilities. Foreign exchange derivatives, principally cross-currency interest rate swaps, are used to economically mitigate risk associated with foreign currency-denominated transactions, which are primarily investments denominated in foreign currencies. Credit index options and equity options are used as macro hedges for certain portions of the investment asset portfolio. Other equity derivatives are also used to economically hedge equity risk related to certain guarantees of specific variable annuities, equity-indexed universal life, index annuity products and guaranteed interest contracts.
With respect to over-the-counter derivatives, AGL deals with highly rated counterparties and does not expect the counterparties to fail to meet their obligations under the contracts. AGL has controls in place to monitor credit
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exposures by limiting transactions with specific counterparties within specified dollar limits and assessing the creditworthiness of counterparties periodically. AGL generally uses International Swaps and Derivative Association Master Agreements and Credit Support Annexes with bilateral collateral provisions to reduce counterparty credit exposures.
Starting in 2022 AGL designated, under Statement of Statutory Accounting Principles (“SSAP”) 86, Derivatives, certain foreign exchange derivatives as effective hedges of certain invested assets. During 2023, AGL also designated certain interest rate swaps as effective cash flow hedges of floating-rate investment assets.
Derivative assets at June 30, 2024 increased $191 million compared to December 31, 2023 and derivative liabilities at June 30, 2024 decreased $851 million compared to December 31, 2023, primarily due to favorable market conditions.
Derivative assets at December 31, 2023 increased $1.4 billion compared to December 31, 2022, while the derivative liabilities at December 31, 2023 increased $146 million compared to December 31, 2022. The increase in the assets was primarily due to new options and market appreciation on options hedging foreign currency risk and interest rate swaps.
Other Invested Assets
Other invested assets include a diversified portfolio of private equity funds, hedge funds, joint ventures, partnerships and limited liability companies in which an insurer has a minor ownership interest (i.e., less than 10 percent), or lacks control.
The composition of AGL’s other invested assets was as follows at the dates indicated:
| | | | | | | | | | | | |
| | | At June 30, | | | At December 31, | |
| (in millions) | | 2024 | | | 2023 | | | 2022 | |
Investments in limited liability companies | | $ | 388 | | | $ | 644 | | | $ | 972 | |
Investments in limited partnerships | | | 3,955 | | | | 3,921 | | | | 4,188 | |
Investments in affiliates | | | 260 | | | | — | | | | — | |
Other investments | | | 1,864 | | | | 1,892 | | | | 2,717 | |
Receivable for securities | | | 205 | | | | 100 | | | | 73 | |
Non-admitted assets | | | (1 | ) | | | (1 | ) | | | (10 | ) |
| | | | | | | | | | | | |
Total other invested assets | | $ | 6,671 | | | $ | 6,556 | | | $ | 7,940 | |
| | | | | | | | | | | | |
The increase in other invested assets at June 30, 2024 compared to December 31, 2023 was primarily due to an increase in receivables for securities.
The decrease in other invested assets at December 31, 2023 compared to December 31, 2022 was primarily due to disposals/paydowns of collateral mortgage loans and sales of hedge funds.
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Net Realized Capital Gains (Losses)
AGL’s net realized capital gains (losses) by asset category were as follows for the periods indicated:
| | | | | | | | | | | | | | | | |
| | | For the Six Months Ended
June 30, | | | For the Years Ended
December 31, | |
| (in millions) | | 2024 | | | 2023 | | | 2023 | | | 2022 | |
Bonds | | $ | (872 | ) | | $ | (383 | ) | | $ | (460 | ) | | $ | (551 | ) |
Preferred stocks | | | — | | | | (6 | ) | | | (12 | ) | | | — | |
Common stocks | | | — | | | | — | | | | 8 | | | | (2 | ) |
Cash, cash equivalents and short-term investments | | | (1 | ) | | | 31 | | | | 36 | | | | (79 | ) |
Mortgage loans | | | (12 | ) | | | (21 | ) | | | (162 | ) | | | (107 | ) |
Real estate | | | — | | | | (3 | ) | | | (3 | ) | | | — | |
Derivatives | | | (461 | ) | | | (258 | ) | | | (329 | ) | | | (1,233 | ) |
Other invested assets | | | (1 | ) | | | 32 | | | | 113 | | | | 80 | |
Other | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Realized capital gains (losses) | | | (1,347 | ) | | | (608 | ) | | | (809 | ) | | | (1,892 | ) |
Federal income tax benefit (expense) | | | 283 | | | | 128 | | | | 170 | | | | 397 | |
Net losses (gains) transferred to IMR | | | 625 | | | | 267 | | | | 276 | | | | 305 | |
| | | | | | | | | | | | | | | | |
Net realized capital gains (losses) | | $ | (439 | ) | | $ | (213 | ) | | $ | (363 | ) | | $ | (1,190 | ) |
| | | | | | | | | | | | | | | | |
Pursuant to SAP, net realized capital gains and losses are reported excluding gains or losses on sales of fixed income investments that are attributable to changes in the general level of interest rates, which are transferred to IMR and amortized into income over the remaining period to maturity.
Impairments
Realized capital losses reported in the table above include impairments. Impairments by asset category were as follows for the periods indicated:
| | | | | | | | | | | | | | | | |
| | | For the Six Months Ended
June 30, | | | For the Years Ended
December 31, | |
| (in millions) | | 2024 | | | 2023 | | | 2023 | | | 2022 | |
Bonds | | $ | (113 | ) | | $ | (70 | ) | | $ | (95 | ) | | $ | (167 | ) |
Preferred stocks | | | — | | | | (6 | ) | | | — | | | | — | |
Common stocks | | | — | | | | — | | | | — | | | | — | |
Mortgage loans | | | (6 | ) | | | (4 | ) | | | (5 | ) | | | (13 | ) |
Real estate | | | (1 | ) | | | (3 | ) | | | — | | | | — | |
Other invested assets | | | (5 | ) | | | (3 | ) | | | (4 | ) | | | (14 | ) |
| | | | | | | | | | | | | | | | |
Total impairments | | $ | (125 | ) | | $ | (86 | ) | | $ | (104 | ) | | $ | (194 | ) |
| | | | | | | | | | | | | | | | |
AGL regularly evaluates its investments for other-than-temporary impairments in value. The determination that a security has incurred an other-than-temporary impairment in value and the amount of any loss recognition requires the judgment of AGL’s management and a continual review of its investments. To determine other-than-temporary impairments, AGL uses fundamental credit analyses of individual securities without regard to rating agency ratings. Based on this analysis, AGL expects to receive cash flows sufficient to cover the amortized cost of all below investment grade securities for which credit impairments were not recognized.
Unrealized Capital Gains (Losses)
Under SAP, the following are recorded in unrealized capital gains (losses):
| | • | | Bonds designated National Association of Insurance Commissioners (“NAIC”) category “6” and redeemable preferred stocks designated NAIC categories “4 – 6” are reported at the lower of amortized |
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| | cost or fair value with a credit or charge to unassigned surplus. Perpetual preferred stocks are reported at fair value not to exceed effective call rate. |
| | • | | Derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge are accounted for at fair value with the changes in fair value recorded as unrealized gains (losses). |
| | • | | Undistributed income and capital gains (losses) for common stock, limited partnerships and limited liability companies are reported in unassigned surplus as a component of unrealized capital gains (losses). |
The net change in unrealized capital gains (losses) of investments, including those related to foreign currency, was as follows for the periods indicated:
| | | | | | | | | | | | | | | | |
| | | For the Six Months Ended
June 30, | | | For the Years Ended
December 31, | |
| (in millions) | | 2024 | | | 2023 | | | 2023 | | | 2022 | |
Bonds | | $ | (133 | ) | | $ | 236 | | | $ | 280 | | | $ | (369 | ) |
Preferred and common stocks | | | (6 | ) | | | 12 | | | | 53 | | | | (59 | ) |
Mortgage loans | | | (135 | ) | | | 169 | | | | 273 | | | | (523 | ) |
Real estate | | | — | | | | — | | | | — | | | | — | |
Derivatives | | | 578 | | | | 328 | | | | 148 | | | | (497 | ) |
Other invested assets | | | 28 | | | | (12 | ) | | | (68 | ) | | | (280 | ) |
Other | | | 9 | | | | (5 | ) | | | (10 | ) | | | 19 | |
Federal income tax benefit (expense) | | | (72 | ) | | | (151 | ) | | | (126 | ) | | | 310 | |
| | | | | | | | | | | | | | | | |
Net change in unrealized gains (losses) of investments | | $ | 269 | | | $ | 577 | | | $ | 550 | | | $ | (1,399 | ) |
| | | | | | | | | | | | | | | | |
Statutory Capitalization
The following table sets forth AGL’s statutory capitalization, including the asset valuation reserve (“AVR”), as of June 30, 2024 and December 31, 2023. The AVR is a component of statutory total adjusted capital, defined by the NAIC for risk-based capital analysis as the sum of statutory-basis capital and surplus plus AVR and one-half of policyholder dividends apportioned for payment.
| | | | | | | | | | | | |
| (in millions) | | As of
June 30, 2024 | | | As of
December 31, 2023 | | | As of
December 31, 2022 | |
Capital and surplus: | | | | | | | | | | | | |
Common stock | | $ | 6 | | | $ | 6 | | | $ | 6 | |
Preferred stock | | | 1 | | | | 1 | | | | 1 | |
Gross paid-in and contributed surplus | | | 5,412 | | | | 5,410 | | | | 5,410 | |
Special surplus funds | | | 1,520 | | | | 1,279 | | | | 916 | |
Unassigned surplus | | | 1,872 | | | | 2,233 | | | | 3,417 | |
| | | | | | | | | | | | |
Total capital and surplus | | | 8,811 | | | | 8,929 | | | | 9,750 | |
AVR | | | 2,375 | | | | 2,343 | | | | 1,681 | |
| | | | | | | | | | | | |
Total capital and surplus and AVR | | $ | 11,186 | | | $ | 11,272 | | | $ | 11,431 | |
| | | | | | | | | | | | |
F-86
Change in Statutory Capital and Surplus
At June 30, 2024 compared to December 31, 2023
The $118 million decrease in statutory capital and surplus from December 31, 2023 to June 30, 2024 was primarily due to the following items:
| | • | | $836 million in net loss; |
| | • | | $200 million dividends to stockholders |
| | • | | $187 million change in net unrealized foreign exchange capital losses; |
| | • | | $78 million change in surplus as a result of reinsurance; |
| | • | | $37 million change in non-admitted assets; and |
| | • | | $32 million change in asset valuation reserve. |
Which, were partially offset by the following items:
| | • | | $478 million due to reinsurance permitted practice; |
| | • | | $456 million change in net unrealized capital gains; and |
| | • | | $293 million change in deferred income tax. |
At December 31, 2023 compared to December 31, 2022
The $821 million decrease in statutory capital and surplus from December 31, 2022 to December 31, 2023 was primarily due to the following items:
| | • | | $2.0 billion in dividends to parent; and |
| | • | | $662 million change in asset valuation reserve. |
Which, were partially offset by the following items:
| | • | | $725 million change in reinsurance permitted practice; |
| | • | | $492 million change in net unrealized foreign exchange loss; |
| | • | | $249 million change in surplus as a result of reinsurance; |
| | • | | $167 million change in deferred taxes; and |
| | • | | $144 million of net income. |
AGL’s Action Level Risk-Based Capital Ratio (“RBC Ratio”) was 389% at December 31, 2023 and 407% at December 31, 2022.
Liquidity and Capital Resources
AGL believes it has sufficient liquidity and capital resources to satisfy reasonably foreseeable future liquidity requirements and meet its obligations, including those arising from reasonably foreseeable contingencies or events, through cash from operations and, to the extent necessary, monetization of invested assets. AGL’s liquidity resources are primarily held in the form of cash, short-term investments and publicly traded, investment grade-rated fixed maturity securities.
AGL’s liquidity is monitored through various internal liquidity risk measures. The primary sources of liquidity are premiums, deposits, fees, reinsurance recoverables, 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.
F-87
AGL is a member of the Federal Home Loan Bank of Dallas (the “FHLB”). Borrowings from the FHLB are used to supplement liquidity or for other uses deemed appropriate by AGL’s management. AGL had no outstanding borrowings from the FHLB at June 30, 2024, December 31, 2023 or December 31, 2022.
AGL has programs that lend securities from its investment portfolio to supplement liquidity or for other uses deemed appropriate by management. Under these programs, AGL lends securities to financial institutions and receives cash as collateral equal to 102 percent of the fair value of the loaned securities. Cash collateral received is kept in cash or invested in short-term investments or used for short-term liquidity purposes. The aggregate number of securities that AGL can lend under its program at any time is limited to five percent of its general account statutory basis admitted assets.
AGL and certain of its affiliates are party to a revolving loan facility with Corebridge Financial Inc., pursuant to which AGL and each such affiliate can, on a several basis, borrow monies from Corebridge (as lender) subject to the terms and conditions stated therein. Principal amounts borrowed under this facility may be repaid and re-borrowed, in whole or in part, from time to time, without penalty. However, the total aggregate amount of loans borrowed by all borrowers under the facility cannot exceed $500 million. The loan facility also sets forth individual borrowing limits for each borrower, with AGL’s maximum borrowing limit being $500 million. AGL had no outstanding balance owing under this revolving loan facility at June 30, 2024, December 31, 2023 or December 31, 2022.
AGL paid dividends of $200 million to its immediate parent AGC Life in the six months ended June 30, 2024. AGL paid cash dividends to AGC Life totaling $2.0 billion and $800 million for the years ended December 31, 2023 and 2022, respectively.
Critical Accounting Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ significantly from those estimates. Significant estimates included in the financial statements are assumptions and judgments utilized in determining if declines in fair values are other-than-temporary, valuation methods for infrequently traded securities and private placements, valuation of policy liabilities and estimates to establish the life and annuity reserves. For a complete discussion of statutory accounting policies, see Note 2 “Summary of Significant Accounting Policies” in the audited statutory-basis financial statements included elsewhere in this filing.
F-88
FINANCIAL STATEMENTS
Second Quarter 2024 Statutory-Basis Financial Statements
F-89
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS
| | | | | | | | |
(in millions) | | June 30,
2024 | | | December 31,
2023 | |
Admitted assets | | | | | | | | |
Cash and investments | | | | | | | | |
Bonds | | $ | 115,162 | | | $ | 112,132 | |
Preferred stock | | | 148 | | | | 80 | |
Common stock | | | 225 | | | | 266 | |
Cash, cash equivalents and short-term investments | | | 959 | | | | 900 | |
Mortgage loans | | | 31,454 | | | | 29,652 | |
Real estate | | | 75 | | | | 75 | |
Contract loans | | | 1,165 | | | | 1,157 | |
Derivatives | | | 2,075 | | | | 1,884 | |
Derivative cash collateral and deferred asset for SSAP 108 | | | 1,440 | | | | 1,985 | |
Other invested assets | | | 6,671 | | | | 6,556 | |
| | | | | | | | |
Total cash and investments | | | 159,374 | | | | 154,687 | |
Amounts recoverable from reinsurers | | | 246 | | | | 251 | |
Amounts receivable under reinsurance contracts | | | 272 | | | | 520 | |
Current federal income tax recoverable | | | 586 | | | | 337 | |
Deferred tax asset | | | 1,104 | | | | 1,164 | |
Due and accrued investment income | | | 1,391 | | | | 1,413 | |
Premiums due, deferred and uncollected | | | 168 | | | | 62 | |
Receivables from affiliates | | | 196 | | | | 222 | |
Other assets | | | 2,984 | | | | 2,323 | |
Separate account assets | | | 72,417 | | | | 68,792 | |
| | | | | | | | |
Total admitted assets | | $ | 238,738 | | | $ | 229,771 | |
| | | | | | | | |
F-90
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS (CONTINUED)
| | | | | | | | |
(in millions) | | June 30,
2024 | | | December 31,
2023 | |
Liabilities | | | | | | | | |
Policy reserves and contractual liabilities | | | | | | | | |
Life and annuity reserves | | $ | 119,209 | | | $ | 113,699 | |
Liabilities for deposit-type contracts | | | 15,926 | | | | 14,014 | |
Accident and health reserves | | | 681 | | | | 697 | |
Premiums received in advance | | | 12 | | | | 10 | |
Policy and contract claims | | | 610 | | | | 657 | |
Policyholder dividends | | | 17 | | | | 17 | |
| | | | | | | | |
Total policy reserves and contractual liabilities | | | 136,455 | | | | 129,094 | |
Payable to affiliates | | | 159 | | | | 224 | |
Interest maintenance reserve | | | 729 | | | | 1,389 | |
Derivatives | | | 102 | | | | 953 | |
Repurchase agreements | | | 979 | | | | 1,623 | |
Collateral for derivatives program | | | 1,827 | | | | 1,729 | |
Funds held under coinsurance | | | 12,911 | | | | 12,849 | |
Accrued expenses and other liabilities | | | 3,738 | | | | 3,598 | |
Net transfers from separate accounts due or accrued | | | (1,758 | ) | | | (1,745 | ) |
Asset valuation reserve | | | 2,375 | | | | 2,343 | |
Separate account liabilities | | | 72,410 | | | | 68,785 | |
| | | | | | | | |
Total liabilities | | | 229,927 | | | | 220,842 | |
| | | | | | | | |
Capital and surplus | | | | | | | | |
Common stock | | | 6 | | | | 6 | |
Preferred stock | | | 1 | | | | 1 | |
Gross paid-in and contributed surplus | | | 5,412 | | | | 5,410 | |
Special surplus funds | | | 1,520 | | | | 1,279 | |
Unassigned surplus | | | 1,872 | | | | 2,233 | |
| | | | | | | | |
Total capital and surplus | | | 8,811 | | | | 8,929 | |
| | | | | | | | |
Total liabilities and capital and surplus | | $ | 238,738 | | | $ | 229,771 | |
| | | | | | | | |
F-91
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF OPERATIONS
| | | | | | | | |
| | | Six Months
Ended June 30, | |
(in millions) | | 2024 | | | 2023 | |
Revenues | | | | | | | | |
Premiums and annuity considerations | | $ | 12,877 | | | $ | 11,996 | |
Net investment income | | | 3,637 | | | | 3,086 | |
Amortization of interest maintenance reserve | | | 32 | | | | 57 | |
Reserve adjustments on reinsurance ceded | | | (1,282 | ) | | | (1,927 | ) |
Commissions and expense allowances | | | 421 | | | | 341 | |
Separate account fees | | | 550 | | | | 512 | |
Other income | | | 517 | | | | 450 | |
| | | | | | | | |
Total revenues | | | 16,752 | | | | 14,515 | |
| | | | | | | | |
Benefits and expenses | | | | | | | | |
Death benefits | | | 334 | | | | 435 | |
Annuity benefits | | | 1,994 | | | | 1,707 | |
Surrender benefits | | | 8,753 | | | | 7,763 | |
Other benefits | | | 699 | | | | 471 | |
Change in reserves | | | 5,456 | | | | 2,753 | |
Commissions | | | 793 | | | | 757 | |
General insurance expenses | | | 506 | | | | 465 | |
Net transfers to separate accounts | | | (422 | ) | | | 1,724 | |
Modco reinsurance assumed | | | (1,636 | ) | | | (1,599 | ) |
Other expenses | | | 370 | | | | 382 | |
| | | | | | | | |
Total benefits and expenses | | | 16,847 | | | | 14,858 | |
| | | | | | | | |
Net gain (loss) before dividends to policyholders and federal income taxes | | | (95 | ) | | | (343 | ) |
Dividends to policyholders | | | 1 | | | | — | |
| | | | | | | | |
Net gain (loss) after dividends to policyholders and before federal income taxes | | | (96 | ) | | | (343 | ) |
Federal income tax expense (benefit) | | | 301 | | | | 17 | |
| | | | | | | | |
Net gain (loss) from operations | | | (397 | ) | | | (360 | ) |
Net realized capital losses, net of tax after transfers to interest maintenance reserves | | | (439 | ) | | | (213 | ) |
| | | | | | | | |
Net income (loss) | | $ | (836 | ) | | $ | (573 | ) |
| | | | | | | | |
F-92
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
| | | | | | | | |
| | | Six Months Ended
June 30, | |
(in millions) | | 2024 | | | 2023 | |
Cash from operations | | | | | | | | |
Premium and annuity considerations, collected, net of reinsurance | | $ | 10,905 | | | $ | 10,364 | |
Net investment income collected | | | 3,644 | | | | 2,642 | |
Other income | | | 162 | | | | (737 | ) |
| | | | | | | | |
Total revenue received | | | 14,711 | | | | 12,269 | |
| | | | | | | | |
Benefits paid | | | 11,675 | | | | 10,256 | |
Net transfers to (from) separate accounts | | | (3,338 | ) | | | (394 | ) |
Commissions and expenses paid | | | 1,462 | | | | 1,293 | |
Dividends paid to policyholders | | | 1 | | | | — | |
Federal income taxes paid | | | 301 | | | | 161 | |
| | | | | | | | |
Total benefits and expenses paid | | | 10,101 | | | | 11,316 | |
| | | | | | | | |
Net cash provided by operations | | | 4,610 | | | | 953 | |
| | | | | | | | |
Cash from investments | | | | | | | | |
Proceeds from investments sold, matured or repaid: | | | | | | | | |
Bonds | | | 7,826 | | | | 6,695 | |
Stocks | | | 46 | | | | 110 | |
Mortgage loans | | | 1,390 | | | | 1,357 | |
Other invested assets | | | 543 | | | | 665 | |
Other, net | | | 970 | | | | 607 | |
| | | | | | | | |
Total proceeds from investments sold, matured or repaid | | | 10,775 | | | | 9,434 | |
| | | | | | | | |
Cost of investments acquired: | | | | | | | | |
Bonds | | | 12,925 | | | | 7,330 | |
Stocks | | | 79 | | | | 29 | |
Mortgage loans | | | 3,321 | | | | 3,569 | |
Real estate | | | 1 | | | | — | |
Derivatives, net | | | 1,269 | | | | 1,298 | |
Other invested assets | | | 526 | | | | 416 | |
Other, net | | | 106 | | | | 183 | |
| | | | | | | | |
Total cost of investments acquired | | | 18,227 | | | | 12,825 | |
| | | | | | | | |
Net adjustment in contract loans | | | 9 | | | | 19 | |
| | | | | | | | |
Net cash provided by (used in) investing activities | | | (7,461 | ) | | | (3,410 | ) |
| | | | | | | | |
Cash from financing and miscellaneous sources | | | | | | | | |
Cash provided (applied): | | | | | | | | |
Capital and paid-in surplus | | | 2 | | | | — | |
Net deposits on (withdrawals from) deposit-type contracts | | | 1,912 | | | | 1,408 | |
Dividends to parent | | | (200 | ) | | | (1,000 | ) |
Other, net | | | 1,196 | | | | 1,798 | |
| | | | | | | | |
Net cash provided by (used in) provided by financing and miscellaneous activities | | | 2,910 | | | | 2,206 | |
| | | | | | | | |
Net increase (decrease) in cash, cash equivalents and short-term investments | | | 59 | | | | (251 | ) |
Cash, cash equivalents and short-term investments at beginning of year | | | 900 | | | | 951 | |
| | | | | | | | |
Cash, cash equivalents and short-term investments at end of period | | $ | 959 | | | $ | 700 | |
| | | | | | | | |
Non-cash activities, excluded from above: | | | | | | | | |
Non-cash transfer from general to separate account | | $ | 1,833 | | | $ | 3,506 | |
Non-cash pension risk transfer premiums | | | 1,334 | | | | — | |
Non-cash transfer from separate to general account | | | 237 | | | | 518 | |
Non-cash Modco to FRL purchases | | | 232 | | | | 274 | |
Non-cash Modco to FRL settlements | | | 148 | | | | 271 | |
Non-cash Hannover reinsurance transaction | | | — | | | | 1,738 | |
Non-cash transfer from other invested assets to bonds | | | — | | | | 236 | |
F-93
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
NOTE 1: OVERVIEW AND BASIS OF PRESENTATION
American General Life Insurance Company (“AGL” or the “Company”), including its wholly owned subsidiaries, is a wholly owned subsidiary of AGC Life Insurance Company (“AGC Life” or the “Parent”), a Missouri-domiciled life insurance company, which is wholly owned by Corebridge Life Holdings, Inc. (“Corebridge Life Holdings”). Corebridge Life Holdings is wholly owned by Corebridge Financial, Inc. (“Corebridge”). American International Group, Inc. (“AIG”) owns 49.0% of Corebridge’s outstanding common stock as of June 30, 2024.
The Company is a stock life insurance company domiciled and licensed under the laws of the State of Texas and is subject to regulation by the Texas Department of Insurance (“TDI”). The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the TDI. These accounting practices vary in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The TDI recognizes only statutory accounting practices (“SAP”) prescribed or permitted by the State of Texas for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under the Texas Insurance Law. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of Texas. The Insurance Commissioner of the State of Texas has the right to permit other specific practices that deviate from prescribed practices.
The accompanying unaudited interim statutory-basis financial statements reflect all normal recurring adjustments necessary in the opinion of management for a fair statement of its admitted assets, results of operations and cash flows for the periods presented. The statement of admitted assets, liabilities and capital and surplus at December 31, 2023 was derived from audited annual statutory-basis financial statements, but does not contain all of the footnote disclosures from the annual financial statements. The financial information does not represent complete financial statements and should be read in conjunction with the statutory-basis financial statements for the year ended December 31, 2023.
F-94
American General Life Insurance Company
(An indirect wholly owned subsidiary of Corebridge Financial, Inc.)
Statutory Financial Statements and
Supplemental Information and
Report of Independent Auditors
At December 31, 2023 and 2022 and
for each of the three years ended December 31, 2023
AMERICAN GENERAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
Report of Independent Auditors
To the Board of Directors and Shareholder of American General Life Insurance Company
Opinions
We have audited the accompanying statutory financial statements of American General Life Insurance Company (the “Company”), which comprise the statutory statements of admitted assets, liabilities and capital and surplus as of December 31, 2023 and 2022, and the related statutory statements of operations, of changes in capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “financial statements”).
Unmodified Opinion on Statutory Basis of Accounting
In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted assets, liabilities and capital and surplus of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in accordance with the accounting practices prescribed or permitted by the Texas Department of Insurance described in Note 2.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the accompanying financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2023 and 2022, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2023.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Texas Department of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America.
The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Texas Department of Insurance. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are available to be issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with US GAAS, we:
| | ○ | | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| | ○ | | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| | ○ | | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. |
| | ○ | | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| | ○ | | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Supplemental Information
Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedule of selected financial data, investment risks interrogatories, summary investment schedule, and schedule of reinsurance disclosures (collectively referred to as the “supplemental schedules”) of the Company as of December 31, 2023 and for the year then ended are presented to comply with the National Association of Insurance Commissioners’ Annual Statement Instructions and Accounting Practices and Procedures Manual and for purposes of additional analysis and are not a required part of the financial statements. The supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules are fairly stated, in all material respects, in relation to the financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
New York, New York
April 18, 2024
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS
| | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | |
Admitted assets | | | | | | | | |
Cash and investments | | $ | 112,132 | | | $ | 108,455 | |
Bonds |
Preferred stock | | | 80 | | | | 93 | |
Common stock | | | 266 | | | | 927 | |
Cash, cash equivalents and short-term investments | | | 900 | | | | 951 | |
Mortgage loans | | | 29,652 | | | | 25,131 | |
Real estate | | | 75 | | | | 9 | |
Contract loans | | | 1,157 | | | | 1,138 | |
Derivatives | | | 1,884 | | | | 466 | |
Derivative cash collateral and deferred asset for SSAP 108 | | | 1,985 | | | | 1,660 | |
Other invested assets | | | 6,556 | | | | 7,940 | |
Total cash and investments | | | 154,687 | | | | 146,770 | |
Amounts recoverable from reinsurers | | | 251 | | | | 270 | |
Amounts receivable under reinsurance contracts | | | 520 | | | | 492 | |
Current federal income tax recoverable | | | 337 | | | | 232 | |
Deferred tax asset | | | 1,164 | | | | 1,087 | |
Due and accrued investment income | | | 1,413 | | | | 1,136 | |
Premiums due, deferred and uncollected | | | 62 | | | | 153 | |
Receivables from affiliates | | | 222 | | | | 263 | |
Other assets | | | 2,323 | | | | 1,515 | |
Separate account assets | | | 68,792 | | | | 59,701 | |
Total admitted assets | | $ | 229,771 | | | $ | 211,619 | |
See accompanying Notes to Statutory Financial Statements.
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS (CONTINUED)
| | | | | | | | |
| | | December 31, | |
| (in millions, except for share data) | | 2023 | | | 2022 | |
Liabilities | | | | | | | | |
Policy reserves and contractual liabilities | | $ | 113,699 | | | $ | 108,850 | |
Life and annuity reserves |
Liabilities for deposit-type contracts | | | 14,014 | | | | 12,316 | |
Accident and health reserves | | | 697 | | | | 711 | |
Premiums received in advance | | | 10 | | | | 10 | |
Policy and contract claims | | | 657 | | | | 715 | |
Policyholder dividends | | | 17 | | | | 17 | |
Total policy reserves and contractual liabilities | | | 129,094 | | | | 122,619 | |
Payable to affiliates | | | 224 | | | | 483 | |
Interest maintenance reserve | | | 1,389 | | | | 1,804 | |
Derivatives | | | 953 | | | | 807 | |
Repurchase agreements | | | 1,623 | | | | 1,725 | |
Collateral for derivatives program | | | 1,729 | | | | 205 | |
Funds held under coinsurance | | | 12,849 | | | | 11,826 | |
Accrued expenses and other liabilities | | | 3,598 | | | | 2,424 | |
Net transfers from separate accounts due or accrued | | | (1,745) | | | | (1,323) | |
Asset valuation reserve | | | 2,343 | | | | 1,681 | |
Separate account liabilities | | | 68,785 | | | | 59,618 | |
Total liabilities | | | 220,842 | | | | 201,869 | |
Commitments and contingencies (see Note 21) | | | | | | | | |
| | |
Capital and surplus | | | 6 | | | | 6 | |
Common stock, $10 par value; 600,000 shares authorized, issued and outstanding |
Preferred stock, $100 par value; 8,500 shares authorized, issued and outstanding | | | 1 | | | | 1 | |
Gross paid-in and contributed surplus | | | 5,410 | | | | 5,410 | |
Special surplus funds | | | 1,279 | | | | 916 | |
Unassigned surplus | | | 2,233 | | | | 3,417 | |
Total capital and surplus | | | 8,929 | | | | 9,750 | |
Total liabilities and capital and surplus | | $ | 229,771 | | | $ | 211,619 | |
See accompanying Notes to Statutory Financial Statements.
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF OPERATIONS
| | | | | | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Revenues | | | | | | | | | | | | |
Premiums and annuity considerations | | $ | 23,157 | | | $ | 39,948 | | | $ | 15,409 | |
Net investment income | | | 6,574 | | | | 7,172 | | | | 7,503 | |
Amortization of interest maintenance reserve | | | 113 | | | | 123 | | | | 162 | |
Reserve adjustments on reinsurance ceded | | | (4,276) | | | | (2,112) | | | | (2,273) | |
Commissions and expense allowances | | | 679 | | | | 779 | | | | 703 | |
Separate account fees | | | 902 | | | | 1,648 | | | | 1,845 | |
Other income | | | 1,018 | | | | 741 | | | | 578 | |
Total revenues | | | 28,167 | | | | 48,299 | | | | 23,927 | |
Benefits and expenses | | | | | | | | | | | | |
Death benefits | | | 749 | | | | 811 | | | | 736 | |
Annuity benefits | | | 3,244 | | | | 2,652 | | | | 2,806 | |
Surrender benefits | | | 15,931 | | | | 9,350 | | | | 8,453 | |
Other benefits | | | 1,077 | | | | 692 | | | | 668 | |
Change in reserves | | | 4,817 | | | | 4,769 | | | | 2,729 | |
Commissions | | | 1,519 | | | | 2,672 | | | | 1,099 | |
General insurance expenses | | | 946 | | | | 928 | | | | 978 | |
Net transfers to (from) separate accounts | | | 2,078 | | | | 1,109 | | | | 1,682 | |
Modco reinsurance assumed | | | (3,394) | | | | 22,095 | | | | — | |
Other expenses | | | 742 | | | | 716 | | | | 704 | |
Total benefits and expenses | | | 27,709 | | | | 45,794 | | | | 19,855 | |
Net gain from operations before dividends to policyholders and federal income taxes | | | 457 | | | | 2,505 | | | | 4,072 | |
Dividends to policyholders | | | 2 | | | | 6 | | | | 1 | |
Net gain from operations after dividends to policyholders and before federal income taxes | | | 455 | | | | 2,499 | | | | 4,071 | |
Federal income tax (benefit) expense | | | (52) | | | | 518 | | | | 1,422 | |
Net gain from operations | | | 507 | | | | 1,981 | | | | 2,649 | |
Net realized capital (losses), net of tax after transfers to interest maintenance reserves | | | (363) | | | | (1,190) | | | | (405) | |
Net income | | $ | 144 | | | $ | 791 | | | $ | 2,244 | |
See accompanying Notes to Statutory Financial Statements.
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| (in millions) | | Common & Preferred Stock | | | Gross Paid-
In and
Contributed Surplus | | | Special Surplus Funds | | | Unassigned Surplus | | | Total Capital and Surplus | |
Balance, January 1, 2021 | | $ | 7 | | | $ | 3,510 | | | $ | (128 | ) | | $ | 4,122 | | | | 7,511 | |
Net income | | | — | | | | — | | | | — | | | | 2,244 | | | | 2,244 | |
Change in net unrealized capital gains (losses) | | | — | | | | — | | | | — | | | | 206 | | | | 206 | |
Change in net unrealized foreign exchange capital gains (losses) | | | — | | | | — | | | | — | | | | (267 | ) | | | (267 | ) |
Change in deferred tax | | | — | | | | — | | | | — | | | | 853 | | | | 853 | |
Change in non-admitted assets | | | — | | | | — | | | | — | | | | (587 | ) | | | (587 | ) |
Change in asset valuation reserve | | | — | | | | — | | | | — | | | | (205 | ) | | | (205 | ) |
Change in surplus from separate accounts | | | — | | | | — | | | | — | | | | 450 | | | | 450 | |
Other changes in surplus in separate accounts | | | — | | | | — | | | | — | | | | (450 | ) | | | (450 | ) |
Change in surplus as a result of reinsurance | | | — | | | | — | | | | — | | | | (2 | ) | | | (2 | ) |
Dividends | | | — | | | | — | | | | — | | | | (1,045 | ) | | | (1,045 | ) |
Prior period corrections | | | — | | | | — | | | | — | | | | (161 | ) | | | (161 | ) |
Reinsurance permitted practice | | | — | | | | — | | | | — | | | | (30 | ) | | | (30 | ) |
Other changes | | | — | | | | — | | | | 254 | | | | (239 | ) | | | 15 | |
Balance, December 31, 2021 | | $ | 7 | | | $ | 3,510 | | | $ | 126 | | | $ | 4,889 | | | | 8,532 | |
Net income | | | — | | | | — | | | | — | | | | 791 | | | | 791 | |
Change in net unrealized capital gains (losses) | | | — | | | | — | | | | — | | | | (694 | ) | | | (694 | ) |
Change in net unrealized foreign exchange capital gains (losses) | | | — | | | | — | | | | — | | | | (705 | ) | | | (705 | ) |
Change in deferred tax | | | — | | | | — | | | | — | | | | (40 | ) | | | (40 | ) |
Change in non-admitted assets | | | — | | | | — | | | | — | | | | (84 | ) | | | (84 | ) |
Change in liability for reinsurance in unauthorized and certified companies | | | — | | | | — | | | | — | | | | (22 | ) | | | (22 | ) |
Change in asset valuation reserve | | | — | | | | — | | | | — | | | | 621 | | | | 621 | |
Change in surplus from separate accounts | | | — | | | | — | | | | — | | | | 296 | | | | 296 | |
Other changes in surplus in separate accounts | | | — | | | | — | | | | — | | | | (296 | ) | | | (296 | ) |
Additional paid in surplus | | | — | | | | 1,900 | | | | — | | | | — | | | | 1,900 | |
Change in surplus as a result of reinsurance | | | — | | | | — | | | | — | | | | (256 | ) | | | (256 | ) |
Dividends | | | — | | | | — | | | | — | | | | (800 | ) | | | (800 | ) |
Prior period corrections | | | — | | | | — | | | | — | | | | 73 | | | | 73 | |
Reinsurance permitted practice | | | — | | | | — | | | | — | | | | 433 | | | | 433 | |
Other changes | | | — | | | | — | | | | 790 | | | | (789 | ) | | | 1 | |
Balance, December 31, 2022 | | $ | 7 | | | $ | 5,410 | | | $ | 916 | | | $ | 3,417 | | | | 9,750 | |
Net income | | | — | | | | — | | | | — | | | | 144 | | | | 144 | |
Change in net unrealized capital gains (losses) | | | — | | | | — | | | | — | | | | 58 | | | | 58 | |
Change in net unrealized foreign exchange capital gains (losses) | | | — | | | | — | | | | — | | | | 492 | | | | 492 | |
Change in deferred tax | | | — | | | | — | | | | — | | | | 167 | | | | 167 | |
Change in non-admitted assets | | | — | | | | — | | | | — | | | | (7 | ) | | | (7 | ) |
Change in liability for reinsurance in unauthorized and certified companies | | | — | | | | — | | | | — | | | | 21 | | | | 21 | |
Change in asset valuation reserve | | | — | | | | — | | | | — | | | | (662 | ) | | | (662 | ) |
Change in surplus from separate accounts | | | — | | | | — | | | | — | | | | (367 | ) | | | (367 | ) |
Other changes in surplus in separate accounts | | | — | | | | — | | | | — | | | | 367 | | | | 367 | |
Additional paid in surplus | | | — | | | | — | | | | — | | | | — | | | | — | |
Change in surplus as a result of reinsurance | | | — | | | | — | | | | — | | | | 249 | | | | 249 | |
Dividends | | | — | | | | — | | | | — | | | | (2,000 | ) | | | (2,000 | ) |
Prior period corrections | | | — | | | | — | | | | — | | | | (8 | ) | | | (8 | ) |
Reinsurance permitted practice | | | — | | | | — | | | | — | | | | 725 | | | | 725 | |
Other changes | | | — | | | | — | | | | 363 | | | | (363 | ) | | | — | |
Balance, December 31, 2023 | | $ | 7 | | | $ | 5,410 | | | $ | 1,279 | | | $ | 2,233 | | | $ | 8,929 | |
See accompanying Notes to Statutory Financial Statements.
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Cash from operations | | | | | | | | | | | | |
Premium and annuity considerations, collected, net of reinsurance | | $ | 23,059 | | | $ | 18,180 | | | $ | 13,618 | |
Net investment income collected | | | 5,711 | | | | 6,547 | | | | 6,966 | |
Other income | | | (1,038) | | | | 557 | | | | 851 | |
Total revenue received | | | 27,732 | | | | 25,284 | | | | 21,435 | |
Benefits paid | | | 21,098 | | | | 13,473 | | | | 12,474 | |
Net transfers to (from) separate accounts | | | (2,569) | | | | 536 | | | | 2,192 | |
Commissions and expenses paid | | | 2,447 | | | | 3,584 | | | | 2,129 | |
Dividends paid to policyholders | | | 3 | | | | 2 | | | | 4 | |
Federal income taxes paid | | | (26) | | | | 1,089 | | | | 1,227 | |
Total benefits and expenses paid | | | 20,953 | | | | 18,684 | | | | 18,026 | |
Net cash provided by operations | | | 6,779 | | | | 6,600 | | | | 3,409 | |
Cash from investments | | | | | | | | | | | | |
Proceeds from investments sold, matured or repaid: | | | | | | | | | | | | |
Bonds | | | 8,775 | | | | 15,962 | | | | 23,554 | |
Stocks | | | 144 | | | | 498 | | | | 233 | |
Mortgage loans | | | 3,446 | | | | 3,005 | | | | 3,082 | |
Other invested assets | | | 1,436 | | | | 1,136 | | | | 2,057 | |
Securities lending reinvested collateral assets | | | — | | | | 1,727 | | | | — | |
Other, net | | | — | | | | 124 | | | | 421 | |
Total proceeds from investments sold, matured or repaid | | | 13,801 | | | | 22,452 | | | | 29,347 | |
Cost of investments acquired: | | | | | | | | | | | | |
Bonds | | | 16,318 | | | | 17,824 | | | | 24,029 | |
Stocks | | | 43 | | | | 300 | | | | 643 | |
Mortgage loans | | | 7,349 | | | | 6,465 | | | | 4,066 | |
Real estate | | | — | | | | 1 | | | | 1 | |
Derivatives, net | | | 2,103 | | | | 823 | | | | 407 | |
Other invested assets | | | 952 | | | | 2,791 | | | | 2,496 | |
Securities lending reinvested collateral assets | | | — | | | | — | | | | 35 | |
Other, net | | | 539 | | | | 1,878 | | | | 127 | |
Total cost of investments acquired | | | 27,304 | | | | 30,082 | | | | 31,804 | |
Net adjustment in contract loans | | | 15 | | | | (26) | | | | (69) | |
Net cash provided by (used in) investing activities | | | (13,518) | | | | (7,604) | | | | (2,388) | |
Cash from financing and miscellaneous sources | | | | | | | | | | | | |
Cash provided (applied): | | | | | | | | | | | | |
Capital and paid-in surplus | | | — | | | | 1,900 | | | | — | |
Net deposits on (withdrawals from) deposit-type contracts | | | 1,698 | | | | (11) | | | | (707) | |
Dividends to parent | | | (2,000) | | | | (800) | | | | (750) | |
Change in securities lending | | | — | | | | (2,426) | | | | 747 | |
Other, net | | | 6,988 | | | | 2,490 | | | | (568) | |
Net cash provided by (used in) provided by financing and miscellaneous activities | | | 6,686 | | | | 1,153 | | | | (1,278) | |
Net increase (decrease) in cash, cash equivalents and short-term investments | | | (51) | | | | 149 | | | | (257) | |
Cash, cash equivalents and short-term investments at beginning of year | | | 951 | | | | 802 | | | | 1,059 | |
Cash, cash equivalents and short-term investments at end of year | | $ | 900 | | | $ | 951 | | | $ | 802 | |
| | | | | | | | | | | | | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | |
| | |
| | | December 31, | |
| | | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Non-cash activities, excluded from above: | | | | | | | | | | | | |
Non-cash transfer from separate to general account | | $ | 4,068 | | | $ | — | | | $ | — | |
Non-cash transfer from general to separate account | | | 1,002 | | | | — | | | | — | |
Non-cash AGLIC -Bermuda redemption | | | 642 | | | | — | | | | — | |
Non-cash transfer from other invested assets to bonds | | | 456 | | | | — | | | | — | |
Non-cash transfer from other invested assets to mortgage loans | | | 425 | | | | 12 | | | | 154 | |
Non-cash Modco to FRL settlements | | | 274 | | | | 204 | | | | 448 | |
Non-cash Hannover reinsurance transaction | | | 253 | | | | — | | | | — | |
Non-cash Modco adjustment on assumed reinsurance | | | — | | | | 22,924 | | | | — | |
Non-cash transfer from other invested assets to common stocks | | | 1 | | | | — | | | | 34 | |
Non-cash pension risk transfer premiums | | | — | | | | 1,159 | | | | 1,809 | |
Settlement of non-cash dividends payable | | | — | | | | — | | | | 295 | |
See accompanying Notes to Statutory Financial Statements.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
American General Life Insurance Company (“AGL” or the “Company”), including its wholly owned subsidiaries, is a wholly owned subsidiary of AGC Life Insurance Company (“AGC Life” or the “Parent”), a Missouri-domiciled life insurance company, which is wholly owned by Corebridge Life Holdings, Inc. (formerly known as AIG Life Holdings, Inc.) (“Corebridge Life Holdings”). Corebridge Life Holdings is wholly owned by Corebridge Financial, Inc. (“Corebridge”), which American International Group, Inc. (“AIG”) owns 52.2% of their outstanding common stock as of December 31, 2023. AIG is a holding company, which through its subsidiaries provides a wide range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers in more than 190 countries and jurisdictions. The term “AIG” means American International Group, Inc. and not any of AIG’s consolidated subsidiaries.
The Company is a stock life insurance company domiciled and licensed under the laws of the State of Texas and is subject to regulation by the Texas Department of Insurance (“TDI”). The Company is also subject to regulation by the states in which it is authorized to transact business. The Company is licensed in 49 states and the District of Columbia.
The Company is a leading provider in the United States of individual term and universal life insurance solutions to middle-income and high-net-worth customers, as well as a leading provider in the United States of fixed and variable annuities. The Company’s primary products include term life insurance, universal, variable universal and whole life insurance, accident and health insurance, single- and flexible-premium deferred fixed and variable annuities, fixed index deferred annuities, single-premium immediate and delayed-income annuities, private placement variable annuities, private placement variable universal life, structured settlements, corporate- and bank-owned life insurance, pension risk transfer annuities, guaranteed investment contracts, funding agreements, stable value wrap products and group benefits. The Company distributes its products through a broad multi-channel distribution network, which includes independent marketing organizations, independent insurance agents and financial advisors, banks, broker dealers, structured settlement brokers and benefit consultants and direct-to-consumer through Corebridge Direct Insurance Services, Inc. (formerly known as AIG Direct Insurance, Inc.) (“Corebridge Direct”).
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the TDI. These accounting practices vary in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”), as described herein.
The TDI recognizes only statutory accounting practices (“SAP”) prescribed or permitted by the State of Texas for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under the Texas Insurance Law. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of Texas. The Insurance Commissioner of the State of Texas has the right to permit other specific practices that deviate from prescribed practices.
At December 31, 2023, 2022 and 2021, the Company used the following permitted practices that resulted in reported statutory surplus or risk-based capital that is different from the statutory surplus or risk-based capital that would have been reported had NAIC statutory accounting practices or the prescribed regulatory accounting practices of the TDI been followed in all respects:
Effective December 31, 2020 and periods through September 30, 2023, the Company renewed a permitted statutory accounting practice to recognize an admitted asset related to the notional value of coverage defined in an excess of loss (“XOL”) reinsurance agreement with a 20-year term that provides coverage to the Company for aggregate claims incurred during the agreement term associated with guaranteed living benefits on certain fixed index annuities generally issued prior to April 2019 (“Block 1”) exceeding an attachment point as defined in the agreement. This permitted practice was previously expanded on October 1, 2020 to similarly recognize an additional admitted asset related to the net notional value of coverage as defined in a separate XOL reinsurance agreement with a 25-year term that provides coverage to the Company for aggregate XOL claims associated with guaranteed living benefits on a block of fixed index annuities generally issued in April 2019 or later, including certain new business issued after the effective date of October 1, 2020 (“Block 2”).
Effective September 30, 2023, the permitted practice for Block 1 and Block 2 was extended through September 30, 2026 and the maximum notional value of Block 2 was increased for certain new business. Effective October 1, 2022 and periods through September 30, 2023, this permitted practice was expanded to similarly recognize an additional admitted asset related to the net notional value of coverage as defined in a separate XOL agreement with a 25-year term that provides coverage to the Company for aggregate XOL claims associated with the base contract along with the guaranteed living benefits rider on a block of fixed annuities inforce on October 1, 2022, including certain new business issued after the effective date of October 1, 2022 (“Block 3”). Effective September 30, 2023, the permitted practice for Block 3 was extended through September 30, 2026 and the maximum notional value was increased for certain new business.
The value of the assets subject to the above permitted practices was approximately $1,742 million, $1,017 million and $584 million in total at December 31, 2023, 2022 and 2021 respectively and are reported in Other assets.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents a reconciliation of the Company’s net income and capital and surplus between NAIC SAP and practices prescribed or permitted by the State of Texas:
| | | | | | | | | | | | | | |
| | | | | December 31, | |
| (in millions) | | SSAP# | | 2023 | | | 2022 | | | 2021 | |
NET INCOME | | | | | | | | | | | | | | |
| | | | |
State basis | | | | $ | 144 | | | $ | 791 | | | $ | 2,244 | |
Net (loss) income, NAIC SAP | | | | $ | 144 | | | $ | 791 | | | $ | 2,244 | |
| | | | |
SURPLUS | | | | | | | | | | | | | | |
| | | | |
State basis | | | | $ | 8,929 | | | $ | 9,750 | | | $ | 8,532 | |
| | | | |
State permitted practices that increase (decrease) NAIC SAP: | | | | | | | | | | | | | | |
| | | | |
XoL reinsurance agreement | | 4 | | | (1,742) | | | | (1,017 | ) | | | (584) | |
Statutory capital and surplus, NAIC SAP | | | | $ | 7,187 | | | $ | 8,733 | | | $ | 7,948 | |
In the event the Company had not employed any or all of these permitted and prescribed practices, the Company’s risk-based capital (“RBC”) would not have triggered a regulatory event.
Certain prior year amounts have been reclassified to conform to the current year presentation.
The statement of cash flows in this report has balances that are different from those in the annual statement filed with the NAIC. The annual statement for 2023 had net cash provided by operations, investments and financing of $6.3 billion, $(12.9) billion and $6.5 billion, respectively, while this report has $6.8 billion, $(13.5) billion and $6.7 billion, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting practices prescribed or permitted by the TDI requires management to make estimates and assumptions that affect the reported amounts in the statutory financial statements and the accompanying notes. It also requires disclosure of contingent assets and liabilities at the date of the statutory financial statements and the reported amounts of revenue and expense during the period. The areas of significant judgments and estimates include the following:
| • | | application of other-than-temporary impairments; |
| • | | estimates with respect to income taxes, including recoverability of deferred tax assets; |
| • | | fair value measurements of certain financial assets; and |
| • | | policy reserves for life, annuity and accident and health insurance contracts, including guarantees. |
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, the Company’s Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus, Statutory Statements of Operations and Statutory Statements of Cash Flows could be materially affected.
Significant Accounting Policies
Bonds not backed by other loans are carried at amortized cost except for those with a NAIC designation of “6” or “6*”. Bonds with a NAIC 6 designation are carried at the lower of amortized cost or fair value, with unrealized losses charged directly to unassigned surplus. Bonds that have not been filed and have not received a designation in over one year from the NAIC’s Investment Analysis Office (“IAO”) receive a “6*” designation and are carried at zero, with the unrealized loss charged directly to unassigned surplus. Bonds filed with the IAO which receive a “6*” designation may carry a value greater than zero. Securities are assigned a NAIC 5* designation if the Company certifies that (1) the documentation necessary to permit a full credit analysis does not exist, (2) the issuer or obligor is current on all contracted interest and principal payments and (3) the Company has an actual expectation of ultimate repayment of all contracted interest and principal. Securities with NAIC 5* designations are deemed to possess the credit characteristics of securities assigned a NAIC 5 designation. The discount or premium on bonds is amortized using the effective yield method.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Loan-backed and structured securities (“LBaSS”) include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), asset-backed securities (“ABS”), pass-thru securities, lease-backed securities, equipment trust certificates, loan-backed securities issued by special purpose corporations or trusts, and securities where there is not direct recourse to the issuer. LBaSS are carried on a basis consistent with that of bonds not backed by loans. Income recognition for LBaSS is determined using the effective yield method and estimated cash flows. Prepayment assumptions for single-class and multi-class mortgage-backed securities (“MBS”) and ABS were obtained from an outside vendor or internal estimates. The Company uses independent pricing services and broker quotes in determining the fair value of its LBaSS. The Company uses the retrospective adjustment method to account for the effect of unscheduled payments affecting high credit quality securities, while securities with less than high credit quality and securities for which the collection of all contractual cash flows is not probable are both accounted for using the prospective adjustment method.
Reference to “non-rated residual tranches or interests” intends to capture securitization tranches, beneficial interests, interests of structured finance investments, as well as other structures, that reflect loss layers without contractual interest or principal payments. Payments to holders of these investments occur after contractual interest and principal payments have been made to other tranches or interests and are based on the remaining available funds. Although payments to holders can occur throughout an investment’s duration (and not just at maturity), such instances still reflect the residual amount permitted to be distributed after other holders have received contractual interest and principal payments.
NAIC designations are determined with a multi-step approach. The initial designation is used to determine the carrying value of the security. The final NAIC designation is used for reporting and affects RBC. The final NAIC designation is determined for most RMBS and CMBS by financial modeling conducted by BlackRock. For credit tenant loans, equipment trust certificates, any corporate-like securities rated by the IAO, interest-only securities, and those securities with an original NAIC designation of 5, 5*, 6, or 6*, the final NAIC designation is based on the IAO or Credit Rating Provider rating and is not subject to financial modeling.
Redeemable preferred stocks with NAIC designations of “1” through “3” are carried at amortized cost. All other redeemable preferred stocks are stated at the lower of cost, amortized cost or fair value, with unrealized capital losses charged directly to unassigned surplus. Perpetual preferred stocks are valued at fair value, not to exceed any currently effective call price. Provisions made for impairment are recorded as realized capital losses when declines in fair value are determined to be other than temporary.
Unaffiliated common stocks are carried at fair value, with unrealized capital gains and losses credited or charged directly to unassigned surplus. Provisions made for impairment are recorded as realized capital losses when declines in fair value are determined to be other than temporary. For Federal Home Loan Bank (“FHLB”) capital stock, which is only redeemable at par, the fair value shall be presumed to be par, unless considered other-than-temporarily impaired.
Subsidiary, controlled, and affiliated (“SCA”) entities: The Company has no investments in insurance SCA entities. Investments in non-insurance SCA entities are recorded based on the equity of the investee per audited financial statements prepared pursuant to U.S. GAAP, which is adjusted to a statutory basis of accounting, if applicable. All investments in non-insurance SCA entities for which audited U.S. GAAP financial statements are not available are non-admitted as assets. Undistributed equity in earnings of affiliates is included in unassigned surplus as a component of unrealized capital gains or losses. Dividends received from such affiliates are recorded as investment income when declared.
Mortgage and mezzanine real estate loans are carried at unpaid principal balances less allowances for credit losses and plus or minus adjustments for the accretion or amortization of discount or premium. Interest income on performing loans is accrued as earned.
Mortgage and mezzanine real estate loans 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. 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 occupancy, profile of the borrower and of the major property tenants, and
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economic trends in the market where the property is located. 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.
Real estate consists of properties occupied by the Company, properties held for the production of income and properties held for sale. Properties occupied by the Company and held for the production of income are carried at depreciated cost, less encumbrances, unless events or circumstances indicate the carrying amount of the asset (amount prior to reduction for encumbrances) may not be recoverable. Properties held for sale are carried at the lower of its depreciated cost or fair value less estimated costs to sell the property and net of encumbrances. Real estate obtained through foreclosure, in satisfaction of a loan, is recorded at the time of foreclosure at the lower of fair value as determined by acceptable appraisal methodologies, or the carrying amount of the related loan. Land is reported at cost.
Cash, cash equivalents and short-term investments include cash on hand and amounts due from banks, highly liquid debt instruments that have original maturities within one year of date of purchase and are carried at amortized cost, interest-bearing money market funds, investment pools and other investments with original maturities within one year from the date of purchase.
Contract loans are carried at unpaid balances, which include unpaid principal plus accrued interest, including 90 days or more past due. All loan amounts in excess of the contract cash surrender value are considered non-admitted assets.
Derivative instruments used in hedging transactions that meet the criteria of a highly effective hedge are reported in a manner consistent with the hedged asset or liability (“hedge accounting”). Changes in statement value or cash flow of derivatives that qualify for hedge accounting are recorded consistently with how the changes in the statement value or cash flow of the hedged asset or liability are recorded. Derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge (“ineffective hedges”) are accounted for at fair value and the changes in fair value are recorded as unrealized gains or losses.
Statement of Statutory Accounting Principles (“SSAP”) 108, Derivatives Hedging Variable Annuity Guarantees, was used as allowed. SSAP 108 allows special accounting treatment for limited derivatives hedging variable annuity guarantee benefits subject to fluctuation as a result of interest rate sensitivity. Starting in 2022 the Company designated, under SSAP 86, Derivatives, certain foreign exchange derivatives as effective hedges of certain invested assets. During 2023, the Company also designated certain interest rate swaps as effective cash flow hedges of floating-rate investment assets.
Other invested assets principally consist of investments in limited partnerships and limited liability companies. Investments in these assets, except for joint ventures, partnerships and limited liability companies with a minor ownership interest, are reported using the equity method. Under SAP, such investments are generally reported based on audited U.S. GAAP equity of the investee, with subsequent adjustment to a statutory basis of accounting, if applicable.
Joint ventures, partnerships and limited liability companies in which the Company has a minor ownership interest (i.e., less than 10 percent) or lacks control, are generally recorded based on the underlying audited U.S. GAAP equity of the investee, with some prescribed exceptions. SAP allows the use of (a) the U.S. GAAP equity as set forth in the footnote reconciliation of foreign GAAP equity and income to U.S. GAAP within audited foreign GAAP financial statements or (b) the International Financial Reporting Standards (“IFRS”) basis equity in audited IFRS financial statements as an acceptable basis for the valuation of minor/non-controlled investments. The audited U.S. tax basis equity may also be used in certain circumstances.
All other investments in entities for which audited U.S. GAAP financial statements, or another acceptable audited basis of accounting as described above were not available have been non-admitted as assets. Undistributed accumulated earnings of such entities are included in unassigned surplus as a component of unrealized capital gains or losses. Distributions received that are not in excess of the undistributed accumulated earnings are recognized as investment income. Impairments that are determined to be other than temporary are recognized as realized capital losses.
Securities lending and repurchase agreements: The Company has a securities lending program, which was approved by its Board of Directors, and lends securities from its investment portfolio to supplement liquidity or for other uses as deemed appropriate by management. Under the program, securities are lent to financial institutions, and in return the Company receives cash as collateral equal to 102 percent of the fair value of the loaned securities. The cash collateral received is invested in cash and/or short-term investments that may be sold or repledged or partially used for short-term liquidity purposes based on conservative cash flow forecasts. Securities lent by the Company under these
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transactions may be sold or repledged by the counterparties. The liability for cash collateral received would be reported in payable for securities lending in the Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus. The Company monitors the fair value of securities loaned and obtains additional collateral as necessary. At the termination of the transactions, the Company and its counterparties are obligated to return the collateral provided and the securities lent, respectively. These transactions are treated as secured financing arrangements.
In addition, the Company is a party to secured financing transactions involving securities sold under agreements to repurchase (repurchase agreements), in which the Company transfers securities in exchange for cash, with an agreement by the Company to repurchase the same or substantially similar securities on agreed upon dates specified in the agreements.
Investment income due and accrued is non-admitted from investment income for bonds and other invested assets when collection of interest is overdue by more than 90 days, or is uncertain, and for mortgage loans when loans are foreclosed, or delinquent in payment for greater than 180 days, or when collection of interest is uncertain.
Net realized capital gains and losses, which are determined by using the specific identification method, are reflected in income net of applicable federal income taxes and transfers to the interest maintenance reserve.
The Company regularly evaluates its investments for other-than-temporary impairment (“OTTI”) in value. The determination that a security has incurred an OTTI in value and the amount of any loss recognition requires the judgment of the Company’s management and a continual review of its investments. For bonds, other than LBaSS, an OTTI shall be considered to have occurred if it is probable that the Company will not be able to collect all amounts due under the contractual terms in effect at the acquisition date of the debt security. If it is determined an OTTI has occurred, the cost basis of bonds are written down to fair value and the amount of the write-down is recognized as a realized capital loss.
For LBaSS, a non-interest related OTTI resulting from a decline in value due to fundamental credit problems of the issuer is recognized when the projected discounted cash flows for a particular security are less than its amortized cost. When a non-interest related OTTI occurs, the LBaSS is written down to the present value of future cash flows expected to be collected. An OTTI is also deemed to have occurred if the Company intends to sell the LBaSS or does not have the intent and ability to retain the LBaSS until recovery. If the decline is interest-related, the LBaSS is written down to fair value.
In periods subsequent to the recognition of an OTTI loss, the Company generally accretes the difference between the new cost basis and the future cash flows expected to be collected, if applicable, as interest income over the remaining life of the security based on the amount and timing of estimated future cash flows.
Non-admitted assets are excluded from admitted assets and the change in the aggregate amount of such assets is reflected as a separate component of unassigned surplus. Non-admitted assets include all assets specifically designated as non-admitted and assets not designated as admitted, such as a certain portion of DTAs, prepaid expenses, electronic data processing (“EDP”) equipment assets, agents’ balances or other receivables over 90 days. Non-admitted assets were $4.6 billion and $4.6 billion at December 31, 2023 and 2022, respectively.
Interest maintenance reserve (“IMR”) is calculated based on methods prescribed by the NAIC and was established to prevent large fluctuations in interest-related investment gains and losses resulting from sales (net of taxes) and interest-related OTTI (net of taxes). IMR applies to all types of fixed maturity investments, including bonds, preferred stocks, MBS, ABS and mortgage loans. An OTTI occurs when the Company, at the reporting date, has the intent to sell an investment or does not have the intent and ability to hold the security before recovery of the cost of the investment. For LBaSS, if the Company recognizes an interest-related OTTI, the non-interest-related OTTI is recorded to the asset valuation reserve, and the interest-related portion to IMR. Such gains and losses are deferred into the IMR and amortized into income using the grouped method over the remaining contractual lives of the securities sold.
Asset valuation reserve (“AVR”) is used to stabilize surplus from fluctuations in the market value of bonds, stocks, mortgage loans, real estate, limited partnerships and other investments. Changes in the AVR are recorded as direct increases or decreases in surplus.
Separate account assets and liabilities generally represent funds for which the contract holder, rather than the Company, bears the investment risk. Separate account contract holders have no claim against the assets of the general account of the Company, except for certain guaranteed products. Separate account assets are generally reported at fair
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value. In addition, certain products with fixed guarantees and market-value-adjusted (“MVA”) fixed annuity contracts in which the assets are generally carried at amortized cost are required by certain states to be carried in a separate account. The operations of the separate accounts are excluded from the Statutory Statements of Operations and Statutory Statements of Cash Flows of the Company. The Company receives fees for assuming mortality and certain expense risks. Such fees are included in separate account fees in the Statutory Statements of Operations. Reserves for variable annuity contracts are provided in accordance with the Variable Annuity Commissioners’ Annuity Reserve Valuation Method (“VACARVM”) under subsection 21 of the Valuation Manual (“VM-21”). Reserves for variable universal life accounts are provided in accordance with subsection 20 of the Valuation Manual (“VM-20”) for new business issued beginning in 2020, and in accordance with the Commissioners’ Reserve Valuation Method (“CRVM”) for policies issued prior to 2020.
Policy reserves are established according to different methods.
Life, annuity, and health reserves are developed by actuarial methods and are generally determined based on published tables using specified interest rates, mortality or morbidity assumptions, and valuation methods prescribed or permitted by statutes that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash values or the amounts required by the TDI.
Principle-based reserving (“PBR”) is designed to tailor the reserving process to more closely reflect the risks of specific products, rather than the previous prescribed approach. Reserve requirements for the Company’s life insurance policies issued after January 1, 2020 are contained in VM-20, Requirements for Principle-Based Reserves for Life Products, policies issued prior to 2020 are reserved for using the CRVM. Under VM-20, these reserves are generally more sensitive to changes in actuarial assumptions.
The Company waives the deduction of deferred fractional premiums on the death of the life and annuity policy insured and returns any premium beyond the date of death. The Company reported additional reserves for surrender values in excess of the corresponding policy reserves.
The Company performs annual cash flow testing in accordance with the Actuarial Opinion and Memorandum Regulation to ensure adequacy of the reserves. Additional reserves are established where the results of cash flow testing under various interest rate scenarios indicate the need for such reserves or where the net premiums exceed the gross premiums on any insurance in force. Total cash flow testing reserves were $175 million and $175 million at December 31, 2023 and 2022, respectively.
A majority of the Company’s variable annuity products are issued with a guaranteed minimum death benefit (“GMDB”) which provides that, upon the death of a contractholder, the contractholder’s beneficiary will receive the greater of (1) the contractholder’s account value, or (2) a GMDB that varies by product. Depending on the product, the GMDB may equal the principal invested, adjusted for withdrawals; or the greatest contract value, adjusted for withdrawals, at the specified contract anniversaries; or the principal invested, adjusted for withdrawals, accumulated at the specified rate per annum. These benefits have issue age and other restrictions to reduce mortality risk exposure. The Company bears the risk that death claims following a decline in the financial markets may exceed contract holder account balances, and that the fees collected under the contract are insufficient to cover the costs of the benefit to be provided. Death benefits on GMDB policies generally reduce on a proportional basis or on a dollar-for-dollar basis when a partial withdrawal occurs.
Reserves for GMDB benefits are included in the VACARVM reserve. PBR is designed to tailor the reserving process to more closely reflect the risks of specific products, rather than the factor-based approach typically employed historically. Variable Annuity (“VA”) reserving requirements are contained in VM-21, Reserves for Variable Requirements for Principle-Based Annuities.
Life policies underwritten as substandard are charged extra premiums. Reserves are computed for a substandard policy by adding the reserve for an otherwise identical non-substandard policy plus a factor times the extra premium charge for the year. The factor varies by duration, type of plan, and underwriting. In addition, an extra mortality reserve is reported for ordinary life insurance policies classified as group conversions. Substandard structured settlement annuity reserves are determined by making a constant addition to the mortality rate of the applicable valuation mortality table so that the life expectancy on the adjusted table is equal to the life expectancy determined by the Company’s underwriters at issue.
Tabular interest, tabular less actual reserves released, and tabular cost have been determined by formula, except for universal life insurance and deferred annuity reserves, which include fund accumulations for which tabular interest has
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been determined from basic data. For the determination of tabular interest on funds not involving life contingencies, the actual credited interest is used.
Liabilities for deposit-type contracts, which include supplementary contracts without life contingencies and annuities certain, are based on the discounting of future payments at an annual statutory effective rate. Tabular interest on other funds not involving life contingencies is based on the interest rate at which the liability accrues.
Policy and contract claims represent the ultimate net cost of all reported and unreported claims incurred during the year. Reserves for unpaid claims are estimated using individual case-basis valuations and statistical analyses. Those estimates are subject to the effects of trends in claim severity and frequency. The estimates are continually reviewed and adjusted as necessary, as experience develops or new information becomes known; such adjustments are included in current operations.
Reserves for future policy benefits to be paid on life and accident and health policies, incurred in the statement period, but not yet reported, were established using historical data from claim lag experience. The data is aggregated from product specific studies performed on the Company’s business.
Premiums and annuity considerations and related expenses are recognized over different periods. Life premiums are recognized as income over the premium paying periods of the related policies. Annuity considerations are recognized as revenue when received. Premiums for deposit-type products are credited directly to the respective reserves and are not recorded in the Statutory Statement of Operations. Health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Acquisition costs such as commissions and other expenses related to the production of new business are charged to the Statutory Statements of Operations as incurred.
Reinsurance premiums and benefits paid or provided are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.
Annuity and deposit-type contract surrender benefits are reported on a cash basis, and include annuity benefits, payments under supplementary contracts with life contingencies, surrenders and withdrawals. Withdrawals from deposit-type contracts directly reduce the liability for deposit-type contracts and are not reported in the Statutory Statements of Operations.
General insurance expenses include allocated expenses pursuant to cost allocation agreements. The Company purchases administrative, accounting, marketing and data processing services from AIG, Corebridge and affiliates and is charged based on estimated levels of usage, transactions or time incurred in providing the respective services. The allocation of costs for investment management services purchased from affiliates is based on the level of assets under management.
Federal income tax expense (benefit) is recognized and computed on a separate company basis pursuant to tax sharing agreements, because the Company is included in the consolidated federal income tax returns of its parent company filing group. For the period prior to the Corebridge initial public offering (the “IPO”) on September 19, 2022, the Company joined in the filing of a consolidated federal income tax return with AIG. For the period following the IPO, the Company will join with AGC Life, Variable Annuity Life Insurance Company (“VALIC”), United States Life Insurance Company in the City of New York (“USL”), and Corebridge Insurance Company of Bermuda, Ltd. (formerly AIG Life of Bermuda, Ltd.) (“Corebridge Bermuda”), in filing a consolidated life company federal income tax return. To the extent that benefits for net operating losses, foreign tax credits, corporate alternative minimum tax (“CAMT”) credits or net capital losses are utilized on a consolidated basis, the Company would recognize tax benefits based upon the amount of those deductions and credits utilized in the consolidated federal income tax return. The federal income tax expense or benefit reflected in the Statutory Statements of Operations represents income taxes provided on income that is currently taxable, but excludes tax on the net realized capital gains or losses.
Income taxes on capital gains or losses reflect differences in the recognition of capital gains or losses on a statutory accounting basis versus a tax accounting basis. The most significant of such differences involve impairments of investments, which are recorded as realized losses in the Statutory Statements of Operations but are not recognized for tax purposes, and the deferral of net capital gains and losses into the IMR for statutory income but not for taxable income. Capital gains and losses on certain related-party transactions are recognized for statutory financial reporting purposes but are deferred for income tax reporting purposes until the security is sold to an outside party.
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A deferred tax asset (“DTA”) or deferred tax liability (“DTL”) is included in the Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus, which reflects the expected future tax consequences of temporary differences between the statement values of assets and liabilities for statutory financial reporting purposes and the amounts used for income tax reporting purposes. The change in the net DTA or DTL is reflected in a separate component of unassigned surplus. Net DTAs are limited in their admissibility.
The CAMT is disregarded when evaluating the need for a valuation allowance for the Company’s non-CAMT DTAs.
Accounting Changes
The Company had no accounting changes during 2023 or 2022.
Substantive changes were made to SSAP 26R, Bonds, SSAP 21R, Other Admitted Assets, and SSAP 43R, Loan-Backed and Structured Securities, effective January 1, 2025. The changes provide a new principle-based bond definition to be used for determining which investments are eligible for reporting on Schedule D as a bond. The changes focus on ensuring appropriate consideration of whether an investment qualifies as an issuer credit obligation or asset-backed security prior to reporting as a bond.
Correction of Errors
SAP requires that corrections of errors related to prior periods be reported as adjustments to unassigned surplus to the extent that they are not material to prior periods.
In 2023, two out-of-period errors were identified and corrected, the largest of which was related to an understatement of reserves for variable annuities due to model implementations in 2022. The total of these corrections decreased unassigned surplus by $8 million.
In 2022, three out-of-period errors were identified and corrected, which increased unassigned surplus by $72 million. This decreased claims reserved as a result of overstated claim reserves from 2019-2021.
In 2021, five out-of-period errors were identified and corrected, which decreased unassigned surplus by $161 million. The most significant of these was a tax correction related to 2013 - 2018.
The Company’s management does not believe these corrections to be material to the Company’s results of operations, financial position, or cash flow for the Company’s previously filed annual statement.
Differences in Statutory Accounting and U.S. GAAP Accounting
The accompanying statutory financial statements have been prepared in accordance with accounting practices prescribed or permitted by the TDI. These accounting practices vary in certain respects from U.S. GAAP. The primary differences between NAIC SAP and U.S. GAAP are as follows.
The objectives of U.S. GAAP differ from the objectives of SAP. U.S. GAAP is designed to measure the entity as a going concern and to produce general purpose financial statements to meet the varying needs of the different users of financial statements. SAP is designed to address the accounting requirements of regulators, who are the primary users of statutory-basis financial statements and whose primary objective is to measure solvency. As a result, U.S. GAAP stresses measurement of earnings and financial condition of a business from period to period, while SAP stresses measurement of the ability of the insurer to pay claims in the future.
Investments. Under SAP, investments in bonds and redeemable preferred stocks are generally reported at amortized cost. However, if bonds are designated category “6” and redeemable preferred stocks are designated categories “4 – 6” by the NAIC, these investments are reported at the lesser of amortized cost or fair value with a credit or charge to unrealized investment gains or losses. For U.S. GAAP, such fixed-maturity investments are designated at purchase as held-to-maturity, trading, or available-for-sale. Held-to-maturity fixed-maturity investments are reported at amortized cost, and the remaining fixed-maturity investments are reported at fair value, with unrealized capital gains and losses reported in operations for those designated as trading and as a component of other comprehensive income for those designated as available-for-sale.
Under SAP, all single- and multi-class MBS or other ABS (e.g., Collateralized Mortgage Obligations (“CMO”) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium with respect to such securities using either the retrospective or prospective method. For LBaSS, if it is
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determined that a decline in fair value is other than temporary, the cost basis of the security is written down to the discounted estimated future cash flows. Bonds, other than LBaSS, that are other-than-temporarily impaired are written down to fair value. For U.S. GAAP purposes, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, MBS and ABS securities), other than high credit quality securities, would be adjusted using the prospective method when there is a change in estimated future cash flows. If high-credit quality securities must be adjusted, the retrospective method would be used. For all bonds, if it is determined that a decline in fair value is other-than-temporary, the cost basis of the security would be written down to the discounted estimated future cash flows, while the non-credit portion of the impairment would be recorded as an unrealized loss in other comprehensive income.
Under SAP, when it is probable that the insurer will be unable to collect all amounts due according to the contractual terms of the mortgage agreement, allowances are established for temporarily-impaired mortgage loans based on the difference between the unpaid loan balance and the estimated fair value of the underlying real estate, less estimated costs to obtain and sell. The initial allowance and subsequent changes in the allowance for mortgage loans are charged or credited directly to unassigned surplus rather than as a component of earnings as would be required under U.S. GAAP. If the impairment is other-than-temporary, a direct write down is recognized as a realized loss, and a new cost basis is established. Under U.S. GAAP, an allowance for credit losses is based on the expectation of lifetime credit losses.
Under SAP, joint ventures, partnerships and limited liability companies in which the insurer has a minor ownership interest (i.e., less than 10 percent) or lacks control are generally recorded based on the underlying audited U.S. GAAP basis equity of the investee. Under U.S. GAAP, joint ventures, partnerships and limited liability companies in which the insurer has a significant ownership interest or is deemed to have control are accounted for under the equity method. Where that is not the case, such investments are carried at fair value with changes in fair value recognized in earnings.
Real Estate. Under SAP, investments in real estate are reported net of related obligations; under U.S. GAAP, investments in real estate are reported on a gross basis. Under SAP, real estate owned and occupied by the insurer is included in investments; under U.S. GAAP, real estate owned and occupied by the insurer is reported as an operating asset, and operating income and expenses include rent for the insurer’s occupancy of those properties.
Derivatives. Under SAP, derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge are accounted for at fair value with the changes in fair value recorded as unrealized capital gains or losses. Under U.S. GAAP, such derivative instruments are accounted for at fair value with the changes in fair value recorded as realized capital gains or losses. Under U.S. GAAP, fair value measurement for free standing derivatives incorporate either counterparty’s credit risk for derivative assets or the insurer’s credit risk for derivative liabilities by determining the explicit cost to protect against credit exposure. This credit exposure evaluation takes into consideration observable credit default swap rates. Under SAP, non-performance risk (own credit-risk) is not reflected in the fair value calculations for derivative liabilities. Under U.S. GAAP, index life insurance features in indexed universal life contracts and certain guaranteed features of variable annuities are bifurcated and accounted for separately as embedded policy derivatives and market risk benefits, respectively. Under SAP, embedded derivatives and market risk benefits are not bifurcated or accounted for separately from the host contract.
Interest Maintenance Reserve. Under SAP, the insurer is required to maintain an IMR. IMR is calculated based on methods prescribed by the NAIC and was established to prevent large fluctuations in interest-related capital gains and losses realized through sales or OTTI. IMR applies to all types of fixed maturity investments, including bonds, preferred stocks, MBS, ABS and mortgage loans. After-tax capital gains or losses realized upon the sale or impairment of such investments resulting from changes in the overall level of interest rates are excluded from current period net income and transferred to the IMR. The transferred after-tax net realized capital gains or losses are then amortized into income over the remaining period to maturity of the divested asset. Realized capital gains and losses are reported net of tax and transfers to the IMR, after net gain from operations. Any negative IMR balance is treated as a non-admitted asset, unless certain criteria are met. This reserve is not required under U.S. GAAP and pre-tax realized capital gains and losses are reported as a component of total revenues, with related taxes included in taxes from operations.
Asset Valuation Reserve. Under SAP, the insurer is required to maintain an AVR, which is computed in accordance with a prescribed formula and represents a provision for possible fluctuations in the value of bonds, equity securities, mortgage loans, real estate, and other invested assets. The level of AVR is based on both the type of investment and its
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credit rating. Under SAP, AVR is included in total adjusted capital for RBC analysis purposes. Changes to AVR are charged or credited directly to unassigned surplus. This reserve is not required under U.S. GAAP.
Subsidiaries. Under SAP, investments in insurance subsidiaries are recorded based upon the underlying audited statutory equity of a subsidiary with all undistributed earnings or losses shown as an unrealized capital gain or loss in unassigned surplus. Dividends received by the parent company from its subsidiaries are recorded through net investment income. Under U.S. GAAP, subsidiaries’ financial statements are combined with the parent company’s financial statements through consolidation. All intercompany balances and transactions are eliminated under U.S. GAAP. Dividends received by the parent company from its subsidiaries reduce the parent company’s investment in the subsidiaries.
Policy Acquisition Costs and Sales Inducements. Under SAP, policy acquisition costs are expensed when incurred. Under U.S. GAAP, acquisition costs that are incremental and directly related to the successful acquisition of new and renewal of existing insurance contracts are deferred as deferred policy acquisition costs (“DAC”). DAC is amortized on a constant level basis (i.e., approximating straight line amortization with adjustments for expected terminations) over the expected term of the related contracts using assumptions consistent with those used in estimating the related liability for future policy benefits, or any other related balances. Under SAP, sales inducements are expensed when incurred. Under U.S. GAAP, certain sales inducements on interest-sensitive life insurance contracts and deferred annuities are deferred and amortized over the life of the contract using the same methodology and assumptions used to amortize DAC.
Deferred Premiums. Under SAP, when deferred premiums exist, statutory deferred premiums are held as a statutory asset, while under U.S. GAAP, deferred premiums are held as a contra-liability in the future policy benefits liability.
Non-admitted Assets. Certain assets designated as “non-admitted,” principally any agents’ balances or unsecured loans or advances to agents, certain DTAs, furniture, equipment and computer software, receivables over 90 days and prepaid expenses, as well as other assets not specifically identified as admitted assets within the NAIC SAP, are excluded from the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus and are charged directly to unassigned surplus. Under U.S. GAAP, such assets are included in the balance sheet.
Universal Life and Annuity Policies. Under SAP, revenues for universal life and annuity policies containing mortality or morbidity risk considerations consist of the entire premium received, and benefits incurred consist of the total of death benefits paid and the change in policy reserves. Payments received on contracts that do not incorporate any mortality or morbidity risk considerations (deposit-type contracts) are credited directly to an appropriate liability for deposit-type contract account without recognizing premium income. Interest credited to deposit-type contracts is recorded as an expense in the Statutory Statements of Operations as incurred. Payments that represent a return of policyholder balances are recorded as a direct reduction of the liability for deposit-type contracts, rather than a benefit expense. Under U.S. GAAP, premiums received in excess of policy charges are not recognized as premium revenue, and benefits represent the excess of benefits paid over the policy account value and interest credited to the account values.
Benefit Reserves. Under SAP, loading is the difference between the gross and valuation net premium. Valuation net premium is calculated using valuation assumptions which are different for statutory and U.S. GAAP. Statutory valuation assumptions are set by the insurer within limits as defined by statutory law. U.S. GAAP valuation assumptions are set by the insurer based on management’s estimates and judgment.
Policyholder funds not involving life contingencies use different valuation assumptions for SAP and U.S. GAAP. Under SAP, prescribed rates of interest related to payout annuities are used in the discounting of expected benefit payments, while under U.S. GAAP, the insurer’s best estimates of interest rates are used.
Under SAP, the CRVM is used for the majority of individual insurance reserves. Under U.S. GAAP, individual insurance policyholder liabilities for traditional forms of insurance are generally established using the net premium ratio (“NPR”) method. For interest-sensitive policies, a liability for policyholder account balances is established under U.S. GAAP based on the contract value that has accrued to the benefit of the policyholder. Policy assumptions used in the estimation of policyholder liabilities are generally prescribed under SAP. Under U.S. GAAP, policy assumptions are based upon best estimates.
Under SAP, the CARVM is used for the majority of individual deferred annuity reserves, while under U.S. GAAP, individual deferred annuity policyholder liabilities are generally equal to the contract value that has accrued to the benefit of the policyholder, together with liabilities for certain contractual guarantees, if applicable. Under SAP, reserves
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NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
for fixed rate deposit-type contracts are based upon their accumulated values, discounted at an annual statutory effective rate, while under U.S. GAAP, reserves for deposit-type contracts are recorded at their accumulated values.
Under GAAP, indexed interest credits and guarantees in excess of contract account values are bifurcated from the host contract as embedded derivatives and market risk benefits, respectively, and reported at fair value. Under SAP, embedded derivatives and market risk benefits are not bifurcated and accounted for separately, but rather are included in the benefit reserve valuation for the host contract.
Reinsurance. Under SAP, policy and contract liabilities ceded to reinsurers are reported as reductions of the related reserves rather than as assets as required under U.S. GAAP. Under SAP, a liability for reinsurance balances has been provided for unsecured policy reserves, unearned premiums, and unpaid losses ceded to reinsurers not licensed to assume such business. Changes to these amounts are credited or charged directly to unassigned surplus. Under U.S. GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings. Under SAP, the criteria used to demonstrate risk transfer varies from U.S. GAAP, which may result in transactions that are accounted for as reinsurance for SAP and deposit accounting for U.S. GAAP. Under SAP, the reserve credit permitted for unauthorized reinsurers is less than or equal to the amount of letter of credit or funds held in trust by the reinsurer. Under U.S. GAAP, assumed and ceded reinsurance is reflected on a gross basis in the balance sheet, and certain commissions allowed by reinsurers on ceded business are deferred and amortized generally on a basis consistent with DAC.
Policyholder Dividend Liabilities. Under SAP, policyholder dividends are recognized when declared. Under U.S. GAAP, policyholder dividends are recognized over the term of the related policies.
Separate Accounts. Under SAP, separate account surplus created through the use of the CRVM, the VACARVM or other reserving methods is reported by the general account as an unsettled transfer from the separate account. The net change on such transfers is included as a part of the net gain from operations in the general account. This is not required under U.S. GAAP.
Separate accounts include certain non-unitized assets which primarily represent MVA fixed options of variable annuity contracts and certain pension risk transfer annuities issued in various states. Under SAP, these contracts are accounted for in the separate account financial statements, while under U.S. GAAP, they are accounted for in the general account.
Deferred Income Taxes. Under SAP, statutory DTAs that are more likely than not to be realized are limited to: 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year, plus 2) the lesser of the remaining gross DTA expected to be realized within a maximum three years of the reporting date or a maximum 15 percent of the capital and surplus excluding any net DTA, EDP equipment and operating software and any net positive goodwill, plus 3) the amount of the remaining gross DTA that can be offset against existing gross DTLs. The remaining DTAs are non-admitted. Deferred taxes do not include amounts for state taxes. Under U.S. GAAP, state taxes are included in the computation of deferred taxes, all DTAs are recorded and a valuation allowance is established if it is more likely than not that some portion of the DTA will not be realized. Under SAP, income tax expense is based upon taxes currently payable. Changes in deferred taxes are reported in surplus and subject to admissibility limits. Under U.S. GAAP, changes in deferred taxes are recorded in income tax expense.
Offsetting of Assets and Liabilities. Under SAP, offsetting of assets and liabilities is not permitted when there are master netting agreements unless four requirements for valid right of offset are met. The requirements include 1) each of the two parties owes the other determinable amounts, 2) the reporting party has the right to set off the amount owed with the amount owed by the other party, 3) the reporting party intends to set off, and 4) the right of setoff is enforceable. The prohibition against offsetting extends to derivatives and collateral posted against derivative positions, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions, when the reporting entity does not have the intent to set off. Under U.S. GAAP, these amounts under master netting arrangements may generally be offset and presented on a net basis pursuant to an accounting election, even when the reporting entity does not have the intent to set off.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS
Bonds and Equity Securities
The following table presents the statement value, gross unrealized gain, gross unrealized loss and the estimated fair value of bonds and equity securities by major security type:
| | | | | | | | | | | | | | | | |
| (in millions) | | Statement
Value | | | Gross
Unrealized
Gains | | | Gross
Unrealized
Losses | | | Fair Value | |
December 31, 2023 | | | | | | | | | | | | | | | | |
Bonds: | | | | | | | | | | | | | | | | |
U.S. government obligations | | $ | 1,321 | | | $ | 5 | | | $ | (214) | | | $ | 1,112 | |
All other governments | | | 2,041 | | | | 21 | | | | (249) | | | | 1,813 | |
States, territories and possessions | | | 239 | | | | 2 | | | | (23) | | | | 218 | |
Political subdivisions of states, territories and possessions | | | 210 | | | | 4 | | | | (12) | | | | 202 | |
Special revenue | | | 5,392 | | | | 39 | | | | (532) | | | | 4,899 | |
Industrial and miscellaneous | | | 98,249 | | | | 1,546 | | | | (9,929) | | | | 89,866 | |
Hybrid securities | | | 377 | | | | 10 | | | | (15) | | | | 372 | |
Bank loans | | | 3,937 | | | | 16 | | | | (96) | | | | 3,857 | |
Parent, subsidiaries and affiliates | | | 366 | | | | — | | | | — | | | | 366 | |
Total bonds | | | 112,132 | | | | 1,643 | | | | (11,070) | | | | 102,705 | |
Preferred stock | | | 80 | | | | 3 | | | | — | | | | 83 | |
Common stock* | | | 266 | | | | — | | | | — | | | | 266 | |
Total equity securities | | | 346 | | | | 3 | | | | — | | | | 349 | |
Total | | $ | 112,478 | | | $ | 1,646 | | | $ | (11,070 | ) | | $ | 103,054 | |
December 31, 2022 | | | | | | | | | | | | | | | | |
Bonds: | | | | | | | | | | | | | | | | |
U.S. government obligations | | $ | 1,314 | | | $ | 4 | | | $ | (198) | | | $ | 1,120 | |
All other government | | | 2,629 | | | | 20 | | | | (385) | | | | 2,264 | |
States, territories and possessions | | | 268 | | | | 2 | | | | (30) | | | | 240 | |
Political subdivisions of states, territories and possessions | | | 332 | | | | 8 | | | | (21) | | | | 319 | |
Special revenue | | | 6,159 | | | | 35 | | | | (710) | | | | 5,484 | |
Industrial and miscellaneous | | | 93,378 | | | | 1,001 | | | | (13,217) | | | | 81,162 | |
Hybrid securities | | | 435 | | | | 10 | | | | (28) | | | | 417 | |
Bank loans | | | 3,580 | | | | 3 | | | | (115) | | | | 3,468 | |
Parent, subsidiaries and affiliates | | | 360 | | | | — | | | | — | | | | 360 | |
Total bonds | | | 108,455 | | | | 1,083 | | | | (14,704) | | | | 94,834 | |
Preferred stock | | | 93 | | | | — | | | | (4) | | | | 89 | |
Common stock* | | | 927 | | | | — | | | | — | | | | 927 | |
Total equity securities | | | 1,020 | | | | — | | | | (4) | | | | 1,016 | |
Total | | $ | 109,475 | | | $ | 1,083 | | | $ | (14,708) | | | $ | 95,850 | |
* Common stock includes $73 million and $753 million of investments in affiliates at December 31, 2023 and 2022, respectively.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Bonds and Equity Securities in Loss Positions
The following table summarizes the fair value and gross unrealized losses (where fair value is less than amortized cost) on bonds and equity securities, including amounts on NAIC 6 and 6* bonds, 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 | |
(in millions)
| | Fair
Value | | | Gross
Unrealized
Losses | | | Fair
Value | | | Gross
Unrealized
Losses | | | Fair
Value | | | Gross
Unrealized
Losses | |
December 31, 2023 | | | | | | | | | | | | | | | | | | | | | | | | |
Bonds: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | $ | 88 | | | $ | (6 | ) | | $ | 889 | | | $ | (208 | ) | | $ | 977 | | | $ | (214 | ) |
All other government | | | 158 | | | | (20 | ) | | | 1,344 | | | | (227 | ) | | | 1,502 | | | | (247 | ) |
U.S. States, territories and possessions | | | 32 | | | | (1 | ) | | | 139 | | | | (22 | ) | | | 171 | | | | (23 | ) |
Political subdivisions of states, territories and possessions | | | 28 | | | | (2 | ) | | | 82 | | | | (11 | ) | | | 110 | | | | (13 | ) |
Special revenue | | | 1,001 | | | | (81 | ) | | | 2,977 | | | | (450 | ) | | | 3,978 | | | | (531 | ) |
Industrial and miscellaneous | | | 11,361 | | | | (1,080 | ) | | | 53,785 | | | | (8,851 | ) | | | 65,146 | | | | (9,931 | ) |
Hybrid securities | | | 40 | | | | (1 | ) | | | 199 | | | | (14 | ) | | | 239 | | | | (15 | ) |
Bank loans | | | 813 | | | | (40 | ) | | | 1,695 | | | | (62 | ) | | | 2,508 | | | | (102 | ) |
Parents, subsidiaries & affliates | | | — | | | | — | | | | 8 | | | | — | | | | 8 | | | | — | |
Total bonds | | | 13,521 | | | | (1,231 | ) | | | 61,118 | | | | (9,845 | ) | | | 74,639 | | | | (11,076 | ) |
Preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Total equity securities | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Total | | $ | 13,521 | | | $ | (1,231 | ) | | $ | 61,118 | | | $ | (9,845 | ) | | $ | 74,639 | | | $ | (11,076 | ) |
December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | |
Bonds: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | $ | 990 | | | $ | (197 | ) | | $ | 1 | | | $ | — | | | $ | 991 | | | $ | (197 | ) |
All other government | | | 1,953 | | | | (389 | ) | | | — | | | | — | | | | 1,953 | | | | (389 | ) |
U.S States, territories and possessions | | | 180 | | | | (30 | ) | | | — | | | | — | | | | 180 | | | | (30 | ) |
Political subdivisions of states, territories and possessions | | | 177 | | | | (21 | ) | | | — | | | | — | | | | 177 | | | | (21 | ) |
Special revenue | | | 4,565 | | | | (694 | ) | | | 78 | | | | (16 | ) | | | 4,643 | | | | (710 | ) |
Industrial and miscellaneous | | | 57,098 | | | | (10,308 | ) | | | 12,196 | | | | (2,927 | ) | | | 69,294 | | | | (13,235 | ) |
Hybrid securities | | | 268 | | | | (30 | ) | | | — | | | | — | | | | 268 | | | | (30 | ) |
Bank loans | | | 2,184 | | | | (71 | ) | | | 897 | | | | (47 | ) | | | 3,081 | | | | (118 | ) |
Total | | $ | 67,415 | | | $ | (11,740 | ) | | $ | 13,172 | | | $ | (2,990 | ) | | $ | 80,587 | | | $ | (14,730 | ) |
Preferred stock | | | 84 | | | | (6 | ) | | | — | | | | — | | | | 84 | | | | (6 | ) |
Common stock | | | 2 | | | | — | | | | — | | | | — | | | | 2 | | | | — | |
Total equity securities | | | 86 | | | | (6 | ) | | | — | | | | — | | | | 86 | | | | (6 | ) |
Total | | $ | 67,501 | | | $ | (11,746 | ) | | $ | 13,172 | | | $ | (2,990 | ) | | $ | 80,673 | | | $ | (14,736 | ) |
As of December 31, 2023 and 2022, the number of bonds and equity securities in an unrealized loss position was 7,290 and 8,092, respectively. Bonds comprised 7,288 of the total, of which 5,725 were in a continuous loss position greater than 12 months at December 31, 2023. Bonds comprised 8,010 of the total, of which 1,189 were in a continuous loss position greater than 12 months at December 31, 2022.
The Company did not recognize the unrealized losses in earnings on these fixed maturity securities at December 31, 2023 and 2022, respectively, because the Company neither intends to sell the securities nor does the Company believe that it is more likely than not that the Company will be required to sell these securities before recovery of their amortized cost basis. For fixed maturity securities with significant declines, the Company performed fundamental credit analyses on a security-by-security basis, which included consideration of credit enhancements, expected defaults on underlying collateral, review of relevant industry analyst reports and forecasts and other available market data.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Contractual Maturities of Bonds
The following table presents the statement value and fair value of bonds by contractual maturity:
| | | | | | | | |
| (in millions) | | Statement Value | | | Fair Value | |
December 31, 2023 | | | | | | | | |
| | |
Due in one year or less | | $ | 1,433 | | | $ | 1,423 | |
| | |
Due after one year through five years | | | 12,717 | | | | 12,396 | |
| | |
Due after five years through ten years | | | 15,311 | | | | 14,262 | |
| | |
Due after ten years | | | 44,241 | | | | 37,416 | |
| | |
LBaSS | | | 38,552 | | | | 37,330 | |
| | | |
Total | | $ | 112,254 | | | $ | 102,827 | |
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.
Bonds in or near default as to payment of principal or interest had a statement value of $25 million and $124 million at December 31, 2023 and 2022, respectively, which is the fair value. At December 31, 2023 and 2022, the Company had no income excluded from due and accrued for bonds.
December 31, 2023 , the Company’s bond portfolio included bonds totaling $6.4 billion not rated investment grade by the NAIC designations (categories 3-6). These bonds accounted for 3 percent of the Company’s total assets and 4 percent of invested assets. These below investment grade securities, excluding structured securities, span across 14 industries. At December 31, 2022, the Company’s bond portfolio included bonds totaling $7.0 billion not rated investment grade by the NAIC designations (categories 3-6). These bonds accounted for 3 percent of the Company’s total assets and 5 percent of invested assets. These below investment grade securities, excluding structured securities, span across 14 industries.
December 31, 2023 and 2022 The following table presents the industries that constitute more than 10% of the below investment grade securities:
| | | | | | | | |
| | |
| | | December 31, | |
| | |
| | | 2023 | | | 2022 | |
Consumer cyclical | | | 17.3% | | | | 21.3% | |
| | |
Consumer non-cyclical | | | 16.0 | | | | 16.1 | |
| | |
Capital Goods | | | 8.0 | | | | 8.3 | |
LBaSS
The Company determines fair value of LBaSS based on the amount at which a security could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The majority of the Company’s ABS, RMBS, CMBS, and collateralized debt obligations (“CDO”) are priced by approved independent third-party valuation service providers and broker dealer quotations. Small portions of the LBaSS that are not traded in active markets are priced by market standard internal valuation methodologies, which include discounted cash flow methodologies and matrix pricing. The estimated fair values are based on available market information and management’s judgments.
The following table presents the statement value and fair value of LBaSS:
| | | | | | | | | | | | | | | | | | |
| | | | |
| | | December 31, 2023 | | | | | December 31, 2022 | |
| (in millions) | | Statement Value | | | Fair Value | | | | | Statement
Value | | | Fair Value | |
| | | | | | |
Loan-backed and structured securities | | $ | 38,552 | | | $ | 37,330 | | | | | $ | 30,699 | | | $ | 28,853 | |
Prepayment assumptions for single class, multi-class mortgage-backed and ABS were obtained from independent third-party valuation service providers or internal estimates. These assumptions are consistent with the current interest rate and economic environment.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
At December 31, 2023 and 2022, the Company had exposure to a variety of LBaSS. These securities could have significant concentrations of credit risk by country, geographical region, property type, servicer or other characteristics. As part of the quarterly surveillance process, the Company takes into account many of these characteristics in making the OTTI assessment.
At December 31, 2023 and 2022, the Company did not have any LBaSS with a recognized OTTI due to the intent to sell or an inability or lack of intent to retain the security for a period of time sufficient to recover the amortized cost basis.
During 2023, 2022 and 2021, the Company recognized total OTTI of $36 million, $114 million and $13 million, respectively, on LBaSS that were still held by the Company. In addition, at December 31, 2023 and 2022, the Company held loan-backed impaired securities (fair value is less than cost or amortized cost) for which an OTTI had not been recognized in earnings as a realized loss. Such impairments include securities with a recognized OTTI for non-interest (credit) related declines that were recognized in earnings, but for which an associated interest-related decline has not been recognized in earnings as a realized capital loss.
The following table summarizes the fair value and aggregate amount of unrealized losses on LBaSS and length of time that individual securities have been in a continuous unrealized loss position:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Less than 12 Months | | | | | 12 Months or More | | | | | Total | |
| (in millions) | | Fair Value | | | Gross Unrealized Losses | | | | | Fair Value | | | Gross Unrealized Losses | | | | | Fair Value | | | Gross Unrealized Losses | |
December 31, 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LBaSS | | $ | 7,184 | | | $ | (454 | ) | | | | $ | 16,089 | | | $ | (1,699 | ) | | | | $ | 23,273 | | | $ | (2,153 | ) |
December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LBaSS | | $ | 16,448 | | | $ | (1,565 | ) | | | | $ | 6,349 | | | $ | (999 | ) | | | | $ | 22,797 | | | $ | (2,564 | ) |
In its OTTI assessment, the Company considers all information relevant to the collectability of the security, including past history, current conditions and reasonable forecasts when developing an estimate of future cash flows. Relevant analyst reports and forecasts for the asset class also receive appropriate consideration. The Company also considers how credit enhancements affect the expected performance of the security. In addition, the Company generally considers its cash and working capital requirements and expected cash flows in relation to its business plans and how such forecasts affect the intent and ability to hold such securities to recovery of their amortized cost.
The Company does not have any LBaSS for which it is not practicable to estimate fair values.
The following table presents the rollforward of non-interest related OTTI for LBaSS:
| | | | | | | | |
| | |
| | | December 31, | |
| | |
| (in millions) | | 2023 | | | 2022 | |
Balance, beginning of year | | $ | 1,256 | | | $ | 1,263 | |
| | |
Increases due to: | | | | | | | | |
| | |
Credit impairment on new securities subject to impairment losses | | | 26 | | | | 42 | |
| | |
Additional credit impairment on previously impaired investments | | | 10 | | | | 71 | |
| | |
Reduction due to: | | | | | | | | |
| | |
Credit impaired securities fully disposed for which there was no prior intent or requirement to sell | | | 80 | | | | 120 | |
| | | |
Balance, end of year | | $ | 1,212 | | | $ | 1,256 | |
See Note 4 for a list with each LBaSS at a CUSIP level where the present value of cash flows expected to be collected is less than the amortized cost basis during the current year and a list of the Company’s structured notes holding at December 31, 2023.
Mortgage Loans
Mortgage loans had outstanding principal balances of $30.4 billion and $25.8 billion at December 31, 2023 and 2022, respectively. Contractual interest rates range from 0.00 percent to 35.00 percent. The mortgage loans at December 31, 2023 had maturity dates ranging from 2023 to 2069.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The Company’s mortgage loans are collateralized by a variety of commercial real estate property types located throughout the U.S. and Canada. The commercial mortgage loans are non-recourse to the borrower.
The following tables present the geographic and property-type distribution of the Company’s mortgage loan portfolio:
| | | | | | | | |
| | | December 31, |
| | | 2023 | | 2022 |
Geographic distribution: | | | | | | | | |
Mid-Atlantic | | | 26.2 | % | | | 28.0 | % |
Foreign | | | 20.0 | | | | 22.5 | |
Pacific | | | 15.1 | | | | 14.7 | |
South Atlantic | | | 15.4 | | | | 12.1 | |
West South Central | | | 6.4 | | | | 6.5 | |
East North Central | | | 5.1 | | | | 5.8 | |
New England | | | 5.3 | | | | 4.5 | |
Mountain | | | 4.4 | | | | 3.9 | |
East South Central | | | 1.5 | | | | 1.5 | |
West North Central | | | 0.6 | | | | 0.5 | |
| | | |
Total | | | 100.0 | % | | | 100.0 | % |
Property type distribution: | | | | | | | | |
Multi-family | | | 32.6 | % | | | 35.9 | % |
Office | | | 19.5 | | | | 23.8 | |
Retail | | | 8.5 | | | | 8.3 | |
Industrial | | | 14.9 | | | | 16.2 | |
Hotel/Motel | | | 4.1 | | | | 4.8 | |
Other | | | 20.4 | | | | 11.0 | |
| | | |
Total | | | 100.0 | % | | | 100.0 | % |
At December 31, 2023, there were 331 mortgage loans with outstanding balances of $20 million or more, which loans collectively, aggregated approximately 75 percent of this portfolio.
The following table presents the minimum and maximum lending rates for new mortgage loans during 2023 and 2022:
| | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | |
| | | 2023 | | | 2022 | |
| (in millions) | | Maximum | | | Minimum | | | Maximum | | | Minimum | |
Office | | | 12.00 | % | | | 3.00 | % | | | 12.60 | % | | | 3.00 | % |
Multi-family | | | 9.84 | | | | 3.01 | | | | 15.03 | | | | 2.98 | |
Retail | | | 8.84 | | | | 5.06 | | | | — | | | | — | |
Industrial | | | 10.34 | | | | 4.08 | | | | 9.34 | | | | 2.68 | |
Hotel/Motel | | | 9.69 | | | | 6.95 | | | | 8.68 | | | | 4.04 | |
Other | | | 26.01 | | | | (0.16 | ) | | | 37.35 | | | | — | |
The Company did not reduce any interest rates during 2023 and 2022.
The maximum percentage of any one loan to the value of security at the time of the loan, exclusive of insured or guaranteed or purchase money mortgage was 144 percent and 90 percent, in 2023 and 2022, respectively.
At December 31, 2023, the Company held $560 million in impaired mortgage loans with a related allowance for credit losses. There were no impaired mortgage loans without a related allowance. At December 31, 2022, the Company held $800 million in impaired mortgages with $492 million of related allowances for credit losses and $308 million in impaired loans without a related allowance. The Company’s average recorded investment in impaired loans was $604 million and $669 million, at December 31, 2023 and 2022, respectively. The Company recognized interest income of $15 million, $22 million and $14 million, in 2023, 2022 and 2021, respectively.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents a rollforward of the changes in the allowance for losses on mortgage loans receivable:
| | | | | | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Balance, beginning of year | | $ | 294 | | | $ | 245 | | | $ | 274 | |
| | | |
Additions (reductions) charged to unrealized capital loss | | | 148 | | | | 58 | | | | (28) | |
| | | |
Direct write-downs charged against allowance | | | (87) | | | | (9) | | | | (1) | |
Balance, end of year | | $ | 355 | | | $ | 294 | | | $ | 245 | |
During 2023, the Company derecognized $71 million of mortgage loans and recognized $71 million of real estate collateral as a result of foreclosure.
The mortgage loan portfolio has been originated by the Company under strict underwriting standards. Commercial mortgage loans on properties such as offices, hotels and shopping centers generally represent a higher level of risk than do mortgage loans secured by multi-family residences. This greater risk is due to several factors, including the larger size of such loans and the more immediate effects of general economic conditions on these commercial property types. However, due to the Company’s strict underwriting standards, the Company believes that it has prudently managed the risk attributable to its mortgage loan portfolio while maintaining attractive yields.
The following table presents the age analysis of mortgage loans:
| | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | |
Current | | $ | 29,547 | | | $ | 24,981 | |
| | |
30 - 59 days past due | | | 68 | | | | 21 | |
| | |
60 - 89 days past due | | | 13 | | | | 3 | |
| | |
90 - 179 days past due | | | 24 | | | | 125 | |
| | |
Greater than 180 days past due | | | — | | | | 1 | |
Total | | $ | 29,652 | | | $ | 25,131 | |
At December 31, 2023 and 2022, the Company had mortgage loans outstanding under participant or co-lender agreements of $22.7 billion and $21.2 billion, respectively.
The Company had $307 million and $466 million in restructured loans at December 31, 2023 and 2022, respectively.
Aggregate mortgage loans having the following loan-to-value ratios as determined from the most current appraisal as of December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| (in millions) | | Residential | | | Commercial | | | Agricultural | |
| | | | | | | |
| Loan-to-Value | | Amount | | | Percentage of Total Admitted Assets | | | Amount | | | Percentage of Total Admitted Assets | | | Amount | | | Percentage of Total Admitted Assets | |
a. above 95% | | $ | 1 | | | | — | % | | $ | 609 | | | | 0.40 | % | | $ | — | | | | — % | |
b. 91% to 95% | | | 1 | | | | — | | | | 246 | | | | 0.20 | | | | — | | | | — | |
c. 81% to 90% | | | 264 | | | | 0.20 | | | | 1,133 | | | | 0.70 | | | | — | | | | — | |
d. 71% to 80% | | | 1,645 | | | | 1.00 | | | | 2,751 | | | | 1.70 | | | | — | | | | — | |
e. below 70% | | | 3,689 | | | | 2.30 | | | | 19,314 | | | | 12.00 | | | | — | | | | — | |
Troubled Debt Restructuring
The Company held no restructured debt for which impairment was recognized for both December 31, 2023 and 2022. At December 31, 2023 , the Company had $4 million outstanding commitments to debtors that hold loans with restructured terms. At December 31, 2022, the Company had $4 million of outstanding commitments to debtors that held loans with restructured terms.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Real Estate
The following table presents the components of the Company’s investment in real estate:
| | | | | | | | |
| | |
| | | December 31, | |
| | |
| (in millions) | | 2023 | | | 2022 | |
Properties occupied by the Company | | $ | — | | | $ | 6 | |
| | |
Properties held for production of income | | | 73 | | | | 3 | |
| | |
Properties held for sale | | | 2 | | | | — | |
| | | |
Total | | $ | 75 | | | $ | 9 | |
The Company recognized no gains or losses in 2023, 2022 and 2021. The Company recognized $3 million in impairment write-downs for its investment in real estate in 2023. The Company did not recognize any impairment write-downs for its investment in real estate during 2022 and 2021.
Other Invested Assets
The following table presents the components of the Company’s other invested assets:
| | | | | | | | |
| | |
| | | December 31, | |
| | |
| (in millions) | | 2023 | | | 2022 | |
Investments in limited liability companies | | $ | 644 | | | $ | 972 | |
| | |
Investments in limited partnerships | | | 3,921 | | | | 4,188 | |
| | |
Other unaffiliated investments | | | 1,892 | | | | 2,717 | |
| | |
Receivable for securities | | | 100 | | | | 73 | |
| | |
Non-admitted assets | | | (1) | | | | (10) | |
| | | |
Total | | $ | 6,556 | | | $ | 7,940 | |
The Company utilizes the look-through approach in valuing its investments in affiliated joint ventures or partnerships that have the characteristics of real estate investments. These affiliated real estate investments had an aggregate value of $955 million at December 31, 2023. All liabilities, commitments, contingencies, guarantees, or obligations of these holding company entities, which are required to be recorded as liabilities, commitments, contingencies, guarantees or obligations under applicable accounting guidance, are reflected in the Company’s determination of the carrying value of the investment in each of the respective holding company entities, if applicable.
The Company recorded impairment write-downs in joint ventures was $4 million, $13 million and $15 million during 2023, 2022 and 2021, respectively.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Net Investment Income
The following table presents the components of net investment income:
| | | | | | | | | | | | |
| | |
| | | Years ended December 31, | |
| | | |
(in millions) | | | 2023 | | | | 2022 | | | | 2021 | |
Bonds | | $ | 5,259 | | | $ | 4,608 | | | $ | 4,802 | |
Preferred stocks | | | 2 | | | | 10 | | | | 4 | |
Common stocks | | | 11 | | | | 2 | | | | 7 | |
Cash and short-term investments | | | 57 | | | | 44 | | | | 15 | |
Mortgage loans | | | 1,437 | | | | 1,038 | | | | 946 | |
Real estate* | | | 4 | | | | 4 | | | | 4 | |
Contract loans | | | 78 | | | | 68 | | | | 65 | |
Derivatives | | | (283) | | | | 994 | | | | 167 | |
Investment income from affiliates | | | 148 | | | | 399 | | | | 1,419 | |
Other invested assets | | | 246 | | | | 320 | | | | 271 | |
Gross investment income | | | 6,959 | | | | 7,487 | | | | 7,700 | |
Investment expenses | | | (385) | | | | (315) | | | | (197) | |
Net investment income | | $ | 6,574 | | | $ | 7,172 | | | $ | 7,503 | |
* Includes amounts for the occupancy of Company-owned property of $2 million in 2023, 2022 and 2021.
Net Realized and Unrealized Capital Gains (Losses)
The following table presents the components of Net realized capital gains (losses):
| | | | | | | | | | | | |
| | | Years ended December 31, | |
(in millions) | | | 2023 | | | | 2022 | | | | 2021 | |
Bonds | | $ | (460) | | | $ | (551) | | | $ | 446 | |
Preferred stocks | | | (12) | | | | — | | | | 14 | |
Common stocks | | | 8 | | | | (2) | | | | 16 | |
Cash and short-term investments | | | 36 | | | | (79) | | | | (1) | |
Mortgage loans | | | (162) | | | | (107) | | | | 18 | |
Real estate | | | (3) | | | | — | | | | — | |
Derivatives | | | (329) | | | | (1,233) | | | | (659) | |
Other invested assets | | | 113 | | | | 80 | | | | 199 | |
Other | | | — | | | | — | | | | (49) | |
Realized capital (losses) gains | | | (809) | | | | (1,892) | | | | (16) | |
Federal income tax benefit (expense) | | | 170 | | | | 397 | | | | 3 | |
Net gains transferred to IMR | | | 276 | | | | 305 | | | | (392) | |
Net realized capital (losses) gains | | $ | (363) | | | $ | (1,190) | | | $ | (405) | |
During 2023, 2022 and 2021, the Company recognized $87 million, $167 million and $42 million, respectively, of impairment write-downs in accordance with the impairment policy described in Note 2.
The following table presents the proceeds from sales of bonds and equities and the related gross realized capital gains and gross realized capital losses:
| | | | | | | | | | | | |
| | | Years ended December 31, | |
(in millions) | | | 2023 | | | | 2022 | | | | 2021 | |
| | | | |
Proceeds | | $ | 3,401 | | | $ | 9,787 | | | $ | 11,495 | |
| | | |
Gross realized capital gains | | $ | 64 | | | $ | 112 | | | $ | 823 | |
Gross realized capital losses | | $ | (456) | | | | (472) | | | | (405) | |
| | | | |
Net realized capital (losses) gains | | $ | (392) | | | $ | (360) | | | $ | 418 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents the net change in unrealized capital gains (losses) of investments (including foreign exchange capital gains (losses):
| | | | | | | | | | | | |
| | |
| | | Years ended December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Bonds | | $ | 280 | | | $ | (369) | | | $ | (171) | |
Preferred and common stocks | | | 53 | | | | (59) | | | | (311) | |
Mortgage loans | | | 273 | | | | (523) | | | | (129) | |
Derivatives | | | 148 | | | | (497) | | | | 139 | |
Other invested assets | | | (68) | | | | (280) | | | | 502 | |
Other | | | (10) | | | | 19 | | | | 25 | |
Federal income tax benefit (expense) | | | (126) | | | | 310 | | | | (116) | |
| | | | |
Net change in unrealized (losses) gains of investments | | $ | 550 | | | $ | (1,399) | | | $ | (61) | |
5GI Securities Measured at Aggregate Book Adjusted Carrying Value and Fair Value
The following table presents 5GI Securities measured at aggregate book adjusted carrying value (BACV) and aggregate fair value at December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Investment | | Number of 5GI Securities | | | | | | Aggregate BACV
(in millions) | | | | | | Aggregate Fair Value (in millions) | |
| | | 2023 | | | 2022 | | | | | | 2023 | | | 2022 | | | | | | 2023 | | | 2022 | |
Bonds - AC | | | 5 | | | | 11 | | | | | | | $ | 45 | | | $ | 15 | | | | | | | $ | 45 | | | $ | 13 | |
LB&SS - AC | | | 3 | | | | 14 | | | | | | | | 3 | | | | 11 | | | | | | | | 1 | | | | 11 | |
Preferred Stock - AC | | | — | | | | — | | | | | | | | — | | | | — | | | | | | | | — | | | | — | |
Preferred Stock - FV | | | 3 | | | | 4 | | | | | | | | 1 | | | | 7 | | | | | | | | 1 | | | | 7 | |
Total | | | 11 | | | | 29 | | | | | | | $ | 49 | | | $ | 33 | | | | | | | $ | 47 | | | $ | 31 | |
AC - Amortized Cost
FV - Fair Value
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
4.LOAN-BACKED AND STRUCTURED SECURITY IMPAIRMENTS AND STRUCTURED NOTES HOLDINGS
LBaSS
The following table presents the LBaSS held by the Company at December 31, 2023 for which it had recognized non-interest related OTTI subsequent to the adoption of SSAP 43R:
| | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | | | | | | | | | | | | | | | | | |
| CUSIP | | Amortized Cost Before Current Period
OTTI | | | Present Value of Projected Cash Flows | | | Recognized OTTI | | | Amortized Cost After OTTI | | | Fair Value at Time of OTTI | | | Date of Financial Statement Where Reported | |
25702@AB2 | | $ | 899 | | | $ | 1 | | | $ | 898 | | | $ | 1 | | | $ | 1 | | | | 3/31/2023 | |
25150WAA2 | | | 6,490 | | | | — | | | | 6,490 | | | | — | | | | — | | | | 3/31/2023 | |
16163HAE1 | | | 504 | | | | 503 | | | | — | | | | 503 | | | | 526 | | | | 3/31/2023 | |
05952GAA9 | | $ | 2,344 | | | $ | 2,293 | | | $ | 51 | | | $ | 2,293 | | | $ | 2,278 | | | | 3/31/2023 | |
22541QQJ4 | | | 4 | | | | — | | | | 4 | | | | — | | | | — | | | | 3/31/2023 | |
12668BKA0 | | | 1,929 | | | | 1,904 | | | | 25 | | | | 1,904 | | | | 1,844 | | | | 3/31/2023 | |
32051GPW9 | | $ | 1,749 | | | $ | 1,747 | | | $ | 3 | | | $ | 1,747 | | | $ | 1,712 | | | | 3/31/2023 | |
Quarterly Total | | $ | 13,919 | | | $ | 6,448 | | | $ | 7,471 | | | $ | 6,448 | | | $ | 6,361 | | | | | |
75114GAC3 | | | 22 | | | | — | | | | 22 | | | | — | | | | — | | | | 6/30/2023 | |
23312RAE5 | | | 27,786 | | | | 13,657 | | | | 14,129 | | | | 13,657 | | | | 11,312 | | | | 6/30/2023 | |
17029RAA9 | | | 1,278 | | | | — | | | | 1,278 | | | | — | | | | — | | | | 6/30/2023 | |
Quarterly Total | | $ | 29,086 | | | $ | 13,657 | | | $ | 15,429 | | | $ | 13,657 | | | $ | 11,312 | | | | | |
007036UQ7 | | | 2,543 | | | | 2,528 | | | | 16 | | | | 2,528 | | | | 2,437 | | | | 9/30/2023 | |
94984NAA0 | | | 1,474 | | | | 1,464 | | | | 11 | | | | 1,464 | | | | 1,565 | | | | 9/30/2023 | |
02660KAA0 | | | 24,925 | | | | 24,825 | | | | 100 | | | | 24,825 | | | | 28,597 | | | | 9/30/2023 | |
93934FGB2 | | | 8,242 | | | | 8,164 | | | | 78 | | | | 8,164 | | | | 9,131 | | | | 9/30/2023 | |
362480AD7 | | | 4,575 | | | | 4,550 | | | | 25 | | | | 4,550 | | | | 5,646 | | | | 9/30/2023 | |
05952EAA4 | | | 420 | | | | 417 | | | | 3 | | | | 417 | | | | 430 | | | | 9/30/2023 | |
17025TBE0 | | | 3,595 | | | | 3,591 | | | | 4 | | | | 3,591 | | | | 3,263 | | | | 9/30/2023 | |
232434AE0 | | | 68,655 | | | | 68,509 | | | | 146 | | | | 68,509 | | | | 71,719 | | | | 9/30/2023 | |
655378AH0 | | | 21,296 | | | | 21,149 | | | | 147 | | | | 21,149 | | | | 24,021 | | | | 9/30/2023 | |
45669BAA0 | | | 60,942 | | | | 60,915 | | | | 27 | | | | 60,915 | | | | 65,476 | | | | 9/30/2023 | |
45660LEF2 | | | 14,309 | | | | 14,261 | | | | 48 | | | | 14,261 | | | | 14,441 | | | | 9/30/2023 | |
61915YAD3 | | | 14,284 | | | | 14,188 | | | | 95 | | | | 14,188 | | | | 15,795 | | | | 9/30/2023 | |
126694PP7 | | | 3,041 | | | | 3,029 | | | | 13 | | | | 3,029 | | | | 2,558 | | | | 9/30/2023 | |
45669FAC7 | | | 3,944 | | | | 3,940 | | | | 4 | | | | 3,940 | | | | 4,052 | | | | 9/30/2023 | |
761118HU5 | | | 2,196 | | | | 2,173 | | | | 23 | | | | 2,173 | | | | 2,632 | | | | 9/30/2023 | |
74923WAB4 | | | 5,131 | | | | 5,130 | | | | 1 | | | | 5,130 | | | | 5,068 | | | | 9/30/2023 | |
Quarterly Total | | $ | 239,572 | | | $ | 238,833 | | | $ | 741 | | | $ | 238,833 | | | $ | 256,831 | | | | | |
67088CAA5 | | | 2,670 | | | | 204 | | | | 2,466 | | | | 204 | | | | 204 | | | | 12/31/2023 | |
058928AN2 | | | 1,083 | | | | 724 | | | | 360 | | | | 724 | | | | 713 | | | | 12/31/2023 | |
61748HJY8 | | | 6,601 | | | | 6,581 | | | | 20 | | | | 6,581 | | | | 5,868 | | | | 12/31/2023 | |
059522BG6 | | | 2,626 | | | | 2,623 | | | | 3 | | | | 2,623 | | | | 2,491 | | | | 12/31/2023 | |
466286AA9 | | | 13,771 | | | | 13,748 | | | | 23 | | | | 13,748 | | | | 15,245 | | | | 12/31/2023 | |
45661XAD4 | | | 11,277 | | | | 11,244 | | | | 33 | | | | 11,244 | | | | 9,860 | | | | 12/31/2023 | |
02147HAF9 | | | 5,644 | | | | 5,603 | | | | 40 | | | | 5,603 | | | | 5,197 | | | | 12/31/2023 | |
92990GAC7 | | | 2,086 | | | | 2,083 | | | | 4 | | | | 2,083 | | | | 1,886 | | | | 12/31/2023 | |
17029PAA3 | | | 24,063 | | | | 14,513 | | | | 9,550 | | | | 14,513 | | | | 11,747 | | | | 12/31/2023 | |
Quarterly Total | | $ | 69,821 | | | $ | 57,323 | | | $ | 12,499 | | | $ | 57,323 | | | $ | 53,211 | | | | | |
| | | | | | |
| | | | | | | Year-end Total | | | $ | 36,139 | | | | | | | | | | | | | |
None of the structured notes held by the Company are defined as a Mortgage-Referenced Security by the IAO.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
5. SECURITIES LENDING AND REPURCHASE AGREEMENTS
Securities Lending
At December 31, 2023 and 2022, the Company had no bonds loaned pursuant to the securities lending program.
The following table presents the aggregate fair value of cash collateral received related to the securities lending program and the terms of the contractually obligated collateral positions:
| | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | |
30 days or less | | $ | — | | | $ | — | |
31 to 60 days | | | — | | | | — | |
61 to 90 days | | | — | | | | — | |
Subtotal | | | — | | | | — | |
Securities collateral received | | | — | | | | — | |
Total collateral received | | $ | — | | | $ | — | |
The following table presents the aggregate amortized cost and fair value of cash collateral reinvested related to the securities lending program by maturity date:
| | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | | | | December 31, 2022 | |
| (in millions) | | Amortized Cost | | | Fair Value | | | | | | Amortized Cost | | | Fair Value | |
Open positions | | $ | — | | | $ | — | | | | | | | $ | — | | | $ | — | |
Subtotal | | | — | | | | — | | | | | | | | — | | | | — | |
| | | | | |
Securities collateral received | | | — | | | | — | | | | | | | | — | | | | — | |
Total collateral reinvested | | $ | — | | | $ | — | | | | | | | $ | — | | | $ | — | |
Repurchase Agreements
At December 31, 2023 and 2022, bonds with a fair value of approximately $1,675 million and $1,668 million, respectively, were subject to repurchase agreements to secure amounts borrowed by the Company.
The following table presents the aggregate fair value of cash collateral received related to the repurchase agreement program and the terms of the contractually obligated collateral positions:
| | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | |
Open positions | | $ | — | | | $ | — | |
30 days or less | | | 1,623 | | | | 1,316 | |
31 to 60 days | | | — | | | | 145 | |
61 to 90 days | | | — | | | | — | |
Greater than 90 days | | | — | | | | 264 | |
Subtotal | | | 1,623 | | | | 1,725 | |
| | |
Securities collateral received | | | — | | | | — | |
Total collateral received | | $ | 1,623 | | | $ | 1,725 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents the original (flow) and residual maturity for bi-lateral repurchase agreement transactions for the year ended December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | FIRST
QUARTER | | | | | | SECOND
QUARTER | | | | | | THIRD
QUARTER | | | | | | FOURTH
QUARTER | |
| | | | | | | |
| a. Maximum Amount | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. Open - No Maturity | | $ | 21 | | | | | | | $ | 21 | | | | | | | $ | 29 | | | | | | | $ | 28 | |
2. Overnight | | | 658 | | | | | | | | 465 | | | | | | | | — | | | | | | | | 344 | |
3. 2 Days to 1 Week | | | 1,989 | | | | | | | | 560 | | | | | | | | — | | | | | | | | 1,004 | |
4. > 1 Week to 1 Month | | | 1,801 | | | | | | | | 274 | | | | | | | | — | | | | | | | | 1,597 | |
5. > 1 Month to 3 Months | | | 73 | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
6. > 3 Months to 1 Year | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
7. > 1 Year | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
| | | | | | | |
b. Ending Balance | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. Open - No Maturity | | $ | 21 | | | | | | | $ | 21 | | | | | | | $ | 29 | | | | | | | $ | 28 | |
2. Overnight | | | — | | | | | | | | 75 | | | | | | | | — | | | | | | | | — | |
3. 2 Days to 1 Week | | | 179 | | | | | | | | — | | | | | | | | — | | | | | | | | 1,004 | |
4. > 1 Week to 1 Month | | | 1,751 | | | | | | | | — | | | | | | | | — | | | | | | | | 586 | |
5. > 1 Month to 3 Months | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
6. > 3 Months to 1 Year | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
7. > 1 Year | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
The following table presents the Company’s liability to return collateral for the year ended December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | FIRST QUARTER | | | | | | SECOND QUARTER | | | | | | THIRD QUARTER | | | | | | FOURTH QUARTER | |
| | | | | | | |
a. Maximum Amount
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. Cash (Collateral - All) | | $ | 4,542 | | | | | | | $ | 1,320 | | | | | | | $ | 29 | | | | | | | $ | 2,973 | |
2. Securities Collateral (FV) | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
b. Ending Balance | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. Cash (Collateral - All) | | $ | 1,951 | | | | | | | $ | 96 | | | | | | | $ | 29 | | | | | | | $ | 1,618 | |
2. Securities Collateral (FV) | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
The Company requires a minimum of 95 percent of the fair value of securities sold under the repurchase agreements to be maintained as collateral. Cash collateral received is invested in corporate bonds and the offsetting collateral liability for repurchase agreements is included in other liabilities.
The following table presents the aggregate amortized cost and fair value of cash collateral reinvested related to the repurchase agreement program by maturity date:
| | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| | | | |
| (in millions) | | Amortized
Cost | | | Fair Value | | | Amortized
Cost | | | Fair Value | |
Open positions | | $ | 2,036 | | | $ | 1,675 | | | $ | 1,933 | | | $ | 1,668 | |
Greater than three years | | | — | | | | — | | | | — | | | | — | |
Subtotal | | | 2,036 | | | | 1,675 | | | | 1,933 | | | | 1,668 | |
Securities collateral received | | | — | | | | — | | | | — | | | | — | |
Total collateral reinvested | | $ | 2,036 | | | $ | 1,675 | | | $ | 1,933 | | | $ | 1,668 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents the fair value of securities under bi-lateral repurchase agreement transactions for the year ended December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| (in millions) | | FIRST QUARTER | | | | | | SECOND QUARTER | | | | | | THIRD
QUARTER | | | | | | FOURTH
QUARTER | |
| | | | | | | |
a. Maximum Amount | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. BACV | | $ | — | | | | | | | $ | — | | | | | | | $ | — | | | | | | | $ | — | |
2. Nonadmitted - Subset of BACV | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
3. Fair Value | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
b. Ending Balance | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. BACV | | $ | 2,436 | | | | | | | $ | 120 | | | | | | | $ | 39 | | | | | | | $ | 2,036 | |
2. Nonadmitted - Subset of BACV | | | — | | | | | | | | — | | | | | | | | — | | | | | | | | — | |
3. Fair Value | | | 2,021 | | | | | | | | 100 | | | | | | | | 26 | | | | | | | | 1,675 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents the fair value of securities under bi-lateral repurchase agreement transactions for the year ended December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 1 None | | | | | 2 NAIC 1 | | | | | 3 NAIC 2 | | | | | 4 NAIC 3 | |
Ending Balance | | | | | | | | | | | | | | | | | | | | | | |
a. Bonds - BACV | | $ | — | | | | | $ | 1,094 | | | | | $ | 942 | | | | | $ | — | |
b. Bonds - FV | | | — | | | | | | 850 | | | | | | 825 | | | | | | — | |
c. LB & SS - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
d. LB & SS - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
e. Preferred Stock - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
f. Preferred Stock - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
g. Common Stock | | | — | | | | | | — | | | | | | — | | | | | | — | |
h. Mortgage Loans - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
i. Mortgage Loans - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
j. Real Estate - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
k. Real Estate - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
l. Derivatives - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
m. Derivatives - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
n. Other Invested Assets - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
o. Other Invested Assets - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
p. Total Assets - BACV | | | — | | | | | | 1,094 | | | | | | 942 | | | | | | — | |
q. Total Assets - FV | | | — | | | | | | 850 | | | | | | 825 | | | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 5 NAIC 4 | | | | | 6 NAIC 5 | | | | | 7 NAIC 6 | | | | | 8 Non-Admitted | |
Ending Balance | | | | | | | | | | | | | | | | | | | | | | |
a. Bonds - BACV | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | |
b. Bonds - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
c. LB & SS - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
d. LB & SS - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
e. Preferred Stock - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
f. Preferred Stock - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
g. Common Stock | | | — | | | | | | — | | | | | | — | | | | | | — | |
h. Mortgage Loans - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
i. Mortgage Loans - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
j. Real Estate - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
k. Real Estate - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
l. Derivatives - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
m. Derivatives - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
n. Other Invested Assets - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
o. Other Invested Assets - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
p. Total Assets - BACV | | | — | | | | | | — | | | | | | — | | | | | | — | |
q. Total Assets - FV | | | — | | | | | | — | | | | | | — | | | | | | — | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
6. RESTRICTED ASSETS
The Company has restricted assets as detailed below. Assets under restriction are general account assets and are not part of the Separate Accounts.
The following table presents the carrying value of the Company’s restricted assets:
| | | | | | | | |
| | |
| | | December 31, | |
| | |
| (in millions) | | 2023 | | | 2022 | |
On deposit with states | | $ | 47 | | | $ | 47 | |
FHLB stock and collateral pledged | | | 6,938 | | | | 5,043 | |
Subject to repurchase agreements | | | 1,618 | | | | 1,933 | |
Collateral for derivatives | | | 1,412 | | | | 1,541 | |
Guaranteed interest contracts | | | 66 | | | | 68 | |
Other restricted assets | | | 985 | | | | 464 | |
Total | | $ | 11,066 | | | $ | 9,096 | |
7. SUBPRIME MORTGAGE RISK EXPOSURE
The following features are commonly recognized characteristics of subprime mortgage loans:
| • | | An interest rate above prime to borrowers who do not qualify for prime rate loans; |
| • | | Borrowers with low credit ratings (FICO scores); |
| • | | Interest-only or negative amortizing loans; |
| • | | Unconventionally high initial loan-to-value ratios; |
| • | | Low initial payments based on a fixed introductory rate that expires after a short initial period, then adjusts to a variable index rate plus a margin for the remaining term of the loan; |
| • | | Borrowers with less than conventional documentation of their income and/or net assets; |
| • | | Very high or no limits on how much the payment amount or the interest rate may increase at reset periods, potentially causing a substantial increase in the monthly payment amount; and/or |
| • | | Substantial prepayment penalties and/or prepayment penalties that extend beyond the initial interest rate adjustment period. |
Non-agency RMBS can belong to one of several different categories depending on the characteristics of the borrower, the property and the loan used to finance the property. Categorization is a function of FICO score, the type of loan, loan-to-value ratio, and property type and loan documentation.
Generally, subprime loans are made to borrowers with low FICO scores, low levels of equity and reduced income/asset documentation. Due to these characteristics, subprime borrowers pay a substantially higher interest rate than prime borrowers. In addition, they often utilize mortgage products that reduce their monthly payments in the near-term. These include adjustable-rate mortgages with low initial rates or interest-only loans. Borrowers in products like this often experience significant “payment shock” when the teaser payment resets upwards after the initial fixed period.
The primary classification mechanism the Company uses for subprime loans is FICO score. Specifically, a pool with an average FICO at origination less than 650 is considered to be subprime. However, the Company may subjectively adjust this classification based on an assessment of the other parameters mentioned above.
To monitor subprime securities, the Company uses a model with vintage-specific assumptions for delinquency roll rates, loss severities and the timing of losses. As and when needed, these vintage-based assumptions are supplemented with deal-specific information including, but not limited to, geographic distribution, realized loss severities, trigger status and scenario analysis.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The Company has no direct exposure through investments in subprime mortgage loans. The Company’s exposure is through other investments, primarily in RMBS, as described above.
The following table presents information regarding the Company’s investments with subprime exposures:
| | | | | | | | | | | | | | | | |
| (in millions) | | Actual Cost | | | Book
Adjusted
Statement
Value | | | Fair Value | | | OTTI
Recognized
to Date | |
December 31, 2023 | | | | | | | | | | | | | | | | |
| | | | |
In general account: | | | | | | | | | | | | | | | | |
RMBS | | $ | 810 | | | $ | 791 | | | $ | 903 | | | $ | (14 | ) |
CDOs | | | 101 | | | | 117 | | | | 113 | | | | — | |
Total subprime exposure | | $ | 911 | | | $ | 908 | | | $ | 1,016 | | | $ | (14 | ) |
December 31, 2022 | | | | | | | | | | | | | | | | |
| | | | |
In general account: | | | | | | | | | | | | | | | | |
RMBS | | $ | 868 | | | $ | 842 | | | $ | 963 | | | $ | (14 | ) |
CDOs | | | 74 | | | | 88 | | | | 83 | | | | — | |
Total subprime exposure | | $ | 942 | | | $ | 930 | | | $ | 1,046 | | | $ | (14 | ) |
The Company has no underwriting exposure to subprime mortgage risk through mortgage guaranty or financial guaranty insurance coverage.
8. DERIVATIVES
The Company has taken positions in certain derivative financial instruments to mitigate or hedge the impact of changes in interest rates, foreign currencies, equity markets, swap spreads, volatility, correlations and yield curve risk on cash flows from investment income, policyholder liabilities and equity. Financial instruments used by the Company for such purposes include interest rate swaps, interest rate swaptions, cross-currency swaps, futures and futures options on equity indices, and futures and futures options on government securities. The Company does not engage in the use of derivative instruments for speculative purposes and is neither a dealer nor trader in derivative instruments.
All derivative instruments are recognized in the financial statements. SSAP 108 allows special accounting treatment for limited derivatives hedging variable annuity guarantee benefits subject to fluctuation as a result of interest rate sensitivity. The special accounting provision permits reporting entities to utilize a form of macro-hedging in which a portfolio of variable annuity policies are jointly designated as the host contracts containing the hedge item, in a fair value hedge, pursuant to a Clearly Defined Hedging Strategy defined within VM-21.
At inception and on an ongoing basis, the hedging relationship must be highly effective in achieving offsetting changes in fair value attributed to the hedged risk during the period that the hedge is designated. The term “highly effective” describes a fair value hedge relationship where the change in fair value of the derivative instrument is within 80 to 125 percent of the opposite change in fair value of the hedged item attributed to the hedged risk.
SSAP 108 requires the Company use the same fair value definition that is used for its economic hedge target, which enables the Company to leverage the existing modeling and attribution platform currently in place for hedging analysis. In addition, the Company uses the VM-21 interest rate sensitivities measured at the beginning of the quarter to estimate the reserve movement attributed to interest rate movement, which leverages the existing modeling and attribution platform in place for Statutory analysis. These approaches and the overall use of the special accounting provision of SSAP 108 in 2022 and 2023 have received the approval of the TDI.
The Company uses a portfolio of interest rates swaps and swaptions to hedge the interest rate risk associated with a portfolio of guaranteed minimum withdrawal benefits (“GMWB”) riders on its variable annuities. This hedging relationship was highly effective and complied with the Clearly Defined Hedging Strategy of VM-21.
Under SSAP 108 all derivatives are reported at fair value. Fair value change in hedge instruments attributable to the hedged risk that offset the change in reserve attributable to the hedged risk is recognized as realized gain/loss in the current period there were no excludable components.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
At December 31, 2023 and 2022, fair value of the derivatives was a liability of $455 million and $1.2 billion, full contract fair value was a liability of $1 billion and $1.7 billion and hedge target fair value was a liability of $963 million and $841 million. For the period ending December 31, 2023 and 2022, fair value change in hedge instruments attributable to the hedged risk that offset the change in reserve attributable to the hedged risk was a realized loss of $193 million and a realized gain $1 billion, respectively. Fair value change in hedge instruments attributable to the hedged risk that do not offset the change in reserve attributable to the hedged risk are recognized as deferred assets/liabilities in the current period and amortized over projected VA guarantees’ Macaulay Duration within the Standard Projection, but not more than 10 years. At December 31, 2023 and 2022, the fair value change in hedge instruments attributable to the hedged risk that do not offset the change in reserve attributable to the hedged risk was a deferred assets of $1.1 billion and deferred assets $739 million, respectively. For the periods ending December 31, 2023 and 2022, amortization was a realized loss of $93 million and a realized loss of $32 million, respectively. Fair value change in hedge instruments not attributable to the hedged risk are recognized as unrealized gain/loss, if any. All fair value changes in hedge instruments were attributable to the hedged risk for the period. Based on the currently liability profile, deferred asset/ liabilities are being amortized over 10 years.
Starting in 2022, the Company designated, under SSAP 86, certain foreign exchange derivatives as effective hedges of certain invested assets. During 2023, the Company also designated certain interest rate swaps as effective cash flow hedges of floating-rate investment assets. Derivatives not designated for hedge accounting are accounted for at fair value with the changes in fair value recorded in surplus as unrealized gains or losses, net of deferred taxes. The value of the Company’s exchange traded futures contracts relates to the one-day lag in the net cash settlement of these contracts.
The Company recognized a net unrealized capital gain of $167 million in 2023, an unrealized capital gain of $478 million in 2022 and an unrealized capital gain of $139 million in 2021, related to derivatives that did not qualify for hedge accounting.
Net cash collateral received for derivative transactions increased in the year 2023, as a result of increases in fair values of derivatives covered by an International Swaps and Derivative Association Master Agreement (“ISDA Master Agreement”) and Credit Support Annex provisions. At December 31, 2023, the Company held collateral for SSAP 86 and SSAP 108 derivatives of $1,861 million, which is invested in cash, cash equivalents and/or short-term investments.
Refer to Note 3 for disclosures related to net realized capital gains (losses).
Swaps, Options, and Futures
Interest rate or cross-currency swap agreements are agreements to exchange with a counterparty, at specified intervals, payments of differing character (for example, variable-rate payments exchanged for fixed-rate payments) or in different currencies, based on an underlying principal balance, notional amount. Generally no cash is exchanged at the outset of the contract and no principal payments are made by either party. A single net payment is usually made by one counterparty at each contractual payment due date, and this net payment is included in the Statutory Statement of Operations.
Options are contracts that grant the purchaser, for a premium payment, the right, but not the obligation, either to purchase or sell a financial instrument at a specified price within a specified period of time. The Company purchases call options on the S&P 500 Index to offset the risk of certain guarantees of specific equity-index annuity and universal life policy values. The Company also purchases put options on the S&P 500 Index to offset volatility risk arising from minimum guarantees embedded in variable annuities. The options are carried at fair value, with changes in fair value recognized in unrealized investment gains and losses.
Financial futures are contracts between two parties that commit one party to purchase and the other to sell a particular commodity or financial instrument at a price determined on the final settlement day of the contract. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The Company uses futures contracts on Euro dollar deposits, U.S. Treasury Notes, U.S. Treasury Bonds, the S&P 500 Index, MidCap 400, Russell 2000, MSCI EAFE, foreign government debt securities, and foreign denominated equity indices to offset the risk of certain guarantees on annuity policy values.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Interest Rate Risk
Interest rate derivatives are used to manage interest rate risk associated with certain guarantees of variable annuities and equity indexed annuities and certain bonds. The Company’s interest rate hedging derivative instruments include (1) interest rate swaps and swaptions; (2) listed futures on government securities; and (3) listed futures options on government securities; and (4) unlisted swaps and swaptions in U.S. Dollar Secured Overnight Financing Rate.
Currency Risk
Foreign exchange contracts used by the Company include cross-currency swaps, which are used to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company holds.
Equity Risk
Equity derivatives are used to mitigate financial risk embedded in certain insurance liabilities.
Credit Risk
The Company is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments, but it does not expect any counterparties to fail to meet their obligations given their high credit ratings. For over-the-counter (“OTC”) derivatives, the Company’s net credit exposure is determined based on master netting agreements, which take into consideration all derivative positions with the counterparty, as well as collateral posted by the counterparty at the balance sheet date. The Company is exposed to credit risk when the net position with a particular counterparty results in an asset that exceeds collateral pledged by that counterparty.
For OTC contracts, the Company generally uses an ISDA Master Agreement and Credit Support Annexes with bilateral collateral provisions to reduce counterparty credit exposures. An ISDA Master Agreement is an agreement between two counterparties, which may cover multiple derivative transactions and such 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, in a single currency, in the event of a default affecting any one derivative transaction or a termination event affecting all or a specified group of the transactions. The Company minimizes the risk that counterparties might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value and may require additional collateral to be posted upon the occurrence of certain events or circumstances. In the unlikely event of a failure to perform by any of the counterparties to these derivative transactions, there would not be a material effect on the Company’s admitted assets, liabilities or capital and surplus.
The Company has also entered into exchange-traded options and futures contracts. Under exchange-traded futures contracts, the Company agrees to purchase a specified number of contracts with other parties and to post or receive variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The parties with whom the Company enters into exchange-traded futures are regulated futures commission merchants who are members of a trading exchange. The credit risk of exchange-traded futures is partially mitigated because variation margin is settled daily in cash. Exchange-traded option contracts are not subject to daily margin settlements and amounts due to the Company based upon favorable movements in the underlying securities or indices are owed upon exercise.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents the notional amounts, statement values and fair values of the Company’s derivative instruments:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| (in millions) | | Contract or Notional Amount | | | Statement Value | | | Fair Value | | | Contract or Notional Amount | | | Statement Value | | | Fair Value | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | $ | 25,958 | | | $ | 1,808 | | | $ | 1,808 | | | $ | 18,022 | | | $ | 1,700 | | | $ | 1,700 | |
Foreign exchange contracts | | | 6,641 | | | | 679 | | | | 679 | | | | 5,190 | | | | 822 | | | | 826 | |
Equity contracts | | | 104,770 | | | | 5,372 | | | | 5,371 | | | | 58,131 | | | | 1,505 | | | | 1,504 | |
Other contracts | | | 14 | | | | — | | | | — | | | | 49 | | | | 1 | | | | 1 | |
Derivative assets, gross | | | 137,383 | | | | 7,859 | | | | 7,858 | | | | 81,392 | | | | 4,028 | | | | 4,031 | |
Counter party netting* | | | — | | | | (5,975) | | | | (5,975) | | | | — | | | | (3,562) | | | | (3,562) | |
Derivative assets, net | | $ | 137,383 | | | $ | 1,884 | | | $ | 1,883 | | | $ | 81,392 | | | $ | 466 | | | $ | 469 | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | $ | 31,308 | | | $ | 2,070 | | | $ | 2,063 | | | $ | 22,448 | | | $ | 2,653 | | | $ | 2,653 | |
Foreign exchange contracts | | | 9,001 | | | | 453 | | | | 467 | | | | 7,484 | | | | 523 | | | | 521 | |
Equity contracts | | | 43,063 | | | | 4,403 | | | | 4,403 | | | | 39,808 | | | | 1,193 | | | | 1,193 | |
Other contracts | | | 47 | | | | 2 | | | | 2 | | | | — | | | | — | | | | — | |
Derivative liabilities, gross | | | 83,419 | | | | 6,928 | | | | 6,935 | | | | 69,740 | | | | 4,369 | | | | 4,367 | |
Counter party netting* | | | — | | | | (5,975) | | | | (5,975) | | | | — | | | | (3,562) | | | | (3,562) | |
Derivative liabilities, net | | $ | 83,419 | | | $ | 953 | | | $ | 960 | | | $ | 69,740 | | | $ | 807 | | | $ | 805 | |
* Represents netting of derivative exposures covered by a qualifying master netting agreement.
The Company has a right of offset of its derivatives asset and liability positions with various counterparties.
The following table presents the effect of the right of offsets:
| | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| (in millions) | | Assets | | | Liabilities | | | Assets | | | Liabilities | |
Gross amount recognized | | $ | 7,859 | | | $ | 6,927 | | | $ | 4,028 | | | $ | 4,369 | |
Amount offset | | | (5,975) | | | | (5,975) | | | | (3,562) | | | | (3,562) | |
Net amount presented in the Statement of Admitted | | | | | | | | | | | | | | | | |
Assets, Liabilities, and Capital and Surplus | | $ | 1,884 | | | $ | 952 | | | $ | 466 | | | $ | 807 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
9. INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK
The following table presents the Company’s derivative financial instruments with concentrations of credit risk:
| | | | | | | | | | | | | | | | | | |
| |
| | | December 31, 2023 | | | | | December 31, 2022 | |
| | | | | | | | | | |
| (in millions) | | Contract or Notional
Amount | | | Final Maturity Date | | | | Contract or Notional Amount | | | Final Maturity Date |
| |
Derivative assets: | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | $ | 25,958 | | | | 2056 | | | | | $ | 18,022 | | | | 2069 | |
Foreign exchange contracts | | | 6,641 | | | | 2061 | | | | | | 5,190 | | | | 2061 | |
Equity contracts | | | 104,770 | | | | 2028 | | | | | | 58,131 | | | | 2028 | |
Credit contracts | | | — | | | | — | | | | | | — | | | | — | |
Other contracts | | | 14 | | | | 2053 | | | | | | 49 | | | | 2042 | |
Derivative liabilities: | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | 31,308 | | | | 2071 | | | | | | 22,448 | | | | 2071 | |
Foreign exchange contracts | | | 9,001 | | | | 2063 | | | | | | 7,484 | | | | 2060 | |
Equity contracts | | | 43,063 | | | | 2025 | | | | | | 39,808 | | | | 2024 | |
Other contracts | | | 47 | | | | 2042 | | | | | | — | | | | — | |
| |
The credit exposure to the Company’s derivative contracts is limited to the fair value of such contracts that are favorable to the Company at the reporting date.
The credit exposure to the Company’s derivative contracts aggregated $829.4 million and $848.9 million at December 31, 2023 and 2022, respectively.
10. FAIR VALUE INSTRUMENTS
Fair Value Measurements
The Company carries certain financial instruments at fair value. The Company defines the fair value of a financial instrument as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company is responsible for the determination of the value of the investments carried at fair value and the supporting methodologies and assumptions.
The degree of judgment used in measuring the fair value of financial instruments generally inversely correlates with the level of observable valuation inputs. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Conversely, financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction, liquidity and general market conditions
Fair Value Hierarchy
Assets and liabilities recorded at fair value 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 the Company has the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. The Company does 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. |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
| • | | 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, the Company must make certain assumptions as to 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 those 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. |
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.
Bonds: Fair value is based principally on value from independent third-party valuation service providers, broker quotes and other independent information.
Preferred stocks: Fair value of unaffiliated preferred stocks is based principally on value from independent third-party service providers, broker quotes and other independent information.
Cash, cash equivalents and short term investments: Carrying amount approximate fair value because of the relatively short period of time between origination and expected realization and their limited exposure to credit risk.
Mortgage loans: Fair values are primarily determined by discounting future cash flows to the present at current market rates, using expected prepayment rates.
Contract loans: Carrying amounts, which approximate fair value, are generally equal to unpaid principal amount as of each reporting date. No consideration is given to credit risk because contract loans are effectively collateralized by the cash surrender value of the policies.
Securities lending reinvested collateral assets: Securities lending assets are generally invested in short-term investments and thus carrying amounts approximate fair values because of the relatively short period of time between origination and expected realizations.
Separate account assets: Variable annuity and variable universal life assets are carried at the market value of the underlying securities. Certain separate account assets related to market value adjustment fixed annuity contracts are carried at book value. Fair value is based principally on the value from independent third-party valuation service providers, broker quotes and other independent information.
Policy reserves and contractual liabilities: Fair value for investment contracts (those without significant mortality risk) not accounted for at fair value were estimated for disclosure purposes using discounted cash flow calculations based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. When no similar contracts are being offered, the discount rate is the appropriate swap rates (if available) or current risk-free interest rates consistent with the currency in which cash flows are denominated.
Payable for securities lending: Cash collateral received from the securities lending program is invested in short-term investments and the offsetting liability is included in payable for securities lending. The carrying amount of this liability approximates fair value because of the relatively short period between origination of the liability and expected settlement.
Receivables/payables for securities: Such amounts represent transactions of a short-term nature for which the statement value is considered a reasonable estimate of fair value.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Fair Value Information about Financial Instruments Not Measured at Fair Value
The following table presents the aggregate fair values of the Company’s financial instruments not measured at fair value compared to their statement values:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Aggregate Fair Value | | | Admitted Assets or Liabilities | | | Level 1 | | | Level 2 | | | Level 3 | |
December 31, 2023 | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | |
Bonds | | $ | 102,685 | | | $ | 112,112 | | | $ | 22 | | | $ | 84,726 | | | $ | 17,937 | |
Preferred stocks | | | 79 | | | | 76 | | | | — | | | | 79 | | | | — | |
Common stocks | | | 196 | | | | 196 | | | | — | | | | 196 | | | | — | |
Cash, cash equivalents and short-term investments | | | 900 | | | | 900 | | | | 778 | | | | 122 | | | | — | |
Mortgage loans | | | 27,861 | | | | 29,652 | | | | — | | | | — | | | | 27,861 | |
Contract loans | | | 1,157 | | | | 1,157 | | | | — | | | | — | | | | 1,157 | |
Derivatives | | | (46) | | | | (39) | | | | | | | | (46) | | | | | |
Receivables for securities | | | 100 | | | | 100 | | | | — | | | | 100 | | | | — | |
Separate account assets | | | 19,068 | | | | 21,379 | | | | — | | | | 19,068 | | | | — | |
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Policy reserves and contractual liabilities | | | 13,330 | | | | 13,439 | | | | — | | | | 79 | | | | 13,251 | |
Derivatives | | | — | | | | — | | | | — | | | | — | | | | — | |
Payable for securities | | | 182 | | | | 182 | | | | — | | | | 182 | | | | — | |
December 31, 2022 | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | |
Bonds | | $ | 94,784 | | | $ | 108,404 | | | $ | — | | | $ | 80,029 | | | $ | 14,755 | |
Preferred stocks | | | 78 | | | | 82 | | | | — | | | | 78 | | | | — | |
Common stocks | | | 163 | | | | 163 | | | | — | | | | 163 | | | | — | |
Cash, cash equivalents and short-term investments | | | 951 | | | | 951 | | | | 564 | | | | 387 | | | | — | |
Mortgage loans | | | 23,082 | | | | 25,131 | | | | — | | | | — | | | | 23,082 | |
Contract loans | | | 1,138 | | | | 1,138 | | | | — | | | | — | | | | 1,138 | |
Derivatives | | | 5 | | | | 2 | | | | | | | | 5 | | | | | |
Receivables for securities | | | 73 | | | | 73 | | | | — | | | | 73 | | | | — | |
Separate account assets | | | 12,087 | | | | 14,525 | | | | — | | | | 12,087 | | | | — | |
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Policy reserves and contractual liabilities | | | 11,734 | | | | 11,635 | | | | — | | | | 106 | | | | 11,628 | |
Derivatives | | | 20 | | | | 22 | | | | | | | | 20 | | | | | |
Payable for securities | | | 369 | | | | 369 | | | | — | | | | 369 | | | | — | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Valuation Methodologies of Financial Instruments Measured at Fair Value
Bonds
Bonds with NAIC 6 or 6* designations and redeemable preferred stocks with NAIC 4, 5 or 6 designations are carried at the lower of amortized cost or fair value. Perpetual preferred stocks are carried at fair value, not to exceed any currently effective call rate. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Whenever available, the Company obtains quoted prices in active markets for identical assets at the balance sheet date to measure bonds at fair value. Market price data generally is obtained from exchange or dealer markets.
The Company estimates the fair value of securities not traded in active markets, by referring to traded securities with similar attributes, using dealer quotations, a matrix pricing methodology, discounted cash flow analyses or internal valuation models. This methodology considers such factors as the issuer’s industry, the security’s rating and tenor, its coupon rate, its position in the capital structure of the issuer, yield curves, credit curves, prepayment rates and other relevant factors. For bonds that are not traded in active markets or that are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments generally are based on available market evidence. In the absence of such evidence, management’s best estimate is used.
Fair values for bonds and preferred stocks based on observable market prices for identical or similar instruments implicitly include the incorporation of counterparty credit risk. Fair values for bonds and preferred stocks based on internal models incorporate counterparty credit risk by using discount rates that take into consideration cash issuance spreads for similar instruments or other observable information.
Common Stocks (Unaffiliated)
Whenever available, the Company obtains quoted prices in active markets for identical assets at the balance sheet date to measure equity securities at fair value. Market price data is generally obtained from exchanges or dealer markets.
Freestanding Derivatives
Derivative assets and liabilities can be exchange-traded or traded OTC. The Company generally values exchange-traded derivatives, such as futures and options, using quoted prices in active markets for identical derivatives at the balance sheet date.
OTC derivatives are valued using market transactions and other observable market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models can require a variety of inputs, including contractual terms, market prices and rates, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.
Certain OTC derivatives trade in less liquid markets with limited pricing information, and the determination of fair value for these derivatives is inherently more difficult. When the Company does not have corroborating market evidence to support significant model inputs and cannot verify the model using market transactions, the transaction price is initially used as the best estimate of fair value. Accordingly, when a pricing model is used to value such an instrument, the model is adjusted so the model value at inception equals the transaction price. Subsequent to initial recognition, the Company updates valuation inputs when corroborated by evidence such as similar market transactions, independent third-party valuation services and/or broker or dealer quotations, or other empirical market data. When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit considerations. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Separate Account Assets
Separate account assets are comprised primarily of registered and open-ended variable funds that trade daily and are measured at fair value using quoted prices in active markets for identical assets. Certain separate account assets are carried at amortized cost.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Assets and Liabilities Measured at Fair Value
The following table presents information about assets and liabilities measured at fair value:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Level 1 | | | Level 2 | | | Level 3 | | | Counterparty Netting* | | | Total | |
December 31, 2023 | | | | | | | | | | | | | | | | | | | | |
Assets at fair value: | | | | | | | | | | | | | | | | | | | | |
Bonds | | | | | | | | | | | | | | | | | | | | |
All Other Government | | | | | | | — | | | | | | | | | | | | — | |
Industrial and miscellaneous | | | — | | | | 14 | | | | 6 | | | | — | | | | 20 | |
Bank loans | | | — | | | | — | | | | — | | | | — | | | | — | |
Total bonds | | | — | | | | 14 | | | | 6 | | | | — | | | | 20 | |
Preferred stock | | | | | | | | | | | | | | | | | | | | |
Industrial and miscellaneous | | | 4 | | | | — | | | | 1 | | | | — | | | | 5 | |
Total preferred stock | | | 4 | | | | — | | | | 1 | | | | — | | | | 5 | |
Common stock | | | | | | | | | | | | | | | | | | | | |
Industrial and miscellaneous | | | — | | | | — | | | | — | | | | — | | | | — | |
Mutual funds | | | 1 | | | | — | | | | — | | | | — | | | | 1 | |
Total common stock | | | 1 | | | | — | | | | — | | | | — | | | | 1 | |
Derivative assets: | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | — | | | | 1,401 | | | | 408 | | | | — | | | | 1,809 | |
Foreign exchange contracts | | | — | | | | 679 | | | | — | | | | — | | | | 679 | |
Equity contracts | | | 6 | | | | 4,665 | | | | 700 | | | | — | | | | 5,371 | |
Other Contracts | | | — | | | | — | | | | — | | | | | | | | — | |
Counterparty netting | | | — | | | | — | | | | | | | | (5,975 | ) | | | (5,975 | ) |
Total derivative assets | | | 6 | | | | 6,745 | | | | 1,108 | | | | (5,975 | ) | | | 1,884 | |
Separate account assets | | | 45,987 | | | | 1,426 | | | | — | | | | — | | | | 47,414 | |
Total assets at fair value | | $ | 45,998 | | | $ | 8,185 | | | $ | 1,115 | | | $ | (5,975 | ) | | $ | 49,324 | |
Liabilities at fair value: | | | | | | | | | | | | | | | | | | | | |
Derivative liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | $ | — | | | $ | 2,070 | | | $ | — | | | $ | — | | | $ | 2,070 | |
Foreign exchange contracts | | | — | | | | 414 | | | | — | | | | — | | | | 414 | |
Equity contracts | | | 2 | | | | 4,336 | | | | 65 | | | | — | | | | 4,403 | |
Credit contracts | | | — | | | | — | | | | — | | | | — | | | | — | |
Other contracts | | | — | | | | — | | | | 2 | | | | — | | | | 2 | |
Counterparty netting | | | — | | | | — | | | | — | | | | (5,975 | ) | | | (5,975 | ) |
Total derivative liabilities | | | 2 | | | | 6,820 | | | | 67 | | | | (5,975 | ) | | | 914 | |
Total liabilities at fair value | | $ | 2 | | | $ | 6,820 | | | $ | 67 | | | $ | (5,975 | ) | | $ | 914 | |
December 31, 2022 | | | | | | | | | | | | | | | | | | | | |
Assets at fair value: | | | | | | | | | | | | | | | | | | | | |
Bonds | | | | | | | | | | | | | | | | | | | | |
All Other Government | | | | | | | 2 | | | | | | | | | | | $ | 2 | |
Industrial and miscellaneous | | $ | — | | | $ | 46 | | | $ | 3 | | | $ | — | | | $ | 49 | |
Total bonds | | | — | | | | 48 | | | | 3 | | | | — | | | | 51 | |
Preferred stock | | | | | | | | | | | | | | | | | | | | |
Industrial and miscellaneous | | | 4 | | | | — | | | | 7 | | | | — | | | | 11 | |
Total preferred stock | | | 4 | | | | — | | | | 7 | | | | — | | | | 11 | |
Common stock | | | | | | | | | | | | | | | | | | | | |
Industrial and miscellaneous | | | 7 | | | | 2 | | | | 2 | | | | — | | | | 11 | |
Mutual funds | | | — | | | | — | | | | — | | | | — | | | | — | |
Total common stock | | | 7 | | | | 2 | | | | 2 | | | | — | | | | 11 | |
Derivative assets: | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | 1 | | | | 1,411 | | | | 288 | | | | — | | | | 1,700 | |
Foreign exchange contracts | | | — | | | | 821 | | | | — | | | | — | | | | 821 | |
Equity contracts | | | 9 | | | | 1,255 | | | | 240 | | | | — | | | | 1,504 | |
Other Contracts | | | | | | | | | | | 1 | | | | | | | | 1 | |
Counterparty netting | | | — | | | | — | | | | — | | | | (3,562 | ) | | | (3,562 | ) |
Total derivative assets | | | 10 | | | | 3,487 | | | | 529 | | | | (3,562 | ) | | | 464 | |
Separate account assets | | | 43,653 | | | | 1,523 | | | | — | | | | — | | | | 45,176 | |
Total assets at fair value | | $ | 43,674 | | | $ | 5,060 | | | $ | 541 | | | $ | (3,562 | ) | | $ | 45,713 | |
Liabilities at fair value: | | | | | | | | | | | | | | | | | | | | |
Derivative liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | $ | — | | | $ | 2,653 | | | $ | — | | | $ | — | | | $ | 2,653 | |
Foreign exchange contracts | | | — | | | | 502 | | | | — | | | | — | | | | 502 | |
Equity contracts | | | 2 | | | | 1,174 | | | | 16 | | | | — | | | | 1,192 | |
Counterparty netting | | | — | | | | — | | | | — | | | | (3,562 | ) | | | (3,562 | ) |
Total derivative liabilities | | | 2 | | | | 4,329 | | | | 16 | | | | (3,562 | ) | | | 785 | |
Total liabilities at fair value | | $ | 2 | | | $ | 4,329 | | | $ | 16 | | | $ | (3,562 | ) | | $ | 785 | |
* Represents netting of derivative exposures covered by a qualifying master netting agreement.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Changes in Level 3 Fair Value Measurements
The following tables present changes in Level 3 assets and liabilities measured at fair value and the gains (losses) related to the Level 3 assets and liabilities that remained on the Statutory Statements of Admitted Assets, Liabilities and Capital and Surplus:
| | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Bonds | | | Preferred Stocks | | | Common Stocks | | | Derivative Assets | | | Total Assets | | | Derivative Liabilities | |
Balance, January 1, 2021 | | $ | 12 | | | $ | — | | | $ | — | | | $ | 181 | | | $ | 193 | | | $ | 55 | |
Total realized/unrealized capital gains or losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Included in net (loss) income | | | (9 | ) | | | 14 | | | | 10 | | | | (56 | ) | | | (41 | ) | | | 7 | |
Included in surplus | | | 15 | | | | — | | | | — | | | | 28 | | | | 43 | | | | (49 | ) |
Purchases, issuances and settlements | | | (43 | ) | | | (12 | ) | | | (10 | ) | | | 258 | | | | 193 | | | | 9 | |
Transfers into Level 3 | | | 38 | | | | 4 | | | | — | | | | 52 | | | | 94 | | | | — | |
Transfers out of Level 3 | | | (2 | ) | | | — | | | | — | | | | (53 | ) | | | (55 | ) | | | — | |
Balance, December 31, 2021 | | $ | 11 | | | $ | 6 | | | $ | — | | | $ | 410 | | | $ | 427 | | | $ | 22 | |
Total realized/unrealized capital gains or losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Included in net (loss) income | | | 13 | | | | — | | | | — | | | | (232 | ) | | | (219 | ) | | | (29 | ) |
Included in surplus | | | (11 | ) | | | (1 | ) | | | — | | | | (214 | ) | | | (226 | ) | | | (22 | ) |
Purchases, issuances and settlements | | | (44 | ) | | | 2 | | | | 1 | | | | 565 | | | | 524 | | | | 45 | |
Transfers into Level 3 | | | 73 | | | | — | | | | 1 | | | | — | | | | 74 | | | | — | |
Transfers out of Level 3 | | | (39 | ) | | | — | | | | — | | | | — | | | | (39 | ) | | | — | |
Balance, December 31, 2022 | | $ | 3 | | | $ | 7 | | | $ | 2 | | | $ | 529 | | | $ | 541 | | | $ | 16 | |
Total realized/unrealized capital gains or losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Included in net (loss) income | | | (10 | ) | | | (7 | ) | | | — | | | | (444 | ) | | | (461 | ) | | | (29 | ) |
Included in surplus | | | — | | | | 1 | | | | — | | | | 329 | | | | 330 | | | | 30 | |
Purchases, issuances and settlements | | | 9 | | | | — | | | | (2 | ) | | | 694 | | | | 701 | | | | 50 | |
Transfers into Level 3 | | | 4 | | | | — | | | | — | | | | — | | | | 4 | | | | — | |
Transfers out of Level 3 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Balance, December 31, 2023 | | $ | 6 | | | $ | 1 | | | $ | — | | | $ | 1,108 | | | $ | 1,115 | | | $ | 67 | |
Assets are transferred out of Level 3 when circumstances change such that significant inputs can be corroborated with market observable data or when the asset is no longer carried at fair value. This may be due to a significant increase in market activity for the asset, a specific event, one or more significant inputs becoming observable or when a long-term interest rate significant to a valuation becomes short-term and thus observable. Transfers out of level 3 can also occur due to favorable credit migration resulting in a higher NAIC designation. Securities are generally transferred into Level 3 due to a decrease in market transparency, downward credit migration and an overall increase in price disparity for certain individual security types. The Company’s policy is to recognize transfers in and out at the end of the reporting period, consistent with the date of the determination of fair value.
In both 2023 and 2022, there were no transfers between Level 1 and Level 2 securities.
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 capital gains (losses) on instruments held at December 31, 2023 and 2022 may include changes in fair value that were attributable to both observable and unobservable inputs.
Quantitative Information About Level 3 Fair Value Measurements
The Company had no quantitative information about level 3 fair value measurements to report at December 31, 2023.
Gross Basis Fair Value Measurements
The following table presents the Company’s derivative assets and liabilities measured at fair value, on a gross basis, before counterparty and cash collateral netting:
| | | | | | | | | | | | | | | | |
| (in millions) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
December 31, 2023 | | | | | | | | | | | | | | | | |
Derivative assets at fair value | | $ | 6 | | | $ | 6,745 | | | $ | 1,108 | | | $ | 7,859 | |
Derivative liabilities at fair value | | | (2) | | | | (6,820) | | | | (67) | | | | (6,889) | |
| | | | |
December 31, 2022 | | | | | | | | | | | | | | | | |
Derivative assets at fair value | | $ | 10 | | | $ | 3,487 | | | $ | 529 | | | $ | 4,026 | |
Derivative liabilities at fair value | | | (2) | | | | (4,329) | | | | (16) | | | | (4,347) | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
11. AGGREGATE POLICY RESERVES AND DEPOSIT FUND LIABILITIES
The following table presents the Company’s reserves by major category:
| | | | | | | | |
(in millions) | | Years ended December 31, | |
| | 2023 | | | 2022 | |
Life insurance | | $ | 41,544 | | | $ | 41,157 | |
Annuities (excluding supplementary contracts with life contingencies) | | | 95,144 | | | | 88,847 | |
Supplementary contracts with life contingencies | | | 371 | | | | 480 | |
Accidental death benefits | | | 15 | | | | 15 | |
Disability - active lives | | | 29 | | | | 31 | |
Disability - disabled lives | | | 208 | | | | 210 | |
Excess of VM-21 reserves over basic reserves | | | 111 | | | | 18 | |
Deficiency reserves | | | 1,180 | | | | 1,272 | |
Other miscellaneous reserve | | | 1,065 | | | | 1,154 | |
Gross life and annuity reserves | | | 139,667 | | | | 133,184 | |
Reinsurance ceded | | | (25,967 | ) | | | (24,335 | ) |
Net life and annuity reserves | | | 113,700 | | | | 108,849 | |
Accident and health reserves | | | | | | | | |
Unearned premium reserves | | | 7 | | | | 7 | |
Present value of amounts not yet due on claims | | | 192 | | | | 193 | |
Additional contract reserves | | | 504 | | | | 520 | |
Gross accident and health reserves | | | 703 | | | | 720 | |
Reinsurance ceded | | | (6 | ) | | | (9 | ) |
Net accident and health reserves | | | 697 | | | | 711 | |
Aggregate policy reserves | | $ | 114,397 | | | | 109,560 | |
The following table presents the withdrawal characteristics of annuity actuarial reserves and deposit-type contract funds and other liabilities without life contingencies:
A. Individual Annuities:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2023 | |
| (in millions) | | General account | | | Separate account with guarantees | | | Separate account non- guaranteed | | | Total | | | % of
Total | |
(1) Subject to discretionary withdrawal : | | | | | | | | | | | | | | | | | | | | |
a. With market value adjusted | | $ | 44,316 | | | $ | 3,563 | | | $ | — | | | $ | 47,879 | | | | 38.34 | % |
b. At book value less current surrender charge of 5% or more | | | 10,554 | | | | — | | | | — | | | | 10,554 | | | | 8.45 | % |
c. At fair value | | | — | | | | 26 | | | | 29,877 | | | | 29,903 | | | | 23.95 | % |
d. Total with market adjustment or at fair value | | | 54,870 | | | | 3,589 | | | | 29,877 | | | | 88,336 | | | | 70.74 | % |
e. At book value without adjustment
(minimal or no charge or adjustment) | | | 22,365 | | | | — | | | | 12 | | | | 22,377 | | | | 17.92 | % |
(2) Not subject to discretionary withdrawal | | | 14,102 | | | | — | | | | 60 | | | | 14,162 | | | | 11.34 | % |
(3) Total (gross: direct + assumed) | | $ | 91,337 | | | $ | 3,589 | | | $ | 29,949 | | | $ | 124,875 | | | | 100.00 | % |
(4) Reinsurance ceded | | | 244 | | | | — | | | | — | | | | 244 | | | | | |
(5) Total (net)* (3) - (4) | | $ | 91,093 | | | $ | 3,589 | | | $ | 29,949 | | | $ | 124,631 | | | | | |
(6) Amount included in A(1)b above that will move to A(1)e in the year after statement date: | | $ | 2,966 | | | $ | — | | | $ | — | | | $ | 2,966 | | | | | |
* Reconciliation of total annuity actuarial reserves and deposit fund liabilities.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
B. Group Annuities:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2023 | |
| (in millions) | | General account | | | Separate account with guarantees | | | Separate account non- guaranteed | | | Total | | | % of Total | |
| (1) | | Subject to discretionary withdrawal : | | | | | | | | | | | | | | | | | | | | |
a. With market value adjusted | | $ | 162 | | | $ | 54 | | | $ | — | | | $ | 216 | | | | 0.63 | % |
b. At book value less current surrender charge of 5% or more | | | 30 | | | | — | | | | — | | | | 30 | | | | 0.09 | % |
c. At fair value | | | — | | | | — | | | | 13,681 | | | | 13,681 | | | | 39.80 | % |
d. Total with market adjustment or at fair value | | | 192 | | | | 54 | | | | 13,681 | | | | 13,927 | | | | 40.52 | % |
e. At book value without adjustment (minimal or no charge or adjustment) | | | 2,108 | | | | — | | | | — | | | | 2,108 | | | | 6.13 | % |
| (2) | | Not subject to discretionary withdrawal | | | 1,878 | | | | 16,434 | | | | 25 | | | | 18,337 | | | | 53.35 | % |
| (3) | | Total (gross: direct + assumed) | | $ | 4,178 | | | $ | 16,488 | | | $ | 13,706 | | | $ | 34,372 | | | | 100.00 | % |
| (4) | | Reinsurance ceded | | | 65 | | | | — | | | | — | | | | 65 | | | | | |
| (5) | | Total (net)* (3) - (4) | | $ | 4,113 | | | $ | 16,488 | | | $ | 13,706 | | | $ | 34,307 | | | | | |
(6) Amount included in B(1)b above that will move to B(1)e in the year after statement date: | | $ | 2 | | | $ | — | | | $ | — | | | $ | 2 | | | | | |
* Reconciliation of total annuity actuarial reserves and deposit fund liabilities.
C. Deposit-Type Contracts (no life contingencies):
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2023 | |
| (in millions) | | General
account | | | Separate
account with
guarantees | | | Separate
account non-
guaranteed | | | Total | | | % of
Total | |
| (1) | | Subject to discretionary withdrawal : | | | | | | | | | | | | | | | | | | | | |
a. With market value adjusted | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | — | % |
b. At book value less current surrender charge of 5% or more | | | — | | | | — | | | | — | | | | — | | | | — | % |
c. At fair value | | | — | | | | — | | | | — | | | | — | | | | — | % |
d. Total with market adjustment or at fair value | | | — | | | | — | | | | — | | | | — | | | | — | % |
e. At book value without adjustment | | | 537 | | | | — | | | | 8 | | | | 545 | | | | 3.87 | % |
| | (minimal or no charge or adjustment) |
| (2) | | Not subject to discretionary withdrawal | | | 13,495 | | | | — | | | | 54 | | | | 13,549 | | | | 96.13 | % |
| (3) | | Total (gross: direct + assumed) | | $ | 14,032 | | | $ | — | | | $ | 62 | | | $ | 14,094 | | | | 100.00 | % |
| (4) | | Reinsurance ceded | | | 17 | | | | — | | | | — | | | | 17 | | | | | |
| (5) | | Total (net)* (3) - (4) | | $ | 14,015 | | | $ | — | | | $ | 62 | | | $ | 14,077 | | | | | |
(6) Amount included in C(1)b above that will move to C(1)e in the year after statement date: | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | |
* Represents annuity reserves reported in separate accounts liabilities.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Withdrawal characteristics of Life Actuarial Reserves as of December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2023 | |
| | | | | General Account | | | Separate Account - non-guaranteed | |
| | | | | Account | | | Cash
value | | | Reserve | | | Account | | | Cash
value | | | Reserve | |
| (in millions) | | value | | | value | |
A. Subject to discretionary withdrawal, | | | | | | | | | | | | | | | | | | | | | | | | |
surrender values, or policy loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | | Term policies with cash value | | $ | — | | | $ | 642 | | | $ | 3,239 | | | $ | — | | | $ | — | | | $ | — | |
| (2) | | Universal life | | | 5,478 | | | | 5,499 | | | | 6,238 | | | | — | | | | — | | | | — | |
| (3) | | Universal life with secondary guarantees | | | 1,641 | | | | 1,453 | | | | 7,987 | | | | — | | | | — | | | | — | |
| (4) | | Indexed universal life | | | 743 | | | | 665 | | | | 730 | | | | — | | | | — | | | | — | |
| (5) | | Indexed universal life with secondary | | | 1,833 | | | | 1,187 | | | | 1,842 | | | | — | | | | — | | | | — | |
| | guarantees |
| (6) | | Indexed life | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| (7) | | Other permanent cash value life insurance | | | 2,183 | | | | 8,605 | | | | 9,854 | | | | 1,760 | | | | 1,760 | | | | 1,760 | |
| (8) | | Variable life | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| (9) | | Variable universal life | | | 113 | | | | 103 | | | | 140 | | | | 1,649 | | | | 1,642 | | | | 1,636 | |
(10) Miscellaneous reserves | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
B. Not subject to discretionary withdrawal | | | | | | | | | | | | | | | | | | | | | | | | |
or no cash values | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | | Term policies without cash value | | | XXX | | | | XXX | | | $ | 11,514 | | | | XXX | | | | XXX | | | $ | — | |
| (2) | | Accidental death benefits | | | XXX | | | | XXX | | | | 15 | | | | XXX | | | | XXX | | | | — | |
| (3) | | Disability - active lives | | | XXX | | | | XXX | | | | 29 | | | | XXX | | | | XXX | | | | — | |
| (4) | | Disability - disabled lives | | | XXX | | | | XXX | | | | 208 | | | | XXX | | | | XXX | | | | — | |
| (5) | | Miscellaneous reserves | | | XXX | | | | XXX | | | | 2,200 | | | | XXX | | | | XXX | | | | — | |
C. Total (gross: direct + assumed) | | $ | 11,991 | | | $ | 18,154 | | | $ | 43,996 | | | $ | 3,409 | | | $ | 3,402 | | | $ | 3,396 | |
D. Reinsurance ceded | | | 6,979 | | | | 10,192 | | | | 25,651 | | | | — | | | | — | | | | — | |
E. Total (net) (C) - (D) | | $ | 5,012 | | | $ | 7,962 | | | $ | 18,345 | | | $ | 3,409 | | | $ | 3,402 | | | $ | 3,396 | |
12. SEPARATE ACCOUNTS
Separate Accounts
The separate accounts held by the Company consist primarily of variable life insurance policies and variable annuities. These contracts generally are non-guaranteed in nature such that the benefit is determined by the performance and/or market value of the investments held in the separate account. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative.
Certain other separate accounts relate to MVA fixed annuity contracts in which the assets are carried at amortized cost.
These policies are required to be held in the Company’s separate account by certain states, including Texas.
Certain other separate accounts relate to flexible premium adjustable life insurance and pension risk transfer annuities in which the assets are carried at amortized cost. These contracts provide the greater of guaranteed interest returns defined in the policy or interest in excess of the guaranteed rate as defined by the Company.
The Company does not engage in securities lending transactions within the separate accounts.
In accordance with the products/transactions recorded within the separate account, some assets are considered legally insulated whereas others are not legally insulated from the general account. The legal insulation of the separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account.
General account reserves of $13 million and $7 million were established for the separate account reserve in excess of assets in subaccounts TFA1-B and TFA1-D, respectively.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents separate account assets by product or transaction:
| | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| (in millions) | | Legally Insulated Assets | | | Separate Accounts Assets (Not Legally Insulated) | | | Legally Insulated Assets | | | Separate Accounts Assets
(Not Legally
Insulated) | |
Variable annuities | | $ | 44,445 | | | $ | — | | | $ | 42,104 | | | $ | — | |
Variable life | | | 2,969 | | | | — | | | | 3,073 | | | | — | |
Bank-owned life insurance – hybrid | | | 503 | | | | — | | | | 482 | | | | — | |
Deferred annuities with MVA features | | | 401 | | | | — | | | | 417 | | | | — | |
Pension risk transfer annuities | | | 18,022 | | | | — | | | | 11,453 | | | | — | |
Annuities with MVA features | | | — | | | | 2,427 | | | | — | | | | 2,148 | |
Fixed annuities excess interest adjustment features | | | — | | | | 25 | | | | — | | | | 24 | |
Total | | $ | 66,340 | | | $ | 2,452 | | | $ | 57,529 | | | $ | 2,172 | |
Some separate account liabilities are guaranteed by the general account. To compensate the general account for the risks taken, the separate accounts pay risk charges to the general account.
If claims were filed on all contracts, the current total maximum guarantee the general account would provide to the separate account as of December 31, 2023 and 2022 is $5.4 billion and $3.9 billion, respectively.
The separate account business seed money balances were $6 million and $0 million at December 31, 2023 and 2022, respectively.
The following table presents the risk charges paid by the separate accounts and the guarantees paid by the general account:
| | | | | | | | |
| (in millions) | | Risk Charge paid by the Separate Account | | | Guarantees Paid by the General Account | |
2023 | | $ | 558 | | | $ | 65 | |
2022 | | | 596 | | | | 64 | |
2021 | | | 539 | | | | 36 | |
2020 | | | 450 | | | | 43 | |
2019 | | | 383 | | | | 35 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents information regarding the separate accounts:
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| (in millions) | | Indexed | | | Non- indexed guarantee less than or equal to 4% | | | Non- indexed guarantee more than 4% | | | Non- guaranteed separate accounts | | | Total | |
December 31, 2023 | | | | | | | | | | | | | | | | | | | | |
Premiums, considerations or deposits | | $ | 803 | | | $ | — | | | $ | 178 | | | $ | 6,597 | | | $ | 7,578 | |
Reserves for accounts with assets at: | | | | | | | | | | | | | | | | | | | | |
Market value | | $ | — | | | $ | — | | | $ | — | | | $ | 46,589 | | | $ | 46,589 | |
Amortized costs | | | 2,611 | | | | 17,306 | | | | 617 | | | | — | | | | 20,534 | |
Total reserves | | $ | 2,611 | | | $ | 17,306 | | | $ | 617 | | | $ | 46,589 | | | $ | 67,123 | |
By withdrawal characteristics: | | | | | | | | | | | | | | | | | | | | |
Subject to discretionary withdrawal with MVA | | $ | 2,611 | | | $ | 17,179 | | | $ | 617 | | | $ | — | | | $ | 20,407 | |
At market value | | | — | | | | — | | | | — | | | | 46,488 | | | | 46,488 | |
Subtotal | | | 2,611 | | | | 17,179 | | | | 617 | | | | 46,488 | | | | 66,895 | |
Not subject to discretionary withdrawal | | | — | | | | 127 | | | | — | | | | 101 | | | | 228 | |
Total reserves | | $ | 2,611 | | | $ | 17,306 | | | $ | 617 | | | $ | 46,589 | | | $ | 67,123 | |
December 31, 2022 | | | | | | | | | | | | | | | | | | | | |
Premiums, considerations or deposits | | $ | 434 | | | $ | — | | | $ | 41 | | | $ | 4,964 | | | $ | 5,439 | |
Reserves for accounts with assets at: | | | | | | | | | | | | | | | | | | | | |
Market value | | $ | — | | | $ | — | | | $ | — | | | $ | 44,187 | | | $ | 44,187 | |
Amortized costs | | | 2,071 | | | | 11,613 | | | | 385 | | | | — | | | | 14,069 | |
Total reserves | | $ | 2,071 | | | $ | 11,613 | | | $ | 385 | | | $ | 44,187 | | | $ | 58,256 | |
By withdrawal characteristics: | | | | | | | | | | | | | | | | | | | | |
Subject to discretionary withdrawal with MVA | | $ | 2,071 | | | $ | 11,154 | | | $ | 385 | | | $ | — | | | $ | 13,610 | |
At market value | | | — | | | | — | | | | — | | | | 44,094 | | | | 44,094 | |
Subtotal | | | 2,071 | | | | 11,154 | | | | 385 | | | | 44,094 | | | | 57,704 | |
Not subject to discretionary withdrawal | | | — | | | | 458 | | | | — | | | | 93 | | | | 551 | |
Total reserves | | $ | 2,071 | | | $ | 11,612 | | | $ | 385 | | | $ | 44,187 | | | $ | 58,255 | |
December 31, 2021 | | | | | | | | | | | | | | | | | | | | |
Premiums, considerations or deposits | | $ | 414 | | | $ | — | | | $ | 9 | | | $ | 6,659 | | | $ | 7,082 | |
Reserves for accounts with assets at: | | | | | | | | | | | | | | | | | | | | |
Market value | | $ | — | | | $ | — | | | $ | — | | | $ | 56,703 | | | $ | 56,703 | |
Amortized costs | | | 1,805 | | | | 9,370 | | | | 361 | | | | — | | | | 11,536 | |
Total reserves | | $ | 1,805 | | | $ | 9,370 | | | $ | 361 | | | $ | 56,703 | | | $ | 68,239 | |
By withdrawal characteristics: | | | | | | | | | | | | | | | | | | | | |
Subject to discretionary withdrawal with MVA | | $ | 1,805 | | | $ | 8,840 | | | $ | 361 | | | $ | — | | | $ | 11,006 | |
At market value | | | — | | | | — | | | | — | | | | 56,565 | | | | 56,565 | |
Subtotal | | | 1,805 | | | | 8,840 | | | | 361 | | | | 56,565 | | | | 67,571 | |
Not subject to discretionary withdrawal | | | — | | | | 530 | | | | — | | | | 138 | | | | 668 | |
Total reserves | | $ | 1,805 | | | $ | 9,370 | | | $ | 361 | | | $ | 56,703 | | | $ | 68,239 | |
Reconciliation of Net Transfers to or from Separate Accounts
The following table presents a reconciliation of the net transfers to (from) separate accounts:
| | | | | | | | | | | | |
| | | Years Ended December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Transfers to separate accounts | | $ | 7,578 | | | $ | 5,439 | | | $ | 7,082 | |
Transfers from separate accounts | | | (5,500) | | | | (4,330 | ) | | | (5,400 | ) |
Net transfers to (from) separate accounts | | | 2,078 | | | | 1,109 | | | | 1,682 | |
Reconciling adjustments: | | | | | | | | | | | | |
Deposit-type contracts | | | — | | | | — | | | | — | |
Total reconciling adjustments | | | — | | | | — | | | | — | |
Transfers as reported in the Statutory Statements of Operations | | $ | 2,078 | | | $ | 1,109 | | | $ | 1,682 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
13. RESERVES FOR GUARANTEED POLICY BENEFITS AND ENHANCEMENTS
Variable annuity contracts may include certain contractually guaranteed benefits to the contract holder. These guaranteed features include GMDB that are payable in the event of death, and living benefits that are payable in the event of annuitization, or, in other instances, at specified dates during the accumulation period. Living benefits include GMWB and, to a lesser extent, guaranteed minimum accumulation benefits (“GMAB”), which are no longer offered. A variable annuity contract may include more than one type of guaranteed benefit feature; for example, it may have both a GMDB and a GMWB. However, a policyholder generally can only receive payout from one guaranteed feature on a contract containing a death benefit and a living benefit, i.e. the features are mutually exclusive. A policyholder cannot purchase more than one living benefit on one contract.
Reserves for GMDB, GMIB and GMWB were included in the VACARVM reserves. Total reserves in excess of cash surrender value were $103.1 million and none at December 31, 2023 and 2022, respectively.
GMDB and GMIB
Depending on the product, the GMDB feature may provide a death benefit of either (a) total deposits made to the contract less any partial withdrawals plus a minimum return or (b) the highest contract value attained, typically on any anniversary date minus any subsequent withdrawals following the contract anniversary. GMIB guarantees a minimum level of periodic income payments upon annuitization. GMDB is the Company’s most widely offered benefit; variable annuity contracts may also include GMIB to a lesser extent, which is no longer offered.
GMWB
Certain of the Company’s variable annuity contracts offer optional GMWB. With a GMWB, the contract holder can monetize the excess of the guaranteed amount over the account value of the contract only through a series of withdrawals that do not exceed a specific percentage per year of the guaranteed amount. If, after the series of withdrawals, the account value is exhausted, the contract holder will receive a series of annuity payments equal to the remaining guaranteed amount, and, for lifetime GMWB products, the annuity payments continue as long as the covered person(s) are living.
14. PARTICIPATING POLICY CONTRACTS
Participating policy contracts entitle a policyholder to share in earnings through dividend payments. These contracts represented less than 1.0 percent of gross insurance in-force at December 31, 2023, 2022 and 2021, respectively. Policyholder dividends for the years ended December 31, 2023, 2022 and 2021 were $13 million, $10 million, and $13 million, respectively.
15. PREMIUM AND ANNUITY CONSIDERATIONS DEFERRED AND UNCOLLECTED
The following table presents the deferred and uncollected insurance premiums and annuity consideration (before deduction for amounts non-admitted):
| | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | | | December 31, 2022 | |
| (in millions) | | Gross | | | Net of Loading | | | | | Gross | | | Net of Loading | |
Ordinary new business | | $ | 22 | | | $ | 22 | | | | | $ | 22 | | | $ | 22 | |
Ordinary renewal | | | (503 | ) | | | 39 | | | | | | (416 | ) | | | 132 | |
Group life | | | (1 | ) | | | (1 | ) | | | | | (2 | ) | | | (2 | ) |
Total | | $ | (482 | ) | | $ | 60 | | | | | $ | (396 | ) | | $ | 152 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
16. REINSURANCE
In the ordinary course of business, the Company utilizes internal and third-party reinsurance transactions to manage insurance risks and to facilitate capital management strategies. Long-duration reinsurance is effected principally under yearly renewable term treaties. Pools of highly-rated third party reinsurers are utilized to manage net amounts at risk in excess of retention limits. Reinsurance agreements do not relieve the Company of its direct obligations to insureds and beneficiaries. Thus, a credit exposure exists with respect to reinsurance ceded to the extent that any reinsurer fails to meet the obligations assumed under any reinsurance agreement. In addition, the Company assumes reinsurance from other insurance companies.
Reinsurance premiums assumed in 2023, 2022 and 2021 were $4.9 billion, $24.5 billion and $2.3 billion, respectively. Reinsurance premiums ceded in 2023, 2022 and 2021 were $2.5 billion, $2.7 billion and $3.3 billion, respectively. Additionally, reserves on reinsurance assumed were $9.8 billion, $5.5 billion and $4.5 billion at December 31, 2023, 2022 and 2021, respectively. The reserve credit taken on reinsurance ceded was $26.0 billion, $24.4 billion and $24.6 billion at December 31, 2023, 2022 and 2021, respectively. Amounts payable or recoverable for reinsurance on policy and contract liabilities are not subject to periodic or maximum limits. At December 31, 2023 and 2022, the Company’s reinsurance recoverables were $251 million and $270 million, respectively.
The Company does not have any reinsurance agreements in effect under which the reinsurer may unilaterally cancel any reinsurance for reasons other than for nonpayment of premium or other similar credits. The Company has no reinsurance agreements in effect such that the amount of losses paid or accrued through the statement date may result in a payment to the reinsurer of amounts which, in aggregate and allowing for offset of mutual credits from other reinsurance agreements with the same reinsurer, exceed the total revenue collected under the reinsured policies.
The Company previously entered into a reinsurance agreement with Hannover Life Reassurance Company of America (“Hannover”) effective July 1, 2016, under which the Company ceded blocks of whole life policies on a coinsurance with funds withheld basis and a block of current assumption universal life business on a yearly renewable term basis. Effective December 31, 2016, the Company recaptured certain term and universal life policies that had been ceded to AGC Life and concurrently amended and restated the July 1, 2016 reinsurance treaty (the “A&R Treaty”) with Hannover to add this in-force term and guaranteed universal life business on a coinsurance basis and additional current assumption universal life on a yearly renewable term basis.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Effective March 31, 2023, the Company recaptured term life business issued from 2017 through 2019 that had previously been ceded to AGC Life on a coinsurance/modified coinsurance basis and concurrently amended the A&R Treaty with Hannover to add this in-force term life business on a coinsurance with funds withheld basis. The Company recognized the net benefit of the recapture and simultaneous cession as a direct credit to surplus of $93 million at March 31, 2023. This increase in surplus will be amortized to income over the life of the treaty.
| | | | | | | | | | | | |
| (in millions) | | | | March 31 Recapture
from AGC Life | | | | March 31 Cession to
Hannover | | | | Net Impact of
Reinsurance |
| | | | | | |
Increase (Decrease) | | | | | | | | | | | | |
| | | | | | |
Summary Of Operations | | | | | | | | | | | | |
| | | | | | |
Premiums | | $ | | 1,538 | | $ | | (1,738) | | $ | | (200) |
| | | | | | |
Commissions on reinsurance ceded | | | | (1,054) | | | | 1054 | | | | — |
| | | | | | |
Reserve adjustments on reinsurance ceded | | | | (484) | | | | — | | | | (484) |
| | | | | | | | | | | | |
| | | | | | |
Total revenue | | $ | | — | | $ | | (684) | | $ | | (684) |
| | | | | | |
Increase in aggregate reserves for life contracts | | $ | | 1,054 | | $ | | (1,738) | | $ | | (684) |
| | | | | | |
Federal income tax expense (benefit) | | | | (221) | | | | 221 | | | | — |
| | | | | | | | | | | | |
Net income | | $ | | (833) | | $ | | 833 | | $ | | — |
| | | | | | | | | | | | |
| | | | | | |
Capital and Surplus Account | | | | | | | | | | | | |
| | | | | | |
Change in surplus as a result of reinsurance | | $ | | — | | $ | | 93 | | $ | | 93 |
Effective September 30, 2023, the Company recaptured universal life business issued from 2017 through 2019 that had previously been ceded to AGC Life on a coinsurance/modified coinsurance basis and concurrently amended the A&R Treaty with Hannover to add this in-force universal life business on a coinsurance with funds withheld basis. The Company recognized the net benefit of the recapture and simultaneous cession as a direct credit to surplus of $253 million at September 30, 2023. This increase in surplus will be amortized to income over the life of the treaty.
| | | | | | | | | | | | |
| (in millions) | | | | Sept 30 Recapture
from AGC Life | | | | Sept 30 Cession to
Hannover | | | | Net Impact of
Reinsurance |
| | | | | | |
Increase (Decrease) | | | | | | | | | | | | |
| | | | | | |
Summary Of Operations | | | | | | | | | | | | |
| | | | | | |
Premiums | | $ | | 2,092 | | $ | | (2,035) | | $ | | 57 |
| | | | | | |
Commissions on reinsurance ceded | | | | (939) | | | | 939 | | | | — |
| | | | | | |
Reserve adjustments on reinsurance ceded | | | | (1,153) | | | | — | | | | (1,153) |
| | | | | | | | | | | | |
| | | | | | |
Total Revenue | | $ | | — | | $ | | (1,096) | | $ | | (1,096) |
| | | | | | |
Increase in aggregate reserves for life contracts | | $ | | 939 | | $ | | (2,035) | | $ | | (1,096) |
| | | | | | |
Federal income tax expense (benefit) | | | | (197) | | | | 197 | | | | — |
| | | | | | | | | | | | |
Net Income | | $ | | (742) | | $ | | 742 | | $ | | — |
| | | | | | | | | | | | |
| | | | | | |
Capital and Surplus Account | | | | | | | | | | | | |
| | | | | | |
Change in surplus as a result of reinsurance | | $ | | — | | $ | | 253 | | $ | | 253 |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The Company previously ceded term and universal life insurance business issued from January 1, 2020 to December 31, 2021 to AGC Life on a coinsurance/modified coinsurance basis. Effective October 1, 2023, AGL recaptured this business, resulting in a $66 million decrease in the Company’s net income.
| | | | | | |
| (in millions) | | | | Oct 1 Recapture from
AGC Life |
| | |
Increase (Decrease) | | | | | | |
| | |
Summary Of Operations | | | | | | |
| | |
Premiums | | $ | | | 129 | |
| | |
Commissions on reinsurance ceded | | | | | (83) | |
| | |
Reserve adjustments on reinsurance ceded | | | | | (46) | |
| | |
Total Revenue | | $ | | | — | |
| | |
Increase in aggregate reserves for life contracts | | $ | | | 83 | |
| | |
Federal income tax expense (benefit) | | | | | (17 | ) |
| | | | | | |
| | |
Net Income | | $ | | | (66 | ) |
| | | | | | |
The coinsurance/modified coinsurance agreements with AGC Life increased the Company’s pre-tax earnings by $63 million in 2023 (excluding the impact of recaptures). In 2022 and 2021, the coinsurance/modified coinsurance agreements with AGC Life increased the Company’s pre-tax earnings by $91 million and $333 million, respectively.
The Company has a modified coinsurance reinsurance agreement with VALIC, pursuant to which certain blocks of VALIC’s VA business are ceded to the Company. At December 31, 2023 and 2022, the liabilities resulting from the agreement and recorded in the accompanying financial statements were $19.9 billion and $22.4 billion, respectively. In 2023 and 2022, the agreement increased the Company’s pre-tax earnings by $319 million and $120 million (excluding initial accounting), respectively. Related to the agreement, included within Other income are assumed expense risk charges of $393 million and $88 million for 2023 and 2022, respectively.
As of December 31, 2023, and 2022, $22.0 billion and $23.9 billion of the Company’s reserves representing a mix of run-off life and annuity risks were ceded to Fortitude Reinsurance Company Ltd.(“Fortitude Re”) under modified coinsurance agreements.
The Company has an annuity coinsurance/modified coinsurance agreement with Corebridge Bermuda in which Corebridge Bermuda reinsures certain deferred annuity contracts issued between 2003 and 2007. The agreement is such that the Company retains and controls assets held in relation to the related reserve. At December 31, 2023 and 2022, the liabilities resulting from the agreement and recorded in the accompanying financial statements were $4.1 billion and $5.0 billion, respectively. In each of 2023, 2022 and 2021, the agreement decreased the Company’s pre-tax earnings by $1 million.
17. FEDERAL INCOME TAXES
Recent U.S. Tax Law Changes
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which finances climate and energy provisions and an extension of enhanced subsidies under the Affordable Care Act with a 15%, CAMT, on adjusted financial statement income for corporations with profits over $1 billion, a 1% stock buyback tax, increased Internal Revenue Service (“IRS”) enforcement funding, and Medicare’s new ability to negotiate prescription drug prices. The AGC Life Insurance Company consolidated federal income tax return group, of which the Company is a member, has determined that as of the reporting date it is an applicable reporting entity for the CAMT.
Although the U.S. Treasury and IRS issued interim CAMT guidance during 2023, many details and specifics of application of the CAMT remain subject to future guidance. The Company’s estimated CAMT liability will continue to be refined based on future guidance.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following table presents the components of the net deferred tax assets and liabilities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | | | Change | |
| | | | | | | | | |
| (in millions) | | Ordinary | | | Capital | | | Total | | | Ordinary | | | Capital | | | Total | | | Ordinary | | | Capital | | | Total | |
Gross DTA | | $ | 3,478 | | | $ | 1,993 | | | $ | 5,471 | | | $ | 3,280 | | | $ | 2,472 | | | $ | 5,752 | | | $ | 198 | | | $ | (479 | ) | | $ | (281 | ) |
Statutory valuation allowance adjustment | | | — | | | | 183 | | | | 183 | | | | — | | | | 303 | | | | 303 | | | | — | | | | (120 | ) | | | (120 | ) |
Adjusted gross DTA | | | 3,478 | | | | 1,810 | | | | 5,288 | | | | 3,280 | | | | 2,169 | | | | 5,449 | | | | 198 | | | | (359 | ) | | | (161 | ) |
DTA non-admitted | | | 2,195 | | | | 1,810 | | | | 4,005 | | | | 1,983 | | | | 2,169 | | | | 4,152 | | | | 212 | | | | (359 | ) | | | (147 | ) |
Net admitted DTA | | | 1,283 | | | | — | | | | 1,283 | | | | 1,297 | | | | — | | | | 1,297 | | | | (14 | ) | | | — | | | | (14 | ) |
DTL | | | 119 | | | | — | | | | 119 | | | | 210 | | | | — | | | | 210 | | | | (91 | ) | | | — | | | | (91 | ) |
Total | | $ | 1,164 | | | $ | — | | | $ | 1,164 | | | $ | 1,087 | | | $ | — | | | $ | 1,087 | | | $ | 77 | | | $ | — | | | $ | 77 | |
The following table presents the ordinary and capital DTA admitted assets as the result of the application of SSAP 101:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | | | Change | |
| | | | | | | | | |
| (in millions) | | Ordinary | | | Capital | | | Total | | | Ordinary | | | Capital | | | Total | | | Ordinary | | | Capital | | | Total | |
| | | | | | | | | |
Admission calculation components | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
SSAP 101 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Federal income taxes paid in prior years recoverable through loss carry backs | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | |
Adjusted gross DTA expected to be realized (excluding amount of DTA from above) after application of the threshold limitation | | | 1,164 | | | | — | | | | 1,164 | | | | 1,087 | | | | — | | | | 1,087 | | | | 77 | | | | — | | | | 77 | |
| | | | | | | | | |
1. Adjusted gross DTA expected to be realized following the reporting date | | | 1,164 | | | | — | | | | 1,164 | | | | 1,087 | | | | — | | | | 1,087 | | | | 77 | | | | — | | | | 77 | |
| | | | | | | | | |
2. Adjusted gross DTA allowed per limitation threshold | | | — | | | | — | | | | 1,164 | | | | — | | | | — | | | | 1,299 | | | | — | | | | — | | | | (135 | ) |
| | | | | | | | | |
Adjusted gross DTA (excluding the amount of DTA from above) offset by gross DTL | | | 119 | | | | — | | | | 119 | | | | 210 | | | | — | | | | 210 | | | | (91 | ) | | | — | | | | (91 | ) |
| | | | | | | | | |
DTA admitted as the result of application of SSAP 101 | | $ | 1,283 | | | $ | — | | | $ | 1,283 | | | $ | 1,297 | | | $ | — | | | $ | 1,297 | | | $ | (14 | ) | | $ | — | | | $ | (14 | ) |
The following table presents the ratio percentage and amount of adjusted capital to determine the recovery period and threshold limitation amount:
| | | | | | | | |
| | | Years Ended December 31, | |
| ($ in millions) | | 2023 | | | 2022 | |
Ratio percentage used to determine recovery period and threshold limitation amount | | | 700 | % | | | 736 | % |
| | |
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation amount | | $ | 7,759 | | | $ | 8,662 | |
The Company has no tax planning strategies used in the determination of adjusted gross DTA’s or net admitted DTA’s.
The Company’s planning strategy does not include the use of reinsurance.
The Company is not aware of any significant DTLs that are not recognized in the statutory financial statements.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The following tables present the major components of the current income tax expense and net deferred tax assets (liabilities):
| | | | | | | | | | | | |
| | | Years Ended December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Current income tax expense | | | | | | | | | | | | |
| | | |
Federal | | $ | (52 | ) | | $ | 518 | | | $ | 1,421 | |
| | | |
Foreign | | | — | | | | — | | | | 1 | |
| | | |
Subtotal | | | (52 | ) | | | 518 | | | | 1,422 | |
Federal income tax on net capital gains (losses) | | | (170 | ) | | | (397 | ) | | | (3 | ) |
Federal income tax incurred | | | (222 | ) | | | 121 | | | | 1,419 | |
| | | | | | | | | | |
| | | Years Ended December 31, | |
| (in millions) | | 2023 | | | 2022 | | | Change | |
Deferred tax assets: | | | | | | | | | | | | |
| | | |
Ordinary: | | | | | | | | | | | | |
| | | |
Policyholder reserves | | $ | 1,644 | | | $ | 1,343 | | | $ | 301 | |
| | | |
Investments | | | 223 | | | | 243 | | | | (20) | |
| | | |
Deferred acquisition costs | | | 1,133 | | | | 1,080 | | | | 53 | |
| | | |
Fixed assets | | | 401 | | | | 102 | | | | 299 | |
| | | |
Policyholder Dividend Accruals | | | 4 | | | | 4 | | | | — | |
| | | |
Compensation and benefits accrual | | | 42 | | | | 45 | | | | (3 | ) |
| | | |
Tax credit carryforward | | | — | | | | — | | | | — | |
| | | |
Net operating loss carry-forward | | | 1 | | | | 435 | | | | (434 | ) |
| | | |
Other (including items less than 5% of total ordinary tax assets) | | | 30 | | | | 28 | | | | 2 | |
Subtotal | | | 3,478 | | | | 3,280 | | | | 198 | |
| | | |
Non-admitted | | | 2,195 | | | | 1,983 | | | | 212 | |
Admitted ordinary deferred tax assets | | | 1,283 | | | | 1,297 | | | | (14 | ) |
Capital: | | | | | | | | | | | | |
Investments | | | 1,993 | | | | 2,472 | | | | (479 | ) |
Subtotal | | | 1,993 | | | | 2,472 | | | | (479 | ) |
| | | |
Statutory Valuation Adjustment | | | 183 | | | | 303 | | | | (120 | ) |
| | | |
Non-admitted | | | 1,810 | | | | 2,169 | | | | (359 | ) |
Admitted capital deferred tax assets | | | — | | | | — | | | | — | |
Admitted deferred tax assets | | | 1,283 | | | | 1,297 | | | | (14 | ) |
Deferred tax liabilities: | | | | | | | | | | | | |
Ordinary: | | | | | | | | | | | | |
| | | |
Deferred and uncollected premium | | | 56 | | | | 105 | | | | (49 | ) |
| | | |
Policyholder reserves | | | 62 | | | | 104 | | | | (42 | ) |
| | | |
General expense | | | — | | | | — | | | | — | |
| | | |
Other (including items less than 5% of total ordinary tax liabilities) | | | 1 | | | | 1 | | | | — | |
Subtotal | | | 119 | | | | 210 | | | | (91 | ) |
Capital: | | | | | | | | | | | | |
| | | |
Other (including items less than 5% of total capital tax liabilities) | | | — | | | | — | | | | — | |
Subtotal | | | — | | | $ | — | | | $ | — | |
Deferred tax liabilities | | | 119 | | | | 210 | | | | (91 | ) |
Net deferred tax assets | | $ | 1,164 | | | $ | 1,087 | | | | 77 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
The change in net deferred income taxes is comprised of the following (this analysis is exclusive of non-admitted assets as the change in non-admitted assets and the change in net deferred income taxes are reported in separate components of capital and surplus):
| | | | | | | | | | | | |
(in millions) | | Years Ended December 31, | | | Change | |
| | 2023 | | | 2022 | |
Total adjusted deferred tax assets | | $ | 5,288 | | | $ | 5,449 | | | $ | (161) | |
Total deferred tax liabilities | | | 119 | | | | 210 | | | | (91) | |
Net adjusted deferred tax assets | | $ | 5,169 | | | $ | 5,239 | | | | (70) | |
Tax effect of unrealized gains (losses) | | | | | | | | | | | 126 | |
Change in net deferred income tax | | | | | | | | | | | 56 | |
The provision for incurred federal taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The following table presents the significant items causing this difference:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | | | December 31, 2021 | |
| | | | | | |
| (in millions) | | Amount | | | Effective
Tax Rate | | | Amount | | | Effective
Tax Rate | | | Amount | | | Effective
Tax Rate | |
Income tax expense at applicable rate | | $ | (16 | ) | | | 21.0 | % | | $ | 191 | | | | 21.0 | % | | $ | 769 | | | | 21.0 | % |
Change in valuation adjustment | | | (120 | ) | | | 154.8 | | | | 303 | | | | 33.2 | | | | — | | | | — | |
Disregarded entities | | | 1 | | | | (1.2 | ) | | | (56 | ) | | | (6.2 | ) | | | (152 | ) | | | (4.3 | ) |
Amortization of interest maintenance reserve | | | (82 | ) | | | 105.5 | | | | (97 | ) | | | (10.4 | ) | | | 21 | | | | 0.6 | |
Surplus adjustments | | | 50 | | | | (65.0 | ) | | | (38 | ) | | | (4.2 | ) | | | (17 | ) | | | (0.5 | ) |
Dividend received deduction | | | (26 | ) | | | 33.2 | | | | (14 | ) | | | (1.6 | ) | | | (15 | ) | | | (0.4 | ) |
Prior year return true-ups and adjustments | | | (84 | ) | | | 108.5 | | | | (25 | ) | | | (2.8 | ) | | | (11 | ) | | | (0.3 | ) |
Other permanent adjustments | | | (3 | ) | | | 3.8 | | | | (8 | ) | | | (0.9 | ) | | | 11 | | | | 0.3 | |
Change in non-admitted assets | | | 10 | | | | (12.7 | ) | | | 8 | | | | 0.9 | | | | 6 | | | | 0.2 | |
LTIP shortfall deduction | | | (8 | ) | | | 10.7 | | | | (4 | ) | | | (0.4 | ) | | | 2 | | | | 0.1 | |
Separation adjustment on pensions | | $ | — | | | | — | | | $ | (99 | ) | | | (10.9 | ) | | $ | — | | | | — | |
Statutory income tax expense (benefit) | | $ | (278 | ) | | | 358.6 | % | | $ | 161 | | | | 17.7 | % | | $ | 614 | | | | 16.7 | % |
| | | | | | |
Federal income taxes incurred | | $ | (222 | ) | | | 286.4 | % | | $ | 121 | | | | 13.3 | % | | $ | 1,419 | | | | 38.7 | % |
Change in net deferred income taxes | | | (56 | ) | | | 72.2 | | | | 40 | | | | 4.4 | | | | (805 | ) | | | (22.0 | ) |
Total statutory income taxes | | $ | (278 | ) | | | 358.6 | % | | $ | 161 | | | | 17.7 | % | | $ | 614 | | | | 16.7 | % |
At December 31, 2023, the Company had no foreign tax credit carryforwards.
At December 31, 2023, the Company had U.S federal operating loss carryforwards of $0.6 million.
At December 31, 2023, the Company had no capital loss carryforwards.
At December 31, 2023, the Company had no alternative minimum tax credits.
At December 31, 2023, the Company had no general business credit carryforwards.
At December 31, 2023, the Company had no CAMT credits.
The following table presents income tax incurred that is available for recoupment in the event of future net losses:
| | | | |
| (in millions) | | | |
| December 31, | | Capital | |
2021 | | $ | 532 | |
2022 | | | — | |
2023 | | | — | |
Total | | $ | 532 | |
In general, realization of DTAs depends on a company’s ability to generate sufficient taxable income of the appropriate character within the carryforward periods in the jurisdictions in which the net operating losses and deductible temporary differences were incurred. In accordance with the requirements established in SSAP 101, the Company assessed its
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
ability to realize DTAs of $5.5 billion and concluded that $183 million valuation allowance was required at December 31, 2023. The Company had concluded that $303 million valuation allowance was required on the DTAs of $5.8 billion at December 31, 2022.
The Company had no deposits admitted under Internal Revenue Code Section 6603.
The following table presents a reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits, excluding interest and penalties:
| | | | | | | | |
(in millions) | | Years Ended December 31, | |
| | 2023 | | | 2022 | |
Gross unrecognized tax benefits at beginning of year | | $ | 7 | | | $ | 7 | |
Increases in tax position for prior years | | | — | | | | — | |
Decreases in tax position for prior years | | | — | | | | — | |
Gross unrecognized tax benefits at end of year | | $ | 7 | | | $ | 7 | |
At December 31, 2023 and 2022, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $7 million & $7 million, respectively.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2023 and 2022, the Company had accrued liabilities of $(0.1) million, respectively, for the payment of interest (net of the federal benefit) and penalties. In 2023 and 2022, the Company did not recognize any expense of interest (net of the federal benefit) and penalties. In 2021, the Company recognized benefit of interest (net of the federal expense) and penalties of $7 million.
The Company regularly evaluates proposed adjustments by taxing authorities. At December 31, 2023, such proposed adjustments would not have resulted in a material change to the Company’s financial condition, although it is possible that the effect could be material to the Company’s results of operations for an individual reporting period. Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next twelve months, based on the information currently available, the Company does not expect any change to be material to its financial condition.
The Company is currently under IRS examinations for the taxable years 2011-2019 and engaging in the IRS Appeals process in regard to years 2007-2010. Although the final outcome of possible issues raised in any future examination are uncertain, the Company believes that the ultimate liability, including interest, will not materially exceed amounts recorded in the financial statements. The Company’s taxable years 2007-2022 remain subject to examination by major tax jurisdictions.
The Company is not subject to the repatriation transition tax for the year ended December 31, 2023.
For the period prior to the Corebridge IPO on September 19, 2022, the Company joined in the filing of a consolidated federal income tax return with AIG. For the period following the IPO, the Company will join with AGC Life, VALIC, USL and Corebridge Bermuda in filing a consolidated life company federal income tax return.
The Company has a written agreement with both parent entities, AIG and AGC Life, under which each subsidiary agrees to pay the parent company an amount equal to the consolidated federal income tax expense multiplied by the ratio that the subsidiary’s separate return tax liability bears to the consolidated tax liability, plus one hundred percent of the excess of the subsidiary’s separate return tax liability over the allocated consolidated tax liability. Both AIG and AGC Life agree to pay each subsidiary for the tax benefits, if any, of net operating losses, net capital losses and tax credits which are not usable by the subsidiary but which are used by other members of the consolidated group.
The Company may be charged with a portion of CAMT incurred by the AGC Life consolidated group (or credited with a portion of the consolidated group’s CAMT credit utilization).
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
18. CAPITAL AND SURPLUS
RBC standards are designed to measure the adequacy of an insurer’s statutory capital and surplus in relation to the risks inherent in its business. The RBC standards consist of formulas that establish capital requirements relating to asset, insurance, business and interest rate risks. The standards are intended to help identify companies that are under-capitalized, and require specific regulatory actions in the event an insurer’s RBC is deficient. The RBC formula develops a risk-adjusted target level of adjusted statutory capital and surplus by applying certain factors to various asset, premium and reserve items. Higher factors are applied to more risky items and lower factors are applied to less risky items. Thus, the target level of statutory surplus varies not only because of the insurer’s size, but also on the risk profile of the insurer’s operations. At December 31, 2023, the Company exceeded RBC requirements that would require any regulatory action.
The Company is subject to the Texas Insurance Code (“TIC”), which imposes certain restrictions on shareholder dividends. Pursuant to TIC 823.107, the maximum amount of dividends in a 12-month period, measured retrospectively from the date of payment, which can be paid by the Company without prior approval of the Texas Insurance Commissioner (the “Commissioner”), is the greater of (i) 10% of its policyholder surplus as of the end of the immediately preceding calendar year; or (ii) its net gain from operations for the immediately preceding calendar year (excluding realized gains), not including pro rata distributions of such insurance company’s own securities. The Company will be permitted to pay a dividend to its shareholder in excess of the greater of such two amounts (i.e., an extraordinary dividend) only if it files notice of the declaration of such an extraordinary dividend and the amount thereof with the Commissioner and the Commissioner either approves the distribution of the extraordinary dividend or does not disapprove the distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (“unassigned funds (surplus)”) calculated as of the most recent financial information available would require the filing of a notice of an extraordinary dividend with the Commissioner.
The maximum amount, before considering the dividend test discussed below, that would qualify as an ordinary dividend, which would consequently be free from restriction and available for payment of dividends to AGC Life (as immediate parent company), by the Company in 2024 is $892 million. The estimated ordinary dividend capacity of the Company is further limited by the fact that the dividend test under Texas insurance law is based on dividends previously paid over a rolling twelve-month period. Consequently, depending on the actual payment dates during 2024, some or all of the dividends estimated to be ordinary in 2024 may require regulatory approval or non-disapproval. Dividend payments in excess of positive retained earnings are classified and reported as a return of capital.
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
Dividends are paid as determined by the Board of Directors and are noncumulative. The following table presents the dividends paid by the Company during 2023, 2022 and 2021:
| | | | | | | | |
| Date | | Type | | Cash or Non-cash | | Amount
(in millions) | |
2023 | | | | | | | | |
March 27, 2023 | | Ordinary | | Cash | | $ | 500 | |
June 20, 2023 | | Ordinary | | Cash | | | 500 | |
September 19, 2023 | | Ordinary | | Cash | | | 500 | |
December 20 2023 | | Ordinary | | Cash | | | 481 | |
December 20 2023 | | Extraordinary | | Cash | | | 19 | |
| | | |
2022 | | | | | | | | |
March 28, 2022 | | Ordinary | | Cash | | $ | 400 | |
June 24, 2022 | | Ordinary | | Cash | | | 400 | |
| | | |
2021 | | | | | | | | |
March 15, 2021 | | Ordinary | | Cash | | $ | 199 | |
June 15, 2021 | | Ordinary | | Cash | | | 266 | |
September 24, 2021 | | Ordinary | | Cash | | | 214 | |
December 22, 2021 | | Extraordinary | | Non-Cash | | | 295 | |
December 27, 2021 | | Ordinary | | Cash | | | 71 | |
The Company has 8,500 shares of $100 par value cumulative preferred stock authorized and outstanding at December 31, 2023.
19. RETIREMENT AND SHARE-BASED AND DEFERRED COMPENSATION
The Company does not directly sponsor any defined benefit or defined contribution plans and does not participate in any multi-employer plans.
Employee Retirement and Postretirement Benefit Plans
Certain employees and retirees of the Company participated in various AIG-sponsored defined benefit pension and postretirement plans. AIG, as sponsor, is ultimately responsible for the maintenance of these plans in compliance with applicable laws. The Company is not directly liable for obligations under these plans; its obligation results from AIG’s allocation of the Company’s share of expenses from the plans based on participants’ earnings for the pension plans and on estimated claims less contributions from participants for the postretirement plans.
The following table presents information about employee-related costs (expense credits) allocated to the Company:
| | | | | | | | | | | | |
| | | Years Ended December 31, | |
| (in millions) | | 2023 | | | 2022 | | | 2021 | |
Defined benefit plans | | $ | 7 | | | $ | (9 | ) | | $ | (11) | |
Postretirement medical and life insurance plans | | | — | | | | 1 | | | | 1 | |
Total | | $ | 7 | | | $ | (8 | ) | | $ | (10) | |
Defined Contribution Plan
Prior to August 22, 2022, the Company’s employees participated in AIG’s qualified defined contribution plan that provided for contributions by employees, as well as an employer contribution. On August 22, 2022, participants’ accounts in the AIG plan were transferred to the Corebridge Financial Inc. Retirement Savings 401(k) Plan.
The 401(k) plan providesfor pre-tax salary reduction contributions by its U.S. employees. Employer matching contributions of 100 percent were made on the first six percent of participant contributions, subject to IRS-imposed limitations, and an additional fully vested, non-elective, non-discretionary employer contribution equal to three percent of
AMERICAN GENERAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS (Continued)
the participant’s annual base compensation for the plan year, paid each pay period regardless of whether the participant currently contributes to the plan, and subject to the IRS-imposed limitations.
The Company’s pre-tax expense associated with this plan was $23 million, $28 million and $27 million in 2023, 2022 and 2021, respectively.
Share-based and Deferred Compensation Plans
Prior to the IPO, certain Corebridge employees received grants of equity awards under the AIG Long Term Incentive Plan (as amended) and its predecessor plan, the AIG 2013 Long Term Incentive Plan, which are governed by the AIG 2013 Omnibus Incentive Plan. The value of AIG equity awards are linked to the performance of AIG’s common stock. AIG granted equity awards to the Company’s employees primarily in the form of AIG restricted stock units (“RSUs”) but also granted AIG performance share units (“PSUs”) and AIG stock options to certain executives. AIG RSUs that were held by the Company’s active employees on September 14, 2022 (the pricing date for the IPO) were converted into RSUs linked to the performance of Corebridge stock (“Corebridge RSUs”), on terms and conditions that are substantially the same as the corresponding AIG RSUs, with the number of AIG RSUs adjusted in a manner intended to preserve their intrinsic value as of immediately before and immediately following the conversion (subject to rounding).
Following the IPO, the Company’s employees participate in several stock compensation programs under the Corebridge Financial, Inc. Long-term Incentive Plan (each as applicable, the “LTIP”), which are governed by the Corebridge Financial, Inc. 2022 Omnibus Incentive Plan, as amended and restated on February 16, 2023. Corebridge’s LTIP provides for an annual award to certain employees, including senior executive officers and other highly compensated employees, that may comprise a combination of one or more of the following units: RSUs or stock options. RSUs and stock options are earned based solely on continued service by the participant and vesting occurs in three equal installments on the first, second and third anniversaries of the grant date.
The Company recognized compensation expenses of $23 million, $31 million and $28 million for the years ending December 31, 2023, 2022 and 2021, respectively, on the grant date of the awards.
20. DEBT
The Company is a member of the Federal Home Loan Bank (“FHLB”) of Dallas. Membership with the FHLB provides the Company with collateralized borrowing opportunities, primarily as an additional source of liquidity or for other uses deemed appropriate by management. The Company’s ownership in the FHLB stock is reported as common stock.
Pursuant to the membership terms, the Company elected to pledge such stock to the FHLB as collateral for the Company’s obligations under agreements entered into with the FHLB.
Cash advances obtained from the FHLB are reported in and accounted for as borrowed money. The Company may periodically obtain cash advances on a same-day basis, up to a limit determined by management and applicable laws.
The Company is required to pledge certain mortgage-backed securities, government and agency securities and other qualifying assets to secure advances obtained from the FHLB. To provide adequate collateral for potential advances, the Company has pledged securities to the FHLB in excess of outstanding borrowings. Upon any event of default by the Company, the recovery by the FHLB would generally be limited to the amount of the Company’s liability under advances borrowed. The Company’s net borrowing capacity at December 31, 2023 is $2 billion
The following table presents the aggregate carrying value of stock held with the FHLB of Dallas and the classification of the stock:
| | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | |
Membership stock - Class B | | $ | 7 | | | $ | 7 | |
Activity stock | | | 183 | | | | 141 | |
Excess stock | | | 5 | | | | 15 | |
Total | | $ | 195 | | | $ | 163 | |
| | |
Actual or estimated borrowing capacity as determined by the insurer | | $ | 6,536 | | | $ | 5,525 | |
The Company did not hold any Class A at December 31, 2023 or 2022.
The following table presents the amount of collateral pledged, including FHLB common stock held, to secure advances from the FHLB:
| | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | | December 31, 2022 | |
| (in millions) | | Amortized
Cost | | | Fair Value | | | Amortized
Cost | | | Fair Value | |
Amount pledged | | $ | 6,938 | | | $ | 6,239 | | | $ | 5,043 | | | $ | 4,432 | |
| | | | |
Maximum amount pledged during reporting period | | | 7,070 | | | | 6,098 | | | | 5,131 | | | | 4,486 | |
The Company’s borrowing capacity determined quarterly based upon the borrowing limit imposed by statute in the state of domicile.
The following table presents the outstanding funding agreements and maximum borrowings from the FHLB:
| | | | | | | | |
| | | December 31, | |
| (in millions) | | 2023 | | | 2022 | |
Amount outstanding | | $ | 4,475 | | | $ | 3,448 | |
Maximum amount borrowed during reporting period | | $ | 4,475 | | | $ | 3,448 | |
While the funding agreements are presented herein to show all amounts received from FHLB, the funding agreements are treated as deposit-type contracts, consistent with the other funding agreements for which the Company’s intent is to earn a spread and not to fund operations. The Company had no debt outstanding with the FHLB at December 31, 2023 or 2022.
The following table reflects the principal amounts of the funding agreements issued to the FHLB:
| | | | | | |
| (in millions) | | | | | | |
| Funding Agreements | | Date Issued | | Amounts | |
10-year floating rate | | February 15, 2018 | | $ | 1,148 | |
| | |
10-year floating rate | | February 15, 2018 | | | 1,277 | |
| | |
10-year floating rate | | February 15, 2018 | | | 175 | |
| | |
10-year floating rate | | February 6, 2018 | | | 87 | |
| | |
10-year floating rate | | January 25, 2018 | | | 31 | |
| | |
10-year floating rate | | May 23, 2017 | | | 52 | |
| | |
10-year floating rate | | January 31, 2017 | | | 67 | |
| | |
10-year floating rate | | January 12, 2017 | | | 57 | |
| | |
10-year floating rate | | June 14, 2016 | | | 254 | |
| | |
5-year fixed rate | | August 25, 2022 | | | 300 | |
| | |
5-year fixed rate | | March 01, 2023 | | | 506 | |
| | |
5-year fixed rate | | September 12, 2023 | | | 521 | |
21. COMMITMENTS AND CONTINGENCIES
Commitments
The Company had commitments to provide funding to various limited partnerships totaling $2.9 billion and at December 31, 2023 and $3.2 billion at December 31, 2022. The commitments to invest in limited partnerships and other funds may be called at the discretion of each fund, as needed and subject to the provisions of such fund’s governing documents, for funding new investments, follow-on investments and/or fees and other expenses of the fund. Of the total commitments at December 31, 2023, $1.4 billion are currently expected to expire in 2024, and the remainder by 2029 based on the expected life cycle of the related funds and the Company’s historical funding trends for such commitments.
At December 31, 2023 and 2022, the Company had $2.8 billion and $3.8 billion, respectively, of outstanding commitments related to various funding obligations associated with its investments in commercial mortgage loans. Of
the total current commitments, $1.0 billion are expected to expire in 2024 and the remainder by 2036, based on the expected life cycle of the related loans and the Company’s historical funding trends for such commitments.
The Company has various long-term, noncancelable operating leases, primarily for office space and equipment, which expire at various dates over the next several years. At December 31, 2023, the future minimum lease payments under the operating leases are as follows:
| | | | |
| (in millions) | | | |
2024 | | $ | 6 | |
2025 | | | 6 | |
2026 | | | 6 | |
2027 | | | 2 | |
2028 | | | 2 | |
Thereafter | | | — | |
Total | | $ | 22 | |
Rent expense was $15 million, $16 million and $18 million in 2023, 2022 and 2021, respectively.
Contingencies
Legal Matters
Certain reinsurers have sought rate increases on certain yearly renewable term agreements. The Company is disputing the requested rate increases under these agreements. Certain reinsurers with whom the Company has disputes have initiated arbitration proceedings against the Company, and others may initiate them in the future. To the extent reinsurers have sought retroactive premium increases, the Company has accrued its current estimate of probable loss with respect to these matters.
AGL continues to defend against Moriarty v. American General Life Insurance Co. (S.D. Cal.), a putative class action involving Sections 10113.71 and 10113.72 of the California Insurance Code which was instituted against AGL on July 18, 2017. In general, those statutes require that for life-insurance policies issued and delivered in California: (1) the policy must contain a 60-day grace period during which the policy remains in force; (2) the insurer must provide a 30-day pre-lapse notice; and (3) the insurer must notify policy owners of the right to designate a secondary recipient for lapse notices. The Moriarty plaintiff contends AGL did not comply with these requirements for a policy issued before these statutes went into effect. The plaintiff seeks damages and other relief. AGL asserts various defenses to the plaintiff’s claims and to class certification. In 2022, the District Court held a trial was necessary to determine whether AGL was liable, and it denied class certification. In May 2023, the case was reassigned to a new judge. On August 14, 2023, the District Court granted the plaintiff’s motion for summary judgment on the plaintiff’s breach-of-contract claim. On September 26, 2023, the District Court decided that good cause exists to allow the plaintiff to file a third motion for class certification. At the same time, however, the District Court certified its August 14, 2013 order for interlocutory appeal to the Ninth Circuit and stayed trial-court proceedings pending the outcome of AGL’s appeal. The Ninth Circuit granted AGL’s petition for interlocutory appeal on November 21, 2023. Briefing in the Ninth Circuit appeal is expected to be complete in mid-2024, with a decision by the Ninth Circuit at some time after that.
AGL is defending other actions in California involving similar issues: Allen v. Protective Life Insurance Co. (E.D. Cal.), filed on June 6, 2022, in which the individual plaintiff filed a motion on August 11, 2023 seeking leave to amend the complaint to add class-action allegations against AGL; and Chuck v. American General Life Insurance Co. (C.D. Cal.), which was filed on September 6, 2023 as a putative class action. However, Plaintiff filed an amended complaint on January 8, 2024 dropping the class action allegation against AGL and adding a sales agent as a defendant.
These cases are in the early stages, and AGL expects their progress will be influenced by future developments in Moriarty and cases against other insurers involving the same statutes.
AGL has accrued its current estimate of probable loss with respect to these litigation matters.
Various other lawsuits against the Company have arisen in the ordinary course of business. The Company believes it is unlikely that contingent liabilities arising from such lawsuits will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Regulatory Matters
Various federal, state or other regulatory agencies may from time to time review, examine or inquire into the operations, practices and procedures of the Company, such as through financial examinations, subpoenas, investigations, market conduct exams or other regulatory inquiries. Based on the current status of pending regulatory examinations, investigations, and inquiries involving the Company, the Company believes it is not likely that these regulatory examinations, investigations, or inquiries will have a material adverse effect on the financial position, results of operations or cash flows of the Company.
Other Contingencies
All fifty states and the District of Columbia have laws requiring solvent life insurance companies, through participation in guaranty associations, to pay assessments to protect the interests of policyholders of insolvent life insurance companies. These state insurance guaranty associations generally levy assessments, up to prescribed limits, on member insurers in a particular state based on the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer is engaged. Such assessments are used to pay certain contractual insurance benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. The Company accrues liabilities for guaranty fund assessments (“GFA”) when an assessment is probable and can be reasonably estimated. The Company estimates the liability using the latest information available from the National Organization of Life and Health Insurance Guaranty Associations. While the Company cannot predict the amount and timing of any future GFA, the Company has established reserves it believes are adequate for assessments relating to insurance companies that are currently subject to insolvency proceedings.
The Company accrued $41 million and $39 million for GFA at December 31, 2023 and 2022, respectively. The Company has recorded receivables of $31 million and $31 million at December 31, 2023 and 2022, respectively, for expected recoveries against the payment of future premium taxes.
During 1997 and 1998, the Company participated in a workers’ compensation underwriting pool with a third party insurance company. Both companies share equally in the pool. Collectively, the workers’ compensation business is assumed from over 50 ceding companies and retro-ceded to 15 programs. The business covers risks primarily from the 1997 and 1998 underwriting years but also includes risk from the 1996 underwriting year. There were no reinsurance recoverables on claim liabilities and reserves included in these financial statements related to the workers’ compensation business at both December 31, 2023 and 2022. While not included in these statutory financial statements, the Company is contingently liable for losses incurred by its 50 percent pool participant should that third party become insolvent or otherwise unable to meet its obligations under the pool agreement.
At December 31, 2023 and 2022, the Company had admitted assets of $62 million and $153 million, respectively, in premiums receivable due from policyholders (or agents). The Company routinely evaluates the collectability of these receivables. Based upon Company experience, the potential for any loss is not believed to be material to the Company’s financial condition.
The Company did not receive any business interruption insurance recoveries during the periods covered by this report.
22. RELATED PARTY TRANSACTIONS
Sale of Retail Mutual Funds Business
On February 8, 2021, Corebridge announced the execution of a definitive agreement with Touchstone Investments, Inc. (“Touchstone”), an indirect wholly owned subsidiary of Western & Southern Financial Group, to sell certain assets of its retail mutual funds business. This sale consisted of the reorganization of twelve of the retail mutual funds managed by the Company’s subsidiary SunAmerica Asset Management, LLC (“SAAMCo”) into certain Touchstone funds. Concurrently, the twelve retail mutual funds managed by SAAMCo, with $6.8 billion in assets, were reorganized into Touchstone funds. Additional consideration has been and may be earned over a three-year period based on asset levels in certain reorganized funds. Six retail mutual funds managed by SAAMCo and not included in the transaction were liquidated. Corebridge continues to retain its fund management platform and capabilities dedicated to its variable annuity insurance products.
Events Related to AIG and Corebridge
Separation of Life and Retirement Business from AIG and Relationship with Blackstone
On September 19, 2022, Corebridge completed an IPO in which AIG sold 80 million shares of Corebridge common stock to the public. Since the IPO, AIG has sold 159.8 million shares of Corebridge common stock and Corebridge has repurchased 17.2 million shares of its common stock from AIG. As of December 31, 2023, AIG owns 52.2% of outstanding common stock of Corebridge.
On November 2, 2021, Argon Holdco LLC (“Argon”), a wholly-owned subsidiary of Blackstone, Inc. (“Blackstone”), acquired a 9.9% equity stake in Corebridge and Corebridge entered into a long-term asset management relationship with Blackstone ISG-1 Advisors L.L.C (“Blackstone IM”). Pursuant to the partnership, Corebridge initially transferred $50 billion in book value of assets in its consolidated investment portfolio to Blackstone IM, with that amount to increase to an aggregate of $92.5 billion by the third quarter of 2027. As of December 31, 2023, Blackstone IM managed approximately $55.4 billion in book value of assets in Corebridge’s investment portfolio.
Pursuant to the Stockholders’ Agreement that Corebridge entered into with AIG and Argon at the time of acquisition of Argon’s Corebridge equity stake, Argon may not sell its ownership interest in Corebridge subject to exceptions permitting Argon to sell 25%, 67% and 75% of its shares after the first, second and third anniversaries, respectively, of the IPO, with the transfer restrictions terminating in full on the fifth anniversary of the IPO. Also, until Argon no longer owns at least 50% of its initial investment in Corebridge, it will have the right to designate for nomination for election one member of the Corebridge Board of Directors.
Prior to the IPO, Corebridge and certain U.S. subsidiaries were included in the consolidated federal income tax return of AIG as well as certain state tax returns where AIG files on a combined or unitary basis. The provision for income taxes is calculated on a separate return basis. Following the IPO, AIG owns a less than 80% interest in Corebridge, resulting in tax deconsolidation of Corebridge from the AIG Consolidated Tax Group and in a small minority of state jurisdictions which follow federal consolidation rules, the most significant being Florida. In addition, under the applicable law, AGC Life and its directly owned life insurance subsidiaries (the “AGC Group”) will not be permitted to join in the filing of a U.S. consolidated federal income tax return with other subsidiaries (collectively, the “Non-Life Group”) for the five year waiting period. Instead, the AGC Group is expected to file separately as members of the AGC consolidated U.S. federal income tax return during the five-year waiting period. Following the five-year waiting period, the AGC Group is expected to join the U.S. consolidated federal income tax return with the Non-Life Group.
Investment Management Agreements with BlackRock
Since April 2022, certain of the Corebridge insurers, including the Company, entered into investment management agreements with BlackRock Financial Management, Inc. (“BlackRock”) and its investment advisory affiliates. Under the investment management agreements with BlackRock, Corebridge completed the transfer of the management of liquid fixed income and certain private placement assets to BlackRock in 2022. As of December 31, 2023, BlackRock managed approximately $85.3 billion in book value of assets in Corebridge’s consolidated investment portfolio. In addition, liquid fixed income assets associated with the Fortitude Re portfolio were separately transferred to BlackRock for management in 2023. The investment management agreements contain detailed investment guidelines and reporting requirements. These agreements also contain reasonable and customary representations and warranties, standard of care, expense reimbursement, liability, indemnity and other provisions.
American Home and National Union Guarantees
The Company has a General Guarantee Agreement with American Home Assurance Company (“American Home”), an indirect wholly owned subsidiary of AIG. Pursuant to the terms of this agreement, American Home has unconditionally and irrevocably guaranteed insurance policies the Company issued between March 3, 2003 and December 29, 2006.
The Company, as successor-in-interest to American General Life and Accident Insurance Company (“AGLA”) has a General Guarantee Agreement with American Home. Pursuant to the terms of this agreement, American Home has unconditionally and irrevocably guaranteed policies of insurance issued by AGLA between March 3, 2003 and September 30, 2010.
The Company, as successor-in-interest to SunAmerica Annuity and Life Assurance Company (“SAAL”) and SunAmerica Life Insurance Company (“SALIC”) has a General Guarantee Agreement with American Home. Pursuant to the terms of
this agreement, American Home has unconditionally and irrevocably guaranteed policies of insurance issued by SAAL and SALIC between January 4, 1999 and December 29, 2006.
The Company, as successor-in-interest to American General Life Insurance Company of Delaware, formerly known as AIG Life Insurance Company (“AIG Life”), has a General Guarantee Agreement with National Union Fire Insurance Company of Pittsburg, Pa. (“National Union”), an indirect wholly owned subsidiary of AIG. Pursuant to the terms of this agreement, National Union has unconditionally and irrevocably guaranteed insurance policies issued by AIG Life Holding, Inc. between July 13, 1998 and April 30, 2010.
Cut-Through Agreement
The Company and Corebridge Bermuda entered into a Cut-through Agreement in which insureds, their beneficiaries and owners were granted a direct right of action against the Company in the event Corebridge Bermuda becomes insolvent or otherwise cannot or refuses to perform its obligations under certain life insurance policies issued by Corebridge Bermuda. The Cut-through Agreement was approved by the TDI. The amount of the retained liability on Corebridge Bermuda’s books related to this agreement was approximately $320,000 and $330,000 for the years ending December 31, 2023 and 2022. The Company believes the probability of loss under this agreement is remote. No liability has been recognized in relation to this guarantee due to immateriality.
Affiliate Transactions
Effective January 1, 2011, the Company entered into a Reinsurance Agreement with AGC Life pursuant to which certain blocks of life business issued by the Company were ceded to AGC Life. The Reinsurance Agreement was non-disapproved by the TDI and Missouri Department of Commerce and Insurance (“MDCI”). Amendment 29 to the reinsurance agreement was approved by the TDI and MDCI effective December 31, 2020 to add certain term and universal life policies issued by AGL on or after January 1, 2020 to the reinsurance agreement. Amendment 29 was closed to new business as of December 31, 2021. Effective March 31, 2023, the Company recaptured certain XXX business issued from 2017 through 2019 from the treaty and concurrently ceded the business to an external reinsurer. Effective September 30, 2023, the Company recaptured certain AXXX business from the treaty issued from 2017 through 2019 and concurrently ceded the business to an external reinsurer. Effective October 1, 2023, the Company recaptured certain term and universal life business issued from 2020 through 2021 from the treaty.
Effective October 1, 2022, the Company entered into a modified coinsurance reinsurance agreement with VALIC, pursuant to which certain blocks of VALIC’s VA business were ceded to the Company. The ceded reserves and assets supporting the reserves remain on VALIC’s balance sheet, pursuant to the modified coinsurance structure. The business covered by the agreement includes substantially all of VALIC’s VA contracts, excluding those issued by VALIC in the State of New York and those that have been previously assumed (through reinsurance) by VALIC. At inception, VALIC ceded $22.9 billion of reserves and received a ceding commission of $1.5 billion from the Company representing the embedded profits in the business ceded. The majority of the initial ceding commission was recognized directly in surplus on an after-tax basis, while a portion of the ceding commission ($0.3 billion) was recognized as Commission and expense allowances on reinsurance ceded in the Summary of Operations as an offset to the related tax expense. The after-tax surplus impact will be amortized over the life of the treaty as the after-tax profits emerge on the reinsured business and will be recognized as Commission and expense allowances on reinsurance ceded in the Summary of Operations, offset by a corresponding charge to change in surplus as a result of reinsurance with no net impact on capital and surplus. After contract inception, the Company paid a ceding commission and expense allowance to reimburse VALIC for its commissions, related issue and policy administration expenses. The agreement was non-disapproved by the TDI. The agreement allows the Company and VALIC to more efficiently manage the reserve and capital requirements for their VA business.
In December 2022, the Company received capital contributions of $1.9 billion from AGC Life in connection with the Company and VALIC reinsurance transaction.
During 2023, the Company purchased $396 million and sold $10 million of securities, at fair market value, from or to one or more of its affiliates in the ordinary course of business.
On January 2, 2020, the Company sold its Houston Campus properties to an affiliate, 2929 REH, a newly formed limited liability company incorporated in the state of Texas. 2929 REH is owned by AIG Life Holdings, Inc. and Knickerbocker Corporation, a Texas corporation wholly owned by Corebridge Life Holdings. The sale of the properties is treated as a sale and leaseback transaction pursuant to SSAP 22R. The gain on sale of $253 million was recognized directly to
special surplus funds and is subsequently amortized to unassigned surplus over a 10 year period. Amortization for the years ending December 31, 2023 and 2022 was $25 million each year.
Corebridge Life Holdings issued two senior promissory notes to the Company in the amount of $150,000,000 and $200,000,000 (“2019 Promissory Notes”) respectively in exchange for cash. Each of the promissory notes was supported by a guarantee issued by AIG for the benefit of the Company, with maturity dates of five and four years, respectively, and interest rates of 2.52% and 2.40% per year, respectively. On December 30, 2019, the TDI issued a letter allowing AGL to record the total amounts due under each promissory note as an admitted asset for the period ending March 31, 2020 and in each subsequent quarter thereafter subject to certain conditions and in accordance with applicable provisions of SSAP No. 25. On August 1, 2023, the guarantee of these promissory notes was novated from AIG to Corebridge. Effective January 2, 2024, Corebridge Life Holdings amended and restated the $200,000,000 promissory note to the Company, extending the note term for five years and updating the interest rate to 5.314%. The amended and restated promissory note was supported by an amended and restated guarantee issued by Corebridge for the benefit of the Company. On January 8, 2024, the TDI issued a letter allowing the Company to record the total amounts due under the amended and restated promissory note as an admitted asset for the period ending March 31, 2024, and in each subsequent quarter thereafter subject to certain conditions and in accordance with applicable provisions of SSAP No. 25.
On May 18, 2022, SAFG Capital LLC, a subsidiary of Corebridge, issued a senior promissory to the Company in the amount of up to $150,000,000. The promissory note is supported by a guarantee issued by Corebridge for the benefit of the Company. The promissory note has a maturity date and a rate per annum equal to term SOFR plus a total spread as defined in the agreement.
In 2018, AGLIC Investments Bermuda Limited, a Bermuda corporation (“AGLIC Bermuda”) was formed by the Company as an investment subsidiary under Texas Insurance Code Section 823.255. The Company made capital contributions of $11 million, $76 million, and $263 million in 2023, 2022 and 2021, respectively. AGLIC Bermuda made distributions to the Company of $738 million in 2023, $214 million in 2022 and $113 million in 2021.
At December 31, 2023, the Company’s unfunded capital commitment to US Fund I, US Fund II, US Fund III, US Fund IV, Europe Fund I and Europe Fund II (which are managed by an affiliate) were approximately $86.9 million, $73.8 million, $73.3 million ,$142.1 million, $49.8 million and $83.7 million, respectively.
At December 31, 2022, the Company’s unfunded capital commitment to US Fund I, US Fund II, US Fund III, US Fund IV, Europe Fund I and Europe Fund II were approximately $86.9 million, $79 million, $191 million, $75.8 million, $47 million and $179 million, respectively.
Financing Agreements
On May 17, 2022, the Company and certain of its affiliates entered into a revolving loan facility with Corebridge, pursuant to which the Company and each such affiliate can, on a several basis, borrow monies from Corebridge (as lender) subject to the terms and conditions stated therein. Principal amounts borrowed under this facility may be repaid and re-borrowed, in whole or in part, from time to time, without penalty. However, the total aggregate amount of loans borrowed by all borrowers under the facility cannot exceed $500,000,000.The loan facility also sets forth individual borrowing limits for each borrower, with the Company’s maximum borrowing limit being $500,000,000.
At both December 31, 2023 and 2022, the Company did not have a balance outstanding under this facility.
Investments in Subsidiary, Controlled and Affiliated Entities
The following table presents information regarding the Company’s investments in non-insurance SCA entities as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| (in millions) | | Gross
Amount | | | Non-
admitted
Amount | | | Admitted
Asset
Amount | | | Date of NAIC Filing | |
| | | | |
AGL LOAN INVESTMENTS CORPORATION | | $ | 69 | | | $ | — | | | $ | 69 | | | | 5/7/2020 | |
AIG Direct - SER B | | | 1 | | | | 1 | | | | — | | | | NA | |
AIG Direct - SER A | | | 1 | | | | 1 | | | | — | | | | NA | |
AGLIC INVESTMENTS BERMUDA LTD. | | | 1 | | | | — | | | | 1 | | | | 10/3/2020 | |
AIG Direct - NON VOTING | | | 1 | | | | 1 | | | | — | | | | NA | |
American Gen Annuity Svc Corp | | | — | | | | — | | | | — | | | | NA | |
UG Corp COM | | | — | | | | — | | | | — | | | | NA | |
AGL Alternative Holdings, LLC | | | 270 | | | | — | | | | 270 | | | | | |
SA Affordable Housing LLC | | | 207 | | | | — | | | | 207 | | | | NA | |
SunAmerica Asset Management LLC | | | 27 | | | | — | | | | 27 | | | | NA | |
Corebridge Commercial Real Estate Lending Holdings, LLC | | | 2 | | | | — | | | | 2 | | | | NA | |
SunAmerica Investors 3, LP | | | 65 | | | | — | | | | 65 | | | | NA | |
GRE LB Industrial Joint Venture II, LP | | | 33 | | | | — | | | | 33 | | | | NA | |
Corebridge Europe Real Estate Fund II LR Feeder, LLC | | | 95 | | | | — | | | | 95 | | | | NA | |
Bayshore PII Company LLC | | | 9 | | | | — | | | | 9 | | | | NA | |
Corebridge U.S. Real Estate Fund IV Development Sidecar LP | | | 48 | | | | — | | | | 48 | | | | NA | |
SPAIG North Williams, LLC | | | (3 | ) | | | — | | | | (3 | ) | | | NA | |
Clinton Grand Holdings LLC | | | 8 | | | | — | | | | 8 | | | | NA | |
AIG LIQUID ALTERNATIVE EQUITY ALPHA FUND, LLC | | | 1 | | | | — | | | | 1 | | | | NA | |
Corebridge U.S. Real Estate Fund III, LP | | | 154 | | | | — | | | | 154 | | | | NA | |
Corebridge U.S. Real Estate Fund IV, LP | | | 179 | | | | — | | | | 179 | | | | NA | |
Touchdown MGP, LLC | | | — | | | | — | | | | — | | | | NA | |
Corebridge Europe Real Estate Fund I S.C.SP | | | 25 | | | | — | | | | 25 | | | | NA | |
Bayshore Shopping Center JV LLC | | | 24 | | | | — | | | | 24 | | | | NA | |
Corebridge U.S. Real Estate Fund II, LP | | | 102 | | | | — | | | | 102 | | | | NA | |
Corebridge REI LB Southeast Industrial JV LLC | | | 74 | | | | — | | | | 74 | | | | NA | |
Corebridge U.S. Real Estate Fund I, LP | | | (26 | ) | | | — | | | | (26 | ) | | | NA | |
Branch Retail Partners II, LP | | | (1 | ) | | | — | | | | (1 | ) | | | NA | |
Corebridge Bartlett Investor II LLC | | | 1 | | | | — | | | | 1 | | | | NA | |
Corebridge Papermill Investor II LLC | | | 1 | | | | — | | | | 1 | | | | NA | |
Corebridge U.S. LT Apartments JV, LP | | | 34 | | | | — | | | | 34 | | | | NA | |
Total | | $ | 1,402 | | | $ | 3 | | | $ | 1,399 | | | | | |
Operating Agreements
The Company has investments in a Liquidity Pool in which funds are managed by an affiliate, AIG Asset Management (U.S.), LLC, in the amount of $856 million and $585 million at December 31, 2023 and 2022, respectively.
Pursuant to service and expense agreements, AIG, Corebridge and affiliates provide, or cause to be provided, administrative, marketing, investment management, accounting, occupancy, and data processing services to the Company. The allocation of costs for services is based generally on estimated levels of usage, transactions or time incurred in providing the respective services. Generally, these agreements provide for the allocation of costs upon either the specific identification basis or a proportional cost allocation basis which management believes to be reasonable. In all cases, billed amounts pursuant to these agreements do not exceed the cost to AIG, Corebridge or the affiliate providing the service. The Company was charged $48 million, $69 million and $134 million under such agreements in 2023, 2022 and 2021, respectively.
Pursuant to an amended and restated investment advisory agreement, the majority of the Company’s invested assets are managed by an affiliate. The investment management fees incurred were $119 million in 2023, $112 million in 2022 and $102 million in 2021.
The majority of the Company’s Swap agreements are entered into with an affiliated counterparty, AIG Markets, Inc. and Corebridge Markets, Inc. (See Note 8).
Other
The Company engages in structured settlement transactions, certain of which involve affiliated property and casualty insurance companies that are subsidiaries of AIG. In a structured settlement arrangement, a property and casualty insurance policy claimant has agreed to settle a casualty insurance claim in exchange for fixed payments over either a fixed determinable period of time or a life contingent period. In such claim settlement arrangements, a casualty insurance claim payment provides the funding for the purchase of a single premium immediate annuity issued by the Company for the ultimate benefit of the claimant. In certain structured settlement arrangements, the affiliated property and casualty insurance company remains contingently liable for the payments to the claimant.
23. SUBSEQUENT EVENTS
Management considers events or transactions that occur after the reporting date, but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. The Company has evaluated subsequent events through April 18, 2024, the date the financial statements were issued.
On March 11, 2024, Corebridge entered into an Amendment and Waiver of Consent and Voting Rights (the “Amendment and Waiver”) with AIG and certain affiliates of Argon and Blackstone that (i) amends the Stockholders Agreement, dated as of November 2, 2021, between Corebridge, AIG and Argon such that Argon shall have no right to consent to any repurchase of shares of common stock of Corebridge, par value $0.01 per share (“Corebridge Common Stock”) if such repurchase would result in Argon owning, of record, more than 9.9% of the then-outstanding Corebridge Common Stock, provided that, no such repurchase will be permitted if it would result in Argon owning, of record, more than 14.9% of the then-outstanding Corebridge Common Stock and (ii) waives the right of Argon, Blackstone and certain of their affiliates to vote or act by written consent with respect to any shares of Corebridge Common Stock owned by them from time to time.
Supplemental Information
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA
| | | | |
| (in millions) | | December 31, 2023 | |
Investment income earned: | | | | |
Government bonds | | $ | 42 | |
Other bonds (unaffiliated) | | | 5,217 | |
Bonds of affiliates | | | 13 | |
Preferred stocks (unaffiliated) | | | 2 | |
Common stocks (unaffiliated) | | | 11 | |
Common stocks of affiliates | | | 25 | |
Cash and short-term investments | | | 57 | |
Mortgage loans | | | 1,449 | |
Real estate | | | 4 | |
Contract loans | | | 78 | |
Other invested assets | | | 335 | |
Derivative instruments | | | (283) | |
Miscellaneous income | | | 10 | |
Gross investment income | | $ | 6,960 | |
| | |
Real estate owned - book value less encumbrances | | $ | 75 | |
| |
Mortgage loans - book value: | | | | |
Commercial mortgages | | $ | 23,562 | |
Residential mortgages | | | 5,601 | |
Mezzanine loans | | | 844 | |
Affiliated residential mortgages | | | — | |
Total mortgage loans | | $ | 30,007 | |
| |
Mortgage loans by standing - book value: | | | | |
Good standing | | $ | 29,676 | |
Good standing with restructured terms | | | 307 | |
Interest overdue more than 90 days, not in foreclosure | | | 17 | |
Foreclosure in process | | | 7 | |
Total mortgage loans | | $ | 30,007 | |
| | |
Partnerships - statement value | | $ | 6,556 | |
| |
Bonds and stocks of parents, subsidiaries and affiliates - statement value: | | | | |
Bonds | | $ | 366 | |
Common stocks | | | 73 | |
| |
Bonds, short-term and cash equivalent bond investments by class and maturity: | | | | |
Bonds, short-term and cash equivalent bond investments by maturity - statement value: | | | | |
Due within one year or less | | $ | 5,622 | |
Over 1 year through 5 years | | | 29,992 | |
Over 5 years through 10 years | | | 29,009 | |
Over 10 years through 20 years | | | 20,066 | |
Over 20 years | | | 27,574 | |
Total maturity | | $ | 112,263 | |
| |
Bonds, short-term and cash equivalent bond investments by class - statement value: | | | | |
Class 1 | | $ | 67,401 | |
Class 2 | | | 38,494 | |
Class 3 | | | 3,480 | |
Class 4 | | | 2,638 | |
Class 5 | | | 225 | |
Class 6 | | | 25 | |
Total by class | | $ | 112,263 | |
| |
Total bonds, short-term and cash equivalent bond investments publicly traded | | | 52,674 | |
Total bonds, short-term and cash equivalent bond investments privately traded | | | 59,590 | |
| |
Preferred stocks - statement value | | $ | 80 | |
Common stocks - market value | | | 266 | |
Short-term investments - book value | | | 122 | |
Cash equivalents - book value | | | 856 | |
Options, caps and floors owned - statement value | | | 1,414 | |
Collar, swap and forward agreements open - statement value | | | (487) | |
Futures contracts open - current value | | | 4 | |
Cash on deposit | | | (78) | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA - (Continued)
| | | | |
| (in millions) | | December 31, 2023 | |
Life insurance in-force: | | | | |
Industrial | | $ | 696 | |
Ordinary | | | 263,929 | |
Credit | | | — | |
Group | | | 3,274 | |
| |
Amount of accidental death insurance in-force under ordinary policies | | | 4,467 | |
| |
Life insurance policies with disability provisions in-force: | | | | |
Industrial | | | 195 | |
Ordinary | | | 37,623 | |
Group life | | | 30 | |
| |
Supplementary contracts in-force: | | | | |
Ordinary - not involving life contingencies: | | | | |
Amount on deposit | | | 651 | |
Income payable | | | 299 | |
| |
Ordinary - involving life contingencies: | | | | |
Amount on deposit | | | 270 | |
Income payable | | | 113 | |
| |
Group - not involving life contingencies: | | | | |
Amount on deposit | | | 1 | |
| |
Annuities: | | | | |
Ordinary: | | | | |
Immediate - amount of income payable | | $ | 1,408 | |
Deferred, fully paid - account balance | | | 71,226 | |
Deferred, not fully paid - account balance | | | 36,165 | |
| |
Group: | | | | |
Amount of income payable | | | 615 | |
Fully paid - account balance | | | 630 | |
Not fully paid - account balance | | | 15,587 | |
| |
Accident and health insurance - premiums in-force: | | | | |
Other | | $ | 64 | |
Group | | | — | |
Credit | | | — | |
| |
Deposit funds and dividend accumulations: | | | | |
Deposit funds - account balance | | $ | 8,907 | |
Dividend accumulations - account balance | | | 488 | |
| |
Claim payments in 2022 | | | | |
Group accident & health: | | | | |
2023 | | $ | — | |
2022 | | | — | |
2021 | | | — | |
2020 | | | — | |
2019 | | | — | |
Prior | | | 166 | |
| |
Other accident & health: | | | | |
2023 | | | 12 | |
2022 | | | (1 | ) |
2021 | | | (80 | ) |
2020 | | | (58 | ) |
2019 | | | (14 | ) |
Prior | | | 427 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES
DECEMBER 31, 2023
(in millions)
1. The Company’s total admitted assets as of December 31, 2023 are $229.8 billion.
The Company’s total admitted assets, excluding separate accounts, as of December 31, 2023 are $161 billion.
2. Following are the 10 largest exposures to a single issuer/borrower/investment, by investment category, excluding: (i) U.S. Government, U.S. Government agency securities and those U.S. Government money market funds listed in the Appendix to the IAO Practices and Procedures Manual as exempt, (ii) property occupied by the Company, and (iii) policy loans:
| | | | | | | | |
| | | | |
| Issuer | | Description of Exposure | | Amount | | | Percentage of Total Admitted
Assets |
| | | |
a. Carlyle Group | | OIA | | $ | 1,513 | | | 0.90 % |
| | | |
b. Senior Direct Lending Program LLC | | BONDS | | | 908 | | | 0.60 |
| | | |
c. Corebridge Real Estate Investors Inc. | | OIA | | | 769 | | | 0.50 |
| | | |
d. Amazon.com, Inc. | | BONDS | | | 602 | | | 0.40 |
| | | |
e. Duke Energy Corporation | | BONDS | | | 560 | | | 0.30 |
| | | |
f. American Electric Power Company, Inc. | | BONDS | | | 491 | | | 0.30 |
| | | |
g. Exelon Corporation | | BONDS | | | 491 | | | 0.30 |
| | | |
h. Southern Company, The | | BONDS | | | 458 | | | 0.30 |
| | | |
i. Microsoft Corporation | | BONDS | | | 438 | | | 0.30 |
| | | |
j. CVS Health Corporation | | BONDS | | | 429 | | | 0.30 |
3. The Company’s total admitted assets held in bonds and preferred stocks, by NAIC rating, are:
| | | | | | | | | | | | | | | | | | | | |
| Bonds and Short-Term Investments | | | | | Preferred Stocks | |
| | | | | | |
| NAIC Rating | | Amount | | | Percentage of
Total Admitted Assets | | | | | NAIC Rating | | Amount | | | Percentage of
Total Admitted
Assets | |
NAIC - 1 | | $ | 67,401 | | | | 41.90 | % | | | | P/RP - 1 | | $ | 76 | | | | — | % |
NAIC - 2 | | | 38,494 | | | | 23.90 | | | | | P/RP - 2 | | | 4 | | | | — | |
NAIC - 3 | | | 3,480 | | | | 2.20 | | | | | P/RP - 3 | | | — | | | | — | |
NAIC - 4 | | | 2,638 | | | | 1.60 | | | | | P/RP - 4 | | | — | | | | — | |
NAIC - 5 | | | 225 | | | | 0.10 | | | | | P/RP - 5 | | | 1 | | | | — | |
NAIC - 6 | | | 25 | | | | — | | | | | P/RP - 6 | | | — | | | | — | |
4. Assets held in foreign investments:
| | | | | | | | |
| | | |
| | | Amount | | | Percentage
of Total Admitted
Assets | |
a. Total admitted assets held in foreign investments | | $ | 27,858 | | | | 17.30 | % |
b. Foreign currency denominated investments | | | 11,584 | | | | 7.20 | |
c. Insurance liabilities denominated in that same foreign currency | | | — | | | | — | |
| 5. | Aggregate foreign investment exposure categorized by NAIC sovereign rating: |
| | | | | | | | |
| | | |
| | | Amount | | | Percentage of Total Admitted Assets | |
a. Countries rated NAIC - 1 | | $ | 25,729 | | | | 16.00 | % |
b. Countries rated NAIC - 2 | | | 1,471 | | | | 0.90 | |
c. Countries rated NAIC - 3 or below | | | 657 | | | | 0.40 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES (Continued)
DECEMBER 31, 2023
(in millions)
6. Two largest foreign investment exposures to a single country, categorized by the country’s NAIC sovereign rating:
| | | | | | | | |
| | | |
| | | Amount | | | Percentage
of Total
Admitted
Assets | |
a. Countries rated NAIC - 1 | | | | | | | | |
Country 1: United Kingdom | | $ | 6,489 | | | | 4.00 | % |
Country 2: Cayman Islands | | | 4,755 | | | | 3.00 | |
b. Countries rated NAIC - 2 | | | | | | | | |
Country 1: Mexico | | | 467 | | | | 0.30 | |
Country 2: Indonesia | | | 251 | | | | 0.20 | |
c. Countries rated NAIC - 3 or below | | | | | | | | |
Country 1: Colombia | | | 188 | | | | 0.10 | |
Country 2: British Virgin Islands | | | 94 | | | | 0.10 | |
7. Aggregate unhedged foreign currency exposure:
| | | | | | | | |
| | | |
| | | Amount | | | Percentage of Total Admitted Assets | |
Aggregate unhedged foreign currency exposure | | $ | 11,584 | | | | 7.20 | % |
8. Aggregate unhedged foreign currency exposure categorized by NAIC sovereign rating:
| | | | | | | | |
| | | |
| | | Amount | | | Percentage of Total Admitted Assets | |
a. Countries rated NAIC - 1 | | $ | 11,577 | | | | 7.20 | % |
b. Countries rated NAIC - 2 | | | 5 | | | | — | |
c. Countries rated NAIC - 3 or below | | | 2 | | | | — | |
9. Two largest unhedged foreign currency exposures to a single country, categorized by the country’s NAIC sovereign rating:
| | | | | | | | |
| | | |
| | | Amount | | | Percentage of Total Admitted Assets | |
a. Countries rated NAIC - 1 | | | | | | | | |
Country 1: United Kingdom | | $ | 4,907 | | | | 3.00 | % |
Country 2: Ireland | | | 2,270 | | | | 1.40 | |
b. Countries rated NAIC - 2 | | | | | | | | |
Country 1: Peru | | | 3 | | | | — | |
Country 2: Mexico | | | 2 | | | | — | |
c. Countries rated NAIC - 3 or below | | | | | | | | |
Country 1: Brazil | | | 2 | | | | — | |
Country 2: | | | — | | | | — | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES (Continued)
DECEMBER 31, 2023
(in millions)
10. Ten largest non-sovereign (i.e. non-governmental) foreign issues:
| | | | | | | | | | | | |
| | | | | NAIC Rating | | Amount | | | Percentage of Total Admitted Assets | |
| | | | |
a. | | 5555233 | | MORTGAGE LOAN | | $ | 390 | | | | 0.20 | % |
| | | | |
b. | | Granite DEBTCO 9 Limited | | MORTGAGE LOAN | | | 314 | | | | 0.20 | |
| | | | |
c. | | 5555143 | | MORTGAGE LOAN | | | 268 | | | | 0.20 | |
| | | | |
d. | | 5555184 | | MORTGAGE LOAN | | | 255 | | | | 0.20 | |
| | | | |
e. | | 5555239 | | MORTGAGE LOAN | | | 254 | | | | 0.20 | |
| | | | |
f. | | Silver (BREDS) | | Other invested Assest | | | 245 | | | | 0.20 | |
| | | | |
g. | | 5555187 | | MORTGAGE LOAN | | | 222 | | | | 0.10 | |
h. | | Royal Dutch Shell plc | | NAIC 1 - Bonds | | | 221 | | | | 0.10 | |
| | | | |
i. | | 5555164 | | MORTGAGE LOAN | | | 220 | | | | 0.10 | |
| | | | |
j. | | 5555138 | | MORTGAGE LOAN | | | 210 | | | | 0.10 | |
11. Assets held in Canadian investments are less than 2.5% of the reporting entity’s total admitted assets.
12. Assets held in investments with contractual sales restrictions are less than 2.5 percent of the Company’s total admitted assets.
13. The Company’s admitted assets held in the ten largest equity interests (including investments in the shares of mutual funds, preferred stocks, publicly traded equity securities, and other equity securities and excluding money market and bond mutual funds listed in the Appendix to the SVO Practices and Procedures Manual as exempt or Class 1) are:
| | | | | | | | | | |
| | | | | Amount | | | Percentage of Total Admitted Assets | |
a. | | Carlyle Group | | $ | 1,513 | | | | 0.90 | % |
b. | | Corebridge Real Estate Investors Inc. | | | 769 | | | | 0.50 | |
c. | | Silver (BREDS) | | | 245 | | | | 0.20 | |
d. | | SUNAMERICA INVESTMENT INC. | | | 233 | | | | 0.10 | |
e. | | BLACKSTONE GROUP | | | 202 | | | | 0.10 | |
f. | | The Spiral | | | 185 | | | | 0.10 | |
g. | | GENERAL ATLANTIC | | | 179 | | | | 0.10 | |
h. | | TEACHERS INSUR & ANNUITY | | | 142 | | | | 0.10 | |
i. | | THOMA BRAVO LLC | | | 138 | | | | 0.10 | |
j. | | Think Investments LLC | | | 130 | | | | 0.10 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES (Continued)
DECEMBER 31, 2023
(in millions)
14. Assets held in nonaffiliated, privately placed equities:
| | | | | | | | | | |
| | | | | Amount | | | Percentage of Total
Admitted Assets | |
| | |
Aggregate statement value of investment held in nonaffiliated, privately placed equities: | | $ | 1,775 | | | | 1.10 | % |
| | |
Largest three investments held in nonaffiliated, privately placed equities: | | | | | | | | |
a. | | Carlyle Alternative Opportunities Fund L.P. | | $ | 368 | | | | 0.20 | |
b. | | Silver (BREDS) | | | 245 | | | | 0.20 | |
c. | | The Spiral | | | 185 | | | | 0.10 | |
| | | | | | | | | | | | | | |
Ten largest fund managers: | | | | | | | | | |
| | | | |
| | | Fund Manager | | Total
Invested | | | Diversified | | | Non-
diversified | |
a. | | Carlyle Group | | $ | 1,513 | | | $ | 1,513 | | | $ | — | |
b. | | Corebridge Real Estate Investors Inc. | | | 769 | | | | — | | | | 769 | |
c. | | Silver (BREDS) | | | 245 | | | | — | | | | 245 | |
d. | | SUNAMERICA INVESTMENT INC. | | | 233 | | | | 233 | | | | — | |
e. | | BLACKSTONE GROUP | | | 202 | | | | 202 | | | | — | |
f. | | The Spiral | | | 185 | | | | — | | | | 185 | |
g. | | GENERAL ATLANTIC | | | 179 | | | | 179 | | | | — | |
h. | | TEACHERS INSUR & ANNUITY | | | 142 | | | | 142 | | | | — | |
i. | | THOMA BRAVO LLC | | | 138 | | | | 138 | | | | — | |
j. | | Think Investments LLC | | | 130 | | | | 130 | | | | — | |
15. Assets held in general partnership interests are less than 2.5 percent of the Company’s total admitted assets.
16. Mortgage loans reported in Schedule B, include the following ten largest aggregate mortgage interests. The aggregate mortgage interest represents the combined value of all mortgages secured by the same property or same group of properties:
| | | | | | | | | | |
| | | | |
| | | | | Amount | | | Percentage of Total Admitted Assets | |
| | | |
a. | | COMMERCIAL MORTGAGE LOAN, Loan No. 5555233, ESP | | $ | 390 | | | | 0.20 | % |
| | | |
b. | | COMMERCIAL MORTGAGE LOAN, Loan No. 8002341, NY | | | 366 | | | | 0.20 | |
| | | |
c. | | COMMERCIAL MORTGAGE LOAN, Loan No. 8002930, CA | | | 272 | | | | 0.20 | |
| | | |
d. | | COMMERCIAL MORTGAGE LOAN, Loan No. 5555143, GBR | | | 268 | | | | 0.20 | |
| | | |
e. | | COMMERCIAL MORTGAGE LOAN, Loan No. 8002711, NJ | | | 265 | | | | 0.20 | |
| | | |
f. | | COMMERCIAL MORTGAGE LOAN, Loan No. 5555184, GBR | | | 255 | | | | 0.20 | |
| | | |
g. | | COMMERCIAL MORTGAGE LOAN, Loan No. 5555239, ESP | | | 254 | | | | 0.20 | |
| | | |
h. | | COMMERCIAL MORTGAGE LOAN, Loan No. 8002917, NY | | | 227 | | | | 0.10 | |
| | | |
i. | | COMMERCIAL MORTGAGE LOAN, Loan No. 5555187, GBR | | | 222 | | | | 0.10 | |
| | | |
j. | | COMMERCIAL MORTGAGE LOAN, Loan No. 5555164, GBR | | | 220 | | | | 0.10 | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES (Continued)
DECEMBER 31, 2023
(in millions)
Amount and percentage of the reporting entity’s total admitted assets held in the following categories of mortgage loans:
| | | | | | | | |
| | | |
| | | Amount | | | Percentage
of Total
Admitted
Assets | |
a. Construction loans | | $ | 1,615 | | | | 1.00 | % |
b. Mortgage loans over 90 days past due | | | 18 | | | | — | |
c. Mortgage loans in the process of foreclosure | | | 7 | | | | — | |
d. Mortgage loans foreclosed | | | — | | | | — | |
e. Restructured mortgage loans | | | 307 | | | | 0.20 | |
17. Aggregate mortgage loans having the following loan-to-value ratios as determined from the most current appraisal as of the annual statement date:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Residential | | | Commercial | | | Agricultural | |
| | | | | | |
| Loan-to-Value | | Amount | | | Percentage
of Total
Admitted
Assets | | | Amount | | | Percentage
of Total
Admitted
Assets | | | Amount | | | Percentage
of Total
Admitted
Assets | |
a. above 95% | | $ | 1 | | | | — | % | | $ | 609 | | | | 0.40 | % | | $ | — | | | | — | % |
b. 91% to 95% | | | 1 | | | | — | | | | 246 | | | | 0.20 | | | | — | | | | — | |
c. 81% to 90% | | | 264 | | | | 0.20 | | | | 1,133 | | | | 0.70 | | | | — | | | | — | |
d. 71% to 80% | | | 1,645 | | | | 1.00 | | | | 2,751 | | | | 1.70 | | | | — | | | | — | |
e. below 70% | | | 3,689 | | | | 2.30 | | | | 19,314 | | | | 12.00 | | | | — | | | | — | |
18. Assets held in each of the five largest investments in one parcel or group of contiguous parcels of real estate reported in Schedule A are less than 2.5 percent of the Company’s total admitted assets.
19. Assets held in mezzanine real estate loans are less than 2.5 percent of the Company’s total admitted assets.
20. The Company’s total admitted assets subject to the following types of agreements as of the following dates:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Unaudited At End of Each Quarter | |
| | | At Year-End | | | | | Quarter | | | Quarter | | | Quarter | |
| | | | | | |
| | | Amount | | | Percentage of Total Admitted Assets | | | | | Amount | | | Amount | | | Amount | |
| | | | | | |
a. Securities lending (do not include assets held as collateral for such transactions) | | $ | — | | | | — | % | | | | $ | — | | | $ | — | | | $ | — | |
b. Repurchase agreements | | | 2,036 | | | | 1.30 | | | | | | 2,436 | | | | 120 | | | | 39 | |
c. Reverse repurchase agreements | | | — | | | | — | | | | | | — | | | | — | | | | — | |
d. Dollar repurchase agreements | | | — | | | | — | | | | | | — | | | | — | | | | — | |
e. Dollar reverse repurchase agreements | | | — | | | | — | | | | | | — | | | | — | | | | — | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL INVESTMENT RISKS INTERROGATORIES (Continued)
DECEMBER 31, 2023
(in millions)
21. The Company’s potential exposure to warrants not attached to other financial instruments, options, caps, and floors:
| | | | | | | | | | | | | | | | | | |
| | | Owned | | | | | Written | |
| | | | | |
| | | Amount | | | Percentage
of Total
Admitted
Assets | | | | | Amount | | | Percentage
of Total
Admitted
Assets | |
a. Hedging | | $ | — | | | | — | % | | | | $ | — | | | | — | % |
b. Income generation | | | — | | | | — | | | | | | — | | | | — | |
c. Other | | | — | | | | — | | | | | | — | | | | — | |
22. The Company’s potential exposure (defined as the amount determined in accordance with the NAIC Annual Statement Instructions) for collars, swaps, and forwards as of the following dates:
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | Unaudited At End of Each Quarter | |
| | | At Year-End | | | 1st Quarter | | | 2nd Quarter | | | 3rd Quarter | |
| | | Amount | | | Percentage
of Total
Admitted
Assets | | | Amount | | | Amount | | | Amount | |
a. Hedging | | $ | 752 | | | | 0.50 | % | | $ | 715 | | | $ | 718 | | | $ | 806 | |
b. Income generation | | | — | | | | — | | | | — | | | | — | | | | — | |
c. Replications | | | — | | | | — | | | | — | | | | — | | | | — | |
d. Other | | | — | | | | — | | | | — | | | | — | | | | — | |
23. The Company’s potential exposure (defined as the amount determined in accordance with the NAIC Annual Statement Instructions) for futures contracts as of the following dates: | |
| | | | | | | |
| | | | | | Unaudited At End of Each Quarter | |
| | | At Year-End | | | 1st Quarter | | | 2nd Quarter | | | 3rd Quarter | |
| | | Amount | | | Percentage
of Total
Admitted
Assets | | | Amount | | | Amount | | | Amount | |
a. Hedging | | $ | 77 | | | | — | % | | $ | 160 | | | $ | 142 | | | $ | 143 | |
b. Income generation | | | — | | | | — | | | | — | | | | — | | | | — | |
c. Replications | | | — | | | | — | | | | — | | | | — | | | | — | |
d. Other | | | — | | | | — | | | | — | | | | — | | | | — | |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL SUMMARY INVESTMENT SCHEDULE
DECEMBER 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Gross Investment
Holdings | | | Admitted Assets as Reported in the Annual Statement | |
| Investment Categories | | Amount | | | Percentage | | | Amount | | | Securities
Lending
Reinvested
Collateral
Amount | | | Total
Amount | | | Percentage | |
Bonds: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. governments | | $ | 1,321 | | | | 0.9 | | | $ | 1,321 | | | $ | — | | | $ | 1,321 | | | | 0.9 | % |
All other governments | | | 2,041 | | | | 1.3 | | | | 2,041 | | | $ | — | | | | 2,041 | | | | 1.3 | |
U.S. states, territories and possessions, etc. guaranteed | | | 239 | | | | 0.2 | | | | 239 | | | $ | — | | | | 239 | | | | 0.2 | |
U.S. political subdivisions of states, territories, and possessions, guaranteed | | | 210 | | | | 0.1 | | | | 210 | | | $ | — | | | | 210 | | | | 0.1 | |
U.S. special revenue and special assessment obligations, etc. non-guaranteed | | | 5,392 | | | | 3.5 | | | | 5,392 | | | $ | — | | | | 5,392 | | | | 3.5 | |
Industrial and miscellaneous | | | 98,249 | | | | 63.5 | | | | 98,249 | | | $ | — | | | | 98,249 | | | | 63.5 | |
Hybrid securities | | | 377 | | | | 0.2 | | | | 377 | | | $ | — | | | | 377 | | | | 0.2 | |
Parent, subsidiaries and affiliates | | | 366 | | | | 0.2 | | | | 366 | | | $ | — | | | | 366 | | | | 0.2 | |
Unaffiliated Bank loans | | | 3,937 | | | | 2.6 | | | | 3,937 | | | $ | — | | | | 3,937 | | | | 2.6 | |
Total long-term bonds | | $ | 112,132 | | | | 72.5 | | | $ | 112,132 | | | $ | — | | | $ | 112,132 | | | | 72.5 | |
Preferred stocks: | | | | | | | | | | | | | | | | | | | | | | | | |
Industrial and miscellaneous (Unaffiliated) | | $ | 80 | | | | 0.1 | | | $ | 80 | | | $ | — | | | $ | 80 | | | | 0.1 | |
Parent, subsidiaries and affiliates | | | — | | | | — | | | | — | | | $ | — | | | | — | | | | — | |
Total preferred stocks | | $ | 80 | | | | 0.1 | | | $ | 80 | | | $ | — | | | $ | 80 | | | | 0.1 | |
Common stocks: | | | | | | | | | | | | | | | | | | | | | | | | |
Industrial and miscellaneous Publicly traded (Unaffiliated) | | $ | — | | | | — | | | $ | — | | | $ | — | | | $ | — | | | | — | |
Industrial and miscellaneous Other (Unaffiliated) | | | 196 | | | | 0.1 | | | | 196 | | | $ | — | | | | 196 | | | | 0.1 | |
Parent, subsidiaries and affiliates Publicly traded | | | 1 | | | | — | | | | 1 | | | $ | — | | | | 1 | | | | — | |
Parent, subsidiaries and affiliates Other | | | 72 | | | | 0.1 | | | | 68 | | | $ | — | | | | 68 | | | | — | |
Mutual funds | | | 1 | | | | — | | | | 1 | | | $ | — | | | | 1 | | | | — | |
Total common stocks | | $ | 270 | | | | 0.2 | | | $ | 266 | | | $ | — | | | $ | 266 | | | | 0.1 | |
Mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Farm mortgages | | $ | — | | | | — | | | $ | — | | | $ | — | | | $ | — | | | | — | |
Residential mortgages | | | 5,601 | | | | 3.6 | | | | 5,601 | | | $ | — | | | | 5,601 | | | | 3.6 | |
Commercial mortgages | | | 23,562 | | | | 15.2 | | | | 23,562 | | | $ | — | | | | 23,562 | | | | 15.2 | |
Mezzanine real estate loans | | | 844 | | | | 0.6 | | | | 844 | | | $ | — | | | | 844 | | | | 0.6 | |
Total valuation allowance | | | (355 | ) | | | (0.2 | ) | | | (355 | ) | | $ | — | | | | (355 | ) | | | (0.2 | ) |
Total mortgage loans | | $ | 29,652 | | | | 19.2 | | | $ | 29,652 | | | $ | — | | | $ | 29,652 | | | | 19.2 | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Properties occupied by company | | $ | — | | | | — | | | $ | — | | | $ | — | | | $ | — | | | | — | |
Properties held for production of income | | | 73 | | | | 0.1 | | | | 73 | | | $ | — | | | | 73 | | | | 0.1 | |
Properties held for sale | | | 2 | | | | — | | | | 2 | | | $ | — | | | | 2 | | | | — | |
Total real estate | | $ | 75 | | | | 0.1 | | | $ | 75 | | | $ | — | | | $ | 75 | | | | 0.1 | |
Cash, cash equivalents and short-term investments: | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | $ | (78 | ) | | | (0.1 | ) | | $ | (78 | ) | | $ | — | | | $ | (78 | ) | | | (0.1 | ) |
Cash equivalents | | | 856 | | | | 0.6 | | | | 856 | | | $ | — | | | | 856 | | | | 0.6 | |
Short-term investments | | | 122 | | | | 0.1 | | | | 122 | | | $ | — | | | | 122 | | | | 0.1 | |
Total cash, cash equivalents and short-term investments | | | 900 | | | | 0.6 | | | | 900 | | | $ | — | | | | 900 | | | | 0.6 | |
Contract loans | | | 1,174 | | | | 0.8 | | | | 1,157 | | | $ | — | | | | 1,157 | | | | 0.8 | |
Derivatives | | | 1,884 | | | | 1.2 | | | | 1,884 | | | $ | — | | | | 1,884 | | | | 1.2 | |
Other invested assets | | | 6,457 | | | | 4.2 | | | | 6,456 | | | $ | — | | | | 6,456 | | | | 4.2 | |
Receivables for securities | | | 100 | | | | 0.1 | | | | 100 | | | $ | — | | | | 100 | | | | 0.1 | |
Securities Lending | | | — | | | | — | | | | — | | | | XXX | | | | XXX | | | | XXX | |
Other invested assets | | | 1,985 | | | | 1.3 | | | | 1,985 | | | $ | — | | | | 1,985 | | | | 1.3 | |
Total invested assets | | $ | 154,709 | | | | 100.0 | | | $ | 154,687 | | | $ | — | | | $ | 154,687 | | | | 100 | % |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF REINSURANCE DISCLOSURES
DECEMBER 31, 2023
The following information regarding reinsurance contracts is presented to satisfy the disclosure requirements in SSAP No. 61R, Life, Deposit-Type and Accident and Health Reinsurance, which apply to reinsurance contracts entered into, renewed or amended on or after January 1, 1996.
| 1. | Has the Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is subject to Appendix A-791, Life and Health Reinsurance Agreements, and includes a provision that limits the reinsurer’s assumption of significant risks identified in Appendix A-791? |
Yes [ ] No [ X ]
If yes, indicate the number of reinsurance contracts to which such provisions apply: __________
If yes, indicate if deposit accounting was applied for all contracts subject to Appendix A-791 that limit significant risks.
Yes [ ] No [ ] N/A [ X ]
| 2. | Has the Company reinsured any risk with any other entity under a reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) that is not subject to Appendix A-791, for which reinsurance accounting was applied and includes a provision that limits the reinsurer’s assumption of risk? |
Yes [ ] No [ X ]
If yes, indicate the number of reinsurance contracts to which such provisions apply: __________
If yes, indicate whether the reinsurance credit was reduced for the risk-limiting features.
Yes [ ] No [ ] N/A [ X ]
| 3. | Does the Company have any reinsurance contracts (other than reinsurance contracts with a federal or state facility) that contain one or more of the following features which may result in delays in payment in form or in fact: |
| | (a) | Provisions that permit the reporting of losses to be made less frequently than quarterly; |
| | (b) | Provisions that permit settlements to be made less frequently than quarterly; |
| | (c) | Provisions that permit payments due from the reinsurer to not be made in cash within ninety (90) days of the settlement date (unless there is no activity during the period); or |
| | (d) | The existence of payment schedules, accumulating retentions from multiple years, or any features inherently designed to delay timing of the reimbursement to the ceding entity. |
Yes [ ] No [ X ]
| 4. | Has the Company reflected reinsurance accounting credit for any contracts that are not subject to Appendix A-791 and not yearly renewable term reinsurance, which meet the risk transfer requirements of SSAP No. 61R? |
| | | | | | |
| | | | |
| Type of contract: | | Response: | | Identify reinsurance contract(s): | | Has the insured event(s)
triggering contract coverage
been recognized? |
| | | | |
Assumption reinsurance – new for the reporting period | | Yes [ ] No [ X ] | | | | N/A |
| | | | |
| Non-proportional reinsurance, which does not result in significant surplus relief | | Yes [ ] No [ X ] | | | | N/A |
AMERICAN GENERAL LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF REINSURANCE DISCLOSURES - (Continued)
DECEMBER 31, 2023
| | | | |
| 5. | | Has the Company ceded any risk, which is not subject to Appendix A-791 and not yearly renewable term reinsurance, under any reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) during the period covered by the financial statements, and either: |
| |
| | (a) Accounted for that contract as reinsurance under statutory accounting principles (SAP) and as a deposit under generally accepted accounting principles (GAAP); or Yes [ ] No [ X ] N/A [ ] (b) Accounted for that contract as reinsurance under GAAP and as a deposit under SAP? Yes [ ] No [ X ] N/A [ ] If the answer to item (a) or item (b) is yes, include relevant information regarding GAAP to SAP differences from the accounting policy footnote to the audited statutory-basis financial statements to explain why the contract(s) is treated differently for GAAP and SAP below: |
| | |
| | | | |
PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 13. | Other Expenses of Issuance and Distribution. |
The registrant’s expenses in connection with the issuance and distribution of the contracts, other than any underwriting commissions, are as follows (except for the SEC filing fee, all amounts shown are estimates):
| | | | |
SEC Filing Fee | | [$ | 14,760 | ] |
Estimated Printing and Filing Costs | | $ | 90.000 | |
Estimated Accounting Fees and Expenses | | $ | 90,000 | |
Estimated Legal Fees and Expenses | | $ | 380,000 | |
| Item 14. | Indemnification of Directors and Officers. |
To the full extent authorized by law, the Company shall indemnify any person made, or threatened to be made, a party to an action or proceeding, whether criminal or civil, by reason of the fact that he, his testator or intestate is or was a director or officer of the corporation or serves or served in any capacity in any other corporation at the request of the corporation. Nothing contained herein shall affect any rights to indemnification to which corporate personnel other than directors and officers may be entitled by contract or otherwise under law.
Insofar as indemnification for liability arising under the Securities Act of 1933 (“Act”) may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
| Item 15. | Recent Sales of Unregistered Securities. |
Not Applicable
| Item 16. | Exhibits and Financial Statement Schedules. |
| | | | |
| (1) | | (i) | | Distribution Agreement, incorporated by reference to Post-Effective Amendment No. 17 and Amendment No. 17, File Nos. 333-185790 and 811-09003, filed on April 25, 2019. |
| | |
| | (ii) | | Amendment No. 2 to Distribution Agreement by and between American General Life Insurance Company and Corebridge Capital Services, Inc., filed herewith. |
| | |
| | (iii) | | Selling Agreement, filed herewith. |
| | |
| (2) | | | | Not Applicable. |
| | |
| (3) | | (i) | | Articles of Incorporation and all Amendments for American General Life Insurance Company, incorporated by reference to initial Registration Statement on Form S-1, filed on February 21, 2024. |
| | |
| | (ii) | | Bylaws of American General Life Insurance Company, restated as of June 8, 2005, incorporated by reference to Pre-Effective Amendment No. 3 to Form S-6 Registration Statement, File No. 333-53909, of American General Life Insurance Company Separate Account VL-R, filed on August 19, 1998. |
| | |
| (4) | | (i) | | AGL Index Linked Variable Annuity Contract ICC24-AG-811 (5/24), filed herewith. |
| | |
| | (ii) | | AGL Index Linked Variable Annuity Contract Data Page ICC24-AG-811-DP (5/24), filed herewith. |
| | |
| | (iii) | | AGL Buffer with Cap Strategy Account Option(s) Rider ICC24-AGE-8116 (5/24), filed herewith. |
| | |
| | (iv) | | AGL Buffer with Cap Secure Rate Strategy Account Option(s) Rider ICC24-AGE-8122 (5/24), filed herewith. |
| | |
| | (v) | | AGL Buffer with Trigger Strategy Account Option(s) Rider ICC24-AGE-8119 (5/24), filed herewith. |
| | |
| | (vi) | | AGL Buffer Dual Direction with Cap Strategy Account Option(s) Rider ICC24-AGE-8120 (5/24), filed herewith. |
| | |
| | (vii) | | AGL Lock with Buffer Strategy Account Option(s) Rider ICC24-AGE-8124 (5/24), filed herewith. |
| | |
| | (viii) | | AGL Buffer with Participation Strategy Account Option(s) Rider ICC24-AGE-8125 (5/24), filed herewith. |
| | |
| | (ix) | | AGL Performance Capture Rider ICC24-AGE-8121 (5/24), filed herewith. |
| | |
| | (x) | | AGL Optional Return of Purchase Payment Death Benefit Rider ICC24-AGE-8117 (5/24), filed herewith. |
| | |
| | (xi) | | AGL Terminal Illness Rider ICC24-AGE-8007 (8/24), filed herewith. |
| | |
| | (xii) | | AGL Extended Care Rider ICC24-AGE-8008 (8/24), filed herewith. |
| | |
| | (xiii) | | AGL Individual Registered Index-Linked Annuity Application ICC24-AGA-228 (5/24), filed herewith. |
| | |
| | (xiv) | | AGL Individual Registered Index-Linked Annuity Application ICC24-AGA-228E (5/24), filed herewith. |
| | |
| (5) | | | | Opinion re: Legality, filed herewith. |
| | |
| (6) | | | | Not Applicable. |
| | |
| (8) | | | | Not Applicable. |
| | |
| (9) | | | | Not Applicable. |
| | |
| (10) | | | | Not Applicable. |
| | |
| (15) | | | | Not Applicable. |
| | |
| (16) | | | | Not Applicable. |
| | |
| (21) | | | | Subsidiaries of the registrant, filed herewith. |
| | |
| (22) | | | | Not Applicable. |
| | |
| (23) | | | | Consent of Independent Auditors, filed herewith. |
| | |
| (24) | | | | Powers of Attorney, incorporated by reference to initial Registration Statement on Form S-1, filed on February 21, 2024. |
| | |
| (25) | | | | Not Applicable. |
| | |
| (101) | | | | Not Applicable. |
| | |
| (107) | | | | Filing Fee Table, filed herewith. |
| (b) | Financial Statement Schedules |
All required financial statement schedules of American General Life Insurance Company are included in Part I of this registration statement.
| (A) | The undersigned registrant hereby undertakes: |
| | (1) | To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this registration statement: |
| | (i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| | (ii) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
| | (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| | (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| | (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| | (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| | (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| | (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| | (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| | (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| | (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (B) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 (“Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Houston, State of Texas, on September 17, 2024.
| | |
| BY: | | AMERICAN GENERAL LIFE INSURANCE COMPANY
(Registrant) |
| |
| BY: | | *CHRISTOPHER B. SMITH |
| | CHRISTOPHER B. SMITH Director, Chairman of the Board and President |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and dates indicated:
| | | | |
Signature | | Title | | Date |
| | |
*CHRISTOPHER B. SMITH CHRISTOPHER B. SMITH | | Director, Chairman of the Board and President (Principal Executive Officer) | | September 17, 2024 |
| | |
*CHRISTOPHER P. FILIAGGI CHRISTOPHER P. FILIAGGI | | Director, Senior Vice President, and
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer) | | September 17, 2024 |
| | |
*TERRI N. FIEDLER | | Director | | September 17, 2024 |
TERRI N. FIEDLER | | | | |
| | |
*TIMOTHY M. HESLIN | | Director | | September 17, 2024 |
TIMOTHY M. HESLIN | | | | |
| | |
*LISA M. LONGINO | | Director | | September 17, 2024 |
LISA M. LONGINO | | | | |
| | |
*JONATHAN J. NOVAK | | Director | | September 17, 2024 |
JONATHAN J. NOVAK | | | | |
| | |
*BRYAN A. PINSKY | | Director | | September 17, 2024 |
BRYAN A. PINSKY | | | | |
| | |
*ELIZABETH B. CROPPER | | Director | | September 17, 2024 |
ELIZABETH B. CROPPER | | | | |
| | | | | | |
*BY: | | /s/ TRINA SANDOVAL | | | | September 17, 2024 |
| | TRINA SANDOVAL Attorney-in-Fact pursuant to Powers of Attorney filed previously. | | |
