v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
23. Income Taxes
U.S. TAX LAW CHANGES
The Inflation Reduction Act of 2022 (H.R. 5376) includes a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income for corporations with average profits over $1 billion over a three-year period. Although the U.S. Treasury and Internal Revenue Service (IRS) issued interim CAMT guidance during 2023, many details and specifics of application of the CAMT remain subject to future guidance. We are subject to CAMT for 2023.
BASIS OF PRESENTATION
We file a consolidated U.S. federal income tax return with our eligible U.S. subsidiaries. Income earned by subsidiaries operating outside the U.S. is taxed, and income tax expense is recorded, based on applicable U.S. and foreign laws.
Following the IPO of Corebridge on September 19, 2022, AIG’s remaining ownership in Corebridge decreased below 80 percent, resulting in tax deconsolidation of Corebridge parent and its subsidiaries from the AIG consolidated U.S. federal income tax group as well as certain state and local jurisdictions where unitary returns are filed.
Subsequent to the tax deconsolidation from AIG, due to the application of relevant U.S. tax laws, American General Corporation and its directly owned life insurance subsidiaries will not be permitted to join in the filing of a consolidated U.S. federal income tax return with Corebridge parent and its non-life-insurance subsidiaries for a period of five years. Corebridge’s net operating losses and tax credit carryforwards that have not been utilized prior to tax deconsolidation from AIG will remain with the relevant Corebridge entities and will be available for utilization by the respective Corebridge U.S. federal income tax groups. The realizability of the deferred tax assets related to such carryforwards is based on the positive and negative evidence applicable to each U.S. federal income tax group.
TAX ACCOUNTING POLICIES
We use an item-by-item approach to release the stranded or disproportionate income tax effects in AOCI related to our available-for-sale securities. Under this approach, a portion of the disproportionate tax effects is assigned to each individual security lot at the date the amount becomes lodged. When the individual securities are sold, mature, or are otherwise impaired on an other-than-temporary basis, the assigned portion of the disproportionate tax effect is reclassified from AOCI to income (loss) from continuing operations.
We consider our foreign earnings with respect to certain operations in Canada, South Africa, Japan, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. A deferred tax liability has not been recorded for those foreign subsidiaries whose earnings are considered to be indefinitely reinvested. If recorded, such deferred tax liability would not be material to our consolidated financial condition. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested.
Global Intangible Low-Taxed Income (GILTI) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain foreign subsidiaries. Consistent with accounting guidance, we have made an accounting policy election to treat GILTI taxes as a period tax charge in the period the tax is incurred.
EFFECTIVE TAX RATE
The following table presents income (loss) from continuing operations before income tax expense (benefit) by U.S. and foreign location in which such pre-tax income (loss) was earned or incurred:
Years Ended December 31,
(in millions)202320222021
U.S.$1,885 $12,431 $11,041 
Foreign1,973 1,868 2,306 
Total$3,858 $14,299 $13,347 
The following table presents the income tax expense (benefit) attributable to pre-tax income (loss) from continuing operations:
Years Ended December 31,
(in millions)202320222021
Foreign and U.S. components of actual income tax expense (benefit):
U.S.:
Current$68 $246 $(216)
Deferred(564)2,363 2,443 
Foreign:
Current423 271 171 
Deferred53 145 43 
Total$(20)$3,025 $2,441 
Our actual income tax expense (benefit) differs from the statutory U.S. federal amount computed by applying the federal income tax rate due to the following:
Years Ended December 31,202320222021
(dollars in millions)Pre-Tax
Income
(Loss)		Tax
Expense
(Benefit)		Percent of
Pre-Tax
Income
(Loss)		Pre-Tax
Income
(Loss)		Tax
Expense
(Benefit)		Percent of
Pre-Tax
Income
(Loss)		Pre-Tax
Income
(Loss)		Tax
Expense
(Benefit)		Percent of
Pre-Tax
Income
(Loss)
U.S. federal income tax at statutory rate
$3,858 $810 21.0 %$14,298 $3,003 21.0 %$13,347 $2,802 21.0 %
Adjustments:
Tax exempt interest
(14)(0.4)(18)(0.1)(18)(0.1)
Uncertain tax positions(a)
162 4.2 (17)(0.1)(9)(0.1)
Reclassifications from AOCI
(45)(1.2)(81)(0.6)(109)(0.8)
Dispositions of subsidiaries(b)
(382)(9.9)— — 11 0.1 
Non-controlling interest
14 0.4 (31)(0.2)(97)(0.7)
Non-deductible transfer pricing charges
16 0.4 12 0.1 16 0.1 
Dividends received deduction
(60)(1.6)(36)(0.3)(37)(0.3)
Effect of foreign operations(c)
176 4.6 150 1.0 136 1.0 
Share-based compensation payments excess tax effect
(31)(0.8)(19)(0.1)16 0.1 
State and local income taxes
10 0.3 47 0.3 38 0.3 
Expiration of tax attribute carryforwards
— — — — 16 0.1
Tax audit resolution(a)
(494)(12.8)— — (935)(7.0)
Affiliated dividend income, net of dividends received deduction59 1.5 — — — — 
Other(d)
116 3.1 40 0.4 (107)(0.8)
Valuation allowance:
Continuing operations
(357)(9.3)(25)(0.2)718 5.4 
Consolidated total amounts
3,858 (20)(0.5)14,298 3,025 21.2 $13,347 2,441 18.3 
Amounts attributable to discontinued operations— — — (1)— — — — — 
Amounts attributable to continuing operations
$3,858 $(20)(0.5)%$14,299 $3,025 21.2 %$13,347 $2,441 18.3 %
(a)Refer to the Accounting for Uncertainty in Income Taxes section below for further discussion on 2023 and 2021 tax audit resolution activity.
(b)Tax implications of the sales of certain AIG and Corebridge subsidiaries, including Validus Re and Laya, as well as tax implications of Corebridge secondary offerings and the announced sale of AIG Life.
(c)Effect of foreign operations is primarily related to income and losses in our foreign operations taxed at statutory tax rates different than 21 percent, and foreign income subject to U.S. taxation.
(d)Primarily includes tax charges associated with tax adjustments related to prior year returns.
DEFERRED TAX ASSET
The following table presents the components of the net deferred tax assets (liabilities):
December 31,
(in millions)20232022
Deferred tax assets:
Losses and tax credit carryforwards$6,107 $6,868 
Basis differences on investments3,441 2,652 
Life policy reserves1,589 1,622 
Accruals not currently deductible, and other89 392 
Investments in foreign subsidiaries66 — 
Loss reserve discount424 352 
Loan loss and other reserves51 62 
Unearned premium reserve reduction87 294 
Fixed assets and intangible assets1,487 1,081 
Unrealized losses related to available for sale debt securities4,728 6,519 
Employee benefits344 382 
Market risk benefit1,010 827 
Other356 458 
Total deferred tax assets19,779 21,509 
Deferred tax liabilities:
Investments in foreign subsidiaries— (41)
Deferred policy acquisition costs(1,853)(1,847)
Fortitude Re funds withheld embedded derivative(711)(862)
Total deferred tax liabilities(2,564)(2,750)
Net deferred tax assets before valuation allowance17,215 18,759 
Valuation allowance(3,116)(4,250)
Net deferred tax assets (liabilities)$14,099 $14,509 
The following table presents AIG's U.S. consolidated federal income tax group tax losses and credits carryforwards.
December 31, 2023Tax
Carryforward Period Ending Tax Year(b)
Unlimited Carryforward Period
and Carryforward Periods(b)
(in millions)GrossEffected2024202520262027202820292030 - After
Net operating loss carryforwards$21,968 $4,613 $— $— $— $— $2,660 $178 $1,775 
Other carryforwards67 — — — — — — 67 
Total AIG U.S. consolidated federal income tax group tax losses and credits carryforwards on a U.S. GAAP basis(a)
$4,680 $— $— $— $— $2,660 $178 $1,842 
(a)Financial reporting basis reflects the impact of unrecognized tax benefits for tax years in which tax attributes can be realized through carryback upon settlement.
(b)Carryforward periods are based on U.S. tax laws governing utilization of tax attributes. Expiration periods are based on the year the carryforward was generated.
ASSESSMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE
The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.
Although the 2022 tax deconsolidation of Corebridge from the AIG consolidated U.S. federal income tax group resulted in the formation of new federal tax filing groups requiring separate deferred tax asset realizability assessments, there was no material change to the total deferred tax asset valuation allowance.
During the fourth quarter, taxable income projections were updated to reflect 2023 results, updated projections of income for our insurance and non-insurance companies, and taxable income generated from prudent and feasible tax planning strategies. While there was improvement in projected tax attribute utilization, given there is a shorter carryforward period to utilize remaining net operating losses, we continue to consider multiple data points and stresses. Additionally, recent events, including changes in target interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, continue to impact actual and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the
realizability of the net operating losses and foreign tax credit carryforwards, we have considered forecasts of future income for each of our businesses, including assumptions about future macroeconomic and AIG-specific conditions and events, and any impact these conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of stresses of key assumptions and evaluated the effect on tax attribute utilization.
After factoring in multiple data points and assessing the relative weight of all positive and negative evidence, we concluded that valuation allowance of $300 million should remain on a portion of AIG's U.S. federal consolidated income tax group tax attribute carryforwards that are not more likely than not to be realized, and reduced our beginning of the year valuation allowance by $405 million. Additionally, we recorded valuation allowance reduction of $8 million related to the write-off of net operating loss carryforwards from acquired entities that are not usable by AIG under the tax law. Accordingly, during the fourth quarter of 2023, we recorded total reduction in valuation allowance of $413 million.
As of December 31, 2023, we reported a valuation allowance of $162 million related to Corebridge. The valuation allowance at Corebridge relates to a portion of both tax attribute carryforwards and certain other deferred tax assets of the Corebridge non-life insurance group that are not more-likely-than-not to be realized. For the twelve months ended December 31, 2023, Corebridge recorded an $11 million increase in valuation allowance.
For the twelve months ended December 31, 2023, recent changes in market conditions, including changes in interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolios of both our U.S. life insurance and non-life insurance companies, resulting in a decrease to deferred tax assets related to net unrealized tax capital losses. The deferred tax assets relate to the unrealized tax capital losses for which the carryforward period has not yet begun, and as such, when assessing recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of December 31, 2023, based on all available evidence, we concluded that a valuation allowance of $1.6 billion is necessary on a portion of the deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized. Of the total valuation allowance, $1.0 billion relates to the unrealized tax capital losses in the U.S. Life Insurance Companies' available for sale securities portfolio and $550 million relates to the unrealized tax capital losses in the non-life insurance companies' available for sale securities portfolio. For the twelve months ended December 31, 2023, we recorded a decrease in valuation allowance of $397 million associated with the unrealized tax capital losses in the U.S. Life Insurance Companies’ available for sale securities portfolio and $355 million associated with the unrealized tax capital losses in the non-life insurance companies’ available for sale securities portfolio. For the three months ended December 31, 2023, we recorded a decrease in valuation allowance of $511 million associated with the unrealized tax capital losses in the U.S. Life Insurance Companies’ available for sale securities portfolio and $355 million associated with the unrealized tax capital losses in the non-life insurance companies’ available for sale securities portfolio. The valuation allowance decrease was primarily allocated to other comprehensive income.
For the twelve months ended December 31, 2023, we recognized a net $44 million increase in deferred tax asset valuation allowance associated with certain foreign and state jurisdictions.
The following table presents the net deferred tax assets (liabilities) at December 31, 2023 and 2022 on a U.S. GAAP basis:
December 31,
(in millions)20232022
Net U.S. deferred tax assets$11,317 $10,831 
Net deferred tax assets (liabilities) in AOCI4,286 5,881 
Valuation allowance(2,006)(3,128)
Subtotal13,597 13,584 
Net foreign, state and local deferred tax assets1,958 2,342 
Valuation allowance(1,110)(1,122)
Subtotal848 1,220 
Subtotal - Net U.S., foreign, state and local deferred tax assets14,445 14,804 
Net foreign, state and local deferred tax liabilities(346)(295)
Total AIG net deferred tax assets (liabilities)$14,099 $14,509 
TAX EXAMINATIONS
We are currently under examination by the IRS for the tax years 2011 through 2019, and are engaging in the Appeals process for certain disagreed issues related to tax years 2007 through 2010.
Listed below are the tax years that remain subject to examination by major tax jurisdictions:
At December 31, 2023Open Tax Years
Major Tax Jurisdiction
United States
2007-2022
Australia
2019-2022
Canada
2019-2022
France
2022-2022
Japan
2017-2022
Korea
2015-2022
Singapore
2019-2022
United Kingdom
2022-2022
ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
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:
Years Ended December 31,
(in millions)202320222021
Gross unrecognized tax benefits, beginning of year$1,191 $1,157 $2,343 
Increases in tax positions for prior years200 29 22 
Decreases in tax positions for prior years(4)(33)(1,233)
Increases in tax positions for current year— 59 37 
Lapse in statute of limitations— (21)— 
Settlements— — (12)
Gross unrecognized tax benefits, end of year$1,387 $1,191 $1,157 
The activity in unrecognized tax benefits for the year ended December 31, 2023 is primarily attributable to the potential resolution of an IRS audit matter. There was no significant activity in unrecognized tax benefits for the year ended December 31, 2022. The activity in unrecognized tax benefits for the year ended December 31, 2021 is primarily attributable to effective settlement of reserves for uncertain tax positions due to the completion of audit activity by the IRS and New York State.
At December 31, 2023 and 2022 and 2021, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $1.4 billion, $1.2 billion and $1.1 billion, respectively. Unrecognized tax benefits that would not affect the effective tax rate generally relate to such factors as the timing, rather than the permissibility of the deduction.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2023, 2022 and 2021, we had accrued liabilities of $52 million, $63 million and $69 million, respectively for the payment of interest (net of the federal benefit) and penalties. For the years ended December 31, 2023, 2022, and 2021, we accrued expense (benefit) of $(11) million, $(2) million, and $(207) million, respectively, for the payment of interest and penalties. There was no significant activity in interest and penalties related to unrecognized tax benefit for the years 2023 or 2022. The activity in 2021 was primarily related to the completion of audit activity by the IRS and New York State.
Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, we do not expect any change to be material to our consolidated financial condition.