AmazonScience/document-haystack

1International2In the UK, the Prudential Regulation Authority (PRA) is the lead prudential supervisor for our UK insurance operations and the 3Financial Conduct Authority has oversight of AIG’s insurance operations for consumer protection and competition matters.  4In the EU, various Directives and Regulations affect our international (re)insurance operations. The Luxembourg insurance regulator, 5the Commissariat aux Assurances, is the insurance regulator for AIG Europe SA, which serves our European Economic Area (EEA) 6and Swiss policyholders. In addition, financial companies that operate in the EU are subject to a range of regulations enforced by the 7national regulators in each member state in which that firm operates. Solvency II governs the insurance industry’s solvency framework 8for the EU, including minimum capital and solvency requirements, governance requirements, risk management and public reporting 9standards. 10AIG’s operating (re)insurance subsidiaries in Bermuda are regulated by the Bermuda Monetary Authority (BMA). Bermuda’s Insurance 11Act 1978, the applicable Codes of Conduct and related regulations impose solvency and liquidity standards and auditing and reporting 12requirements on Bermuda (re)insurance companies and grant the BMA powers to supervise, investigate and intervene in the affairs of 13(re)insurance companies. A variety of requirements and restrictions are imposed on our Bermuda operating (re)insurance subsidiaries 14including: periodic financial reporting; corporate governance framework; solvency and financial performance; compliance with 15minimum enhanced capital requirements; and minimum solvency margins and liquidity ratios (the latter for general business 16(re)insurers); and limitations on dividends and distributions.17The Monetary Authority of Singapore (MAS) supervises AIG’s insurance subsidiary in Singapore. It has broad authority under the 18Insurance Act 1966 to regulate insurance business in Singapore as well as insurers, insurance intermediaries and related institutions. 19Our Singapore insurance operations are subject to minimum capital and solvency requirements as well as financial reporting, 20corporate governance and conduct of business requirements. The MAS has authority to conduct inspections and investigations on 21insurers and to administer sanctions for regulatory non-compliance. Our Singapore insurance subsidiary holds insurance entities in 22the Asia Pacific region. The MAS holds the Chief Executive of the Singapore insurance subsidiary principally responsible for the 23management and conduct of the business of the subsidiary, including the business of its subsidiaries and overseas branches.24The Japan Financial Services Agency (JFSA) regulates AIG’s operating insurance subsidiaries and insurance holding company in 25Japan. The JFSA has extensive authority under the Insurance Business Act and related regulations to oversee licensing, sales 26practices, business conduct, investments, reserves and solvency, amongst other matters. Our Japanese insurance operations are 27required to maintain a minimum solvency margin ratio (SMR), which is a measure of capital adequacy. The failure to maintain an 28appropriate SMR, or comply with other similar indicators of financial health, could result in the JFSA imposing corrective actions on 29our operations.30FSB and IAIS31The Financial Stability Board (FSB) consists of representatives of national financial authorities of the G20 countries. The FSB is not a 32regulator but is focused primarily on promoting international financial stability. The FSB has issued a series of frameworks and 33recommendations to address such issues as systemic financial risk, financial group supervision, capital and solvency standards, 34effective recovery and resolution regimes, corporate governance including compensation, and a number of related issues associated 35with responses to the financial crisis.36The International Association of Insurance Supervisors (IAIS) represents insurance regulators and supervisors of more than 200 37jurisdictions (including regions and states) in nearly 140 countries and seeks to promote globally consistent insurance industry 38supervision. The IAIS is not a regulator, but one of its activities is to develop insurance regulatory standards for use by local 39authorities across the globe. For example, the IAIS has adopted ComFrame, a Common Framework for the Supervision of 40Internationally Active Insurance Groups (IAIGs). ComFrame assists regulators in addressing an IAIG’s risks by providing supervisory 41standards for areas such as group supervision, governance and internal controls, enterprise risk management, and recovery and 42resolution planning. We currently meet the criteria set forth to identify an IAIG, and the NYDFS, as our group-wide supervisor, has 43publicly disclosed us as an IAIG on the IAIS’ register of IAIGs.  44In addition, the FSB has charged the IAIS with developing a framework for measuring and mitigating systemic risks posed by the 45insurance sector, and in response the IAIS developed an enhanced set of supervisory policy measures for the assessment and 46mitigation of systemic risk in the insurance sector (Holistic Framework), with implementation beginning in 2020. The Holistic 47Framework recognizes that systemic risk can emanate from specific activities and exposures arising from either sector-wide trends or 48concentrations in individual insurers. In light of the IAIS adoption of the Holistic Framework, the FSB decided in December 2022 to 49discontinue the annual identification of Global Systemically Important Insurers in favor of instead applying the Holistic Framework to 50inform the FSB’s consideration of systemic risk in insurance. 51As part of ComFrame, the IAIS is developing a risk-based global insurance capital standard (ICS) applicable to IAIGs, with the 52purpose of creating a common language for supervisory discussions of group solvency of IAIGs. The IAIS has adopted ICS Version 532.0 for a five-year monitoring phase, with an initial phase that commenced January 2020. During the initial phase, ICS Version 2.0 is 54used for confidential reporting to group-wide supervisors and discussion in supervisory colleges, but will not trigger supervisory action. 55ITEM 1 | Business5610 AIG | 2023 Form 10-K