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1In addition, fluctuations in interest rates may expose us to the risk of increases in certain statutory reserve requirements that are 2based on formulas or models that consider interest rates, which would reduce statutory capital, and increases in capital requirements 3and the amount of assets we must maintain to support statutory reserves, which would reduce surplus.4The primary source of our exposure to credit spreads is in the value of our fixed income securities. If credit spreads widen 5significantly, we could be exposed to higher levels of defaults and impairments. If credit spreads tighten significantly, it could result in 6reduced net investment income and, in turn, reduced profitability associated with new purchases of fixed maturity securities.7Tightening credit spreads would reduce the discount rates used in the principles-based statutory reserve calculation, potentially 8increasing statutory reserve requirements and, in turn, reducing statutory surplus. Although these effects on bond fund valuation and 9reserve discount rates run in offsetting directions for either credit spread widening or narrowing, it is possible for one of them to 10outweigh the other under certain market conditions. Any of these risks could cause an adverse effect on our business, results of 11operations, financial condition and liquidity.12RESERVES AND EXPOSURES13The amount and timing of insurance and reinsurance liability claims are difficult to predict and such claims may exceed the 14related liability for unpaid losses and loss adjustment expenses or future policy benefits, or the liabilities associated with 15certain guaranteed benefits and indexed features accounted for as embedded derivatives at fair value.16We regularly review the adequacy of the established liability for unpaid losses and loss adjustment expenses and future policy 17benefits, as well as liabilities associated with certain guaranteed benefits and indexed features accounted for as embedded 18derivatives at fair value. We also conduct extensive analyses of our reserves and embedded derivatives during the year. Our liability 19for unpaid losses and loss adjustment expenses, future policy benefits and embedded derivatives, however, has and may develop 20adversely and materially impact our businesses, results of operations, financial condition and liquidity.21For General Insurance, estimation of ultimate net losses, loss expenses and the liability for unpaid losses and loss adjustment 22expenses is a complex process, particularly for both long-tail and medium-tail liability lines of business. There is also greater 23uncertainty in establishing reserves with respect to new business, particularly new business involving recently introduced product 24lines. In these cases, there is less historical experience or knowledge and less data upon which the actuaries can rely. Estimating 25reserves is further complicated by unexpected claims or unintended coverages that emerge due to unexpected events, such as 26pandemics or geopolitical conflicts. These emerging issues may increase the size or number of claims beyond our underwriting intent 27and may not become apparent for many years after a policy is issued.28While we use a number of analytical reserve development techniques to project future loss development, the liability for unpaid losses 29and loss adjustment expenses has been and may continue to be significantly affected by changes in loss cost trends or loss 30development factors that were relied upon in setting the liability for unpaid losses and loss adjustment expenses. These changes in 31loss cost trends or loss development factors could be due to changes in actual versus expected claims and losses, difficulties in 32predicting changes, such as changes in inflation, unemployment, or other social or economic factors affecting claims, including judicial 33and legislative actions, and changes in the tort environment. Any deviation in loss cost trends or in loss development factors might not 34be identified for an extended period of time after we record the initial loss reserve estimates for any accident year or number of years.35For Life and Retirement, establishment and ongoing calculations of reserves for future policy benefits and related reinsurance assets 36as well as embedded derivatives and MRBs is a complex process with significant judgmental inputs, assumptions and modeling 37techniques, in each case yielding corresponding results which may be inaccurate or incorrect. We make assumptions regarding 38mortality, morbidity, discount rates, persistency and policyholder behavior at various points, including at the time of issuance and in 39subsequent reporting periods. An increase in the valuation of the liability could result to the extent emerging and actual experience 40deviates from these assumptions. The inputs and assumptions used in	connection	with calculations of reserves for future policy 41benefits are inherently uncertain. Experience may develop adversely such that additional reserves must be established or the value of 42MRBs or embedded derivatives may increase. Adverse experience could arise out of a number of factors, including, but not limited to, 43a severe short-term event, such as a pandemic or changes to policyholder behavior during stressed economic periods, or due to mis-44estimation of long-term assumptions such as mortality, interest rates, credit spreads, equity market levels and volatility and 45persistency assumptions. Certain variables, such as policyholder behavior, are difficult to estimate and can have a significant impact 46on future policy benefits, MRBs and embedded derivatives. We review and update actuarial assumptions at least annually, typically in 47the third quarter for reserves, MRBs and embedded derivatives. Additionally, we regularly carry out cash flow testing for statutory 48reporting. If actual experience or revised future expectations result in projected future losses, we may be required to record additional 49liabilities through a charge to policyholder benefit expense, net realized gains or losses, or changes in market risk benefits in the then-50current period, which could negatively affect our business, results of operations, financial condition and liquidity. 51For additional information on reserve development, see Part II, Item 7. MD&A – Insurance Reserves.52For additional information on our loss reserves, see Part II, Item 7. MD&A – Critical Accounting Estimates – Loss Reserves and 53Note 13 to the Consolidated Financial Statements.54ITEM 1A | Risk Factors55AIG | 2023 Form 10-K 19