AmazonScience/document-haystack

1We rely on investment management and advisory arrangements with third-party investment managers for the majority of our 2investment portfolio. The historical performance of Blackstone, BlackRock or any other investment manager we engage 3should not be considered as indicative of the future results of our investment portfolio, our future results or any returns 4expected on AIG Common Stock. 5In 2021, AIG entered into a long-term investment management relationship with Blackstone, pursuant to which Blackstone is initially 6managing $50 billion of Corebridge’s existing investment portfolio, with that amount increasing to an aggregate of $92.5 billion by the 7third quarter of 2027. In addition, beginning in April 2022, certain AIG and Corebridge insurance company subsidiaries entered into 8investment management agreements with BlackRock and as of December 31, 2023, BlackRock manages $135 billion of our 9investment portfolio, consisting of liquid fixed income and certain private placement assets, including $76 billion of Corebridge assets. 10In addition, liquid fixed income assets associated with the Fortitude Re funds withheld asset portfolio were separately transferred to 11BlackRock for management.12As part of the arrangements with Blackstone, Blackstone is serving as exclusive external investment manager for certain of 13Corebridge's current and future insurance company subsidiaries for certain asset classes, which has led to an increase in investment 14management fees payable by us as compared to expenses we have historically incurred for similar services. Under the arrangements 15with Blackstone, there are provisions that require minimum management fees to be paid to Blackstone to the extent actual amounts 16charged to the Corebridge insurance company subsidiaries are below such minimums. Also, the exclusivity provisions and termination 17provisions that are part of these arrangements with Blackstone may prevent certain of our Corebridge subsidiaries from retaining 18other external investment managers with respect to the subject asset classes who may produce better returns on investments than 19Blackstone. In addition, pursuant to the relevant agreements with Blackstone, if such agreements are terminated for reasons other 20than certain specified reasons, Corebridge could be required to continue paying investment advisory fees to Blackstone regardless of 21the termination. Corebridge may not have the funds available to pay any such fees and its insurance company subsidiaries may not 22be able or permitted to pay dividends or make other distributions to Corebridge in an amount sufficient to pay any such fees or at all. 23Any requirement to pay such fees could adversely affect our business, results of operations, financial condition and liquidity.24In addition, Blackstone and BlackRock are generally compensated based solely on our assets which they manage, rather than by 25investment return targets, and as a result, Blackstone and BlackRock are not directly incentivized to maximize investment returns. Our 26investment portfolio’s returns have benefited historically from investment opportunities and general market conditions that may not 27currently exist and may not be repeated. There can be no guarantee that Blackstone, BlackRock or any other investment manager we 28engage will be able to achieve any particular returns or generate investment opportunities with attractive, risk-adjusted returns for our 29investment portfolio in the future. If Blackstone or BlackRock is unable to effectively manage our portfolio, due to the concentration of 30assets in our portfolio that are managed by Blackstone and BlackRock, such inability could adversely affect our business, results of 31operations, financial condition and liquidity.32Additionally, from time to time, we consider and engage in discussions with external asset managers about managing other assets in 33our investment portfolio that are currently managed by us. If we increase the amount of assets in our investment portfolio managed by 34external asset managers, it may lead to an increase in investment advisory fees payable by us. In addition, we may become more 35reliant on our external asset managers, and such increased dependence may reduce our internal capabilities and expertise or expose 36us to greater risk, including the risk that external asset managers may fail to meet our performance expectations or otherwise 37experience disruptions or losses.38Our valuation of investments and derivatives involves the application of methodologies and assumptions to derive 39estimates, which may differ from actual experience and could result in changes to investment valuations that may materially 40adversely affect our business, results of operations, financial condition and liquidity or lead to volatility in our net income.41It has been and may continue to be difficult to value certain of our investments or derivatives that are not actively traded. There also 42may be cases where certain assets in normally active markets with significant observable data become inactive with insufficient 43observable data due to the financial environment or market conditions in effect at that time. As a result, valuations may include inputs 44and assumptions that are less observable or require greater estimation and judgment as well as valuation methods that are more 45complex. These values may not be realized in a market transaction, may not reflect the value of the asset and may change very 46rapidly as market conditions change and valuation assumptions are modified. Decreases in value and/or an inability to realize that 47value in a market transaction or other disposition may have a material adverse effect on our business, results of operations, financial 48condition and liquidity.49For information regarding volatility in accounting as it relates to Fortitude Re, see Reserves and Exposures – “Fortitude Re may fail to 50perform its obligations and the accounting treatment of our reinsurance agreements with Fortitude Re leads to volatility in our results 51of operations” above.52ITEM 1A | Risk Factors5324 AIG | 2023 Form 10-K