AmazonScience/document-haystack

1our customers, the compensation of our distribution partners, the manner in which we handle claims on our policies and the 2administration of our policies and contracts, as well as the power to limit or restrict our business for failure to comply with applicable 3laws and regulations. Our Life and Retirement companies and their distributors are also subject to laws and regulations governing the 4standard of care applicable to sales of our products, the provision of advice to our customers and the manner in which certain conflicts 5of interest arising from or related to such sales or giving of advice are to be addressed. In addition, federal and state securities laws 6and regulations apply to certain of our insurance products that are considered ‘securities’ under such laws, including our variable 7annuity contracts, variable life insurance policies and the separate accounts that issue them, as well as our broker-dealer, investment 8advisor and mutual fund operations.9We strive to comply with laws and regulations applicable to our businesses, operations and legal entities, including maintenance of all 10required licenses and approvals. The application of and compliance with such laws and regulations may be subject to interpretation, 11evolving industry practices and regulatory expectations that could result in increased compliance costs. The relevant authorities may 12not agree with our interpretation of these laws and regulations, including, for example, our implementation of new or revised 13requirements related to the classification of debt securities that do not qualify as bonds, or with our policies and procedures adopted 14to address evolving industry practices or meet regulatory expectations. Such authorities’ interpretations and views may also change 15from time to time. It is also possible that the laws, regulations and interpretations across various jurisdictions in which we do business 16may conflict with one another and affect how we do business in the United States and globally. If we are found not to have complied 17with applicable legal or regulatory requirements, these authorities could preclude or temporarily suspend us from carrying on some or 18all of our activities, impose substantial administrative penalties such as fines or require corrective actions, which individually or in the 19aggregate could interrupt our operations and materially and adversely affect our reputation, business, results of operations and 20financial condition. Additionally, when such authorities’ interpretation of new or revised requirements related to capital, accounting 21treatment and/or valuation manual or reserving (such as PBR) materially differs from ours, we have incurred or may incur higher 22operating costs, or sales of products subject to such requirements or treatment may be affected.23Regulators in jurisdictions in which we do business have adopted RBC, solvency and liquidity standards applicable to insurers and 24reinsurers operating in their jurisdiction. Failure to comply with such capital (including, in the U.S., RBC), solvency, liquidity and similar 25requirements, or as otherwise may be agreed by us or one of our insurance company subsidiaries with an insurance regulator, would 26generally permit the insurance regulator to take certain regulatory actions that could materially impact the affected company’s 27operations. Those actions range from requiring an insurer to submit a plan describing how it would regain a specified RBC or solvency 28ratio to a mandatory regulatory takeover of the company. The NAIC adopted in 2020, and the IAIS is developing and testing for 29implementation beginning in 2025, methodologies for assessing group-wide regulatory capital, which might evolve into more formal 30group-wide prescribed capital requirements on certain insurance companies and/or their holding companies that may augment state-31law RBC standards, and similar international standards, that apply at the legal entity level, and such capital calculations may be 32made, in whole or in part, on bases other than the statutory statements of our insurance and reinsurance subsidiaries. Furthermore, 33efforts to address systemic risks within the financial services industry, including insurance services, may lead regulators to apply new 34or heightened standards and safeguards for activities or practices that we and other insurers or other nonbank financial services 35companies, including insurers, engage in. In addition to the regulation of specific activities, the Financial Stability Oversight Council 36has authority under Dodd-Frank to determine that certain nonbank financial companies be designated as nonbank SIFIs subject to 37supervision by the Board of Governors of the Federal Reserve System and enhanced prudential standards, and recently adopted 38revised guidance and procedures intended to govern any such designations. We cannot predict the effect that any such initiatives or 39heightened standards may have on our business, results of operations, liquidity and financial condition.40There has also been increased regulatory scrutiny of the use of “big data” techniques, machine learning, predictive models and 41artificial intelligence, including in the insurance industry. Certain insurance regulators are developing, or have developed, regulations 42or guidance applicable to insurance companies that use artificial intelligence, “big data” techniques, machine learning and predictive 43models in their operations. We cannot predict what, if any, regulatory actions may be taken in the future with regard to “big data,” 44artificial intelligence, machine learning or predictive models, but any limitations or restrictions could have a material impact on our 45business, processes, results of operations and financial condition. 46We also cannot predict the impact that laws and regulations adopted in foreign jurisdictions may have on the financial markets 47generally or our businesses, results of operations or cash flows. It is possible such laws and regulations, including, without limitation, 48Solvency II and European Data Protection Board Cross Border Data Transfer in the EU, and standard-setting initiatives by the FSB 49and the IAIS, including, but not limited to, the IAIS’ Common Framework for the Supervision of IAIGs, its holistic framework for the 50assessment and mitigation of systemic risk and the development and refinement of a risk-based global ICS, may significantly alter our 51business practices. For example, regulators have imposed and may continue to impose new requirements or issue new guidance 52aimed at addressing or mitigating climate change-related risks. They may also limit our ability to engage in capital or liability 53management, require us to raise additional capital, and impose burdensome requirements and additional costs. It is also possible that 54the laws and regulations adopted in foreign jurisdictions will differ from one another, and that they could be inconsistent with the laws 55and regulations of other jurisdictions in which we operate, including the United States.56For additional information on our regulatory environment, see Item 1. Business – Regulation.57ITEM 1A | Risk Factors5834 AIG | 2023 Form 10-K