AmazonScience/document-haystack

1Use of Non-GAAP Measures2Throughout this MD&A, we present our financial condition and results of operations in the way we believe will be most meaningful and 3representative of our business results. Some of the measurements we use are “non-GAAP financial measures” under SEC rules and 4regulations. GAAP is the acronym for “generally accepted accounting principles” in the United States. The non-GAAP financial 5measures we present may not be comparable to similarly-named measures reported by other companies.6We use the following operating performance measures because we believe they enhance the understanding of the underlying 7profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful 8comparisons with our insurance competitors. When we use these measures, reconciliations to the most comparable GAAP measure 9are provided on a consolidated basis in the Consolidated Results of Operations section of this MD&A.10Book value per common share, excluding accumulated other comprehensive income (loss) (AOCI) adjusted for the 11cumulative unrealized gains and losses related to Fortitude Re funds withheld assets and deferred tax assets (DTA) 12(Adjusted book value per common share) is used to show the amount of our net worth on a per-common share basis after 13eliminating items that can fluctuate significantly from period to period including changes in fair value (1) of AIG’s available for sale 14securities portfolio, (2) of market risk benefits attributable to our own credit risk and (3) due to discount rates used to measure 15traditional and limited payment long-duration insurance contracts, foreign currency translation adjustments and U.S. tax attribute 16deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for 17sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. In addition, we adjust for 18the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets held by AIG in support of Fortitude Re’s 19reinsurance obligations to AIG post deconsolidation of Fortitude Re (Fortitude Re funds withheld assets) since these fair value 20movements are economically transferred to Fortitude Re. We exclude deferred tax assets representing U.S. tax attributes related to 21net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates 22based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion 23of the DTA utilized is included in these book value per common share metrics. Adjusted book value per common share is derived by 24dividing total AIG common shareholders’ equity, excluding AOCI adjusted for the cumulative unrealized gains and losses related to 25Fortitude Re funds withheld assets, and DTA (Adjusted common shareholders’ equity), by total common shares outstanding. 26Return on common equity – Adjusted after-tax income excluding AOCI adjusted for the cumulative unrealized gains and 27losses related to Fortitude Re funds withheld assets and DTA (Adjusted return on common equity) is used to show the rate of 28return on common shareholders’ equity. We believe this measure is useful to investors because it eliminates items that can fluctuate 29significantly from period to period, including changes in fair value (1) of AIG’s available for sale securities portfolio, (2) of market risk 30benefits attributable to our own credit risk and (3) due to discount rates used to measure traditional and limited payment long-duration 31insurance contracts, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates 32the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no 33offsetting impact for certain related insurance liabilities. In addition, we adjust for the cumulative unrealized gains and losses related to 34Fortitude Re funds withheld assets since these fair value movements are economically transferred to Fortitude Re. We exclude 35deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not 36yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss 37carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted return on common equity. 38Adjusted return on common equity is derived by dividing actual or annualized adjusted after-tax income attributable to AIG common 39shareholders by average Adjusted common shareholders’ equity.40Adjusted after-tax income attributable to AIG common shareholders is derived by excluding the tax effected adjusted pre-tax 41income (APTI) adjustments described below, dividends on preferred stock, noncontrolling interest on net realized gains (losses), other 42non-operating expenses and the following tax items from net income attributable to AIG:43• deferred income tax valuation allowance releases and charges;44• changes in uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or 45operating performance; and46• net tax charge related to the enactment of the Tax Cuts and Jobs Act.47Adjusted revenues exclude Net realized gains (losses), income from non-operating litigation settlements (included in Other income 48for GAAP purposes), changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income 49for GAAP purposes) and income from elimination of the international reporting lag. Adjusted revenues is a GAAP measure for our 50segments.51ITEM 7 | Use of Non-GAAP Measures5246 AIG | 2023 Form 10-K