AmazonScience/document-haystack

1forecasts to stresses of key assumptions and evaluate the effect on tax attribute utilization. We also apply stresses to our 2assumptions about the effectiveness of relevant prudent and feasible tax planning strategies. In performing our assessment of 3recoverability, we consider tax laws governing the utilization of net operating loss, capital loss and foreign tax credit carryforwards in 4each applicable jurisdiction. These tax laws are subject to change, resulting in incremental uncertainty in our assessment of 5recoverability.6Uncertain Tax Positions7Uncertain tax positions represent AIG’s liability for income taxes on tax years subject to review by the Internal Revenue Service (IRS) 8or other tax authorities. We determine whether it is more likely than not that a tax position will be sustained, based on technical merits, 9upon examination by the relevant taxing authorities before any part of the benefit can be recognized in the financial statements. A tax 10position is measured at the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. The 11completion of review, or the expiration of federal statute of limitations for a given audit period could result in an adjustment to the 12liability for income taxes.13For a discussion of our framework for assessing the recoverability of our deferred tax asset and other tax topics, see Note 23 to the 14Consolidated Financial Statements.15Executive Summary16OVERVIEW17This overview of the MD&A highlights selected information and may not contain all of the information that is important to current or 18potential investors in our securities. You should read this Annual Report in its entirety for a more detailed description of events, trends, 19uncertainties, risks and critical accounting estimates affecting us.20Adoption of Targeted Improvements to the Accounting for Long-Duration Contracts21In August 2018, the Financial Accounting Standards Board (FASB) issued an accounting standard update with the objective of making 22targeted improvements to the existing recognition, measurement, presentation and disclosure requirements for long-duration 23contracts issued by an insurance entity. 24The Company adopted the targeted improvements to the accounting for long-duration contracts (the standard or LDTI) on January 1, 252023, with a transition date of January 1, 2021 (as described in additional detail below). 26The Company adopted the standard using the modified retrospective transition method relating to liabilities for traditional and limited 27payment contracts and deferred policy acquisition costs associated therewith, while the Company adopted the standard in relation to 28MRBs on a retrospective basis. Based upon this transition method, as of the January 1, 2021 transition date (Transition Date), the 29impact of the adoption of the standard was a net decrease to beginning AOCI of $2.2 billion and a net increase to beginning Retained 30earnings of $933 million. 31The net increase in Retained earnings resulted from: 32• The reclassification of the cumulative effect of non-performance adjustments related to our products in Individual Retirement and 33Group Retirement operating segments that are currently measured at fair value (e.g., living benefit guarantees associated with 34variable annuities), 35Partially offset by: 36• A reduction from the difference between the fair value and carrying value of benefits not previously measured at fair value (e.g., 37death benefit guarantees associated with variable annuities). 38The net decrease in AOCI resulted from: 39• The reclassification of the cumulative effect of non-performance adjustments discussed above, 40• Changes to the discount rate which will most significantly impact our Life Insurance and Institutional Markets segments,41Partially offset by: 42• The removal of Deferred policy acquisition costs, Unearned revenue reserves, Sales inducement assets and certain future 43policyholder benefit balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments. 44ITEM 7 | Critical Accounting Estimates45AIG | 2023 Form 10-K 57