Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Stockholders' Equity

Stockholders' Equity

11. Stockholders’ Equity

Common Stock Dividends

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Dividends declared per common share	$	0.64	$	0.63	$	1.92	$	1.80

Reconciliation of Outstanding Common Shares

	For the three months ended		For the nine months ended
	September 30,		September 30,
	2022	2021	2022	2021
	(in millions)
Beginning balance	249.9	269.0	261.7	273.3
Shares issued	1.0	0.3	3.3	2.4
Treasury stock acquired	(6.0)	(3.2)	(20.1)	(9.6)
Ending balance	244.9	266.1	244.9	266.1

In February 2020, our Board of Directors (“Board”) authorized a share repurchase program of up to $900.0 million of our outstanding common stock, which was completed in November 2021. In June 2021, our Board authorized a share repurchase program of up to $1.2 billion of our outstanding common stock, which was completed in August 2022. In January 2022, our Board authorized a $1.6 billion increase to the June 2021 share repurchase program authorization, which has no expiration date. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders’ equity.

In March 2022, we entered into an accelerated share repurchase program with a third party financial institution to repurchase $700.0 million of common stock. We received approximately 8.5 million shares at an initial cost of $560.0 million from our counterparty as of March 31, 2022, which was recorded in treasury stock. The associated $140.0 million forward contract was recorded in additional paid-in capital. This program closed in June 2022, at which time an additional 1.4 million shares were delivered based on the $70.53 daily volume-weighted average price of our common stock, less a discount, during the term of the program.

In August 2022, we entered into an accelerated share repurchase program with a third-party financial institution to repurchase $400.0 million of common stock. We received approximately 4.1 million shares at an initial cost of $320.0 million from our counterparty as of August 16, 2022, which was recorded in treasury stock. This program closed in September 2022, at which time an additional 1.2 million shares were delivered based on the $76.48 daily volume-weighted average price of our common stock, less a discount, during the term of the program.

Other Comprehensive Loss

	For the three months ended						For the nine months ended
	September 30, 2022						September 30, 2022
	Pre-Tax		Tax		After-Tax		Pre-Tax		Tax		After-Tax
	(in millions)
Net unrealized losses on available-for-sale securities during the period	$	(3,653.1)	$	778.1	$	(2,875.0)	$	(14,046.9)	$	2,978.5	$	(11,068.4)
Reclassification adjustment for losses included in net income (1)		76.3		(15.6)		60.7		83.8		(21.0)		62.8
Adjustments for assumed changes in amortization patterns		379.8		(79.8)		300.0		1,127.2		(236.7)		890.5
Adjustments for assumed changes in policyholder liabilities		58.9		(15.7)		43.2		510.9		(108.5)		402.4
Net unrealized losses on available-for-sale securities		(3,138.1)		667.0		(2,471.1)		(12,325.0)		2,612.3		(9,712.7)
Net unrealized gains on derivative instruments during the period		104.6		(22.0)		82.6		84.2		(17.7)		66.5
Reclassification adjustment for gains included in net income (2)		(4.4)		1.0		(3.4)		(21.8)		4.6		(17.2)
Adjustments for assumed changes in amortization patterns		(0.7)		0.1		(0.6)		4.9		(1.1)		3.8
Adjustments for assumed changes in policyholder liabilities		(0.2)		—		(0.2)		(3.0)		0.6		(2.4)
Net unrealized gains on derivative instruments		99.3		(20.9)		78.4		64.3		(13.6)		50.7
Foreign currency translation adjustment		(63.6)		9.5		(54.1)		(179.3)		4.5		(174.8)
Unrecognized postretirement benefit obligation during the period		0.1		(0.1)		—		2.2		(0.6)		1.6
Amortization of amounts included in net periodic benefit cost (3)		9.2		(2.2)		7.0		27.6		(7.2)		20.4
Net unrecognized postretirement benefit obligation		9.3		(2.3)		7.0		29.8		(7.8)		22.0
Other comprehensive loss	$	(3,093.1)	$	653.3	$	(2,439.8)	$	(12,410.2)	$	2,595.4	$	(9,814.8)

	For the three months ended						For the nine months ended
	September 30, 2021						September 30, 2021
	Pre-Tax		Tax		After-Tax		Pre-Tax		Tax		After-Tax
	(in millions)
Net unrealized losses on available-for-sale securities during the period	$	(546.4)	$	127.4	$	(419.0)	$	(2,461.6)	$	554.9	$	(1,906.7)
Reclassification adjustment for gains included in net income (1)		(2.6)		0.2		(2.4)		(3.8)		0.2		(3.6)
Adjustments for assumed changes in amortization patterns		32.2		(6.8)		25.4		121.3		(25.5)		95.8
Adjustments for assumed changes in policyholder liabilities		477.2		(104.8)		372.4		1,573.7		(365.3)		1,208.4
Net unrealized losses on available-for-sale securities		(39.6)		16.0		(23.6)		(770.4)		164.3		(606.1)
Net unrealized gains on derivative instruments during the period		31.2		(6.6)		24.6		53.7		(11.3)		42.4
Reclassification adjustment for gains included in net income (2)		(3.9)		0.8		(3.1)		(13.0)		2.7		(10.3)
Adjustments for assumed changes in amortization patterns		(0.5)		0.1		(0.4)		(0.5)		0.1		(0.4)
Adjustments for assumed changes in policyholder liabilities		(0.4)		—		(0.4)		1.0		(0.3)		0.7
Net unrealized gains on derivative instruments		26.4		(5.7)		20.7		41.2		(8.8)		32.4
Foreign currency translation adjustment		(189.3)		(4.0)		(193.3)		(209.5)		(4.6)		(214.1)
Unrecognized postretirement benefit obligation during the period		—		—		—		(9.1)		1.9		(7.2)
Amortization of amounts included in net periodic benefit cost (3)		12.8		(3.5)		9.3		38.8		(10.4)		28.4
Net unrecognized postretirement benefit obligation		12.8		(3.5)		9.3		29.7		(8.5)		21.2
Other comprehensive loss	$	(189.7)	$	2.8	$	(186.9)	$	(909.0)	$	142.4	$	(766.6)

(1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations.

(2) See Note 4, Derivative Financial Instruments, under the caption “Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations” for further details.

(3) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 9, Employee and Agent Benefits, under the caption “Components of Net Periodic Benefit Cost” for further details.

Accumulated Other Comprehensive Income (Loss)

	Net unrealized		Net unrealized		Foreign		Unrecognized		Accumulated
	gains (losses) on		gains		currency		postretirement		other
	available-for-sale		on derivative		translation		benefit		comprehensive
	securities (1)		instruments		adjustment		obligation		income (loss)
	(in millions)
Balances as of July 1, 2021	$	3,555.8	$	29.9	$	(1,333.3)	$	(448.6)	$	1,803.8
Other comprehensive loss during the period, net of adjustments		(21.2)		23.8		(191.0)		—		(188.4)
Amounts reclassified from AOCI		(2.4)		(3.1)		—		9.3		3.8
Other comprehensive loss		(23.6)		20.7		(191.0)		9.3		(184.6)
Balances as of September 30, 2021	$	3,532.2	$	50.6	$	(1,524.3)	$	(439.3)	$	1,619.2
Balances as of July 1, 2022	$	(3,649.7)	$	31.5	$	(1,682.2)	$	(329.7)	$	(5,630.1)
Other comprehensive loss during the period, net of adjustments		(2,531.7)		81.8		(54.9)		—		(2,504.8)
Amounts reclassified from AOCI		60.7		(3.4)		—		7.0		64.3
Other comprehensive loss		(2,471.0)		78.4		(54.9)		7.0		(2,440.5)
Balances as of September 30, 2022	$	(6,120.7)	$	109.9	$	(1,737.1)	$	(322.7)	$	(8,070.6)

	Net unrealized		Net unrealized		Foreign		Unrecognized		Accumulated
	gains (losses) on		gains		currency		postretirement		other
	available-for-sale		on derivative		translation		benefit		comprehensive
	securities (1)		instruments		adjustment		obligation		income (loss)
	(in millions)
Balances as of January 1, 2021	$	4,138.3	$	18.2	$	(1,312.9)	$	(460.5)	$	2,383.1
Other comprehensive loss during the period, net of adjustments		(602.5)		42.7		(211.4)		(7.2)		(778.4)
Amounts reclassified from AOCI		(3.6)		(10.3)		—		28.4		14.5
Other comprehensive loss		(606.1)		32.4		(211.4)		21.2		(763.9)
Balances as of September 30, 2021	$	3,532.2	$	50.6	$	(1,524.3)	$	(439.3)	$	1,619.2
Balances as of January 1, 2022	$	3,467.4	$	51.8	$	(1,563.6)	$	(344.7)	$	1,610.9
Other comprehensive loss during the period, net of adjustments		(9,775.3)		67.9		(173.5)		1.6		(9,879.3)
Amounts reclassified from AOCI		62.8		(17.2)		—		20.4		66.0
Other comprehensive loss		(9,712.5)		50.7		(173.5)		22.0		(9,813.3)
Adjustment for reinsurance (2)		124.4		7.4		—		—		131.8
Balances as of September 30, 2022	$	(6,120.7)	$	109.9	$	(1,737.1)	$	(322.7)	$	(8,070.6)

(1) Net unrealized gains (losses) on available-for-sale securities for which an allowance for credit loss has been recorded were $0.9 million and $(16.2) million as of September 30, 2022 and 2021, respectively.

(2) Reflects the January 1, 2022, balance associated with our ULSG business that was ceded to Talcott Life & Annuity Re.

Noncontrolling Interest

Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners’ share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position.

The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is excluded from stockholders’ equity and reported separately as redeemable noncontrolling interest on the consolidated statements of financial position. Our redeemable noncontrolling interest primarily relates to consolidated sponsored investment funds for which interests are redeemed at fair value from the net assets of the funds.

For our redeemable noncontrolling interest related to other consolidated subsidiaries, redemptions are required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. The carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value and will impact the numerator in our earnings per share calculations. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital.

Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions):

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
	(in millions)
Balance at beginning of period	$	268.5	$	330.6	$	332.5	$	255.6
Net income (loss) attributable to redeemable noncontrolling interest		(4.6)		2.7		(38.0)		9.5
Redeemable noncontrolling interest of deconsolidated entities (1)		(2.8)		(37.4)		(2.8)		(37.4)
Contributions from redeemable noncontrolling interest		17.2		60.2		48.2		148.2
Distributions to redeemable noncontrolling interest		(22.7)		(11.7)		(84.1)		(34.8)
Purchase of subsidiary shares from redeemable noncontrolling interest (2)		(1.1)		(0.7)		(1.1)		(6.1)
Change in redemption value of redeemable noncontrolling interest		(0.5)		—		(0.1)		8.6
Other comprehensive income (loss) attributable to redeemable noncontrolling interest		1.1		(0.4)		0.5		(0.3)
Balance at end of period	$	255.1	$	343.3	$	255.1	$	343.3

(1) We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation.

(2) In third quarter 2022, we acquired an additional interest in Origin Asset Management. In second quarter 2021, we acquired the remaining interest in Principal Innovations, Inc. and its wholly owned subsidiary, RobustWealth, Inc.