QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ¨ | Accelerated filer | ¨ | ||||||||||||||
þ | Smaller reporting company | ||||||||||||||||
Emerging growth company |
Page | ||||||||
Item 1. | Financial Statements (at June 30, 2020 (Unaudited) and December 31, 2019 and for the Three Months and Six Months Ended June 30, 2020 and 2019 (Unaudited)): | |||||||
Item 2. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 6. | ||||||||
June 30, 2020 | December 31, 2019 | |||||||||||||
Assets | ||||||||||||||
Investments: | ||||||||||||||
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $ | $ | $ | ||||||||||||
Mortgage loans (net of allowance for credit losses of $ | ||||||||||||||
Short-term investments, principally at estimated fair value | ||||||||||||||
Other invested assets, principally at estimated fair value | ||||||||||||||
Total investments | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Accrued investment income | ||||||||||||||
Premiums, reinsurance and other receivables | ||||||||||||||
Deferred policy acquisition costs | ||||||||||||||
Other assets | ||||||||||||||
Separate account assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholder’s Equity | ||||||||||||||
Liabilities | ||||||||||||||
Future policy benefits | $ | $ | ||||||||||||
Policyholder account balances | ||||||||||||||
Other policy-related balances | ||||||||||||||
Payables for collateral under derivative transactions | ||||||||||||||
Current income tax payable | ||||||||||||||
Deferred income tax liability | ||||||||||||||
Other liabilities | ||||||||||||||
Separate account liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Contingencies, Commitments and Guarantees (Note 10) | ||||||||||||||
Stockholder’s Equity | ||||||||||||||
Common stock, par value $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings (deficit) | ||||||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||||
Total stockholder’s equity | ||||||||||||||
Total liabilities and stockholder’s equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Premiums | $ | $ | $ | $ | |||||||||||||||||||
Universal life and investment-type product policy fees | |||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||
Other revenues | ( | ( | ( | ( | |||||||||||||||||||
Net investment gains (losses) | |||||||||||||||||||||||
Net derivative gains (losses) | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Expenses | |||||||||||||||||||||||
Policyholder benefits and claims | |||||||||||||||||||||||
Interest credited to policyholder account balances | |||||||||||||||||||||||
Amortization of deferred policy acquisition costs | |||||||||||||||||||||||
Other expenses | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
Income (loss) before provision for income tax | |||||||||||||||||||||||
Provision for income tax expense (benefit) | |||||||||||||||||||||||
Net income (loss) | $ | $ | $ | $ | |||||||||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ |
Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholder’s Equity | |||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax | ( | ( | |||||||||||||||||||||||||||
Balance at March 31, 2020 | |||||||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax | |||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | $ |
Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholder’s Equity | |||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Capital contribution | |||||||||||||||||||||||||||||
Net income (loss) | ( | ( | |||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax | |||||||||||||||||||||||||||||
Balance at March 31, 2019 | |||||||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax | |||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Net cash provided by (used in) operating activities | $ | ( | $ | ( | |||||||
Cash flows from investing activities | |||||||||||
Sales, maturities and repayments of: | |||||||||||
Fixed maturity securities | |||||||||||
Mortgage loans | |||||||||||
Purchases of: | |||||||||||
Fixed maturity securities | ( | ( | |||||||||
Mortgage loans | ( | ( | |||||||||
Cash received in connection with freestanding derivatives | |||||||||||
Cash paid in connection with freestanding derivatives | ( | ( | |||||||||
Net change in short-term investments | |||||||||||
Net change in other invested assets | |||||||||||
Net cash provided by (used in) investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Policyholder account balances: | |||||||||||
Deposits | |||||||||||
Withdrawals | ( | ( | |||||||||
Net change in payables for collateral under derivative transactions | |||||||||||
Short-term debt issued | |||||||||||
Short-term debt repaid | ( | ||||||||||
Capital contribution | |||||||||||
Net cash provided by (used in) financing activities | |||||||||||
Change in cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information | |||||||||||
Net cash paid (received) for: | |||||||||||
Interest | $ | $ | |||||||||
Standard | Description | Effective Date | Impact on Financial Statements | ||||||||
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an other-than-temporary impairment on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses. | January 1, 2020 using the modified retrospective method | The Company recorded an after tax net increase to retained earnings of less than $ |
Standard | Description | Effective Date | Impact on Financial Statements | ||||||||
ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts | The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred policy acquisition costs (“DAC”), and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances. The market risk benefit guidance is required to be applied on a retrospective basis, while the changes to guidance for insurance liabilities and DAC may be applied to existing carrying amounts on the effective date or on a retrospective basis. | The amendments are currently effective for the Company on January 1, 2022. On July 7, the FASB released an exposure draft which if adopted, will change the effective date of the amendments to January 1, 2023. | The Company continues to evaluate the new guidance and therefore is unable to estimate the impact to its financial statements. The most significant impact is expected to be the measurement of liabilities for variable annuity guarantees. |
Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||
Annuities | Life | Corporate & Other | Total | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Pre-tax adjusted earnings | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Provision for income tax expense (benefit) | ( | ( | ||||||||||||||||||||||||
Adjusted earnings | $ | ( | $ | $ | ( | ( | ||||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||
Net investment gains (losses) | ||||||||||||||||||||||||||
Net derivative gains (losses) | ||||||||||||||||||||||||||
Other adjustments to net income (loss) | ||||||||||||||||||||||||||
Provision for income tax (expense) benefit | ( | |||||||||||||||||||||||||
Net income (loss) | $ | |||||||||||||||||||||||||
Interest revenue | $ | $ | $ |
Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||
Annuities | Life | Corporate & Other | Total | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Pre-tax adjusted earnings | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Provision for income tax expense (benefit) | ( | ( | ( | |||||||||||||||||||||||
Adjusted earnings | $ | ( | $ | ( | $ | ( | ( | |||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||
Net investment gains (losses) | ||||||||||||||||||||||||||
Net derivative gains (losses) | ||||||||||||||||||||||||||
Other adjustments to net income (loss) | ||||||||||||||||||||||||||
Provision for income tax (expense) benefit | ( | |||||||||||||||||||||||||
Net income (loss) | $ | |||||||||||||||||||||||||
Interest revenue | $ | $ | $ |
Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||
Annuities | Life | Corporate & Other | Total | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Pre-tax adjusted earnings | $ | $ | $ | ( | $ | |||||||||||||||||||||
Provision for income tax expense (benefit) | ( | ( | ||||||||||||||||||||||||
Adjusted earnings | $ | $ | $ | ( | ||||||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||
Net investment gains (losses) | ||||||||||||||||||||||||||
Net derivative gains (losses) | ||||||||||||||||||||||||||
Other adjustments to net income (loss) | ( | |||||||||||||||||||||||||
Provision for income tax (expense) benefit | ( | |||||||||||||||||||||||||
Net income (loss) | $ | |||||||||||||||||||||||||
Interest revenue | $ | $ | $ |
Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||
Annuities | Life | Corporate & Other | Total | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Pre-tax adjusted earnings | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Provision for income tax expense (benefit) | ( | ( | ( | ( | ||||||||||||||||||||||
Adjusted earnings | $ | ( | $ | ( | $ | ( | ( | |||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||
Net investment gains (losses) | ||||||||||||||||||||||||||
Net derivative gains (losses) | ||||||||||||||||||||||||||
Other adjustments to net income (loss) | ||||||||||||||||||||||||||
Provision for income tax (expense) benefit | ( | |||||||||||||||||||||||||
Net income (loss) | $ | |||||||||||||||||||||||||
Interest revenue | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Annuities | $ | $ | $ | $ | ||||||||||||||||||||||
Life | ||||||||||||||||||||||||||
Corporate & Other | ||||||||||||||||||||||||||
Adjustments | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||
(In millions) | |||||||||||
Annuities | $ | $ | |||||||||
Life | |||||||||||
Corporate & Other | |||||||||||
Total | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||
In the Event of Death | At Annuitization | In the Event of Death | At Annuitization | ||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Annuity Contracts (1), (2) | |||||||||||||||||||||||||||||
Variable Annuity Guarantees | |||||||||||||||||||||||||||||
Total account value (3) | $ | $ | $ | $ | |||||||||||||||||||||||||
Separate account value | $ | $ | $ | $ | |||||||||||||||||||||||||
Net amount at risk | $ | (4) | $ | (5) | $ | (4) | $ | (5) | |||||||||||||||||||||
Average attained age of contract holders |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Allowance for Credit Losses (1) | Gross Unrealized | Estimated Fair Value | Amortized Cost | Allowance for Credit Losses | Gross Unrealized | Estimated Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains | Losses | Gains | Losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. corporate | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign corporate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CMBS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. government and agency | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RMBS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ABS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
State and political subdivision | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Due in One Year or Less | Due After One Year Through Five Years | Due After Five Years Through Ten Years | Due After Ten Years | Structured Securities (1) | Total Fixed Maturity Securities | ||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Amortized cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Estimated fair value | $ | $ | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Less than 12 Months | 12 Months or Greater | ||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. corporate | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Foreign corporate | |||||||||||||||||||||||||||||||||||||||||||||||
CMBS | |||||||||||||||||||||||||||||||||||||||||||||||
RMBS | |||||||||||||||||||||||||||||||||||||||||||||||
ABS | |||||||||||||||||||||||||||||||||||||||||||||||
State and political subdivision | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total number of securities in an unrealized loss position |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Carrying Value | % of Total | Carrying Value | % of Total | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
Commercial | $ | % | $ | % | |||||||||||||||||||
Agricultural | |||||||||||||||||||||||
Total mortgage loans | |||||||||||||||||||||||
Allowance for credit losses | ( | ( | ( | ( | |||||||||||||||||||
Total mortgage loans, net | $ | % | $ | % |
Commercial | Agricultural | Total | |||||||||||||||
(In millions) | |||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | ||||||||||||||
Cumulative effect of change in accounting principle | ( | ( | |||||||||||||||
Balance at January 1, 2020 | |||||||||||||||||
Current period provision | |||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ |
2020 | 2019 | 2018 | 2017 | 2016 | Prior | Total | |||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Commercial mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Loan-to-value ratios | |||||||||||||||||||||||||||||||||||||||||
Less than 65% | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
65% to 75% | |||||||||||||||||||||||||||||||||||||||||
76% to 80% | |||||||||||||||||||||||||||||||||||||||||
Greater than 80% | |||||||||||||||||||||||||||||||||||||||||
Total commercial mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Agricultural mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Loan-to-value ratios | |||||||||||||||||||||||||||||||||||||||||
Less than 65% | |||||||||||||||||||||||||||||||||||||||||
65% to 75% | |||||||||||||||||||||||||||||||||||||||||
Total agricultural mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Amortized Cost | % of Total | Amortized Cost | % of Total | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
Debt-Service Coverage Ratios: | |||||||||||||||||||||||
Greater than 1.20x | $ | % | $ | % | |||||||||||||||||||
1.00x - 1.20x | |||||||||||||||||||||||
Less than 1.00x | |||||||||||||||||||||||
Total | $ | % | $ | % |
June 30, 2020 | December 31, 2019 | ||||||||||
(In millions) | |||||||||||
Fixed maturity securities | $ | $ | |||||||||
Derivatives | |||||||||||
Subtotal | |||||||||||
Amounts allocated from: | |||||||||||
Future policy benefits | ( | ( | |||||||||
DAC and DSI | ( | ( | |||||||||
Subtotal | ( | ( | |||||||||
Deferred income tax benefit (expense) | ( | ( | |||||||||
Net unrealized investment gains (losses) | $ | $ |
Six Months Ended June 30, 2020 | |||||
(In millions) | |||||
Balance at December 31, 2019 | $ | ||||
Unrealized investment gains (losses) during the period | |||||
Unrealized investment gains (losses) relating to: | |||||
Future policy benefits | ( | ||||
DAC and DSI | ( | ||||
Deferred income tax benefit (expense) | ( | ||||
Balance at June 30, 2020 | $ | ||||
Change in net unrealized investment gains (losses) | $ |
June 30, 2020 | December 31, 2019 | ||||||||||
(In millions) | |||||||||||
Invested assets on deposit (regulatory deposits) | $ | $ | |||||||||
Invested assets pledged as collateral (1) | |||||||||||
Total invested assets on deposit and pledged as collateral (2) | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Carrying Amount | Maximum Exposure to Loss | Carrying Amount | Maximum Exposure to Loss | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fixed maturity securities | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Investment income: | |||||||||||||||||||||||
Fixed maturity securities | $ | $ | $ | $ | |||||||||||||||||||
Mortgage loans | |||||||||||||||||||||||
Cash, cash equivalents and short-term investments | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total investment income | |||||||||||||||||||||||
Less: Investment expenses | |||||||||||||||||||||||
Net investment income | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fixed maturity securities | $ | $ | $ | $ | |||||||||||||||||||
Mortgage loans | ( | ( | |||||||||||||||||||||
Other | |||||||||||||||||||||||
Total net investment gains (losses) | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Proceeds | $ | $ | $ | $ | |||||||||||||||||||
Gross investment gains | $ | $ | $ | $ | |||||||||||||||||||
Gross investment losses | ( | ( | |||||||||||||||||||||
Net investment gains (losses) | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
Primary Underlying Risk Exposure | Gross Notional Amount | Estimated Fair Value | Gross Notional Amount | Estimated Fair Value | |||||||||||||||||||||||||||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||||||||||||||||||||
Foreign currency swaps | Foreign currency exchange rate | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Total qualifying hedges | |||||||||||||||||||||||||||||||||||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||||||||||||||||||||||||||||||||
Interest rate caps | Interest rate | ||||||||||||||||||||||||||||||||||||||||
Foreign currency swaps | Foreign currency exchange rate | ||||||||||||||||||||||||||||||||||||||||
Equity index options | Equity market | ||||||||||||||||||||||||||||||||||||||||
Equity total return swaps | Equity market | ||||||||||||||||||||||||||||||||||||||||
Total non-designated or non-qualifying derivatives | |||||||||||||||||||||||||||||||||||||||||
Embedded derivatives: | |||||||||||||||||||||||||||||||||||||||||
Ceded guaranteed minimum income benefits | Other | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
Direct guaranteed minimum benefits | Other | N/A | N/A | ( | |||||||||||||||||||||||||||||||||||||
Direct index-linked annuities | Other | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
Total embedded derivatives | Other | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Net Derivative Gains (Losses) Recognized for Derivatives | Net Derivative Gains (Losses) Recognized for Hedged Items | Net Investment Income | Amount of Gains (Losses) Deferred in AOCI | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Three Months Ended June 30, 2020 | |||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency exchange rate derivatives | $ | $ | $ | $ | ( | ||||||||||||||||||
Total cash flow hedges | ( | ||||||||||||||||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||||||||||||||
Interest rate derivatives | ( | ||||||||||||||||||||||
Foreign currency exchange rate derivatives | |||||||||||||||||||||||
Equity derivatives | |||||||||||||||||||||||
Embedded derivatives | ( | ||||||||||||||||||||||
Total non-qualifying hedges | |||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | ||||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency exchange rate derivatives | $ | $ | $ | $ | |||||||||||||||||||
Total cash flow hedges | |||||||||||||||||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||||||||||||||
Interest rate derivatives | ( | ||||||||||||||||||||||
Foreign currency exchange rate derivatives | |||||||||||||||||||||||
Equity derivatives | |||||||||||||||||||||||
Embedded derivatives | |||||||||||||||||||||||
Total non-qualifying hedges | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Net Derivative Gains (Losses) Recognized for Derivatives | Net Derivative Gains (Losses) Recognized for Hedged Items | Net Investment Income | Amount of Gains (Losses) Deferred in AOCI | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Six Months Ended June 30, 2020 | |||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency exchange rate derivatives | $ | $ | $ | $ | |||||||||||||||||||
Total cash flow hedges | |||||||||||||||||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||||||||||||||
Interest rate derivatives | ( | ||||||||||||||||||||||
Foreign currency exchange rate derivatives | |||||||||||||||||||||||
Equity derivatives | ( | ||||||||||||||||||||||
Embedded derivatives | |||||||||||||||||||||||
Total non-qualifying hedges | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Foreign currency exchange rate derivatives | $ | $ | $ | $ | |||||||||||||||||||
Total cash flow hedges | |||||||||||||||||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||||||||||||||
Interest rate derivatives | ( | ||||||||||||||||||||||
Foreign currency exchange rate derivatives | |||||||||||||||||||||||
Equity derivatives | |||||||||||||||||||||||
Embedded derivatives | ( | ||||||||||||||||||||||
Total non-qualifying hedges | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Gross Amounts Not Offset on the Balance Sheets | ||||||||||||||||||||||||||||||||||||||
Gross Amount Recognized | Financial Instruments (1) | Collateral Received/Pledged (2) | Net Amount | Securities Collateral Received/Pledged (3) | Net Amount After Securities Collateral | |||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Derivative assets | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Derivative liabilities | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
Derivative assets | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Derivative liabilities | $ | $ | ( | $ | $ | $ | ( | $ |
June 30, 2020 | December 31, 2019 | |||||||||||||
(In millions) | ||||||||||||||
Estimated fair value of derivatives in a net liability position (1) | $ | $ | ||||||||||||
Estimated Fair Value of Collateral Provided (2): | ||||||||||||||
Fixed maturity securities | $ | $ |
June 30, 2020 | |||||||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
U.S. corporate | $ | $ | $ | $ | |||||||||||||||||||
Foreign corporate | |||||||||||||||||||||||
CMBS | |||||||||||||||||||||||
U.S. government and agency | |||||||||||||||||||||||
RMBS | |||||||||||||||||||||||
ABS | |||||||||||||||||||||||
State and political subdivision | |||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||
Total fixed maturity securities | |||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Derivative assets: (1) | |||||||||||||||||||||||
Interest rate | |||||||||||||||||||||||
Foreign currency exchange rate | |||||||||||||||||||||||
Equity market | |||||||||||||||||||||||
Total derivative assets | |||||||||||||||||||||||
Embedded derivatives within asset host contracts (2) | |||||||||||||||||||||||
Separate account assets | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative liabilities: (1) | |||||||||||||||||||||||
Equity market | $ | $ | $ | $ | |||||||||||||||||||
Embedded derivatives within liability host contracts (2) | |||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ |
December 31, 2019 | |||||||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
U.S. corporate | $ | $ | $ | $ | |||||||||||||||||||
Foreign corporate | |||||||||||||||||||||||
CMBS | |||||||||||||||||||||||
U.S. government and agency | |||||||||||||||||||||||
RMBS | |||||||||||||||||||||||
ABS | |||||||||||||||||||||||
State and political subdivision | |||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||
Total fixed maturity securities | |||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Derivative assets: (1) | |||||||||||||||||||||||
Interest rate | |||||||||||||||||||||||
Foreign currency exchange rate | |||||||||||||||||||||||
Equity market | |||||||||||||||||||||||
Total derivative assets | |||||||||||||||||||||||
Embedded derivatives within asset host contracts (2) | |||||||||||||||||||||||
Separate account assets | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative liabilities: (1) | |||||||||||||||||||||||
Equity market | $ | $ | $ | $ | |||||||||||||||||||
Embedded derivatives within liability host contracts (2) | |||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
June 30, 2020 | December 31, 2019 | Impact of Increase in Input on Estimated Fair Value | |||||||||||||||||||||||||||||||||||||||||||||
Valuation Techniques | Significant Unobservable Inputs | Range | Range | ||||||||||||||||||||||||||||||||||||||||||||
Embedded derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
Direct, assumed and ceded guaranteed minimum benefits | • | Option pricing techniques | • | Mortality rates | - | - | Decrease (1) | ||||||||||||||||||||||||||||||||||||||||
• | Lapse rates | - | - | Decrease (2) | |||||||||||||||||||||||||||||||||||||||||||
• | Utilization rates | - | - | Increase (3) | |||||||||||||||||||||||||||||||||||||||||||
• | Withdrawal rates | - | - | (4) | |||||||||||||||||||||||||||||||||||||||||||
• | Long-term equity volatilities | - | - | Increase (5) | |||||||||||||||||||||||||||||||||||||||||||
• | Nonperformance risk spread | - | - | Decrease (6) |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||
Corporate (1) | Structured Securities | Net Embedded Derivatives (2) | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Three Months Ended June 30, 2020 | ||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | |||||||||||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | ( | |||||||||||||||||||
Total realized/unrealized gains (losses) included in AOCI | ||||||||||||||||||||
Purchases (5) | ||||||||||||||||||||
Sales (5) | ( | |||||||||||||||||||
Issuances (5) | ||||||||||||||||||||
Settlements (5) | ( | |||||||||||||||||||
Transfers into Level 3 (6) | ||||||||||||||||||||
Transfers out of Level 3 (6) | ( | ( | ||||||||||||||||||
Balance, end of period | $ | $ | $ | |||||||||||||||||
Three Months Ended June 30, 2019 | ||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | |||||||||||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | ||||||||||||||||||||
Total realized/unrealized gains (losses) included in AOCI | ( | |||||||||||||||||||
Purchases (5) | ||||||||||||||||||||
Sales (5) | ||||||||||||||||||||
Issuances (5) | ||||||||||||||||||||
Settlements (5) | ( | |||||||||||||||||||
Transfers into Level 3 (6) | ||||||||||||||||||||
Transfers out of Level 3 (6) | ( | ( | ||||||||||||||||||
Balance, end of period | $ | $ | $ | |||||||||||||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2020 (7) | $ | $ | $ | ( | ||||||||||||||||
Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at June 30, 2020 (7) | $ | $ | $ | |||||||||||||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2019 (7) | $ | $ | $ | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||
Corporate (1) | Structured Securities | Net Embedded Derivatives (2) | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Six Months Ended June 30, 2020 | ||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | |||||||||||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | ||||||||||||||||||||
Total realized/unrealized gains (losses) included in AOCI | ||||||||||||||||||||
Purchases (5) | ||||||||||||||||||||
Sales (5) | ( | |||||||||||||||||||
Issuances (5) | ||||||||||||||||||||
Settlements (5) | ( | |||||||||||||||||||
Transfers into Level 3 (6) | ||||||||||||||||||||
Transfers out of Level 3 (6) | ( | ( | ||||||||||||||||||
Balance, end of period | $ | $ | $ | |||||||||||||||||
Six Months Ended June 30, 2019 | ||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | |||||||||||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | ( | |||||||||||||||||||
Total realized/unrealized gains (losses) included in AOCI | ||||||||||||||||||||
Purchases (5) | ||||||||||||||||||||
Sales (5) | ||||||||||||||||||||
Issuances (5) | ||||||||||||||||||||
Settlements (5) | ( | |||||||||||||||||||
Transfers into Level 3 (6) | ||||||||||||||||||||
Transfers out of Level 3 (6) | ( | ( | ||||||||||||||||||
Balance, end of period | $ | $ | $ | |||||||||||||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2020 (7) | $ | $ | $ | |||||||||||||||||
Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at June 30, 2020 (7) | $ | $ | $ | |||||||||||||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2019 (7) | $ | $ | $ | |||||||||||||||||
June 30, 2020 | |||||||||||||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Premiums, reinsurance and other receivables | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Policyholder account balances | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Other liabilities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Premiums, reinsurance and other receivables | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Policyholder account balances | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Other liabilities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Three Months Ended June 30, 2020 | |||||||||||||||||
Unrealized Investment Gains (Losses), Net of Related Offsets (1) | Unrealized Gains (Losses) on Derivatives | Total | |||||||||||||||
(In millions) | |||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | ||||||||||||||
OCI before reclassifications | ( | ||||||||||||||||
Deferred income tax benefit (expense) | ( | ( | |||||||||||||||
AOCI before reclassifications, net of income tax | |||||||||||||||||
Amounts reclassified from AOCI | ( | ( | |||||||||||||||
Deferred income tax benefit (expense) | |||||||||||||||||
Amounts reclassified from AOCI, net of income tax | ( | ( | |||||||||||||||
Balance at June 30, 2020 | $ | $ | $ |
Three Months Ended June 30, 2019 | |||||||||||||||||
Unrealized Investment Gains (Losses), Net of Related Offsets (1) | Unrealized Gains (Losses) on Derivatives | Total | |||||||||||||||
(In millions) | |||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | ||||||||||||||
OCI before reclassifications | |||||||||||||||||
Deferred income tax benefit (expense) | ( | ( | ( | ||||||||||||||
AOCI before reclassifications, net of income tax | |||||||||||||||||
Amounts reclassified from AOCI | ( | ( | |||||||||||||||
Deferred income tax benefit (expense) | |||||||||||||||||
Amounts reclassified from AOCI, net of income tax | ( | ( | |||||||||||||||
Balance at June 30, 2019 | $ | $ | $ |
Six Months Ended June 30, 2020 | |||||||||||||||||
Unrealized Investment Gains (Losses), Net of Related Offsets (1) | Unrealized Gains (Losses) on Derivatives | Total | |||||||||||||||
(In millions) | |||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | ||||||||||||||
OCI before reclassifications | |||||||||||||||||
Deferred income tax benefit (expense) | ( | ( | ( | ||||||||||||||
AOCI before reclassifications, net of income tax | |||||||||||||||||
Amounts reclassified from AOCI | ( | ( | |||||||||||||||
Deferred income tax benefit (expense) | |||||||||||||||||
Amounts reclassified from AOCI, net of income tax | ( | ( | |||||||||||||||
Balance at June 30, 2020 | $ | $ | $ |
Six Months Ended June 30, 2019 | |||||||||||||||||
Unrealized Investment Gains (Losses), Net of Related Offsets (1) | Unrealized Gains (Losses) on Derivatives | Total | |||||||||||||||
(In millions) | |||||||||||||||||
Balance at December 31, 2018 | $ | ( | $ | $ | ( | ||||||||||||
OCI before reclassifications | |||||||||||||||||
Deferred income tax benefit (expense) | ( | ( | ( | ||||||||||||||
AOCI before reclassifications, net of income tax | |||||||||||||||||
Amounts reclassified from AOCI | ( | ( | |||||||||||||||
Deferred income tax benefit (expense) | |||||||||||||||||
Amounts reclassified from AOCI, net of income tax | ( | ( | |||||||||||||||
Balance at June 30, 2019 | $ | $ | $ |
AOCI Components | Amounts Reclassified from AOCI | Statements of Operations and Comprehensive Income (Loss) Location | ||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses): | ||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses) | $ | $ | $ | $ | Net investment income | |||||||||||||||||||||||||||
Net unrealized investment gains (losses), before income tax | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | ( | ( | ( | |||||||||||||||||||||||||||||
Net unrealized investment gains (losses), net of income tax | ||||||||||||||||||||||||||||||||
Total reclassifications, net of income tax | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Compensation | $ | $ | $ | $ | ||||||||||||||||||||||
Contracted services and other labor costs | ||||||||||||||||||||||||||
Transition services agreements | ||||||||||||||||||||||||||
Establishment costs | ||||||||||||||||||||||||||
Premium and other taxes, licenses and fees | ( | |||||||||||||||||||||||||
Volume related costs, excluding compensation, net of DAC capitalization | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total other expenses | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Premiums | |||||||||||||||||||||||
Reinsurance ceded | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Universal life and investment-type product policy fees | |||||||||||||||||||||||
Reinsurance ceded | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other revenues | |||||||||||||||||||||||
Reinsurance ceded | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Policyholder benefits and claims | |||||||||||||||||||||||
Reinsurance ceded | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other expenses | |||||||||||||||||||||||
Reinsurance ceded | $ | ( | $ | ( | $ | ( | $ | ( |
June 30, 2020 | December 31, 2019 | ||||||||||
(In millions) | |||||||||||
Assets | |||||||||||
Premiums, reinsurance and other receivables | $ | $ | |||||||||
Liabilities | |||||||||||
Other liabilities | $ | $ |
Page | |||||
Component of Adjusted Earnings | How Derived from GAAP (1) | ||||||||||
(i) | Fee income | (i) | Universal life and investment-type policy fees (excluding (a) unearned revenue adjustments related to net investment gains (losses) and net derivative gains (losses) and (b) GMIB Fees) plus Other revenues (excluding other revenues associated with related party reinsurance) and amortization of deferred gain on reinsurance. | ||||||||
(ii) | Net investment spread | (ii) | Net investment income plus Investment Hedge Adjustments and interest received on ceded fixed annuity reinsurance deposit funds reduced by Interest credited to policyholder account balances and interest on future policy benefits. | ||||||||
(iii) | Insurance-related activities | (iii) | Premiums less Policyholder benefits and claims (excluding (a) GMIB Costs, (b) Market Value Adjustments, (c) interest on future policy benefits and (d) amortization of deferred gain on reinsurance) plus the pass through of performance of ceded separate account assets. | ||||||||
(iv) | Amortization of DAC | (iv) | Amortization of DAC (excluding amounts related to (a) net investment gains (losses), (b) net derivative gains (losses), (c) GMIB Fees and GMIB Costs and (d) Market Value Adjustments). | ||||||||
(v) | Other expenses, net of DAC capitalization | (v) | Other expenses reduced by capitalization of DAC. | ||||||||
(vi) | Provision for income tax expense (benefit) | (vi) | Tax impact of the above items. |
Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
(In millions) | ||||||||||||||
Revenues | ||||||||||||||
Premiums | $ | 19 | $ | 16 | ||||||||||
Universal life and investment-type product policy fees | 46 | 47 | ||||||||||||
Net investment income | 66 | 56 | ||||||||||||
Other revenues | (40) | (42) | ||||||||||||
Net investment gains (losses) | 5 | 5 | ||||||||||||
Net derivative gains (losses) | 155 | 24 | ||||||||||||
Total revenues | 251 | 106 | ||||||||||||
Expenses | ||||||||||||||
Policyholder benefits and claims | 14 | 24 | ||||||||||||
Interest credited to policyholder account balances | 19 | 17 | ||||||||||||
Capitalization of DAC | (20) | (18) | ||||||||||||
Amortization of DAC | 33 | 6 | ||||||||||||
Other expenses | 60 | 57 | ||||||||||||
Total expenses | 106 | 86 | ||||||||||||
Income (loss) before provision for income tax | 145 | 20 | ||||||||||||
Provision for income tax expense (benefit) | 29 | 3 | ||||||||||||
Net income (loss) | $ | 116 | $ | 17 |
Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
(In millions) | ||||||||||||||
GMLB Riders | $ | 121 | $ | 44 | ||||||||||
Other derivative instruments | 2 | (5) | ||||||||||||
Net investment gains (losses) | 5 | 5 | ||||||||||||
Pre-tax adjusted earnings | 17 | (24) | ||||||||||||
Income (loss) before provision for income tax | 145 | 20 | ||||||||||||
Provision for income tax expense (benefit) | 29 | 3 | ||||||||||||
Net income (loss) | $ | 116 | $ | 17 |
Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
(In millions) | ||||||||||||||
Net income (loss) | $ | 116 | $ | 17 | ||||||||||
Add: Provision for income tax expense (benefit) | 29 | 3 | ||||||||||||
Income (loss) before provision for income tax | 145 | 20 | ||||||||||||
Less: GMLB Riders | 121 | 44 | ||||||||||||
Less: Other derivative instruments | 2 | (5) | ||||||||||||
Less: Net investment gains (losses) | 5 | 5 | ||||||||||||
Pre-tax adjusted earnings | 17 | (24) | ||||||||||||
Less: Provision for income tax expense (benefit) | 2 | (6) | ||||||||||||
Adjusted earnings | $ | 15 | $ | (18) |
Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
(In millions) | ||||||||||||||
Fee income | $ | 62 | $ | 68 | ||||||||||
Net investment spread | 38 | 30 | ||||||||||||
Insurance-related activities | (30) | (66) | ||||||||||||
Amortization of DAC | (13) | (17) | ||||||||||||
Other expenses, net of DAC capitalization | (40) | (39) | ||||||||||||
Pre-tax adjusted earnings | 17 | (24) | ||||||||||||
Provision for income tax expense (benefit) | 2 | (6) | ||||||||||||
Adjusted earnings | $ | 15 | $ | (18) |
Exhibit No. | Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
104* | The cover page of Brighthouse Life Insurance Company of NY’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (included within the Exhibit 101 attachments). |
BRIGHTHOUSE LIFE INSURANCE COMPANY OF NY | |||||||||||
By: | /s/ Lynn A. Dumais | ||||||||||
Name: | Lynn A. Dumais | ||||||||||
Title: | Vice President and Chief Financial Officer | ||||||||||
(Duly Authorized Officer and Principal Financial Officer) |
/s/ Conor E. Murphy | ||
Conor E. Murphy Chairman of the Board, President and Chief Executive Officer |
/s/ Lynn A. Dumais | ||
Lynn A. Dumais Vice President and Chief Financial Officer |
/s/ Conor E. Murphy | ||
Conor E. Murphy Chairman of the Board, President and Chief Executive Officer |
/s/ Lynn A. Dumais | ||
Lynn A. Dumais Vice President and Chief Financial Officer |
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Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Amortized cost of fixed maturity securities available-for-sale | $ 3,055 | $ 2,897 |
Fixed maturity securities, allowance for credit losses | 0 | 0 |
Mortgage loans valuation allowances | $ 4 | $ 3 |
Stockholder’s Equity | ||
Common stock, par value | $ 10 | $ 10 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares, issued | 200,000 | 200,000 |
Common stock, shares outstanding | 200,000 | 200,000 |
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenues | ||||
Premiums | $ 11 | $ 7 | $ 19 | $ 16 |
Universal life and investment-type product policy fees | 23 | 24 | 46 | 47 |
Net Investment Income | 33 | 30 | 66 | 56 |
Other revenues | (18) | (22) | (40) | (42) |
Net investment gains (losses) | 0 | 5 | 5 | 5 |
Net derivative gains (losses) | 27 | 27 | 155 | 24 |
Total revenues | 76 | 71 | 251 | 106 |
Expenses | ||||
Policyholder benefits and claims | 13 | 14 | 14 | 24 |
Interest credited to policyholder account balances | 9 | 9 | 19 | 17 |
Amortization of deferred policy acquisition costs | 11 | 5 | 33 | 6 |
Other expenses | 21 | 20 | 40 | 39 |
Total expenses | 54 | 48 | 106 | 86 |
Income (loss) before provision for income tax | 22 | 23 | 145 | 20 |
Provision for income tax expense (benefit) | 4 | 4 | 29 | 3 |
Net income (loss) | 18 | 19 | 116 | 17 |
Comprehensive income (loss) | $ 154 | $ 80 | $ 208 | $ 124 |
Business, Basis of Presentation and Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business, Basis of Presentation and Summary of Significant Accounting Policies | 1. Business, Basis of Presentation and Summary of Significant Accounting Policies Business “BHNY” and the “Company” refer to Brighthouse Life Insurance Company of NY, a New York domiciled life insurance company. Brighthouse Life Insurance Company of NY is a wholly-owned subsidiary of Brighthouse Life Insurance Company, which is an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF” together with its subsidiaries and affiliates, “Brighthouse Financial”). The Company is licensed to transact business in the state of New York. BHNY markets and/or administers traditional life, universal life, variable annuity and fixed annuity products to individuals. The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other. Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates. Reclassifications Certain amounts in the prior year periods’ interim condensed financial statements and related footnotes thereto have been reclassified to conform with the current period presentation as may be discussed when applicable in the Notes to the Interim Condensed Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. The accompanying interim condensed financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2019 balance sheet data was derived from audited financial statements included in Brighthouse Life Insurance Company of NY’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed financial statements should be read in conjunction with the financial statements of the Company included in the 2019 Annual Report. Adoption of New Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. ASUs adopted as of June 30, 2020 are summarized as follows:
ASUs issued but not yet adopted as of June 30, 2020 are summarized as follows:
CARES Act In response to the worldwide pandemic sparked by the novel coronavirus (the “COVID-19 pandemic”), on March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act contains numerous provisions intended to provide swift aid, including through tax relief, to businesses and individuals affected by the COVID-19 pandemic. The Company does not believe that the CARES Act will have a material impact to its financial statements at this time. The Company will continue to closely monitor developments related to the COVID-19 pandemic and the CARES Act.
|
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 2. Segment Information The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other. Annuities The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security. Life The Life segment consists of insurance products and services, including term, whole and universal life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis. Corporate & Other Corporate & Other contains the excess capital not allocated to the segments and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes term life insurance sold direct to consumers, which is no longer being offered for new sales. Financial Measures and Segment Accounting Policies Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted earnings should not be viewed as a substitute for net income (loss). Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends. The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings: •Net investment gains (losses); •Net derivative gains (losses) except earned income and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and •Certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”). The following are significant items excluded from total expenses, net of income tax, in calculating adjusted earnings: •Amounts associated with benefits related to GMIBs (“GMIB Costs”); •Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and •Amortization of DAC related to: (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments. The tax impact of the adjustments mentioned above is calculated net of the statutory tax rate, which could differ from the Company’s effective tax rate. The segment accounting policies are the same as those used to prepare the Company’s interim condensed financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below. Segment investment and capitalization targets are based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets. Operating results by segment, as well as Corporate & Other, were as follows:
Total revenues by segment, as well as Corporate & Other, were as follows:
Total assets by segment, as well as Corporate & Other, were as follows at:
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Insurance |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance | 3. Insurance Guarantees As discussed in Notes 1 and 3 of the Notes to the Financial Statements included in the 2019 Annual Report, the Company issues variable annuity contracts with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMABs”), the non-life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that do not require annuitization are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 5. Information regarding the Company’s guarantee exposure was as follows at:
_______________ (1)The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2)Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Financial Statements included in the 2019 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured. (3)Includes the contract holder’s investments in the general account and separate account, if applicable. (4)Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. (5)Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved.
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Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 4. Investments See Note 1 of the Notes to the Financial Statements included in the 2019 Annual Report for a description of the Company’s accounting policies for investments and Note 6 for information about the fair value hierarchy for investments and the related valuation methodologies. In connection with the adoption of new guidance related to the credit losses (see Note 1), effective January 1, 2020, the Company updated its accounting policies on certain investments. Any accounting policy updates required by the new guidance are described in this footnote. Fixed Maturity Securities Available-for-sale Fixed Maturity Securities by Sector Fixed maturity securities by sector were as follows at:
_______________ (1)The allowance for credit losses on total fixed maturity securities was less than $1 million at June 30, 2020. The Company did not hold any non-income producing fixed maturity securities at either June 30, 2020 or December 31, 2019. Maturities of Fixed Maturity Securities The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at June 30, 2020:
_______________ (1)Structured securities include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”). Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity. Continuous Gross Unrealized Losses for Fixed Maturity Securities by Sector The estimated fair value and gross unrealized losses of fixed maturity securities in an unrealized loss position, by sector and by length of time that the securities have been in a continuous unrealized loss position, were as follows at:
Allowance for Credit Losses for Fixed Maturity Securities Evaluation and Measurement Methodologies For fixed maturity securities in an unrealized loss position, management first assesses whether the Company intends to sell, or whether it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to estimated fair value through net investment gains (losses). For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the allowance for credit loss evaluation process include, but are not limited to: (i) the extent to which estimated fair value is less than amortized cost; (ii) any changes to the rating of the security by a rating agency; (iii) adverse conditions specifically related to the security, industry or geographic area; and (iv) payment structure of the fixed maturity security and the likelihood of the issuer being able to make payments in the future or the issuer’s failure to make scheduled interest and principal payments. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss is deemed to exist and an allowance for credit losses is recorded, limited by the amount that the estimated fair value is less than the amortized cost basis, with a corresponding charge to net investment gains (losses). Any unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive income (loss) (“OCI”). Once a security specific allowance for credit losses is established, the present value of cash flows expected to be collected from the security continues to be reassessed. Any changes in the security specific allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in net investment gains (losses). Fixed maturity securities are also evaluated to determine whether any amounts have become uncollectible. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses. Accrued interest receivables are presented separate from the amortized cost basis of fixed maturity securities. An allowance for credit losses is not estimated on an accrued interest receivable, rather receivable balances 90-days past due are deemed uncollectible and are written off with a corresponding reduction to net investment income. The accrued interest receivable on fixed maturity securities totaled $23 million at June 30, 2020 and is included in accrued investment income. Fixed maturity securities are also evaluated to determine if they qualify as purchased financial assets with credit deterioration (“PCD”). To determine if the credit deterioration experienced since origination is more than insignificant, both (i) the extent of the credit deterioration and (ii) any rating agency downgrades are evaluated. For securities categorized as PCD assets, the present value of cash flows expected to be collected from the security are compared to the par value of the security. If the present value of cash flows expected to be collected is less than the par value, credit losses are embedded in the purchase price of the PCD asset. In this situation, both an allowance for credit losses and amortized cost gross-up is recorded, limited by the amount that the estimated fair value is less than the grossed-up amortized cost basis. Any difference between the purchase price and the present value of cash flows is amortized or accreted into net investment income over the life of the PCD asset. Any subsequent PCD asset allowance for credit losses is evaluated in a manner similar to the process described above for fixed maturity securities. Current Period Evaluation Based on the Company’s current evaluation of its fixed maturity securities in an unrealized loss position and the current intent or requirement to sell, the Company recorded an allowance for credit losses of less than $1 million, relating to two securities at June 30, 2020. Management concluded that for all other fixed maturity securities in an unrealized loss position, the unrealized loss was not due to issuer specific credit-related factors and as a result was recognized in OCI. Where unrealized losses have not been recognized into income, it is primarily because the securities’ bond issuer(s) are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in estimated fair value is largely due to changes in interest rates and non-issuer-specific credit spreads. These issuers continued to make timely principal and interest payments and the estimated fair value is expected to recover as the securities approach maturity. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at:
Allowance for Credit Losses for Mortgage Loans Evaluation and Measurement Methodologies The allowance for credit losses is a valuation account that is deducted from the mortgage loan’s amortized cost basis to present the net amount expected to be collected on the mortgage loan. The loan balance, or a portion of the loan balance, is written-off against the allowance when management believes this amount is uncollectible. Accrued interest receivables are presented separate from the amortized cost basis of mortgage loans. An allowance for credit losses is generally not estimated on an accrued interest receivable, rather when a loan is placed in nonaccrual status the associated accrued interest receivable balance is written off with a corresponding reduction to net investment income. For mortgage loans that are granted payment deferrals due to the COVID-19 pandemic, interest continues to be accrued during the deferral period if the loan was less than 30 days past due at December 31, 2019 and performing at the onset of the pandemic. Accrued interest on COVID-19 pandemic impacted loans was not significant at June 30, 2020. The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $3 million at June 30, 2020. The allowance for credit losses is estimated using relevant available information, from internal and external sources, relating to past events, current conditions, and a reasonable and supportable forecast. Historical credit loss experience provides the basis for estimating expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics and environmental conditions. A reasonable and supportable forecast period of two-years is used with an input reversion period of one-year. Mortgage loans are evaluated in both portfolio segments to determine the allowance for credit losses. The loan-level loss rates are determined using individual loan terms and characteristics, risk pools/internal ratings, national economic forecasts, prepayment speeds, and estimated default and loss severity. The resulting loss rates are applied to the mortgage loan’s amortized cost to generate an allowance for credit losses. In certain situations, the allowance for credit losses is measured as the difference between the loan’s amortized cost and liquidation value of the collateral. These situations include collateral dependent loans, expected troubled debt restructurings (“TDRs”), foreclosure probable loans, and loans with dissimilar risk characteristics. Rollforward of the Allowance for Credit Losses for Mortgage Loans by Portfolio Segment The changes in the allowance for credit losses by portfolio segment were as follows:
Credit Quality of Mortgage Loans by Portfolio Segment The amortized cost of mortgage loans by year of origination and credit quality indicator was as follows at:
The loan-to-value ratio is a measure commonly used to assess the quality of commercial and agricultural mortgage loans. The loan-to-value ratio compares the amount of the loan to the estimated fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. Performing status is a measure commonly used to assess the quality of residential mortgage loans. A loan is considered performing when the borrower makes consistent and timely payments. The amortized cost of commercial mortgage loans by debt-service coverage ratio was as follows at:
The debt-service coverage ratio compares a property’s net operating income to its debt-service payments. Debt-service coverage ratios less than 1.00 times indicate that property operations do not generate enough income to cover the loan’s current debt payments. A debt-service coverage ratio greater than 1.00 times indicates an excess of net operating income over the debt-service payments. Past Due Mortgage Loans by Portfolio Segment The Company has a high-quality, well performing mortgage loan portfolio, with all mortgage loans classified as performing at both June 30, 2020 and December 31, 2019. Delinquency is defined consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans — 60 days and agricultural mortgage loans — 90 days. To the extent a payment deferral is agreed to with a borrower, in response to the COVID-19 pandemic, the past due status of the impacted loans is locked-in as of March 1, 2020, which reflects the date on which the COVID-19 pandemic began to affect the borrower’s ability to make payments, as provided in the CARES Act. At June 30, 2020, the Company did not have any COVID-19 pandemic modified loans in delinquent status. The Company did not have any mortgage loans past due at June 30, 2020. Mortgage Loans in Nonaccrual Status by Portfolio Segment Mortgage loans are placed in a nonaccrual status if there are concerns regarding collectability of future payments or the loan is past due, unless the past due loan is well collateralized and in the process of foreclosure. To the extent a payment deferral is agreed to with a borrower, in response to the COVID-19 pandemic, the impacted loans generally will not be reported as in a nonaccrual status during the period of deferral. A COVID-19 pandemic modified loan is only reported as a nonaccrual asset in the event a borrower declares bankruptcy, the borrower experiences significant credit deterioration such that the Company does not expect to collect all principal and interest due, or the loan was 90 days past due at the onset of the pandemic. At June 30, 2020, the Company did not have any COVID-19 pandemic modified loans in nonaccrual status. The Company did not have any mortgage loans in a nonaccrual status at both June 30, 2020 and December 31, 2019. Modified Mortgage Loans by Portfolio Segment Under certain circumstances, modifications are granted to non-performing mortgage loans. Each modification is evaluated to determine if a TDR has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the amount of debt owed, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company did not have any mortgage loans modified in a troubled debt restructuring during the six months ended June 30, 2020. Short-term modifications made on a good faith basis to borrowers who were not more than 30 days past due at December 31, 2019 and in response to the COVID-19 pandemic are not considered TDRs.Net Unrealized Investment Gains (Losses) Unrealized investment gains (losses) on fixed maturity securities and the effect on DAC, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in accumulated other comprehensive income (loss) (“AOCI”). The components of net unrealized investment gains (losses), included in AOCI, were as follows at:
The changes in net unrealized investment gains (losses) were as follows:
Concentrations of Credit Risk There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both June 30, 2020 and December 31, 2019. Invested Assets on Deposit and Pledged as Collateral Invested assets on deposit and pledged as collateral at estimated fair value were as follows at:
_______________ (1)The Company has pledged invested assets in connection with derivative transactions (see Note 5). (2)The Company did not hold any restricted cash and cash equivalents at either June 30, 2020 or December 31, 2019. Variable Interest Entities The Company has invested in legal entities that are variable interest entities (“VIEs”). VIEs are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to (i) direct the activities of the VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. There were no material VIEs for which the Company has concluded that it is the primary beneficiary at June 30, 2020 or December 31, 2019. The carrying amount and maximum exposure to loss related to the VIEs for which the Company has concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:
The Company’s investments in unconsolidated VIEs are described below. Fixed Maturity Securities The Company invests in U.S. corporate bonds, foreign corporate bonds, and Structured Securities issued by VIEs. The Company is not obligated to provide any financial or other support to these VIEs, other than the original investment. The Company’s involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment manager, which are generally viewed as having the power to direct the activities that most significantly impact the economic performance of the VIE, nor does the Company function in any of these roles. The Company does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity; as a result, the Company has determined it is not the primary beneficiary, or consolidator, of the VIE. The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities Available-for-sale” for information on these securities. Net Investment Income The components of net investment income were as follows:
Net Investment Gains (Losses) Components of Net Investment Gains (Losses) The components of net investment gains (losses) were as follows:
Sales or Disposals of Fixed Maturity Securities Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as follows:
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | 5. Derivatives Accounting for Derivatives See Note 1 of the Notes to the Financial Statements included in the 2019 Annual Report for a description of the Company’s accounting policies for derivatives and Note 8 for information about the fair value hierarchy for derivatives. Derivative Strategies Types of Derivative Instruments and Derivative Strategies The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to minimize its exposure to various market risks. Commonly used derivative instruments include, but are not necessarily limited to: •Interest rate caps; •Foreign currency swaps, and •Equity derivatives: options and total return swaps For detailed information on these contracts and the related strategies, see Note 7 of the Notes to the Financial Statements included in the 2019 Annual Report. Primary Risks Managed by Derivatives The primary underlying risk exposure, gross notional amount and estimated fair value of derivatives held were as follows at:
The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses) were as follows:
At June 30, 2020 and December 31, 2019, the balance in AOCI associated with cash flow hedges was $17 million and $6 million, respectively. Counterparty Credit Risk The Company may be exposed to credit-related losses in the event of counterparty nonperformance on derivative instruments. Generally, the credit exposure is the fair value at the reporting date less any collateral received from the counterparty. The Company manages its credit risk by: (i) entering into derivative transactions with creditworthy counterparties governed by master netting agreements; (ii) trading through regulated exchanges and central clearing counterparties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review. See Note 6 for a description of the impact of credit risk on the valuation of derivatives. The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
_______________ (1)Represents amounts subject to an enforceable master netting agreement or similar agreement. (2)The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement. (3)Securities collateral received from counterparties is not reported on the balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received. The Company’s collateral arrangements generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. Certain of these arrangements also include credit-contingent provisions which permit the party with positive fair value to terminate the derivative at the current fair value or demand immediate full collateralization from the party in a net liability position, in the event that the financial strength or credit rating of the party in a net liability position falls below a certain level. The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:
_______________ (1)After taking into consideration the existence of netting agreements. (2)All of the Company’s collateral arrangements provide for daily posting of collateral for the full value of the derivative contract. As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | 6. Fair Value Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. Recurring Fair Value Measurements The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, are presented in the tables below. Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy.
_______________ (1)Derivative assets are presented within other invested assets on the balance sheets and derivative liabilities are presented within other liabilities on the balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the balance sheets. (2)Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the balance sheets. Valuation Controls and ProceduresThe Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by its valuation service providers. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse Financial’s Board of Directors regarding compliance with fair value accounting standards. The fair value of financial assets and financial liabilities is based on quoted market prices, where available. Prices received are assessed to determine if they represent a reasonable estimate of fair value. Several controls are performed, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing,” are used for a non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments. A formal process is also applied to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, the last available price will be used. Additional controls are performed, such as, balance sheet analytics to assess reasonableness of period to period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the six months ended June 30, 2020. Determination of Fair Value Fixed Maturity Securities The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below. U.S. corporate and foreign corporate securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues. U.S. government and agency, state and political subdivision and foreign government securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker-dealer quotes, and comparable securities that are actively traded. Structured Securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to; collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance. Short-term Investments The fair value for actively traded short-term investments are determined using quoted market prices and are classified as Level 1 assets. For financial instruments classified as Level 2 assets or liabilities, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below. Fair value is determined using third-party commercial pricing services, with the primary input being quoted prices in markets that are not active. Derivatives Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates and/or financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. The Company’s OTC derivatives are settled bilateral contracts between two counterparties (“OTC-bilateral”). The fair values for OTC-bilateral derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs. The significant inputs to the pricing models for most OTC-bilateral derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments. Most inputs for OTC-bilateral derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income. The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period. Embedded Derivatives Embedded derivatives principally include certain direct variable annuity guarantees and certain affiliated ceded reinsurance agreements related to such variable annuity guarantees, and equity crediting rates within index-linked annuity contracts. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the balance sheets. The Company determines the fair value of these embedded derivatives by estimating the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations of policyholder behavior. The calculation is based on in-force business and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates. The percentage of fees included in the initial fair value measurement is not updated in subsequent periods. Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly-traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience. The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for BHF’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims-paying ability of the issuing insurance subsidiaries as compared to BHF’s overall financial strength. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. Transfers Into or Out of Level 3: Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) Certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows at:
_______________ (1)Mortality rates vary by age and by demographic characteristics such as gender. The range shown reflects the mortality rate for policyholders between 35 and 90 years old, which represents the majority of the business with living benefits. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement. (2)The range shown reflects base lapse rates for major product categories for duration 1-20, which represents majority of business with living benefit riders. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. (3)The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. (4)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value. (5)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (6)Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative. The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value. The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) were summarized as follows:
_______________ (1)Comprised of U.S. and foreign corporate securities. (2)Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (3)Amortization of premium/accretion of discount is included within net investment income. Changes in the allowance for credit losses and direct write-offs are charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). (4)Interest accruals, as well as cash interest coupons received, are excluded from the rollforward. (5)Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements. (6)Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward. (7)Changes in unrealized gains (losses) included in net income (loss) for fixed maturities are reported in either net investment income or net investment gains (losses). Substantially all changes in unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses).Fair Value of Financial Instruments Carried at Other Than Fair Value The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income and payables for collateral under derivative transactions. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure. The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:
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Short-term Debt |
3 Months Ended |
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Jun. 30, 2020 | |
Short-term Debt [Abstract] | |
Short-term Debt | 7. Short-term DebtIntercompany Liquidity FacilitiesBHF has established an intercompany liquidity facility with certain of its insurance and non-insurance subsidiaries to provide short-term liquidity within and across the combined group of companies. Under the facility, which is comprised of a series of revolving loan agreements among BHF and its participating subsidiaries, each company may lend to or borrow from each other, subject to certain maximum limits for a term not more than 364 days. For each insurance subsidiary, the borrowing and lending limit is 3% of the respective insurance subsidiary’s statutory admitted assets as of the previous year end. For BHF and each non-insurance subsidiary, the borrowing and lending limit is based on a formula tied to the statutory admitted assets of the respective insurance subsidiaries. On March 30, 2020, BHNY issued a $100 million promissory note to Brighthouse Holdings, LLC, which bore interest at a fixed rate of 2.4996% and was repaid upon maturity on June 30, 2020. |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | 8. Equity Accumulated Other Comprehensive Income (Loss) Information regarding changes in the balances of each component of AOCI was as follows:
_______________ (1)See Note 4 for information on offsets to investments related to future policy benefits, DAC and DSI. Information regarding amounts reclassified out of each component of AOCI was as follows:
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Other Revenues and Other Expenses |
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Other Revenues and Other Expenses | 9. Other Revenues and Other Expenses Other Revenues The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund. The percentage is specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees. To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds and is used to recognize revenue associated with 12b-1 fees. Other revenues consisted primarily of 12b-1 fees of $3 million and $6 million for the three months and six months ended June 30, 2020, respectively, and $3 million and $6 million for the three months and six months ended June 30, 2019, respectively, of which all were reported in the Annuities segment. Other Expenses Information on other expenses was as follows:
Related Party Expenses See Note 11 for a discussion of related party expenses included in the table above.
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Contingencies, Commitments and Guarantees |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies, Commitments and Guarantees | 10. Contingencies, Commitments and Guarantees Contingencies Litigation Sales Practices Claims Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities or other products. The Company continues to defend vigorously against the claims in these matters. The Company believes adequate provision has been made in its financial statements for all probable and reasonably estimable losses for sales practices matters. Summary Various litigations, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations, it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s net income or cash flows in particular quarterly or annual periods. Other Contingencies The Company applies the same standard of recognition for non-litigation loss contingencies when assertions are made involving disputes with counterparties to contractual arrangements entered into by the Company, including with third-party vendors. In such cases, the Company establishes liabilities when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In cases where it is not probable, but is reasonably possible that a loss will be incurred, no accrual is made. The Company is not currently able to estimate any reasonably possible unrecorded loss or range of loss associated with such matters, and will be unable to do so until sufficient information to support any such assessments is available. On a quarterly and annual basis, the Company reviews relevant information with respect to non-litigation contingencies and, when applicable, updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews. Commitments Mortgage Loan Commitments The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $13 million and $11 million at June 30, 2020 and December 31, 2019, respectively. Commitments to Fund Private Corporate Bond Investments The Company commits to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $16 million and $10 million at June 30, 2020 and December 31, 2019, respectively. Guarantees In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. The Company had no liability for indemnities, guarantees and commitments at both June 30, 2020 and December 31, 2019.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | 11. Related Party TransactionsThe Company has various existing arrangements with its Brighthouse affiliates and had previous arrangements with MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”) for services necessary to conduct its activities. Certain of the MetLife services have continued, however, MetLife ceased to be a related party in June 2018. See Note 9 for amounts related to continuing transition services. The Company also has related party debt transactions (see Note 7). Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows: Reinsurance Agreements The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth. Information regarding the significant effects of related party reinsurance included on the interim condensed statements of operations and comprehensive income (loss) was as follows:
Information regarding the significant effects of ceded related party reinsurance included on the interim condensed balance sheets was as follows at:
The Company cedes risks to Brighthouse Life Insurance Company related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in the estimated fair value are included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $539 million and $338 million at June 30, 2020 and December 31, 2019, respectively. Net derivative gains (losses) associated with the embedded derivatives were ($17) million and $201 million for the three months and six months ended June 30, 2020, respectively, and $35 million and $32 million for the three months and six months ended June 30, 2019, respectively. Shared Services and Overhead Allocations Brighthouse Services, LLC, an affiliate, currently provides the Company certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting and information technology. Revenues received from an affiliate related to these agreements, recorded in universal life and investment-type product policy fees, were $3 million and $6 million for the three months and six months ended June 30, 2020, respectively and $3 million and $6 million for the three months and six months ended June 30, 2019, respectively. Costs incurred under these arrangements were $13 million and $26 million for the three months and six months ended June 30, 2020, respectively, and $15 million and $30 million for the three months and six months ended June 30, 2019, respectively, and were recorded in other expenses. Included in these costs are those incurred related to the establishment of services and infrastructure to replace those previously provided by MetLife. The Company incurred costs of $1 million and $2 million for the three months and six months ended June 30, 2020, respectively, and did not incur any costs for the three months and six months ended June 30, 2019. The Company is charged a fee to reflect the value of the available infrastructure and services provided by these costs. While management believes the method used to allocate expenses under this arrangement is reasonable, the allocated expenses may not be indicative of those of a stand-alone entity. The Company had net receivables (payables) from/to affiliates, related to the items discussed above, of ($1) million and ($18) million at June 30, 2020 and December 31, 2019, respectively. Broker-Dealer Transactions The related party expense for the Company was commissions paid on the sale of variable products and passed through to the broker-dealer affiliate. The related party revenue for the Company was fee income passed through the broker-dealer affiliate from trusts and mutual funds whose shares serve as investment options of policyholders of the Company. Fee income received related to these transactions and recorded in other revenues was $3 million and $6 million for the three months and six months ended June 30, 2020, respectively and $3 million and $6 million for the three months and six months ended June 30, 2019, respectively. Commission expenses incurred related to these transactions and recorded in other expenses was $17 million and $34 million for the three months and six months ended June 30, 2020, respectively, and $17 million and $32 million for the three months and six months ended June 30, 2019, respectively. The Company also had related party fee income receivables of $1 million at both June 30, 2020 and December 31, 2019.
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Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates, Policy [Policy Text Block] | Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.
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Consolidation of Subsidiaries, Policy [Policy Text Block] | Reclassifications Certain amounts in the prior year periods’ interim condensed financial statements and related footnotes thereto have been reclassified to conform with the current period presentation as may be discussed when applicable in the Notes to the Interim Condensed Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. The accompanying interim condensed financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2019 balance sheet data was derived from audited financial statements included in Brighthouse Life Insurance Company of NY’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed financial statements should be read in conjunction with the financial statements of the Company included in the 2019 Annual Report.
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New Accounting Pronouncements, Policy [Policy Text Block] | Adoption of New Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. ASUs adopted as of June 30, 2020 are summarized as follows:
ASUs issued but not yet adopted as of June 30, 2020 are summarized as follows:
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Investments, Policy [Policy Text Block] | For fixed maturity securities in an unrealized loss position, management first assesses whether the Company intends to sell, or whether it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to estimated fair value through net investment gains (losses). For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the allowance for credit loss evaluation process include, but are not limited to: (i) the extent to which estimated fair value is less than amortized cost; (ii) any changes to the rating of the security by a rating agency; (iii) adverse conditions specifically related to the security, industry or geographic area; and (iv) payment structure of the fixed maturity security and the likelihood of the issuer being able to make payments in the future or the issuer’s failure to make scheduled interest and principal payments. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss is deemed to exist and an allowance for credit losses is recorded, limited by the amount that the estimated fair value is less than the amortized cost basis, with a corresponding charge to net investment gains (losses). Any unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive income (loss) (“OCI”). Once a security specific allowance for credit losses is established, the present value of cash flows expected to be collected from the security continues to be reassessed. Any changes in the security specific allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in net investment gains (losses). Fixed maturity securities are also evaluated to determine whether any amounts have become uncollectible. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses. Accrued interest receivables are presented separate from the amortized cost basis of fixed maturity securities. An allowance for credit losses is not estimated on an accrued interest receivable, rather receivable balances 90-days past due are deemed uncollectible and are written off with a corresponding reduction to net investment income. The accrued interest receivable on fixed maturity securities totaled $23 million at June 30, 2020 and is included in accrued investment income. Fixed maturity securities are also evaluated to determine if they qualify as purchased financial assets with credit deterioration (“PCD”). To determine if the credit deterioration experienced since origination is more than insignificant, both (i) the extent of the credit deterioration and (ii) any rating agency downgrades are evaluated. For securities categorized as PCD assets, the present value of cash flows expected to be collected from the security are compared to the par value of the security. If the present value of cash flows expected to be collected is less than the par value, credit losses are embedded in the purchase price of the PCD asset. In this situation, both an allowance for credit losses and amortized cost gross-up is recorded, limited by the amount that the estimated fair value is less than the grossed-up amortized cost basis. Any difference between the purchase price and the present value of cash flows is amortized or accreted into net investment income over the life of the PCD asset. Any subsequent PCD asset allowance for credit losses is evaluated in a manner similar to the process described above for fixed maturity securities. Delinquency is defined consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans — 60 days and agricultural mortgage loans — 90 days. To the extent a payment deferral is agreed to with a borrower, in response to the COVID-19 pandemic, the past due status of the impacted loans is locked-in as of March 1, 2020, which reflects the date on which the COVID-19 pandemic began to affect the borrower’s ability to make payments, as provided in the CARES Act.Mortgage loans are placed in a nonaccrual status if there are concerns regarding collectability of future payments or the loan is past due, unless the past due loan is well collateralized and in the process of foreclosure. To the extent a payment deferral is agreed to with a borrower, in response to the COVID-19 pandemic, the impacted loans generally will not be reported as in a nonaccrual status during the period of deferral. A COVID-19 pandemic modified loan is only reported as a nonaccrual asset in the event a borrower declares bankruptcy, the borrower experiences significant credit deterioration such that the Company does not expect to collect all principal and interest due, or the loan was 90 days past due at the onset of the pandemic.Under certain circumstances, modifications are granted to non-performing mortgage loans. Each modification is evaluated to determine if a TDR has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the amount of debt owed, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest.Short-term modifications made on a good faith basis to borrowers who were not more than 30 days past due at December 31, 2019 and in response to the COVID-19 pandemic are not considered TDRs.
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Derivatives, Policy [Policy Text Block] | Derivative Strategies Types of Derivative Instruments and Derivative Strategies The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to minimize its exposure to various market risks. Commonly used derivative instruments include, but are not necessarily limited to: •Interest rate caps; •Foreign currency swaps, and •Equity derivatives: options and total return swaps Counterparty Credit RiskGenerally, the credit exposure is the fair value at the reporting date less any collateral received from the counterparty.
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information, by Segment | Operating results by segment, as well as Corporate & Other, were as follows:
Total assets by segment, as well as Corporate & Other, were as follows at:
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Reconciliation of Revenue from Segments to Consolidated | Total revenues by segment, as well as Corporate & Other, were as follows:
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Insurance (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees related to Annuity, Universal and Variable Life Contracts | Information regarding the Company’s guarantee exposure was as follows at:
_______________ (1)The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2)Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Financial Statements included in the 2019 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured. (3)Includes the contract holder’s investments in the general account and separate account, if applicable. (4)Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. (5)Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved.
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Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Maturity Securities by Sector | Fixed maturity securities by sector were as follows at:
_______________ (1)The allowance for credit losses on total fixed maturity securities was less than $1 million at June 30, 2020.
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Maturities of Fixed Maturity Securities | The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at June 30, 2020:
_______________ (1)Structured securities include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).
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Continuous Gross Unrealized Losses for Fixed Maturity Securities by Sector | The estimated fair value and gross unrealized losses of fixed maturity securities in an unrealized loss position, by sector and by length of time that the securities have been in a continuous unrealized loss position, were as follows at:
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Mortgage Loans by Portfolio Segment | Mortgage loans are summarized as follows at:
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Rollforward of the Allowance for Credit Losses for Mortgage Loans by Portfolio Segment | The changes in the allowance for credit losses by portfolio segment were as follows:
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Credit Quality of Mortgage Loans by Portfolio Segment | The amortized cost of mortgage loans by year of origination and credit quality indicator was as follows at:
The amortized cost of commercial mortgage loans by debt-service coverage ratio was as follows at:
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Net Unrealized Investment Gains (Losses) | The components of net unrealized investment gains (losses), included in AOCI, were as follows at:
The changes in net unrealized investment gains (losses) were as follows:
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Invested Assets on Deposit and Pledged as Collateral | Invested assets on deposit and pledged as collateral at estimated fair value were as follows at:
_______________ (1)The Company has pledged invested assets in connection with derivative transactions (see Note 5). (2)The Company did not hold any restricted cash and cash equivalents at either June 30, 2020 or December 31, 2019.
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Variable Interest Entities | The carrying amount and maximum exposure to loss related to the VIEs for which the Company has concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:
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Components of Net Investment Income | The components of net investment income were as follows:
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Components of Net Investment Gains (Losses) | The components of net investment gains (losses) were as follows:
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Sales or Disposals of Fixed Maturity Securities | Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as follows:
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Derivatives (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | The primary underlying risk exposure, gross notional amount and estimated fair value of derivatives held were as follows at:
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Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses) were as follows:
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Components of Net Derivatives Gains (Losses) | The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses) were as follows:
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Estimated Fair Value of Derivative Assets and Liabilities after Master Netting Agreements and Cash Collateral | The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
_______________ (1)Represents amounts subject to an enforceable master netting agreement or similar agreement. (2)The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement. (3)Securities collateral received from counterparties is not reported on the balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received.
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Estimated Fair Value of Derivative Assets and Liabilities after Master Netting Agreements and Cash Collateral | The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
_______________ (1)Represents amounts subject to an enforceable master netting agreement or similar agreement. (2)The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement. (3)Securities collateral received from counterparties is not reported on the balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received.
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Schedule of Derivative Instruments | The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:
_______________ (1)After taking into consideration the existence of netting agreements. (2)All of the Company’s collateral arrangements provide for daily posting of collateral for the full value of the derivative contract. As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately.
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recurring Fair Value Measurements | The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, are presented in the tables below. Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy.
_______________ (1)Derivative assets are presented within other invested assets on the balance sheets and derivative liabilities are presented within other liabilities on the balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the balance sheets. (2)Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the balance sheets.
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Fair Value Inputs, Quantitative Information | Certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows at:
_______________ (1)Mortality rates vary by age and by demographic characteristics such as gender. The range shown reflects the mortality rate for policyholders between 35 and 90 years old, which represents the majority of the business with living benefits. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement. (2)The range shown reflects base lapse rates for major product categories for duration 1-20, which represents majority of business with living benefit riders. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. (3)The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. (4)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value. (5)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (6)Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.
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Fair Value, Measured on Recurring Basis, Unobservable Input Reconciliation | The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) were summarized as follows:
_______________ (1)Comprised of U.S. and foreign corporate securities. (2)Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (3)Amortization of premium/accretion of discount is included within net investment income. Changes in the allowance for credit losses and direct write-offs are charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). (4)Interest accruals, as well as cash interest coupons received, are excluded from the rollforward. (5)Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements. (6)Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward. (7)Changes in unrealized gains (losses) included in net income (loss) for fixed maturities are reported in either net investment income or net investment gains (losses). Substantially all changes in unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses).
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Fair Value of Financial Instruments Carried at Other Than Fair Value | The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:
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Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss) | Information regarding changes in the balances of each component of AOCI was as follows:
_______________ (1)See Note 4 for information on offsets to investments related to future policy benefits, DAC and DSI.
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Reclassification out of Accumulated Other Comprehensive Income (Loss) | Information regarding amounts reclassified out of each component of AOCI was as follows:
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Other Revenues and Other Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Operating Cost and Expense, by Component [Table Text Block] | Information on other expenses was as follows:
|
Related Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of reinsurance | Information regarding the significant effects of related party reinsurance included on the interim condensed statements of operations and comprehensive income (loss) was as follows:
Information regarding the significant effects of ceded related party reinsurance included on the interim condensed balance sheets was as follows at:
|
Business, Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020
USD ($)
segment
|
Dec. 31, 2019
USD ($)
|
|
Number of Reportable Segments | segment | 2 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ 550 | $ 434 |
Cumulative Effect, Period of Adoption, Adjustment [Member] | Maximum | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ 1 |
Segment Information (Reconciliation of Operating Revenues to Total Revenues) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 76 | $ 71 | $ 251 | $ 106 |
Annuities | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 26 | 22 | 50 | 44 |
Life | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 17 | 14 | 33 | 26 |
Corporate & Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 1 | 0 | 1 | 1 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 32 | $ 35 | $ 167 | $ 35 |
Segment Information (Total Assets) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 10,204 | $ 9,957 |
Annuities | ||
Segment Reporting Information [Line Items] | ||
Total assets | 8,178 | 7,888 |
Life | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,889 | 1,933 |
Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 137 | $ 136 |
Segment Information (Narrative) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020
segment
| |
Segment Reporting [Abstract] | |
Number of segments | 2 |
Insurance (Guarantees Related to Annuity Contracts) (Details) - Variable Annuity Guarantees - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Guaranteed Death Benefits | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Total account value (3) | $ 4,380 | $ 4,683 |
Separate account value | 4,372 | 4,675 |
Net amount at risk | $ 38 | $ 4 |
Average attained age of contract holders | 68 years | 68 years |
Guaranteed Annuitization Benefits | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Total account value (3) | $ 3,444 | $ 3,742 |
Separate account value | 3,443 | 3,741 |
Net amount at risk | $ 530 | $ 310 |
Average attained age of contract holders | 68 years | 68 years |
Investments (Maturities of Fixed Maturity Securities) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Amortized cost, due in one year or less | $ 42 | |
Amortized cost, due after one year through five years | 532 | |
Amortized cost, due after five years through ten years | 896 | |
Amortized cost, due after ten years | 779 | |
Amortized cost, Structured Securities | 806 | |
Fixed maturity securities, amortized cost | 3,055 | $ 2,897 |
Estimated fair value, due in one year or less | 43 | |
Estimated fair value, due after one year through five years | 563 | |
Estimated fair value, due after five years through ten years | 974 | |
Estimated fair value, due after ten years | 922 | |
Estimated fair value, Structured Securities | 852 | |
Fixed maturity securities, estimated fair value | $ 3,354 | $ 3,067 |
Investments (Net Unrealized Investment Gains (Losses)) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Components of net unrealized investment gains (losses) included in accumulated other comprehensive loss | ||
Fixed maturity securities | $ 299 | $ 170 |
Derivatives | 17 | 6 |
Subtotal | 316 | 176 |
Amounts allocated from: Future policy benefits | (10) | (3) |
Amounts allocated from: DAC and DSI | (36) | (19) |
Subtotal | (46) | (22) |
Deferred income tax benefit (expense) | (56) | (32) |
Net unrealized investment gains (losses) | $ 214 | $ 122 |
Investments (Changes in Net Unrealized Investment Gains (Losses)) (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Investments, Debt and Equity Securities [Abstract] | |
Unrealized investment gains (losses), beginning of period | $ 122 |
Unrealized investment gains (losses) during the period | 140 |
Unrealized investment gains (losses) relating to: Future policy benefits | (7) |
Unrealized investment gains (losses) relating to: DAC and DSI | (17) |
Unrealized investment gains (losses) relating to: Deferred income tax benefit (expense) | (24) |
Unrealized investment gains (losses), end of period | 214 |
Change in net unrealized investment gains (losses) | $ 92 |
Investments (Invested Assets on Deposit and Pledged as Collateral) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Invested assets on deposit (regulatory deposits) | $ 2 | $ 2 |
Invested assets pledged as collateral | 33 | 19 |
Total invested assets on deposit and pledged as collateral | $ 35 | $ 21 |
Investments (Variable Interest Entities) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Carrying amount | $ 10,204 | $ 9,957 |
VIE, Not Primary Beneficiary | Fixed maturity securities | ||
Variable Interest Entity [Line Items] | ||
Carrying amount | 348 | 394 |
Maximum exposure to loss | $ 320 | $ 376 |
Investments (Net Investment Income) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Net Investment Income [Line Items] | ||||
Gross investment income | $ 34 | $ 31 | $ 69 | $ 58 |
Less: Investment expenses | 1 | 1 | 3 | 2 |
Net investment income | 33 | 30 | 66 | 56 |
Fixed maturity securities | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 28 | 25 | 55 | 48 |
Mortgage loans | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 6 | 5 | 12 | 9 |
Cash, cash equivalents and short-term investments | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 0 | 1 | 1 | 1 |
Other | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | $ 0 | $ 0 | $ 1 | $ 0 |
Investments (Components of Net Investment Gains (Losses)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Net investment gains (losses), fixed maturity securities | $ 1 | $ 5 | $ 6 | $ 5 |
Net investment gains (losses), mortgage loans | (1) | 0 | (1) | 0 |
Net investment gains (losses), other | 0 | 0 | 0 | 0 |
Net investment gains (losses) | $ 0 | $ 5 | $ 5 | $ 5 |
Investments (Sales or Disposals of Fixed Maturity Securities) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds from sales or disposals of fixed maturity securities | $ 52 | $ 359 | $ 179 | $ 414 |
Fixed maturity securities, gross investment gains | 1 | 6 | 6 | 6 |
Fixed maturity securities, gross investment losses | 0 | (1) | 0 | (1) |
Fixed maturity securities, net investment gains (losses) | $ 1 | $ 5 | $ 6 | $ 5 |
Investments (Fixed Maturity Securities - Narrative) (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, estimated fair value | $ 3,354 | $ 3,067 |
Fixed maturity securities, allowance for credit losses | $ 0 | 0 |
Fixed maturity securities with allowance for credit losses, number of securities | 2 | |
Fixed maturity securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Accrued interest receivable | $ 23 | |
Non Income Producing | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, estimated fair value | 0 | $ 0 |
Maximum | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, allowance for credit losses | $ 1 |
Investments (Mortgage Loans - Narrative) (Details) - Mortgage Loans - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accrued interest receivable | $ 3 | |
Financing receivables past due, COVID-19 pandemic modified loans | 0.00% | |
Financing receivables past due | $ 0 | |
Financing receivables in nonaccrual status, COVID-19 pandemic modified loans | 0.00% | |
Financing receivables in nonaccrual status | $ 0 | $ 0 |
Financing receivables modified in a troubled debt restructuring | $ 0 | |
Performing | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivable, before allowance for credit losses by performance status as a percentage of financing receivables, before allowance for credit losses | 100.00% | 100.00% |
Investments (Invested Assets on Deposit and Pledged as Collateral - Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Restricted cash and cash equivalents | $ 0 | $ 0 |
Derivatives (Estimated Fair Value of OTC-Bilateral Derivatives (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative [Line Items] | ||
Estimated Fair Value of Derivatives in Net Liability Position | $ 27 | $ 18 |
Fixed Maturity Securities | ||
Derivative [Line Items] | ||
Estimated Fair Value of Collateral Provided | $ 33 | $ 19 |
Derivatives (Derivatives Pertaining to Hedged Items - Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax | $ 17 | $ 6 |
Short-term Debt (Details) - Intercompany Liquidity Facilities - USD ($) $ in Millions |
Jun. 30, 2020 |
Mar. 30, 2020 |
---|---|---|
Short-term Debt [Line Items] | ||
Intercompany maximum borrowing lending limit | 3.00% | |
Debt instrument, face amount | $ 100 | |
Debt instrument, stated interest rate | 2.4996% |
Other Expenses (Other Expenses) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Other Income and Expenses [Abstract] | ||||
Compensation | $ 5 | $ 4 | $ 10 | $ 9 |
Contracted services and other labor costs | 4 | 3 | 8 | 6 |
Transition services agreements | 0 | 4 | 2 | 8 |
Establishment costs | 2 | 2 | 4 | 3 |
Premium and other taxes, licenses and fees | 0 | (1) | 1 | 0 |
Volume related costs, excluding compensation, net of DAC capitalization | 5 | 5 | 10 | 9 |
Other | 5 | 3 | 5 | 4 |
Total other expenses | $ 21 | $ 20 | $ 40 | $ 39 |
Other Revenues (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Distribution Service [Member] | ||||
Revenue from Contract with Customer, Including Assessed Tax | $ 3 | $ 3 | $ 6 | $ 6 |
Contingencies, Commitments and Guarantees (Commitments and Guarantees - Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Liabilities for indemnities, guarantees and commitments | $ 0 | $ 0 |
Mortgage Loan Commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability | 13 | 11 |
Commitments to Fund Private Corporate Bond Investments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability | $ 16 | $ 10 |
Related Party Transactions (Effects of Affiliated Reinsurance on Statements of Operations) (Details) - Affiliated Entity - Ceded - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Premiums | ||||
Reinsurance ceded | $ (12) | $ (11) | $ (20) | $ (21) |
Universal life and investment-type product policy fees | ||||
Reinsurance ceded | (1) | (1) | (2) | (2) |
Other revenues | ||||
Reinsurance ceded | (22) | (25) | (46) | (49) |
Policyholder benefits and claims | ||||
Reinsurance ceded | (19) | (18) | (58) | (26) |
Other expenses | ||||
Reinsurance ceded | $ (1) | $ (2) | $ (3) | $ (4) |
Related Party Transactions (Effects of Affiliated Reinsurance on Balance Sheets) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets: | ||
Premiums, reinsurance and other receivables | $ 1,236 | $ 1,048 |
Liabilities: | ||
Other liabilities | 888 | 912 |
Ceded | Affiliated Entity | ||
Assets: | ||
Premiums, reinsurance and other receivables | 757 | 567 |
Liabilities: | ||
Other liabilities | $ 332 | $ 387 |
Related Party Transactions (Reinsurance Transactions - Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Embedded Derivative, Fair Value of Embedded Derivative Asset | $ 539 | $ 539 | $ 338 | ||
Affiliated Entity | Ceded guaranteed minimum benefits | |||||
Embedded Derivative, Fair Value of Embedded Derivative Asset | 539 | 539 | $ 338 | ||
Net derivatives gains (losses) | $ (17) | $ 35 | $ 201 | $ 32 |
Related Party Transactions (Shared Services and Overhead Allocations - Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Insurance Commissions and Fees | $ 23 | $ 24 | $ 46 | $ 47 | |
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party | 13 | 15 | 26 | 30 | |
Related Party Transaction, Amounts of Transaction | 1 | 0 | 2 | 0 | |
Affiliated Entity | |||||
Insurance Commissions and Fees | 3 | $ 3 | 6 | $ 6 | |
All Services and Transactions Except Broker Dealer Activities [Member] | |||||
Related Party Transaction, Due from (to) Related Party | $ (1) | $ (1) | $ (18) |
Related Party Transactions (Broker Dealer Transactions - Narrative) (Details) - Broker Dealer Activities [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Revenue from Related Parties | $ 3 | $ 3 | $ 6 | $ 6 | |
Related Party Transaction, Expenses from Transactions with Related Party | 17 | $ 17 | 34 | $ 32 | |
Due from Related Parties | $ 1 | $ 1 | $ 1 |
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