Adoption of ASU 2018-12 (Tables)

6 Months Ended

Jun. 30, 2023

Cumulative Effect Adjustments to Components of Stockholders' Equit



							Total
	Retained						Stockholders’
	Earnings			AOCI			Equity
Shadow impacts:
DAC, VOBA, DSI and DFEL	$	-		$	2,271		$	2,271
Additional liabilities for other
insurance benefits		-			1,197			1,197
LFPB and other ⁽¹⁾		(187	)		(1,715	)		(1,902	)
MRBs ⁽²⁾		(6,086	)		2,874			(3,212	)
Total	$	(6,273	)	$	4,627		$	(1,646	)

⁽¹⁾Includes impacts to reserves and ceded reserves reported within future contract benefits and reinsurance recoverables, respectively on the Consolidated Balance Sheets, excluding shadow impacts on additional liabilities for other insurance benefits.

⁽²⁾Includes impacts related to MRB assets and MRB liabilities reported on the Consolidated Balance Sheets, and ceded MRBs reported within other assets on the Consolidated Balance Sheets.

Effect of Accounting Adoption to Consolidated Balance Sheets



							Total
	Retained						Stockholders’
	Earnings			AOCI			Equity
DAC, VOBA and DSI	$	-		$	6,079		$	6,079
Reinsurance recoverables		607			2,431			3,038
Other assets ⁽¹⁾		242			-			242
Future contract benefits		(844	)		(3,088	)		(3,932	)
MRBs, net		(7,956	)		3,656			(4,300	)
DFEL		-			(3,190	)		(3,190	)
Other liabilities ⁽²⁾		1,678			(1,261	)		417
Total	$	(6,273	)	$	4,627		$	(1,646	)

⁽¹⁾Consists primarily of ceded MRB adjustments.

⁽²⁾Consists of state and federal tax adjustments.

Summary of Changes in DAC, VOBA and DSI



			Impact from
	Balance		Removal of		Balance
	Pre-Adoption		Shadow		Post-Adoption
	December 31,		Balances		January 1,
	2020		from AOCI		2021
DAC
Traditional Life	$	1,082	$	-	$	1,082
UL and Other		394		5,031		5,425
Variable Annuities		3,518		52		3,570
Fixed Annuities		264		215		479
Group Protection		187		-		187
Retirement Plan Services		120		112		232
Total DAC		5,565		5,410		10,975

VOBA
Traditional Life		67		-		67
UL and Other		180		630		810
Fixed Annuities		-		23		23
Total VOBA		247		653		900

DSI ⁽¹⁾
UL and Other		35		-		35
Variable Annuities		148		2		150
Fixed Annuities		17		13		30
Retirement Plan Services		13		1		14
Total DSI		213		16		229
Total DAC, VOBA and DSI	$	6,025	$	6,079	$	12,104

⁽¹⁾Pre-adoption DSI balance was previously reported in other assets on the Consolidated Balance Sheets.

Summary of Changes in DFEL



			Impact from
	Balance		Removal of		Balance
	Pre-Adoption		Shadow		Post-Adoption
	December 31,		Balances		January 1,
	2020		from AOCI		2021
DFEL ⁽¹⁾
UL and Other	$	113	$	3,185	$	3,298
Variable Annuities		288		5		293
Total DFEL	$	401	$	3,190	$	3,591

⁽¹⁾Pre-adoption DFEL balance was previously reported in other contract holder funds on the Consolidated Balance Sheets.

Summary of Changes in Future Contract Benefits



			Impact from			Single-A
	Balance		Removal of			Discount		Cumulative		Balance
	Pre-Adoption		Shadow			Rate		Effect to		Post-Adoption
	December 31,		Balances			Measurement		Retained		January 1,
	2020 ⁽¹⁾		from AOCI			in AOCI		Earnings		2021
LFPB
Traditional Life	$	3,483	$	-		$	943	$	-	$	4,426
Payout Annuities		2,314		(105	)		415		44		2,668
Liability for Future Claims
Group Protection		5,422		-			517		-		5,939
Additional Liabilities for Other
Insurance Benefits
UL and Other		13,649		(1,515	)		-		174		12,308
Other Operations ⁽²⁾		10,463		(80	)		2,913		626		13,922
Other ⁽³⁾		3,565		-			-		-		3,565
Total future contract benefits	$	38,896	$	(1,700	)	$	4,788	$	844	$	42,828

⁽¹⁾Balance pre-adoption excludes features that meet the definition of an MRB upon transition, including features that were previously accounted for as an additional liability. Also, balance pre-adoption reflects certain reclassifications of non-life contingent account balances from future contract benefits to policyholder account balances within the Consolidated Balance Sheets.

⁽²⁾Represents future contract benefits reported in Other Operations primarily attributable to the indemnity reinsurance agreements with Protective ($6.3 billion and $7.4 billion as of December 31, 2020, and January 1, 2021, respectively) and Swiss Re ($2.0 billion and $3.5 billion as of December 31, 2020, and January 1, 2021, respectively). Includes LFPB and additional liabilities balances.

⁽³⁾Represents other miscellaneous reserves outside the scope of ASU 2018-12.

Summary of Balances of LFPB Liability for Future Claims



			Single-A
	Balance		Discount		Cumulative			Balance
	Pre-Adoption		Rate		Effect to			Post-Adoption
	December 31,		Measurement		Retained			January 1,
	2020 ⁽¹⁾		in AOCI		Earnings			2021
Reinsured LFPB
Traditional Life	$	755	$	151	$	-		$	906
Payout Annuities		2		-		-			2
Reinsured Liability for Future
Claims
Group Protection		148		14		-			162
Reinsured Additional Liabilities
for Other Insurance Benefits
UL and Other		335		-		(3	)		332
Reinsured Other Operations ⁽²⁾		14,320		2,266		610			17,196
Reinsured Other ⁽³⁾		790		-		-			790
Total reinsurance recoverables	$	16,350	$	2,431	$	607		$	19,388

⁽¹⁾Balance pre-adoption excludes features that meet the definition of a ceded MRB upon transition, including features that were previously accounted for as reinsured additional liabilities.

⁽²⁾Represents reinsurance recoverables reported in Other Operations primarily attributable to the indemnity reinsurance agreements with Protective ($12.0 billion and $13.2 billion as of December 31, 2020, and January 1, 2021, respectively) and Swiss Re ($1.3 billion and $2.6 billion as of December 31, 2020, and January 1, 2021, respectively). Includes reinsured LFPB and reinsured additional liabilities balances.

⁽³⁾Represents other miscellaneous reinsurance recoverables outside the scope of ASU 2018-12.

Summary of Changes in Net Liability Position of MRBs




	Balance		Cumulative			Cumulative			Balance
	Pre-Adoption		Effect of			Effect to			Post-Adoption
	December 31,		Credit Risk			Retained			January 1,
	2020⁽¹⁾		to AOCI			Earnings			2021
MRBs, Net
Variable Annuities	$	831	$	(3,592	)	$	7,968		$	5,207
Fixed Annuities		192		(52	)		(22	)		118
Retirement Plan Services		11		(12	)		10			9
Total MRBs, net	$	1,034	$	(3,656	)	$	7,956		$	5,334

⁽¹⁾Balance pre-adoption includes all features that meet the definition of an MRB upon transition, including features that were previously accounted for as additional liabilities or embedded derivatives.

Summary of Changes in Net Asset Position of Ceded MRBs




	Balance		Cumulative		Balance
	Pre-Adoption		Effect to		Post-Adoption
	December 31,		Retained		January 1,
	2020⁽¹⁾		Earnings		2021
Ceded MRBs, Net
Variable Annuities	$	215	$	121	$	336
Total ceded MRBs, net	$	215	$	121	$	336

⁽¹⁾Balance pre-adoption includes all features that meet the definition of a ceded MRB upon transition, including features that were previously accounted for as reinsured additional liabilities or embedded derivatives.

Summary of Effects of Adoption of ASU 2018-12

The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Balance Sheets:



	As of December 31, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Deferred acquisition costs, value of business acquired and
deferred sales inducements ⁽²⁾	$	13,803		$	(1,568	)	$	12,235
Reinsurance recoverables, net of allowance for credit losses		19,882			(439	)		19,443
Market risk benefit assets		-			2,807			2,807
Other assets ⁽²⁾		20,493			(1,691	)		18,802
Total assets		335,108			(891	)		334,217
Future contract benefits ⁽²⁾		41,756			(2,930	)		38,826
Market risk benefit liabilities		-			2,078			2,078
Deferred front-end loads ⁽²⁾		5,669			(617	)		5,052
Other liabilities ⁽²⁾		11,976			45			12,021
Total liabilities		330,539			(1,424	)		329,115
Retained earnings		6,707			(783	)		5,924
Accumulated other comprehensive income (loss)		(7,668	)		1,316			(6,352	)
Total stockholders’ equity		4,569			533			5,102

⁽¹⁾The amounts as previously reported were derived from Note 1 in our 2022 Form 10-K/A, as updated by the May 2023 Form 8-K.

⁽²⁾Certain amounts have been reclassified to conform to the presentation adopted in the current period.

‎

The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Statements of Comprehensive Income (Loss):



	For the Three Months Ended June 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Fee income	$	1,506		$	(97	)	$	1,409
Realized gain (loss)		515			586			1,101
Total revenues		5,088			489			5,577
Benefits		2,890			(936	)		1,954
Interest credited		706			4			710
Market risk benefit (gain) loss		-			477			477
Policyholder liability remeasurement (gain) loss		-			85			85
Commissions and other expenses		1,123			84			1,207
Total expenses		4,831			(286	)		4,545
Income (loss) before taxes		257			775			1,032
Federal income tax expense (benefit)		29			163			192
Net income (loss)		228			612			840
Unrealized investment gain (loss)		(5,585	)		(1,070	)		(6,655	)
Market risk benefit non-performance risk gain (loss)		-			354			354
Policyholder liability discount rate remeasurement gain (loss)		-			710			710
Total other comprehensive income (loss), net of tax		(5,589	)		(6	)		(5,595	)
Comprehensive income (loss)		(5,361	)		606			(4,755	)
Net income (loss) per common share:
Basic		1.34			3.57			4.91
Diluted		1.28			3.55			4.83



	For the Six Months Ended June 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Fee income	$	3,074		$	(207	)	$	2,867
Realized gain (loss)		540			742			1,282
Total revenues		9,762			535			10,297
Benefits		5,458			(1,348	)		4,110
Interest credited		1,403			4			1,407
Market risk benefit (gain) loss		-			(881	)		(881	)
Policyholder liability remeasurement (gain) loss		-			126			126
Commissions and other expenses		2,358			102			2,460
Total expenses		9,428			(1,997	)		7,431
Income (loss) before taxes		334			2,532			2,866
Federal income tax expense (benefit)		15			530			545
Net income (loss)		319			2,002			2,321
Unrealized investment gain (loss)		(10,772	)		(3,381	)		(14,153	)
Market risk benefit non-performance risk gain (loss)		-			374			374
Policyholder liability discount rate remeasurement gain (loss)		-			1,521			1,521
Total other comprehensive income (loss), net of tax		(10,778	)		(1,486	)		(12,264	)
Comprehensive income (loss)		(10,458	)		515			(9,943	)
Net income (loss) per common share:
Basic		1.87			11.57			13.44
Diluted		1.80			11.45			13.25

⁽¹⁾The amounts as previously reported were derived from Note 23 in our 2022 Form 10-K/A.



	For the Three Months Ended June 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Retained earnings balance as of beginning-of-period	$	9,346		$	(2,992	)	$	6,354
Net income (loss)		228			612			840
Retained earnings balance as of end-of-period		9,445			(2,380	)		7,065
Accumulated other comprehensive income (loss) balance
as of beginning-of-period		1,252			2,063			3,315
Other comprehensive income (loss), net of tax		(5,589	)		(6	)		(5,595	)
Accumulated other comprehensive income (loss) balance
as of end-of-period		(4,337	)		2,057			(2,280	)
Total stockholders’ equity as of end-of-period		9,654			(323	)		9,331



	For the Six Months Ended June 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Retained earnings balance as of beginning-of-year	$	9,578		$	(4,382	)	$	5,196
Net income (loss)		319			2,002			2,321
Retained earnings balance as of end-of-period		9,445			(2,380	)		7,065
Accumulated other comprehensive income (loss) balance
as of beginning-of-year		6,441			3,543			9,984
Other comprehensive income (loss), net of tax		(10,778	)		(1,486	)		(12,264	)
Accumulated other comprehensive income (loss) balance
as of end-of-period		(4,337	)		2,057			(2,280	)
Total stockholders’ equity as of end-of-period		9,654			(323	)		9,331

⁽¹⁾The amounts as previously reported were derived from Note 23 in our 2022 Form 10-K/A.

The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Statements of Cash Flows:



	For the Six Months Ended June 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Net income (loss)	$	319		$	2,002		$	2,321
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Realized (gain) loss		(540	)		(742	)		(1,282	)
Market risk benefit (gain) loss		-			(881	)		(881	)
Change in:
Deferred acquisition costs, value of business acquired, deferred sales
inducements and deferred front-end loads		-			244			244
Insurance liabilities and reinsurance-related balances ⁽²⁾		2,837			(1,167	)		1,670
Accrued expenses		(371	)		(4	)		(375	)
Federal income tax accruals		69			530			599
Other ⁽²⁾		(4	)		18			14

⁽¹⁾The amounts as previously reported were derived from Note 23 in our 2022 Form 10-K/A.

⁽²⁾Certain amounts have been reclassified to conform to the presentation adopted in the current period.