Segment Information

9 Months Ended

Sep. 30, 2023

Segment Information [Abstract]

Segment Information

17. Segment Information

We provide products and services and report results through our Annuities, Life Insurance, Group Protection and Retirement Plan Services segments. We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments. Our reporting segments reflect the manner by which our chief operating decision makers view and manage the business. A discussion of these segments and Other Operations is found in Note 21 in our 2022 Form 10-K/A, as updated by Note 20 in the May 2023 Form 8-K.

Segment operating revenues and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments. Income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable:

Items related to annuity product features, which include changes in MRBs, including gains and losses and benefit payments, changes in the fair value of the derivative instruments we hold to hedge GLB and GDB riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the embedded derivative liabilities of our indexed annuity contracts and the associated index options we hold to hedge them, including collateral expense associated with the hedge program (collectively, “net annuity product features”);

Items related to life insurance product features, which include changes in the fair value of derivatives we hold as part of VUL hedging, changes in reserves resulting from benefit ratio unlocking associated with the impact of capital markets, and changes in the fair value of the embedded derivative liabilities of our IUL contracts and the associated index options we hold to hedge them (collectively, “net life insurance product features”);

Credit loss-related adjustments on fixed maturity AFS securities, mortgage loans on real estate and reinsurance-related assets (“credit loss-related adjustments”);

Changes in the fair value of equity securities, certain derivatives, certain other investments and realized gains (losses) on sales, disposals and impairments of financial assets (collectively, “investment gains (losses)”);

Changes in the fair value of reinsurance-related embedded derivatives, trading securities and mortgage loans on real estate electing the fair value option (“changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans”);

Income (loss) from the initial adoption of new accounting standards, regulations and policy changes;

Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;

Transaction and integration costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business;

Gains (losses) on modification or early extinguishment of debt;

Losses from the impairment of intangible assets and gains (losses) on other non-financial assets; and

Income (loss) from discontinued operations.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

Changes in the fair value of the derivative instruments we hold to hedge GLB and GDB riders, net of fee income allocated to support the cost of hedging them, and changes in the fair value of the embedded derivative liabilities of our indexed annuity and IUL contracts and the associated index options we hold to hedge them (collectively, “revenue adjustments from annuity and life insurance product features”);

Credit loss-related adjustments;

Investment gains (losses);

Changes in the fair value of reinsurance-related embedded derivatives, trading securities and certain mortgage loans;

Revenue adjustments from the initial adoption of new accounting standards; and

Amortization of deferred gains arising from reserve changes on business sold through reinsurance.

The tables below reconcile our segment measures of performance to the GAAP measures presented in the Consolidated Statements of Comprehensive Income (Loss) (in millions):

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Revenues
Operating revenues:
Annuities	$	1,197		$	1,113		$	3,528		$	3,356
Life Insurance		1,723			1,623			5,241			5,059
Group Protection		1,388			1,333			4,176			3,958
Retirement Plan Services		327			316			988			949
Other Operations		38			36			127			111
Revenue adjustments from annuity and life insurance product features		(14	)		386			(1,908	)		1,697
Credit loss-related adjustments		(27	)		(133	)		(53	)		(122	)
Investment gains (losses) (1)		(400	)		13			(1,126	)		6
Changes in the fair value of reinsurance-related embedded derivatives,
trading securities and certain mortgage loans		(29	)		(15	)		(27	)		(46	)
Total revenues	$	4,203		$	4,672		$	10,946		$	14,969

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Net Income (Loss)
Income (loss) from operations:
Annuities	$	248		$	275		$	794		$	886
Life Insurance		(173	)		(2,171	)		(153	)		(2,085	)
Group Protection		68			12			247			15
Retirement Plan Services		43			47			133			159
Other Operations		(113	)		(112	)		(306	)		(276	)
Net annuity product features, after-tax		1,045			893			850			2,591
Net life insurance product features, after-tax		85			20			(133	)		16
Credit loss-related adjustments, after-tax		(21	)		(104	)		(41	)		(96	)
Investment gains (losses), after-tax (1)		(306	)		10			(880	)		5
Changes in the fair value of reinsurance-related embedded derivatives,
trading securities and certain mortgage loans, after-tax		(23	)		(12	)		(21	)		(36	)
Impairment of intangibles		-			(634	)		-			(634	)
Transaction and integration costs related to mergers,
acquisitions and divestitures, after-tax (2)		-			-			(7	)		-
Net income (loss)	$	853		$	(1,776	)	$	483		$	545

⁽¹⁾Includes a $467 million pre-tax ($369 million after-tax) and $1.1 billion pre-tax ($862 million after-tax) impairment of fixed maturity AFS securities in an unrealized loss position for the three and nine months ended September 30, 2023, respectively, resulting from the Company’s intent to sell these securities as part of the previously announced Fortitude Re reinsurance transaction. Within the

investment portfolio anticipated to be sold in the transaction, there are additional fixed maturity AFS securities in an unrealized gain position of approximately $164 million after-tax as of September 30, 2023. Pursuant to the applicable accounting guidance, the Company impaired the securities in a loss position down to fair market value upon entry into the agreement in the second quarter and recognized additional impairment of certain of these securities during the third quarter due to higher interest rates. The Company will recognize a gain for any securities in an unrealized gain position at the time when the transaction closes. For more information, see Notes 4 and 8.

⁽²⁾Includes costs pertaining to the Fortitude Re reinsurance transaction. For more information, see Note 8.

Other segment information (in millions) was as follows:

	As of		As of
	September 30,		December 31,
	2023		2022
Assets
Annuities	$	171,598	$	167,377
Life Insurance		94,237		94,536
Group Protection		9,389		9,780
Retirement Plan Services		41,558		41,900
Other Operations		21,629		20,624
Total assets	$	338,411	$	334,217