Adoption Of ASU 2018-12 (Tables)

9 Months Ended

Sep. 30, 2023

Cumulative Effect Adjustments to Components of Stockholders' Equity



							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
Variable Annuities	$	3,518	$	52	$	3,570
Fixed Annuities		264		215		479
Traditional Life		1,082		-		1,082
UL and Other		394		5,031		5,425
Group Protection		187		-		187
Retirement Plan Services		120		112		232
Total DAC		5,565		5,410		10,975

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

DSI ⁽¹⁾
Variable Annuities		148		2		150
Fixed Annuities		17		13		30
UL and Other		35		-		35
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⁾
Variable Annuities	$	288	$	5	$	293
UL and Other		113		3,185		3,298
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
Payout Annuities	$	2,314	$	(105	)	$	415	$	44	$	2,668
Traditional Life		3,483		-			943		-		4,426
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 Changes in Reinsurance Recoverables



			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
Payout Annuities	$	2	$	-	$	-		$	2
Traditional Life		755		151		-			906
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 September 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Fee income	$	1,527		$	(146	)	$	1,381
Realized gain (loss)		212			37			249
Total revenues		4,781			(109	)		4,672
Benefits		5,103			(2,954	)		2,149
Interest credited		722			4			726
Market risk benefit (gain) loss		-			(798	)		(798	)
Policyholder liability remeasurement (gain) loss		-			2,692			2,692
Commissions and other expenses		1,355			(75	)		1,280
Total expenses		7,929			(1,131	)		6,798
Income (loss) before taxes		(3,148	)		1,022			(2,126	)
Federal income tax expense (benefit)		(565	)		215			(350	)
Net income (loss)		(2,583	)		807			(1,776	)
Unrealized investment gain (loss)		(4,287	)		(768	)		(5,055	)
Market risk benefit non-performance risk gain (loss)		-			(150	)		(150	)
Policyholder liability discount rate remeasurement gain (loss)		-			549			549
Total other comprehensive income (loss), net of tax		(4,291	)		(369	)		(4,660	)
Comprehensive income (loss)		(6,874	)		438			(6,436	)
Net income (loss) per common share:
Basic		(15.22	)		4.76			(10.46	)
Diluted		(15.23	)		4.76			(10.47	)



	For the Nine Months Ended September 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Fee income	$	4,601		$	(352	)	$	4,249
Realized gain (loss)		752			779			1,531
Total revenues		14,542			427			14,969
Benefits		10,561			(4,302	)		6,259
Interest credited		2,125			8			2,133
Market risk benefit (gain) loss		-			(1,679	)		(1,679	)
Policyholder liability remeasurement (gain) loss		-			2,818			2,818
Commissions and other expenses		3,714			27			3,741
Total expenses		17,358			(3,129	)		14,229
Income (loss) before taxes		(2,816	)		3,556			740
Federal income tax expense (benefit)		(552	)		747			195
Net income (loss)		(2,264	)		2,809			545
Unrealized investment gain (loss)		(15,058	)		(4,149	)		(19,207	)
Market risk benefit non-performance risk gain (loss)		-			224			224
Policyholder liability discount rate remeasurement gain (loss)		-			2,070			2,070
Total other comprehensive income (loss), net of tax		(15,069	)		(1,855	)		(16,924	)
Comprehensive income (loss)		(17,333	)		954			(16,379	)
Net income (loss) per common share:
Basic		(13.18	)		16.36			3.18
Diluted		(13.23	)		16.33			3.10

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



	For the Three Months Ended September 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Retained earnings balance as of beginning-of-period	$	9,445		$	(2,380	)	$	7,065
Net income (loss)		(2,583	)		807			(1,776	)
Retained earnings balance as of end-of-period		6,762			(1,573	)		5,189
Accumulated other comprehensive income (loss) balance
as of beginning-of-period		(4,337	)		2,057			(2,280	)
Other comprehensive income (loss), net of tax		(4,291	)		(369	)		(4,660	)
Accumulated other comprehensive income (loss) balance
as of end-of-period		(8,628	)		1,688			(6,940	)
Total stockholders’ equity as of end-of-period		2,668			115			2,783



	For the Nine Months Ended September 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)		(2,264	)		2,809			545
Retained earnings balance as of end-of-period		6,762			(1,573	)		5,189
Accumulated other comprehensive income (loss) balance
as of beginning-of-year		6,441			3,543			9,984
Other comprehensive income (loss), net of tax		(15,069	)		(1,855	)		(16,924	)
Accumulated other comprehensive income (loss) balance
as of end-of-period		(8,628	)		1,688			(6,940	)
Total stockholders’ equity as of end-of-period		2,668			115			2,783

⁽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 Nine Months Ended September 30, 2022
				Adoption
	As			of New
	Previously			Accounting			As
	Reported ⁽¹⁾			Standard			Adjusted
Net income (loss)	$	(2,264	)	$	2,809		$	545
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Realized (gain) loss		(752	)		(779	)		(1,531	)
Market risk benefit (gain) loss		-			(1,679	)		(1,679	)
Change in:
Deferred acquisition costs, value of business acquired, deferred sales
inducements and deferred front-end loads		74			291			365
Insurance liabilities and reinsurance-related balances ⁽²⁾		5,872			(1,409	)		4,463
Accrued expenses		(402	)		(5	)		(407	)
Federal income tax accruals		(498	)		747			249
Other ⁽²⁾		299			25			324

⁽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.