INSURANCE LIABILITIES

12 Months Ended

Dec. 31, 2021

Variable Annuity Contracts – GMDB, GMIB, GIB and GWBL and Other Features

The Company has certain variable annuity contracts with GMDB, GMIB, GIB and GWBL and other features in-force that guarantee one of the following:

•Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals);

•Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals);

•Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages;

•Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit, which may include either a five year or an annual reset; or

•Withdrawal: the withdrawal is guaranteed up to a maximum amount per year for life.

Liabilities for Variable Annuity Contracts with GMDB and GMIB Features without NLG Rider Feature

The change in the liabilities for variable annuity contracts with GMDB and GMIB features and without a NLG feature are summarized in the tables below. The amounts for the direct contracts (before reinsurance ceded) and assumed contracts are reflected in the consolidated balance sheets in future policy benefits and other policyholders’ liabilities. The amounts for the ceded contracts are reflected in the consolidated balance sheets in amounts due from reinsurers. The amounts for the ceded GMIB that are reflected in the consolidated balance sheets in GMIB reinsurance contract asset are, at fair value.

Change in Liability for Variable Annuity Contracts with GMDB and GMIB Features and No NLG Feature

Year Ended December 31, 2021, 2020 and 2019


	GMDB				GMIB
	Direct		Ceded		Direct		Ceded
	(in millions)
Balance, January 1, 2019	$	4,657	$	(107)	$	3,744	$	(1,993)
Paid guarantee benefits	(438)		14		(256)		72
Other changes in reserve	556		(6)		1,183		(545)
Balance, December 31, 2019	4,775		(99)		4,671		(2,466)
Paid guarantee benefits	(495)		15		(293)		79
Other changes in reserve	813		—		1,647		(472)
Balance, December 31, 2020	5,093		(84)		6,025		(2,859)
Paid guarantee benefits	(461)		113		(377)		58
Other changes in reserve	379		(90)		304		735
Impact of the Venerable transaction (1)	—		(2,176)		—		(2,141)
Balance, December 31, 2021	$	5,011	$	(2,237)	$	5,952	$	(4,207)

____________

(1)Includes the impact as of June 1, 2021 on the ceded reserves to Venerable. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable transaction.

Liabilities for Embedded and Freestanding Insurance Related Derivatives

The liability for the GMxB derivative features, the liability for SCS, SIO, MSO and IUL indexed features and the asset and liability for the GMIB reinsurance contracts and amounts due from reinsurers related to GMIB NLG product features (GMIB NLG Reinsurance) are considered embedded or freestanding insurance derivatives and are reported at fair value. For the fair value of the assets and liabilities associated with these embedded or freestanding insurance derivatives, see Note 7 of the Notes to these Consolidated Financial Statements.

Account Values and Net Amount at Risk

Account Values and NAR for direct variable annuity contracts in force with GMDB and GMIB features as of December 31, 2021 are presented in the following tables by guarantee type. For contracts with the GMDB feature, the NAR in the event of death is the amount by which the GMDB feature exceeds the related Account Values. For contracts with the GMIB feature, the NAR in the event of annuitization is the amount by which the present value of the GMIB benefits exceed the related Account Values, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. Since variable annuity contracts with GMDB features may also offer GMIB guarantees in the same contract, the GMDB and GMIB amounts listed are not mutually exclusive.

Direct Variable Annuity Contracts with GMDB and GMIB Features

as of December 31, 2021


	Guarantee Type
	Return of Premium		Ratchet		Roll-Up		Combo		Total
	(in millions, except age and interest rate)
Variable annuity contracts with GMDB features
Account Values invested in:
General Account	$	16,188	$	84	$	51	$	156	$	16,479
Separate Accounts	59,603		9,804		3,412		34,486		107,305
Total Account Values	$	75,791	$	9,888	$	3,463	$	34,642	$	123,784

NAR, gross	$	90	$	29	$	1,333	$	15,732	$	17,184
NAR, net of amounts reinsured	$	86	$	26	$	937	$	7,948	$	8,997

Average attained age of policyholders (in years)	51.5		69.1		75.5		71.1		55.6
Percentage of policyholders over age 70	11.7%		51.3%		72.6%		57.5%		20.7%
Range of contractually specified interest rates	N/A		N/A		3% - 6%		3% - 6.5%		3% - 6.5%

Variable annuity contracts with GMIB features
Account Values invested in:
General Account	$	—	$	—	$	16	$	202	$	218
Separate Accounts	—		—		26,173		36,833		63,006
Total Account Values	$	—	$	—	$	26,189	$	37,035	$	63,224

NAR, gross	$	—	$	—	$	632	$	9,093	$	9,725
NAR, net of amounts reinsured	$	—	$	—	$	202	$	3,708	$	3,910

Average attained age of policyholders (in years)	N/A		N/A		65.0		70.8		68.7
Weighted average years remaining until annuitization	N/A		N/A		6.0		0.6		2.6
Range of contractually specified interest rates	N/A		N/A		3% - 6%		3% - 6.5%		3% - 6.5%

For more information about the reinsurance programs of the Company’s GMDB and GMIB exposure, see “Reinsurance” in Note 10 of the Notes to these Consolidated Financial Statements.

Separate Accounts Investments by Investment Category Underlying Variable Annuity Contracts with GMDB and GMIB Features

The total Account Values of variable annuity contracts with GMDB and GMIB features include amounts allocated to the guaranteed interest option, which is part of the General Account and variable investment options that invest through Separate Accounts in variable insurance trusts. The following table presents the aggregate fair value of assets, by major investment category, held by Separate Accounts that support variable annuity contracts with GMDB and GMIB features. The investment performance of the assets impacts the related Account Values and, consequently, the NAR associated with the GMDB and GMIB benefits and guarantees. Because the Company’s variable annuity contracts offer both GMDB and GMIB features, GMDB and GMIB amounts are not mutually exclusive.

Investment in Variable Insurance Trust Mutual Funds


	December 31,
	2021				2020
Mutual Fund Type	GMDB		GMIB		GMDB		GMIB
	(in millions)
Equity	$	52,744	$	20,009	$	46,850	$	18,771
Fixed income	5,384		2,505		5,506		2,701
Balanced	48,152		40,228		47,053		39,439
Other	1,025		264		1,111		275
Total	$	107,305	$	63,006	$	100,520	$	61,186

Hedging Programs for GMDB, GMIB, GIB and Other Features

The Company has a program intended to hedge certain risks associated first with the GMDB feature and with the GMIB feature of the Accumulator series of variable annuity products. The program has also been extended to cover other guaranteed benefits as they have been made available. This program utilizes derivative contracts, such as exchange-traded equity, currency and interest rate futures contracts, total return and/or equity swaps, interest rate swap and floor contracts, swaptions, variance swaps as well as equity options, that collectively are managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in the capital markets. At the present time, this program hedges certain economic risks on products sold from 2001 forward, to the extent such risks are not externally reinsured.

These programs do not qualify for hedge accounting treatment. Therefore, gains (losses) on the derivatives contracts used in these programs, including current period changes in fair value, are recognized in net derivative gains (losses) in the period in which they occur, and may contribute to income (loss) volatility.

Variable and Interest-Sensitive Life Insurance Policies - NLG

The NLG feature contained in variable and interest-sensitive life insurance policies keeps them in force in situations where the policy value is not sufficient to cover monthly charges then due. The NLG remains in effect so long as the policy meets a contractually specified premium funding test and certain other requirements.

The change in the NLG liabilities, reflected in future policy benefits and other policyholders’ liabilities in the consolidated balance sheets, is summarized in the table below.



	Direct Liability		Reinsurance Ceded		Net
	(in millions)
Balance, January 1, 2019	$	788	$	(734)	$	54
Paid guarantee benefits	(20)		—		(20)
Other changes in reserves	126		(74)		52
Balance, December 31, 2019	894		(808)		86
Paid guarantee benefits	(40)		—		(40)
Other changes in reserves	162		(75)		87
Balance, December 31, 2020	1,016		(883)		133
Paid guarantee benefits	(84)		—		(84)
Other changes in reserves	158		(45)		113
Balance at December 31, 2021	$	1,090	$	(928)	$	162