Shareholders' Equity

9 Months Ended

Sep. 30, 2020

The following tables provide the amounts related to each component of OCI:


	Three Months Ended September 30,
	2020						2019
	Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
	(in millions)
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	$	225	$	(53)	$	172	$	294	$	(58)	$	236
Reclassification of net (gains) losses on securities included in net income (2)	(4)		1		(3)		10		(2)		8
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	(94)		20		(74)		(195)		41		(154)
Net unrealized gains (losses) on securities	127		(32)		95		109		(19)		90
Foreign currency translation	27		—		27		(23)		1		(22)
Total other comprehensive income (loss)	$	154	$	(32)	$	122	$	86	$	(18)	$	68


	Nine Months Ended September 30,
	2020						2019
	Pretax		Income Tax Benefit (Expense)		Net of Tax		Pretax		Income Tax Benefit (Expense)		Net of Tax
	(in millions)
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period (1)	$	562	$	(118)	$	444	$	1,463	$	(259)	$	1,204
Reclassification of net (gains) losses on securities included in net income (2)	—		—		—		5		(1)		4
Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables	(223)		47		(176)		(694)		146		(548)
Net unrealized gains (losses) on securities	339		(71)		268		774		(114)		660
Net unrealized gains (losses) on derivatives:
Reclassification of net (gains) losses on derivatives included in net income (3)	—		—		—		(1)		—		(1)
Net unrealized gains (losses) on derivatives	—		—		—		(1)		—		(1)
Foreign currency translation	(15)		1		(14)		(32)		1		(31)
Total other comprehensive income (loss)	$	324	$	(70)	$	254	$	741	$	(113)	$	628

(1) Includes impairments on Available-for-Sale securities related to factors other than credit that were recognized in OCI during the period.

(2) Reclassification amounts are recorded in net investment income.

(3) Includes nil and $1 million pretax gain reclassified to interest and debt expense for the nine months ended September 30, 2020 and 2019, respectively.

Other comprehensive income (loss) related to net unrealized gains (losses) on securities includes three components: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit impairments to credit losses; and (iii) other adjustments primarily consisting of changes in insurance and annuity asset and liability balances, such as DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.

The following tables present the changes in the balances of each component of AOCI, net of tax:


	Net Unrealized Gains (Losses) on Securities			Net Unrealized Gains (Losses) on Derivatives		Defined Benefit Plans		Foreign Currency Translation		Other		Total
	(in millions)
Balance, July 1, 2020	$	749		$	6	$	(138)	$	(222)	$	(1)	$	394

OCI before reclassifications	98			—		—		27		—		125
Amounts reclassified from AOCI	(3)			—		—		—		—		(3)
Total OCI	95			—		—		27		—		122
Balance, September 30, 2020	$	844	(1)	$	6	$	(138)	$	(195)	$	(1)	$	516

Balance, January 1, 2020	$	576		$	6	$	(138)	$	(181)	$	(1)	$	262

OCI before reclassifications	268			—		—		(14)		—		254

Total OCI	268			—		—		(14)		—		254
Balance, September 30, 2020	$	844	(1)	$	6	$	(138)	$	(195)	$	(1)	$	516


	Net Unrealized Gains (Losses) on Securities			Net Unrealized Gains (Losses) on Derivatives		Defined Benefit Plans		Foreign Currency Translation		Other		Total
	(in millions)
Balance, July 1, 2019	$	590		$	7	$	(120)	$	(207)	$	(1)	$	269

OCI before reclassifications	82			—		—		(22)		—		60
Amounts reclassified from AOCI	8			—		—		—		—		8
Total OCI	90			—		—		(22)		—		68
Balance, September 30, 2019	$	680	(1)	$	7	$	(120)	$	(229)	$	(1)	$	337

Balance, January 1, 2019	$	20		$	8	$	(120)	$	(198)	$	(1)	$	(291)

OCI before reclassifications	656			—		—		(31)		—		625
Amounts reclassified from AOCI	4			(1)		—		—		—		3
Total OCI	660			(1)		—		(31)		—		628
Balance, September 30, 2019	$	680	(1)	$	7	$	(120)	$	(229)	$	(1)	$	337

(1) Includes nil and $(1) million of noncredit related impairments on securities and net unrealized gains (losses) on previously impaired securities as of September 30, 2020 and September 30, 2019, respectively.

For the nine months ended September 30, 2020 and 2019, the Company repurchased a total of 6.3 million shares and 9.8 million shares, respectively, of its common stock for an aggregate cost of $956 million and $1.3 billion, respectively. In February 2019, the Company’s Board of Directors authorized a repurchase of up to $2.5 billion of the Company’s common stock through March 31, 2021. In August 2020, the Company’s Board of Directors authorized an additional expenditure of up to $2.5 billion for the repurchase of shares of the Company’s common stock through September 30, 2022. As of September 30, 2020, the Company had $2.7 billion remaining under these share repurchase authorizations.

The Company may also reacquire shares of its common stock under its share-based compensation plans related to restricted stock awards and certain option exercises. The holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligation. These vested restricted shares are reacquired by the Company and the Company’s payment of the holders’ income tax obligations are recorded as a treasury share purchase.

For the nine months ended September 30, 2020 and 2019, the Company reacquired 0.3 million shares and 0.3 million shares, respectively, of its common stock through the surrender of shares upon vesting and paid in the aggregate $51 million and $34 million, respectively, related to the holders’ income tax obligations on the vesting date. Option holders may elect to net settle their vested awards resulting in the surrender of the number of shares required to cover the strike price and tax obligation of the options exercised. These shares are reacquired by the Company and recorded as treasury shares. For the nine months ended September 30, 2020 and 2019, the Company reacquired 0.7 million shares and 0.5 million shares, respectively, of its common stock through the net settlement of options for an aggregate value of $128 million and $70 million, respectively.

During the nine months ended September 30, 2020 and 2019, the Company reissued 0.5 million and 0.7 million, respectively, treasury shares for restricted stock award grants, performance share units and issuance of shares vested under advisor deferred compensation plans.