Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information[Text Block]

During the third quarter of 2020, as the Company continues to reposition its business and implement strategies focusing on product features and sales, the composition of its reportable segments changed from five to four segments. The Chief Operating Decision Maker (“CODM”) manages the Annuities and Protection business as one operating segment, referred to as Retirement & Protection Solutions. The Retirement & Protection Solutions segment includes Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, the Company moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. These segment reporting changes align with the way the CODM began assessing the performance of the Company’s reportable segments and other business activities effective in the third quarter of 2020. Certain prior period amounts have been revised to conform to the current presentation. The Company’s four reporting segments are Advice & Wealth Management, Asset Management, Retirement & Protection Solutions and Corporate & Other.

The accounting policies of the segments are the same as those of the Company, except for operating adjustments defined below, the method of capital allocation, the accounting for gains (losses) from intercompany revenues and expenses and not providing for income taxes on a segment basis.

Management uses segment adjusted operating measures in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by some securities analysts and investors. Consistent with GAAP accounting guidance for segment reporting, adjusted operating earnings is the Company’s measure of segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. The Company believes the presentation of segment adjusted operating earnings, as the Company measures it for management purposes, enhances the understanding of its business by reflecting the underlying performance of its core operations and facilitating a more meaningful trend analysis.

Management excludes mean reversion related impacts from the Company’s adjusted operating measures. The mean reversion related impact is defined as the impact on variable annuity and VUL products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves.

Adjusted operating earnings is defined as adjusted operating net revenues less adjusted operating expenses. Adjusted operating net revenues and adjusted operating expenses exclude the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual), mean reversion related impacts (the impact on variable annuity and VUL products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves), integration and restructuring charges and the impact of consolidating investment entities. Adjusted operating net revenues also exclude net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual) and the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments. Adjusted operating expenses also exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), and the DSIC and DAC amortization offset to net realized investment gains or losses. The market impact on variable annuity guaranteed benefits, fixed index annuity benefits and IUL benefits includes changes in embedded derivative values caused by changes in financial market conditions, net of changes in economic hedge values and unhedged items including the difference between assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and certain policyholder contract elections, net of related impacts on DAC and DSIC amortization. The market impact also includes certain valuation adjustments made in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures, including the impact on embedded derivative values of discounting projected benefits to reflect a current estimate of the Company’s life insurance subsidiary’s nonperformance spread.

The following tables summarize selected financial information by segment and reconcile segment totals to those reported on the consolidated financial statements:

	September 30, 2020		December 31, 2019
	(in millions)
Advice & Wealth Management	$	20,558	$	17,607
Asset Management	8,143		8,226
Retirement & Protection Solutions	107,411		104,227
Corporate & Other	22,575		21,768
Total assets	$	158,687	$	151,828

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Adjusted operating net revenues:
Advice & Wealth Management	$	1,667	$	1,682	$	4,899	$	4,889
Asset Management	739		742		2,093		2,143
Retirement & Protection Solutions	781		788		2,295		2,337
Corporate & Other	132		450		412		1,340
Less: Eliminations (1)(2)	342		362		1,006		1,044
Total segment adjusted operating net revenues	2,977		3,300		8,693		9,665
Net realized gains (losses)	4		(13)		(19)		(4)
Revenue attributable to consolidated investment entities	21		22		52		67
Market impact on IUL benefits, net	1		17		(10)		(8)
Market impact of hedges on investments	—		(9)		—		(37)
Integration and restructuring charges	—		—		—		(3)
Total net revenues per Consolidated Statements of Operations	$	3,003	$	3,317	$	8,716	$	9,680

(1) Represents the elimination of intersegment revenues recognized for the three months ended September 30, 2020 and 2019 in each segment as follows: Advice & Wealth Management ($219 million and $240 million, respectively); Asset Management ($13 million and $13 million, respectively); Retirement & Protection Solutions ($110 million and $110 million, respectively); and Corporate & Other (nil and $(1) million, respectively).

(2) Represents the elimination of intersegment revenues recognized for the nine months ended September 30, 2020 and 2019 in each segment as follows: Advice & Wealth Management ($649 million and $689 million, respectively); Asset Management ($39 million and $40 million, respectively); Retirement & Protection Solutions ($319 million and $319 million, respectively); and Corporate & Other ($(1) million and $(4) million, respectively).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Adjusted operating earnings:
Advice & Wealth Management	$	320	$	396	$	969	$	1,122
Asset Management	198		173		496		483
Retirement & Protection Solutions	(89)		165		300		545
Corporate & Other	(202)		(79)		(309)		(187)
Total segment adjusted operating earnings	227		655		1,456		1,963
Net realized gains (losses)	4		(11)		(18)		(2)
Net income (loss) attributable to consolidated investment entities	—		(1)		(2)		—
Market impact on variable annuity guaranteed benefits, net	(427)		(2)		274		(204)
Market impact on IUL benefits, net	(4)		48		(35)		(29)
Market impact on fixed annuity benefits, net	—		(1)		—		—
Mean reversion related impacts	17		(36)		(30)		18
Market impact of hedges on investments	—		(9)		—		(37)
Integration and restructuring charges	(1)		(2)		(4)		(11)
Pretax income per Consolidated Statements of Operations	$	(184)	$	641	$	1,641	$	1,698