Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Information

During the third quarter of 2020, as the Company continued 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 net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual); the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and UL insurance contracts), net of hedges and the related DSIC and 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); the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments; integration and restructuring charges; and the impact of consolidating CIEs. The market impact on non-traditional long-duration products 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 reconciles segment totals to those reported on the consolidated financial statements:

	June 30, 2021		December 31, 2020
	(in millions)
Advice & Wealth Management	$	22,040	$	21,266
Asset Management	9,220		8,406
Retirement & Protection Solutions	116,065		114,850
Corporate & Other	24,378		21,361
Total assets	$	171,703	$	165,883

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)
Adjusted operating net revenues:
Advice & Wealth Management	$	1,980	$	1,537	$	3,859	$	3,232
Asset Management	879		668		1,707		1,354
Retirement & Protection Solutions	808		755		1,595		1,514
Corporate & Other	119		131		258		280
Eliminations (1)(2)	(399)		(326)		(778)		(664)
Total segment adjusted operating net revenues	3,387		2,765		6,641		5,716
Net realized gains (losses)	10		(3)		67		(23)
Revenue attributable to consolidated investment entities	16		15		50		31
Market impact on non-traditional long-duration products, net	21		(66)		26		(11)
Mean reversion related impacts	1		1		1		—
Market impact of hedges on investments	(17)		—		(17)		—
Total net revenues per Consolidated Statements of Operations	$	3,418	$	2,712	$	6,768	$	5,713

(1) Represents the elimination of intersegment revenues recognized for the three months ended June 30, 2021 and 2020 in each segment as follows: Advice & Wealth Management ($266 million and $208 million, respectively); Asset Management ($14 million and $13 million, respectively); Retirement & Protection Solutions ($118 million and $105 million, respectively); and Corporate & Other ($1 million and nil, respectively).

(2) Represents the elimination of intersegment revenues recognized for the six months ended June 30, 2021 and 2020 in each segment as follows: Advice & Wealth Management ($516 million and $430 million, respectively); Asset Management ($27 million and $26 million, respectively); Retirement & Protection Solutions ($234 million and $209 million, respectively); and Corporate & Other ($1 million and $(1) million, respectively).

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions)
Adjusted operating earnings:
Advice & Wealth Management	$	423	$	271	$	812	$	649
Asset Management	253		141		481		298
Retirement & Protection Solutions	182		222		365		389
Corporate & Other	(77)		(57)		(98)		(107)
Total segment adjusted operating earnings	781		577		1,560		1,229
Net realized gains (losses)	11		(2)		66		(22)
Net income (loss) attributable to consolidated investment entities	(2)		—		(3)		(2)
Market impact on non-traditional long-duration products, net	(87)		(1,113)		(483)		670
Mean reversion related impacts	42		14		98		(47)
Market impact of hedges on investments	(17)		—		(17)		—
Integration and restructuring charges	(7)		(2)		(7)		(3)
Pretax income per Consolidated Statements of Operations	$	721	$	(526)	$	1,214	$	1,825