Financing Receivables

12 Months Ended

Dec. 31, 2021

Financing receivables are comprised of commercial loans, consumer loans, and deposit receivables. See Note 2 for information regarding the Company’s accounting policies related to financing receivables and the allowance for credit losses.

Allowance for Credit Losses

The following tables present a rollforward of the allowance for credit losses:


	Commercial Loans		Consumer Loans		Total
	(in millions)


Balance, January 1, 2021	$	66	$	2	$	68
Provisions	(13)		2		(11)
Charge-offs	(8)		(2)		(10)
Recoveries	—		1		1
Other	2		—		2
Balance, December 31, 2021	$	47	$	3	$	50


	Commercial Loans		Consumer Loans		Total
	(in millions)
Balance, December 31, 2019 (1)	$	51	$	—	$	51
Cumulative effect of adoption of current expected credit losses guidance	2		3		5
Balance, January 1, 2020	53		3		56
Provisions	19		2		21
Charge-offs	(6)		(3)		(9)

Balance, December 31, 2020	$	66	$	2	$	68

(1) Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset.


	Commercial Loans
	(in millions)
Balance at January 1, 2019	$	49
Provisions	5
Charge-offs	(4)
Recoveries of amounts previously written off	1
Balance at December 31, 2019	$	51

The decrease in the allowance for credit losses provision for commercial loans reflects the sale of certain commercial mortgage loans and syndicated loans in conjunction with the fixed deferred and immediate annuity reinsurance transaction discussed in Note 1.

Accrued interest on commercial loans was $13 million and $16 million as of December 31, 2021 and 2020, respectively, and is recorded in Receivables and excluded from the amortized cost basis of commercial loans.

Purchases and Sales

During the year ended December 31, 2021, the Company sold $746 million of commercial mortgage loans.

During the years ended December 31, 2021, 2020 and 2019, the Company purchased $37 million, $173 million and $162 million, respectively, of syndicated loans, and sold $354 million, $17 million and $54 million, respectively, of syndicated loans.

During the years ended December 31, 2021 and 2020, the Company purchased $33 million and $22 million, respectively, of residential mortgage loans, and sold $1 million and nil, respectively, of residential mortgage loans. The allowance for credit losses for residential mortgage loans was not material as of both December 31, 2021 and 2020.

The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.

Credit Quality Information

Nonperforming loans were $9 million and $21 million as of December 31, 2021 and 2020, respectively. All other loans were considered to be performing.

Commercial Loans

Commercial Mortgage Loans

The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Loan-to-value ratio is the primary credit quality indicator included in this review. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates when credit risk changes. Commercial mortgage loans which management has assigned its highest risk rating were less than 1% of total commercial mortgage loans as of both December 31, 2021 and 2020. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. Total commercial mortgage loan modifications through December 31, 2020 due to the COVID-19 pandemic consisted of 93 loans with a total unpaid balance of $369 million. Modifications primarily consisted of short-term forbearance and interest only payments. There were no additional modifications during the year ended December 31, 2021. As of December 31, 2021, there were no loans remaining that were modified due to COVID-19. All loans returned to their normal payment schedules. Total commercial mortgage loans past due were nil as of December 31, 2021 and 2020, respectively.

The tables below present the amortized cost basis of commercial mortgage loans by the year of origination and loan-to-value ratio:


	December 31, 2021
Loan-to-Value Ratio	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	20	$	10	$	—	$	29	$	59
80% - 100%	9		2		9		2		—		29		51
60% - 80%	142		80		60		23		61		138		504
40% - 60%	42		33		86		74		57		401		693
< 40%	11		8		48		6		58		478		609
Total	$	204	$	123	$	223	$	115	$	176	$	1,075	$	1,916


	December 31, 2020
Loan-to-Value Ratio	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
> 100%	$	—	$	—	$	2	$	—	$	—	$	10	$	12
80% - 100%	15		16		12		3		7		15		68
60% - 80%	89		166		27		32		46		144		504
40% - 60%	23		57		74		155		113		551		973
< 40%	7		23		80		99		64		895		1,168
Total	$	134	$	262	$	195	$	289	$	230	$	1,615	$	2,725

Loan-to-value ratio is based on income and expense data provided by borrowers at least annually and long-term capitalization rate assumptions based on property type.

In addition, the Company reviews the concentrations of credit risk by region and property type. Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:


	Loans				Percentage
	December 31,				December 31,
	2021		2020		2021		2020
	(in millions)
East North Central	$	194	$	259	10	%	10	%
East South Central	57		115		3		4
Middle Atlantic	122		178		6		7
Mountain	119		247		6		9
New England	28		54		2		2
Pacific	627		825		33		30
South Atlantic	497		681		26		25
West North Central	141		198		7		7
West South Central	131		168		7		6
	1,916		2,725		100	%	100	%
Less: allowance for credit losses	12		29
Total	$	1,904	$	2,696

Concentrations of credit risk of commercial mortgage loans by property type were as follows:


	Loans				Percentage
	December 31,				December 31,
	2021		2020		2021		2020
	(in millions)
Apartments	$	496	$	713	26	%	26	%
Hotel	14		50		1		2
Industrial	319		427		17		16
Mixed use	68		87		3		3
Office	271		372		14		14
Retail	617		881		32		32
Other	131		195		7		7
	1,916		2,725		100	%	100	%
Less: allowance for credit losses	12		29
Total	$	1,904	$	2,696

Syndicated Loans

The recorded investment in syndicated loans as of December 31, 2021 and 2020 was $149 million and $595 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were nil and $3 million as of December 31, 2021 and 2020, respectively. The Company assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.

The tables below present the amortized cost basis of syndicated loans by origination year and internal risk rating:


	December 31, 2021
Internal Risk Rating	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	1	$	—	$	—	$	—	$	1
Risk 4	—		—		—		—		1		2		3
Risk 3	—		—		4		5		5		6		20
Risk 2	15		4		12		10		18		12		71
Risk 1	8		3		3		11		16		13		54
Total	$	23	$	7	$	20	$	26	$	40	$	33	$	149


	December 31, 2020
Internal Risk Rating	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Risk 5	$	—	$	—	$	—	$	—	$	—	$	3	$	3
Risk 4	—		—		4		9		—		10		23
Risk 3	—		9		8		25		13		25		80
Risk 2	30		57		62		69		14		41		273
Risk 1	17		32		47		58		22		40		216
Total	$	47	$	98	$	121	$	161	$	49	$	119	$	595

Financial Advisor Loans

The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is highly dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. Accordingly, the primary risk factor for advisor loans is termination status. The allowance for credit losses related to loans to advisors that have terminated their relationship with the Company was $5 million and $7 million as of December 31, 2021 and December 31, 2020, respectively.

The tables below present the amortized cost basis of advisor loans by origination year and termination status:


	December 31, 2021
Termination Status	2021		2020		2019		2018		2017		Prior		Total
	(in millions)
Active	$	136	$	147	$	119	$	89	$	116	$	113	$	720
Terminated	1		1		—		—		—		6		8
Total	$	137	$	148	$	119	$	89	$	116	$	119	$	728


	December 31, 2020
Termination Status	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Active	$	171	$	137	$	101	$	127	$	83	$	86	$	705
Terminated	—		—		—		1		1		8		10
Total	$	171	$	137	$	101	$	128	$	84	$	94	$	715

Consumer Loans

Credit Card Receivables

The credit cards are co-branded with Ameriprise Financial, Inc. and issued to the Company’s customers by a third party. FICO scores and delinquency rates are the primary credit quality indicators for the credit card portfolio. Delinquency rates are measured based on the number of days past due. Credit card receivables over 30 days past due were 1% of total credit card receivables as of both December 31, 2021 and December 31, 2020.

The table below presents the amortized cost basis of credit card receivables by FICO score:


	December 31, 2021		December 31, 2020
	(in millions)
> 800	$	30	$	28
750 - 799	24		23
700 - 749	25		25
650 - 699	14		15
< 650	5		5
Total	$	98	$	96

Policy Loans

Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, there is no allowance for credit losses.

Margin Loans

The margin loans balance was $1.2 billion and $1.0 billion as of December 31, 2021 and 2020, respectively. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As of both December 31, 2021 and 2020, the allowance for credit losses on margin loans was not material.

Pledged Asset Lines of Credit

The pledged asset lines of credit balance was $467 million and $224 million million as of December 31, 2021 and 2020, respectively. The Company monitors collateral supporting pledged asset lines of credit and requests additional collateral when necessary in order to mitigate the risk of loss. As of December 31, 2021 and 2020, there was no allowance for credit losses on pledged asset lines of credit.

Deposit Receivables

Deposit receivables were $7.9 billion and $1.4 billion as of December 31, 2021 and 2020, respectively. Deposit receivables are fully collateralized by the fair value of the assets held in trusts. Based on management’s evaluation of the nature of the underlying assets and the potential for changes in the collateral value, there was no allowance for credit losses for the deposit receivables as of December 31, 2021 and 2020. The increase in deposit receivables is primarily driven by the reinsurance transaction, effective July 1, 2021, to reinsure fixed deferred and non-life contingent immediate annuity policies. See Note 1 for more information on the fixed deferred and immediate annuity reinsurance transaction.

Troubled Debt Restructurings

There were no loans accounted for as a troubled debt restructuring by the Company during the years ended December 31, 2021, 2020 and 2019. There are no commitments to lend additional funds to borrowers whose loans have been restructured.