INSURANCE LIABILITIES

6 Months Ended

Jun. 30, 2022

Variable Annuity Contracts – GMDB and GMIB Features

The Company has certain variable annuity contracts with GMDB and GMIB 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; or

•Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit, which may include an annual reset.

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 balance sheets in future policy benefits and other policyholders’ liabilities. The amounts for the ceded contracts are reflected in the balance sheets in amounts due from reinsurers.

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

Three and Six Months Ended June 30, 2022 and 2021


	GMDB				GMIB
	Direct		Ceded		Direct		Ceded
	(in millions)








Balance, April 1, 2022	$	5	$	(5)	$	2	$	(1)
Paid guarantee benefits	—		—		—		—
Other changes in reserve	1		(1)		—		—
Balance, June 30, 2022	$	6	$	(6)	$	2	$	(1)

Balance, April 1, 2021	$	3	$	(3)	$	—	$	—
Paid guarantee benefits	—		—		—		—
Other changes in reserve	(1)		1		1		(1)
Balance, June 30, 2021	$	2	$	(2)	$	1	$	(1)


	GMDB				GMIB
	Direct		Ceded		Direct		Ceded
	(in millions)








Balance, January 1, 2022	$	5	$	(5)	$	1	$	(1)
Paid guarantee benefits	—		—		—		—
Other changes in reserve	1		(1)		1		—
Balance, June 30, 2022	$	6	$	(6)	$	2	$	(1)

Balance, January 1, 2021	$	4	$	(4)	$	1	$	(1)
Paid guarantee benefits	—		—		—		—
Other changes in reserve	(2)		2		—		—
Balance, June 30, 2021	$	2	$	(2)	$	1	$	(1)

Liabilities for Embedded and Freestanding Insurance Related Derivatives

The liability for the GMxB derivative features and the liability for MSO and IUL indexed features 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 6 of the Notes to these 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 June 30, 2022 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 June 30, 2022


	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	$	—		$	—		$	—	$	—	$	—
Separate Accounts	290			87			—		—		377
Total Account Values	$	290		$	87		$	—	$	—	$	377

NAR, gross	$	44		$	12		$	—	$	—	$	56
NAR, net of amounts reinsured	$	44		$	12		$	—	$	—	$	56

Average attained age of policyholders (in years)	59.6			62.1			—		—		60.1
Percentage of policyholders over age 70	10.3		%	15.0		%	—%		—%		11.3		%
Range of contractually specified interest rates	N/A			N/A			N/A		T+ 200bps		T+ 200bps

Variable annuity contracts with GMIB features
Account Values invested in:
General Account	$	—		$	—		$	—	$	—	$	—
Separate Accounts	—			—			370		—		370
Total Account Values	$	—		$	—		$	370	$	—	$	370

NAR, gross (1)	$	—		$	—		$	—	$	—	$	—
NAR, net of amounts reinsured (1)	$	—		$	—		$	—	$	—	$	—

Average attained age of policyholders (in years)	N/A			N/A			64.3		—		64.3
Weighted average years remaining until annuitization	N/A			N/A			9.8		—		9.8
Range of contractually specified interest rates	N/A			N/A			T+200bp		N/A		T+ 200bps

____________

(1) Amounts reported for NAR are $0 million as the values are less than $1 million at June 30, 2022.

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



	June 30, 2022				December 31, 2021
Mutual Fund Type	GMDB		GMIB		GMDB		GMIB
	(in millions)
Equity	$	33	$	6	$	27	$	5
Fixed income	8		2		6		2
Balanced	334		362		238		263
Other	2		—		1		—
Total	$	377	$	370	$	272	$	270

Hedging Programs for GMDB and GMIB Features

The Company has a program intended to hedge certain risks associated first with the GMDB feature and with the GMIB feature of the Retirement Cornerstone series of variable annuity products.This program utilizes derivative contracts, such as exchange-traded equity and interest rate futures contracts 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 these products 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 balance sheets, is summarized in the table below.


	2022						2021
	Direct Liability		Reinsurance Ceded		Net		Direct Liability		Reinsurance Ceded		Net
	(in millions)




















Balance, April 1,	$	6	$	(3)	$	3	$	6	$	(3)	$	3
Paid guarantee benefits	—		—		—		—		—		—
Other changes in reserve	1		—		1		—		—		—
Balance, June 30,	$	7	$	(3)	$	4	$	6	$	(3)	$	3

Balance, January 1,	$	6	$	(3)	$	3	$	6	$	(3)	$	3
Paid guarantee benefits	—		—		—		—		—		—
Other changes in reserve	1		—		1		—		—		—
Balance, June 30,	$	7	$	(3)	$	4	$	6	$	(3)	$	3