Leases

12 Months Ended

Dec. 31, 2020

LEASES

The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease, and a right-of-use asset and lease liability is recognized as part of other assets and other liabilities, respectively, in the consolidated balance sheet. See note 1 - Adoption of Accounting Standards - Leases for additional information regarding the accounting for leases.

Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company's discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercising those options. The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease, if that rate is readily determinable, or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

Lease expense is included in general and administrative expenses in the consolidated statement of income. Additional information regarding the Company’s real estate operating leases is as follows:


(for the year ended December 31, in millions)	2020			2019

Lease cost
Operating leases	$	95		$	92
Short-term leases (1)	2			10

Lease expense	97			102
Less: sublease income (2)	—			—
Net lease cost	$	97		$	102

Other information on operating leases

Cash payments to settle a lease liability reported in cash flows	$	109		$	104
Right-of-use assets obtained in exchange for new lease liabilities	$	67		$	60
Weighted average discount rate	2.51		%	3.02		%
Weighted average remaining lease term	5.0 years			5.1 years

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(1) Leases with a term of twelve months or less are not recorded on the consolidated balance sheet.

(2) Sublease income consists of rent from third parties of office space and is recognized as part of other revenues in the consolidated statement of income.

Lease expense was $185 million for the year ended December 31, 2018 for real estate and other operating leases.

The following table presents the contractual maturities of the Company's lease liabilities:


(in millions)	Real Estate Lease Liability

2021	$	103
2022	86
2023	67
2024	50
2025	30
Thereafter	51
Total undiscounted lease payments	387
Less: present value adjustment	25
Operating lease liability	$	362