Leases

12 Months Ended

Dec. 31, 2023

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.

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)	2023			2022			2021

Lease cost
Operating leases	$	76		$	81		$	89
Short-term leases (1)	3			2			1

Lease expense	79			83			90
Less: sublease income (2)	—			—			—
Net lease cost	$	79		$	83		$	90

Other information on operating leases

Cash payments to settle a lease liability reported in cash flows	$	87		$	93		$	104
Right-of-use assets obtained in exchange for new lease liabilities	$	37		$	30		$	59
Weighted average discount rate	2.79		%	2.39		%
Weighted average remaining lease term	4.1 years			4.4 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.

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


(in millions)	Real Estate Lease Liability

2024	$	81
2025	58
2026	51
2027	36
2028	19
Thereafter	15
Total undiscounted lease payments	260
Less: present value adjustment	17
Operating lease liability	$	243