Investments

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investments

6. Investments

Fixed Maturity Securities Available-for-Sale

Fixed Maturity Securities Available-for-Sale by Sector

The following table presents the fixed maturity securities available-for-sale (“AFS”) by sector. U.S. corporate and foreign corporate sectors include redeemable preferred stock. Residential mortgage-backed securities (“RMBS”) includes agency, prime, alternative and sub-prime mortgage-backed securities. Asset-backed securities (“ABS”) includes securities collateralized by corporate loans and consumer loans. Municipals includes taxable and tax-exempt revenue bonds and, to a much lesser extent, general obligations of states, municipalities and political subdivisions. Commercial mortgage-backed securities (“CMBS”) primarily includes securities collateralized by multiple commercial mortgage loans. RMBS, ABS and CMBS are, collectively, “Structured Products.”

	June 30, 2021										December 31, 2020
	Amortized Cost				Gross Unrealized (1)				Estimated Fair Value		Amortized Cost				Gross Unrealized (1)				Estimated Fair Value
Sector			Allowance for Credit Loss		Gains		Losses						Allowance for Credit Loss		Gains		Losses
	(In millions)
U.S. corporate	$	80,103	$	(39)	$	11,557	$	250	$	91,371	$	79,788	$	(44)	$	13,924	$	252	$	93,416
Foreign government	58,674		(21)		6,728		751		64,630		63,243		(21)		8,883		406		71,699
Foreign corporate	59,400		(32)		6,690		453		65,605		60,995		(16)		8,897		468		69,408
U.S. government and agency	41,292		—		5,599		335		46,556		39,094		—		8,095		89		47,100
RMBS	28,211		—		1,753		116		29,848		28,415		—		2,062		42		30,435
ABS	16,519		—		224		30		16,713		16,963		—		231		75		17,119
Municipals	11,439		—		2,497		13		13,923		10,982		—		2,746		6		13,722
CMBS	11,464		(7)		633		41		12,049		11,331		—		681		102		11,910
Total fixed maturity securities AFS	$	307,102	$	(99)	$	35,681	$	1,989	$	340,695	$	310,811	$	(81)	$	45,519	$	1,440	$	354,809

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(1)Excludes gross unrealized gains (losses) related to assets held-for-sale; these unrealized gains (losses) are included in AOCI as no component of equity is held-for-sale. See Note 3 for information on the Company’s business dispositions.

Maturities of Fixed Maturity Securities AFS

The amortized cost, net of allowance for credit loss (“ACL”), and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at June 30, 2021:

	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Products		Total Fixed Maturity Securities AFS
	(In millions)
Amortized cost, net of ACL	$	10,526	$	52,424	$	57,986	$	129,880	$	56,187	$	307,003
Estimated fair value	$	10,670	$	55,246	$	64,867	$	151,302	$	58,610	$	340,695

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities AFS not due at a single maturity date have been presented in the year of final contractual maturity. Structured Products are shown separately, as they are not due at a single maturity.

Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position without an ACL by sector and aggregated by length of time that the securities have been in a continuous unrealized loss position.

	June 30, 2021								December 31, 2020
	Less than 12 Months				Equal to or Greater than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
Sector & Credit Quality	Estimated Fair Value		Gross Unrealized Losses (1)		Estimated Fair Value		Gross Unrealized Losses (1)		Estimated Fair Value		Gross Unrealized Losses (1)		Estimated Fair Value		Gross Unrealized Losses (1)
	(Dollars in millions)
U.S. corporate	$	5,081	$	169	$	1,278	$	77	$	4,338	$	196	$	506	$	50
Foreign government	8,679		409		2,751		338		6,795		305		836		100
Foreign corporate	5,915		275		1,991		178		4,856		321		1,255		147
U.S. government and agency	10,982		318		144		17		4,619		87		33		2
RMBS	5,353		98		442		18		1,531		27		152		14
ABS	3,105		13		1,078		16		3,428		26		2,842		49
Municipals	554		13		6		—		273		6		—		—
CMBS	815		14		763		27		1,887		63		612		39
Total fixed maturity securities AFS	$	40,484	$	1,309	$	8,453	$	671	$	27,727	$	1,031	$	6,236	$	401
Investment grade	$	38,324	$	1,225	$	7,132	$	548	$	24,572	$	829	$	5,841	$	350
Below investment grade	2,160		84		1,321		123		3,155		202		395		51
Total fixed maturity securities AFS	$	40,484	$	1,309	$	8,453	$	671	$	27,727	$	1,031	$	6,236	$	401
Total number of securities in an unrealized loss position	2,939				827				2,177				690

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(1)Excludes gross unrealized losses related to assets held-for-sale; these unrealized losses are included in AOCI as no component of equity is held-for-sale. See Note 3 for information on the Company’s business dispositions.

Evaluation of Fixed Maturity Securities AFS for Credit Loss

Evaluation and Measurement Methodologies

Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the credit loss evaluation process include, but are not limited to: (i) the extent to which the estimated fair value has been below amortized cost, (ii) adverse conditions specifically related to a security, an industry sector or sub-sector, or an economically depressed geographic area, adverse change in the financial condition of the issuer of the security, changes in technology, discontinuance of a segment of the business that may affect future earnings, and changes in the quality of credit enhancement, (iii) payment structure of the security and likelihood of the issuer being able to make payments, (iv) failure of the issuer to make scheduled interest and principal payments, (v) whether the issuer, or series of issuers or an industry has suffered a catastrophic loss or has exhausted natural resources, (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers, (vii) with respect to Structured Products, changes in forecasted cash flows after considering the changes in the financial condition of the underlying loan obligors and quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security, (viii) changes in the rating of the security by a rating agency, and (ix) other subjective factors, including concentrations and information obtained from regulators.

The methodology and significant inputs used to determine the amount of credit loss are as follows:

•The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows. The discount rate is generally the effective interest rate of the security at the time of purchase for fixed-rate securities and the spot rate at the date of evaluation of credit loss for floating-rate securities.

•When determining collectability and the period over which value is expected to recover, the Company applies considerations utilized in its overall credit loss evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s single best estimate, the most likely outcome in a range of possible outcomes, after giving consideration to a variety of variables that include, but are not limited to: payment terms of the security; the likelihood that the issuer can service the interest and principal payments; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; any private and public sector programs to restructure foreign government securities and municipals; and changes to the rating of the security or the issuer by rating agencies.

•Additional considerations are made when assessing the unique features that apply to certain Structured Products including, but not limited to: the quality of underlying collateral, historical performance of the underlying loan obligors, historical rent and vacancy levels, changes in the financial condition of the underlying loan obligors, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying loans or assets backing a particular security, changes in the quality of credit enhancement and the payment priority within the tranche structure of the security.

With respect to securities that have attributes of debt and equity (“perpetual hybrid securities”), consideration is given in the credit loss analysis as to whether there has been any deterioration in the credit of the issuer and the likelihood of recovery in value of the securities that are in a severe unrealized loss position. Consideration is also given as to whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any dividend payments.

In periods subsequent to the recognition of an initial ACL on a security, the Company reassesses credit loss quarterly. Subsequent increases or decreases in the expected cash flow from the security result in corresponding decreases or increases in the ACL which are recorded within net investment gains (losses); however, the previously recorded ACL is not reduced to an amount below zero. Full or partial write-offs are deducted from the ACL in the period the security, or a portion thereof, is considered uncollectible. Recoveries of amounts previously written off are recorded to the ACL in the period received. When the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, any ACL is written off and the amortized cost is written down to estimated fair value through a charge within net investment gains (losses), which becomes the new amortized cost of the security.

Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position

Gross unrealized losses on securities without an ACL increased $548 million for the six months ended June 30, 2021 to $2.0 billion primarily due to increases in interest rates, partially offset by narrowing credit spreads.

Gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater were $671 million at June 30, 2021, or 34% of the total gross unrealized losses on securities without an ACL.

Investment Grade Fixed Maturity Securities AFS

Of the $671 million of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $548 million, or 82%, were related to 641 investment grade securities. Unrealized losses on investment grade securities are principally related to widening credit spreads since purchase and, with respect to fixed-rate securities, rising interest rates since purchase.

Below Investment Grade Fixed Maturity Securities AFS

Of the $671 million of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $123 million, or 18%, were related to 186 below investment grade securities. Unrealized losses on below investment grade securities are principally related to U.S. and foreign corporate securities (primarily industrial and consumer), foreign government securities and CMBS and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty, as well as, with respect to fixed-rate securities, rising interest rates since purchase. Management evaluates U.S. corporate and foreign corporate securities based on factors such as expected cash flows, financial condition and near-term and long-term prospects of the issuers. Management evaluates CMBS based on actual and projected cash flows after considering the quality of underlying collateral, credit enhancements, expected prepayment speeds, current and forecasted loss severity, the payment terms of the underlying assets backing a particular security and the payment priority within the tranche structure of the security. Management evaluates foreign government securities based on factors impacting the issuers such as expected cash flows, financial condition of the issuers and any country specific economic conditions or public sector programs to restructure foreign government securities.

Current Period Evaluation

At June 30, 2021, with respect to securities in an unrealized loss position without an ACL, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized cost. Based on the Company’s current evaluation of its securities in an unrealized loss position without an ACL, the Company concluded that these securities had not incurred a credit loss and should not have an ACL at June 30, 2021.

Future provisions for credit loss will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings and collateral valuation.

Rollforward of Allowance for Credit Loss for Fixed Maturity Securities AFS By Sector

The rollforward of ACL for fixed maturity securities AFS by sector is as follows:

	U.S.  Corporate		Foreign Government		Foreign Corporate		RMBS		CMBS		Total
Three Months Ended June 30, 2021	(In millions)
Balance, at beginning of period	$	43	$	21	$	33	$	—	$	7	$	104
Additions:
ACL not previously recorded	—		—		4		—		4		8
Changes for securities with previously recorded ACL	4		—		(1)		—		(4)		(1)
Securities sold or exchanged	(8)		—		(4)		—		—		(12)
Securities intended/required to be sold prior to recovery of amortized cost basis	—		—		—		—		—		—
Balance, at end of period	$	39	$	21	$	32	$	—	$	7	$	99
Three Months Ended June 30, 2020
Balance, at beginning of period	$	51	$	136	$	—	$	—	$	—	$	187
Additions:
ACL not previously recorded	7		3		16		2		—		28
Changes for securities with previously recorded ACL	(7)		(4)		—		—		—		(11)
Securities sold or exchanged	(20)		(6)		—		—		—		(26)
Securities intended/required to be sold prior to recovery of amortized cost basis	(1)		—		—		—		—		(1)
Balance, at end of period	$	30	$	129	$	16	$	2	$	—	$	177

	U.S.  Corporate		Foreign Government		Foreign Corporate		RMBS		CMBS		Total
Six Months Ended June 30, 2021	(In millions)
Balance, at beginning of period	$	44	$	21	$	16	$	—	$	—	$	81
Additions:
ACL not previously recorded	—		—		25		—		11		36
Changes for securities with previously recorded ACL	3		—		(5)		—		(4)		(6)
Securities sold or exchanged	(8)		—		(4)		—		—		(12)
Securities intended/required to be sold prior to recovery of amortized cost basis	—		—		—		—		—		—
Balance, at end of period	$	39	$	21	$	32	$	—	$	7	$	99
Six Months Ended June 30, 2020
Balance, at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—
Additions:
ACL not previously recorded	58		139		16		2		—		215
Changes for securities with previously recorded ACL	(7)		(4)		—		—		—		(11)
Securities sold or exchanged	(20)		(6)		—		—		—		(26)
Securities intended/required to be sold prior to recovery of amortized cost basis	(1)		—		—		—		—		(1)
Balance, at end of period	$	30	$	129	$	16	$	2	$	—	$	177

Equity Securities

Equity securities include common and preferred stock which are reported at estimated fair value, with changes in estimated fair value included in net investment gains (losses). See Note 8 for further information.

Contractholder-Directed Equity Securities and Fair Value Option Securities

Contractholder-directed equity securities and FVO securities (“FVO Securities”) (collectively, “Unit-linked and FVO Securities”) include three categories of investments for which the FVO has been elected, or are otherwise required to be carried at estimated fair value, with changes in estimated fair value included in net income. See Note 8 for further information.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	June 30, 2021				December 31, 2020
Portfolio Segment	Carrying Value		% of Total		Carrying Value		% of Total
	(Dollars in millions)
Commercial	$	51,602	63.3	%	$	52,434	62.5	%
Agricultural	18,044		22.1		18,128		21.6
Residential	12,281		15.1		13,782		16.4
Total amortized cost	81,927		100.5		84,344		100.5
Allowance for credit loss	(570)		(0.7)		(590)		(0.7)
Subtotal mortgage loans, net	81,357		99.8		83,754		99.8
Residential — FVO	140		0.2		165		0.2
Total mortgage loans, net	$	81,497	100.0	%	$	83,919	100.0	%

The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. See Note 8 for further information.

The amount of net discounts, included within total amortized cost, primarily attributable to residential mortgage loans was $843 million and $944 million at June 30, 2021 and December 31, 2020, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential mortgage loans at June 30, 2021 and December 31, 2020 was $193 million and $209 million; $156 million and $174 million; and $100 million and $108 million, respectively.

Purchases of mortgage loans, consisting primarily of residential mortgage loans, were $532 million and $986 million for the three months and six months ended June 30, 2021, respectively, and $417 million and $1.7 billion for the three months and six months ended June 30, 2020, respectively.

Allowance for Credit Loss Rollforward by Portfolio Segment

The changes in the ACL, by portfolio segment, were as follows:

	Six Months Ended June 30,
	2021								2020
	Commercial		Agricultural		Residential		Total		Commercial		Agricultural		Residential		Total
	(In millions)
Balance, beginning of period	$	252	$	106	$	232	$	590	$	246	$	52	$	55	$	353
Provision (release)	22		(7)		(23)		(8)		47		6		62		115
Adoption of credit loss guidance	—		—		—		—		(118)		35		161		78
Initial credit losses on PCD loans (1)	—		—		2		2		—		—		16		16
Charge-offs, net of recoveries	—		(13)		(1)		(14)		—		(2)		(5)		(7)
Balance, end of period	$	274	$	86	$	210	$	570	$	175	$	91	$	289	$	555

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(1)Represents the initial credit losses on purchased mortgage loans accounted for as purchased financial assets with credit deterioration (“PCD”).

Allowance for Credit Loss Methodology

The Company records an allowance for expected lifetime credit loss in an amount that represents the portion of the amortized cost basis of mortgage loans that the Company does not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. In determining the Company’s ACL, management: (i) pools mortgage loans that share similar risk characteristics, (ii) considers expected lifetime credit loss over the contractual term of its mortgage loans adjusted for expected prepayments and any extensions, and (iii) considers past events and current and forecasted economic conditions. Each of the Company’s commercial, agricultural and residential mortgage loan portfolio segments are evaluated separately. The ACL is calculated for each mortgage loan portfolio segment based on inputs unique to each loan portfolio segment. On a quarterly basis, mortgage loans within a portfolio segment that share similar risk characteristics, such as internal risk ratings or consumer credit scores, are pooled for calculation of ACL. On an ongoing basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is reasonably possible or probable) and reasonably expected troubled debt restructurings (“TDRs”) (i.e., the Company grants concessions to borrower that is experiencing financial difficulties) are evaluated individually for credit loss. The ACL for loans evaluated individually are established using the same methodologies for all three portfolio segments. For example, the ACL for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the ACL which is recorded on a quarterly basis as a charge or credit to earnings in net investment gains (losses).

Commercial and Agricultural Mortgage Loan Portfolio Segments

Commercial and agricultural mortgage loan ACL are calculated in a similar manner. Within each loan portfolio segment, commercial and agricultural, loans are pooled by internal risk rating. Estimated lifetime loss rates, which vary by internal risk rating, are applied to the amortized cost of each loan, excluding accrued investment income, on a quarterly basis to develop the ACL. Internal risk ratings are based on an assessment of the loan’s credit quality, which can change over time. The estimated lifetime loss rates are based on several loan portfolio segment-specific factors, including (i) the Company’s experience with defaults and loss severity, (ii) expected default and loss severity over the forecast period, (iii) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, (iv) loan specific characteristics including loan-to-value (“LTV”) ratios, and (v) internal risk ratings. These evaluations are revised as conditions change and new information becomes available. The Company uses its several decades of historical default and loss severity experience which capture multiple economic cycles. The Company uses a forecast of economic assumptions for a two-year period for most of its commercial and agricultural mortgage loans, while a one-year period is used for loans originated in certain markets. After the applicable forecast period, the Company reverts to its historical loss experience using a straight-line basis over two years. For evaluations of commercial mortgage loans, in addition to historical experience, management considers factors that include the impact of a rapid change to the economy, which may not be reflected in the loan portfolio, recent loss and recovery trend experience as compared to historical loss and recovery experience, and loan specific characteristics including debt service coverage ratios (“DSCR”). In estimating expected lifetime credit loss over the term of its commercial mortgage loans, the Company adjusts for expected prepayment and extension experience during the forecast period using historical prepayment and extension experience considering the expected position in the economic cycle and the loan profile (i.e., floating rate, shorter-term fixed rate and longer-term fixed rate) and after the forecast period using long-term historical prepayment experience. For evaluations of agricultural mortgage loans, in addition to historical experience, management considers factors that include increased stress in certain sectors, which may be evidenced by higher delinquency rates, or a change in the number of higher risk loans. In estimating expected lifetime credit loss over the term of its agricultural mortgage loans, the Company’s experience is much less sensitive to the position in the economic cycle and by loan profile; accordingly, historical prepayment experience is used, while extension terms are not prevalent with the Company’s agricultural mortgage loans.

Commercial mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios, DSCR and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher LTV ratios and lower DSCR. Agricultural mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, as well as reviews on a geographic and property-type basis. The monitoring process for agricultural mortgage loans also focuses on higher risk loans.

For commercial mortgage loans, the primary credit quality indicator is the DSCR, which compares a property’s net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the DSCR, the higher the risk of experiencing a credit loss. The Company also reviews the LTV ratio of its commercial mortgage loan portfolio. LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio is routinely updated for all but the lowest risk loans as part of the Company’s ongoing review of its commercial mortgage loan portfolio.

For agricultural mortgage loans, the Company’s primary credit quality indicator is the LTV ratio. The values utilized in calculating this ratio are developed in connection with the ongoing review of the agricultural mortgage loan portfolio and are routinely updated.

Commitments to lend: After loans are approved, the Company makes commitments to lend and, typically, borrowers draw down on some or all of the commitments. The timing of mortgage loan funding is based on the commitment expiration dates. A liability for credit loss for unfunded commercial and agricultural mortgage loan commitments is recorded within net investment gains (losses). The liability is based on estimated lifetime loss rates as described above and the amount of the outstanding commitments, which for lines of credit, considers estimated utilization rates. When the commitment is funded or expires, the liability is adjusted accordingly.

Residential Mortgage Loan Portfolio Segment

The Company’s residential mortgage loan portfolio is comprised primarily of purchased closed end, amortizing residential mortgage loans, including both performing loans purchased within 12 months of origination and reperforming loans purchased after they have been performing for at least 12 months post-modification. Residential mortgage loans are pooled by loan type (i.e., new origination and reperforming) and pooled by similar risk profiles (including consumer credit score and LTV ratios). Estimated lifetime loss rates, which vary by loan type and risk profile, are applied to the amortized cost of each loan excluding accrued investment income on a quarterly basis to develop the ACL. The estimated lifetime loss rates are based on several factors, including (i) industry historical experience and expected results over the forecast period for defaults, (ii) loss severity, (iii) prepayment rates, (iv) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, and (v) loan pool specific characteristics including consumer credit scores, LTV ratios, payment history and home prices. These evaluations are revised as conditions change and new information becomes available. The Company uses industry historical experience which captures multiple economic cycles as the Company has purchased most of its residential mortgage loans in the last five years. The Company uses a forecast of economic assumptions for a two-year period for most of its residential mortgage loans. After the applicable forecast period, the Company immediately reverts to industry historical loss experience.

For residential mortgage loans, the Company’s primary credit quality indicator is whether the loan is performing or nonperforming. The Company generally defines nonperforming residential mortgage loans as those that are 60 or more days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss.

Mortgage Loan Concessions

In response to the adverse economic impact of the COVID-19 Pandemic, in 2021 and 2020, the Company granted concessions to certain of its commercial, agricultural and residential mortgage loan borrowers, including payment deferrals and other loan modifications. The Company has elected the option under the Coronavirus Aid, Relief, and Economic Security Act, the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) issued by bank regulatory agencies, not to account for or report qualifying concessions as TDRs and not to classify such loans as either past due or nonaccrual during the payment deferral period. Additionally, in accordance with the FASB’s published response to a COVID-19 Pandemic technical inquiry, the Company continues to accrue interest income on such loans that have deferred payment. The Company records an ACL on this accrued interest income.

Commercial

For some commercial mortgage loan borrowers (principally in the retail and hotel sectors), the Company granted concessions which were primarily interest and principal payment deferrals generally ranging from three to four months and, to a much lesser extent, maturity date extensions. Deferred commercial mortgage loan interest and principal payments were $30 million at June 30, 2021.

Agricultural

For some agricultural mortgage loan borrowers (principally in the annual crops and agribusiness sectors), the Company granted concessions which were primarily principal payment deferrals generally ranging from three to 12 months, and covenant changes and, to a much lesser extent, maturity date extensions. Deferred agricultural mortgage loan interest and principal payments were $4 million at June 30, 2021.

Residential

For some residential mortgage loan borrowers, the Company granted concessions which were primarily three-month interest and principal payment deferrals. Deferred residential mortgage loan interest and principal payments were $34 million at June 30, 2021.

Credit Quality of Mortgage Loans by Portfolio Segment

The amortized cost of commercial mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2021:

Credit Quality Indicator	2021		2020		2019		2018		2017		Prior		Revolving Loans		Total		% of Total
	(Dollars in millions)
LTV ratios:
Less than 65%	$	2,289	$	5,108	$	4,305	$	5,301	$	4,069	$	12,943	$	1,980	$	35,995	69.8	%
65% to 75%	747		1,262		4,003		2,458		1,465		2,673		—		12,608		24.4
76% to 80%	66		40		340		66		404		503		—		1,419		2.7
Greater than 80%	8		—		4		80		249		1,239		—		1,580		3.1
Total	$	3,110	$	6,410	$	8,652	$	7,905	$	6,187	$	17,358	$	1,980	$	51,602	100.0	%
DSCR:
> 1.20x	$	2,937	$	5,671	$	8,214	$	7,880	$	5,667	$	15,787	$	1,980	$	48,136	93.3	%
1.00x - 1.20x	86		450		65		25		135		787		—		1,548		3.0
<1.00x	87		289		373		—		385		784		—		1,918		3.7
Total	$	3,110	$	6,410	$	8,652	$	7,905	$	6,187	$	17,358	$	1,980	$	51,602	100.0	%

The amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2021:

Credit Quality Indicator	2021		2020		2019		2018		2017		Prior		Revolving Loans		Total		% of Total
	(Dollars in millions)
LTV ratios:
Less than 65%	$	994	$	3,079	$	1,951	$	2,833	$	973	$	5,518	$	860	$	16,208	89.8	%
65% to 75%	234		405		175		101		52		582		100		1,649		9.1
76% to 80%	—		—		—		—		—		11		—		11		0.1
Greater than 80%	—		—		134		—		—		42		—		176		1.0
Total	$	1,228	$	3,484	$	2,260	$	2,934	$	1,025	$	6,153	$	960	$	18,044	100.0	%

The amortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2021:

Credit Quality Indicator	2021		2020		2019		2018		2017		Prior		Revolving Loans		Total		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	103	$	526	$	1,783	$	840	$	378	$	8,177	$	—	$	11,807	96.1	%
Nonperforming (1)	—		4		56		17		6		391		—		474		3.9
Total	$	103	$	530	$	1,839	$	857	$	384	$	8,568	$	—	$	12,281	100.0	%

__________________

(1)Includes residential mortgage loans in process of foreclosure of $83 million and $103 million at June 30, 2021 and December 31, 2020, respectively.

LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. At June 30, 2021, the amortized cost of commercial and agricultural mortgage loans with an LTV ratio in excess of 100% was $668 million, or less than 1% of total commercial and agricultural mortgage loans.

Past Due and Nonaccrual Mortgage Loans

The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both June 30, 2021 and December 31, 2020. The Company defines delinquency consistent with industry

practice, when mortgage loans are past due more than two or more months, as applicable, by portfolio segment. The past due and nonaccrual mortgage loans at amortized cost, prior to ACL, by portfolio segment, were as follows:

	Past Due				Greater than 90 Days Past Due  and Still Accruing Interest				Nonaccrual
Portfolio Segment	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
	(In millions)
Commercial	$	—	$	10	$	—	$	7	$	163	$	317
Agricultural	227		252		3		20		259		266
Residential	474		556		8		64		466		534
Total	$	701	$	818	$	11	$	91	$	888	$	1,117

The amortized cost for nonaccrual commercial, agricultural and residential mortgage loans at beginning of year 2020 was $176 million, $137 million and $418 million, respectively. The amortized cost for nonaccrual commercial mortgage loans with no ACL was $0 and $168 million at June 30, 2021 and December 31, 2020, respectively. The amortized cost for nonaccrual agricultural mortgage loans with no ACL was $192 million and $178 million at June 30, 2021 and December 31, 2020, respectively. There were no nonaccrual residential mortgage loans without an ACL at either June 30, 2021 or December 31, 2020.

Real Estate and Real Estate Joint Ventures

The Company’s real estate investment portfolio is diversified by property type, geography and income stream, including income from operating leases, operating income and equity in earnings from equity method real estate joint ventures. Real estate investments, by income type, as well as income earned, were as follows at and for the periods indicated:

	June 30, 2021		December 31, 2020		Three Months Ended June 30,				Six Months Ended June 30,
					2021		2020		2021		2020
Income Type	Carrying Value				Income
	(In millions)
Leased real estate investments	$	5,245	$	5,450	$	108	$	101	$	219	$	207
Other real estate investments	440		419		44		24		86		59
Real estate joint ventures	6,216		6,064		53		(23)		76		1
Total real estate and real estate joint ventures	$	11,901	$	11,933	$	205	$	102	$	381	$	267

The carrying value of real estate investments acquired through foreclosure was $185 million and $20 million at June 30, 2021 and December 31, 2020, respectively. Depreciation expense on real estate investments was $31 million and $61 million for the three months and six months ended June 30, 2021, respectively, and $31 million and $59 million for the three months and six months ended June 30, 2020, respectively. Real estate investments were net of accumulated depreciation of $917 million and $1.1 billion at June 30, 2021 and December 31, 2020, respectively.

Leases

Leased Real Estate Investments - Operating Leases

The Company, as lessor, leases investment real estate, principally commercial real estate for office and retail use, through a variety of operating lease arrangements, which typically include tenant reimbursement for property operating costs and options to renew or extend the lease. In some circumstances, leases may include an option for the lessee to purchase the property. In addition, certain leases of retail space may stipulate that a portion of the income earned is contingent upon the level of the tenants’ revenues. The Company has elected a practical expedient of not separating non-lease components related to reimbursement of property operating costs from associated lease components. These property operating costs have the same timing and pattern of transfer as the related lease component, because they are incurred over the same period of time as the operating lease. Therefore, the combined component is accounted for as a single operating lease. Risk is managed through lessee credit analysis, property type diversification, and geographic diversification.

See Note 8 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report for a summary of leased real estate investments and income earned, by property type.

Leveraged and Direct Financing Leases

The Company has diversified leveraged lease and direct financing lease portfolios. Its leveraged leases principally include renewable energy generation facilities, rail cars, commercial real estate and commercial aircraft, and its direct financing leases principally include commercial real estate. These assets are leased through a variety of lease arrangements, which may include options to renew or extend the lease and options for the lessee to purchase the property. Residual values are estimated using available third-party data at inception of the lease. Risk is managed through lessee credit analysis, asset allocation, geographic diversification, and ongoing reviews of estimated residual values, using available third-party data and, in certain leases, linking the amount of future rental receipts to changes in inflation rates. Generally, estimated residual values are not guaranteed by the lessee or a third-party.

Lease receivables are generally due in periodic installments. The payment periods for leveraged leases generally range from one to 11 years, but in certain circumstances can be over 11 years, while the payment periods for direct financing leases generally range from one to 25 years but in certain circumstances can be over 25 years.

The Company records an allowance for expected lifetime credit loss in an amount that represents the portion of the investment in leases that the Company does not expect to collect, resulting in the investment in leases being presented at the net amount expected to be collected. In determining the ACL, management: (i) pools leases that share similar risk characteristics, (ii) considers expected lifetime credit loss over the contractual term of the lease, and (iii) considers past events and current and forecasted economic conditions. Leases with dissimilar risk characteristics are evaluated individually for credit loss. Expected lifetime credit loss on leveraged lease receivables is estimated using a probability of default and loss given default model, where the probability of default incorporates third-party credit ratings of the lessee and the related historical default data. Direct financing leases principally relate to leases of commercial real estate; accordingly, expected lifetime credit loss is estimated on such lease receivables consistent with the methodology for commercial mortgage loans (see “— Mortgage Loans — Allowance for Credit Loss Methodology”). The Company also assesses the non-guaranteed residual values for recoverability by comparison to the current estimated fair value of the leased asset and considers other relevant market information such as independent third-party forecasts, consulting, asset brokerage and investment banking reports and data, comparable market transactions, and factors such as the competitive dynamics impacting specific industries, technological change and obsolescence, government and regulatory rules, tax policy, potential environmental liabilities and litigation.

The investment in leveraged and direct financing leases, net of ACL, was $796 million and $1.3 billion, respectively, at June 30, 2021 and $816 million and $1.3 billion, respectively, at December 31, 2020. The ACL for leveraged and direct financing leases was $42 million and $44 million at June 30, 2021 and December 31, 2020, respectively.

Cash Equivalents

The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $13.4 billion and $9.7 billion at June 30, 2021 and December 31, 2020, respectively.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities AFS and derivatives and the effect on policyholder liabilities, DAC, VOBA and deferred sales inducements (“DSI”) that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

The components of net unrealized investment gains (losses), included in AOCI, were as follows:

	June 30, 2021		December 31, 2020
	(In millions)
Fixed maturity securities AFS	$	33,813	$	44,415
Derivatives	1,353		1,924
Other	233		267
Subtotal	35,399		46,606
Amounts allocated from:
Policyholder liabilities	(6,862)		(10,797)
DAC, VOBA and DSI	(3,451)		(4,050)
Subtotal	(10,313)		(14,847)
Deferred income tax benefit (expense)	(6,456)		(8,009)
Net unrealized investment gains (losses)	18,630		23,750
Net unrealized investment gains (losses) attributable to noncontrolling interests	(22)		(20)
Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	18,608	$	23,730

The changes in net unrealized investment gains (losses) were as follows:

	Six Months Ended June 30, 2021
	(In millions)
Balance, beginning of period	$	23,730
Unrealized investment gains (losses) during the period	(11,207)
Unrealized investment gains (losses) relating to:
Policyholder liabilities	3,935
DAC, VOBA and DSI	599
Deferred income tax benefit (expense)	1,553
Net unrealized investment gains (losses)	18,610
Net unrealized investment gains (losses) attributable to noncontrolling interests	(2)
Balance, end of period	$	18,608
Change in net unrealized investment gains (losses)	$	(5,120)
Change in net unrealized investment gains (losses) attributable to noncontrolling interests	(2)
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	(5,122)

Concentrations of Credit Risk

Investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at estimated fair value at June 30, 2021 and December 31, 2020, were in fixed income securities of the Japanese government and its agencies of $33.8 billion and $35.8 billion, respectively, and in fixed income securities of the South Korean government and its agencies of $7.4 billion and $8.0 billion, respectively.

Securities Lending and Repurchase Agreements

Securities, Collateral and Reinvestment Portfolio

A summary of the outstanding securities lending and repurchase agreements is as follows:

		June 30, 2021						December 31, 2020
		Securities (1)						Securities (1)
Agreement Type		Estimated Fair Value		Cash Collateral Received from Counterparties (2), (3)		Reinvestment Portfolio at Estimated Fair Value		Estimated Fair Value		Cash Collateral Received from Counterparties (2), (3)		Reinvestment Portfolio at Estimated Fair Value
	(In millions)
Securities lending		$	20,110	$	20,480	$	20,573	$	18,262	$	18,628	$	18,884
Repurchase agreements		$	3,551	$	3,460	$	3,497	$	3,276	$	3,210	$	3,251

__________________

(1)Securities on loan in connection with these programs are included within fixed maturity securities AFS and short-term investments.

(2)In connection with securities lending and repurchase agreements, in addition to cash collateral received, the Company received from counterparties non-cash security collateral of $31 million and $1 million at June 30, 2021 and December 31, 2020, respectively, which is not reflected on the interim condensed consolidated financial statements.

(3)The liability for cash collateral for these programs is included within payables for collateral under securities loaned and other transactions and other liabilities.

Contractual Maturities

A summary of the remaining contractual maturities of securities lending and repurchase agreements is as follows:

	June 30, 2021										December 31, 2020
	Remaining Maturities										Remaining Maturities
Security Type	Open (1)		1 Month or Less		Over 1 Month  to 6 Months		Over 6 Months to 1 Year		Total		Open (1)		1 Month or Less		Over 1 Month  to 6 Months		Over 6 Months to 1 Year		Total
	(In millions)
Cash collateral liability by loaned security type:
Securities lending:
U.S. government and agency	$	5,063	$	7,818	$	6,446	$	—	$	19,327	$	2,946	$	10,553	$	4,009	$	—	$	17,508
Foreign government	—		296		731		—		1,027		—		291		826		—		1,117
Agency RMBS	—		—		124		—		124		—		—		—		—		—
U.S. corporate	1		—		—		—		1		3		—		—		—		3
Municipals	1		—		—		—		1		—		—		—		—		—
Total	$	5,065	$	8,114	$	7,301	$	—	$	20,480	$	2,949	$	10,844	$	4,835	$	—	$	18,628
Repurchase agreements:
U.S. government and agency	$	—	$	3,460	$	—	$	—	$	3,460	$	—	$	3,210	$	—	$	—	$	3,210

__________________

(1)The related loaned security could be returned to the Company on the next business day, which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both.

The securities lending and repurchase agreements reinvestment portfolios consist principally of high quality, liquid, publicly-traded fixed maturity securities AFS, short-term investments, cash equivalents or cash. If the securities on loan or the reinvestment portfolio become less liquid, liquidity resources within the general account are available to meet any potential cash demands when securities on loan are put back by the counterparty.

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans, which are presented at carrying value at:

	June 30, 2021		December 31, 2020
	(In millions)
Invested assets on deposit (regulatory deposits)	$	1,892	$	1,933
Invested assets held in trust (external reinsurance agreements) (1)	1,107		1,124
Invested assets pledged as collateral (2)	25,752		25,884
Total invested assets on deposit, held in trust and pledged as collateral	$	28,751	$	28,941

__________________

(1)    Represents assets held in trust related to third-party reinsurance agreements. Excludes assets held in trust of $2.1 billion and $2.4 billion related to reinsurance agreements between wholly-owned subsidiaries as of June 30, 2021 and December 31, 2020, respectively.

(2)     The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements, secured debt, a collateral financing arrangement (see Notes 4, 13 and 14 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report) and derivative transactions (see Note 7).

See “— Securities Lending and Repurchase Agreements” for information regarding securities supporting securities lending and repurchase agreement transactions and Note 5 for information regarding investments designated to the closed block. In addition, the Company’s investment in Federal Home Loan Bank common stock, which is considered restricted until redeemed by the issuers, was $791 million and $814 million, at redemption value, at June 30, 2021 and December 31, 2020, respectively.

Variable Interest Entities

The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

Consolidated VIEs

Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.

The following table presents the total assets and total liabilities relating to investment-related VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at:

	June 30, 2021				December 31, 2020
Asset Type	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Investment funds (1)	$	319	$	10	$	258	$	1
Renewable energy partnership (1)	82		—		87		—
Other investments (2)	2		—		4		5
Total	$	403	$	10	$	349	$	6

__________________

(1)Assets of the investment funds and renewable energy partnership primarily consisted of other invested assets.

(2)Assets of other investments primarily consisted of other assets at June 30, 2021, and cash and cash equivalents at December 31, 2020.

Unconsolidated VIEs

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:

	June 30, 2021				December 31, 2020
Asset Type	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS (2)	$	60,152	$	60,152	$	60,115	$	60,115
Other limited partnership interests	10,766		17,029		8,355		14,911
Other invested assets	1,217		1,293		1,320		1,404
Other investments	660		663		619		639
Total	$	72,795	$	79,137	$	70,409	$	77,069

__________________

(1)The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests is equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third-parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $3 million at both June 30, 2021 and December 31, 2020. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2)For variable interests in Structured Products included within fixed maturity securities AFS, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.

As described in Note 15, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs for either the six months ended June 30, 2021 or 2020.

Net Investment Income

The components of net investment income were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Asset Type	2021		2020		2021		2020
	(In millions)
Fixed maturity securities AFS	$	2,739	$	2,787	$	5,492	$	5,662
Equity securities	9		11		20		25
FVO Securities (1)	50		114		86		36
Mortgage loans	885		862		1,748		1,746
Policy loans	120		124		241		250
Real estate and real estate joint ventures	205		102		381		267
Other limited partnership interests	1,047		(607)		2,329		(287)
Cash, cash equivalents and short-term investments	24		52		49		144
Operating joint ventures	15		31		38		56
Other	40		29		94		131
Subtotal investment income	5,134		3,505		10,478		8,030
Less: Investment expenses	232		236		469		560
Subtotal, net	4,902		3,269		10,009		7,470
Unit-linked investments (1)	378		818		585		(322)
Net investment income	$	5,280	$	4,087	$	10,594	$	7,148

__________________

(1)Changes in estimated fair value subsequent to purchase of FVO Securities and contractholder-directed equity securities supporting unit-linked variable annuity type liabilities (“Unit-linked investments”) still held as of the end of the respective periods and included in net investment income were $347 million and $549 million for the three months and six months ended June 30, 2021, respectively, and $766 million and ($322) million for the three months and six months ended June 30, 2020, respectively.

Net investment income from equity method investments, comprised of real estate joint ventures, other limited partnership interests, tax credit and renewable energy partnerships and operating joint ventures, totaled $1.0 billion and $2.3 billion for the three months and six months ended June 30, 2021, respectively, and ($688) million and ($365) million for the three months and six months ended June 30, 2020, respectively.

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Asset Type	2021		2020		2021		2020
	(In millions)
Fixed maturity securities AFS	$	5	$	150	$	(62)	$	154
Equity securities (1)	55		72		130		(212)
FVO Securities	1		(4)		4		(3)
Mortgage loans	(2)		(80)		58		(143)
Real estate and real estate joint ventures	368		2		416		3
Other limited partnership interests	(8)		1		(13)		5
Other (2), (3)	22		101		42		125
Subtotal	441		242		575		(71)
Change in estimated fair value of other limited partnership interests and real estate joint ventures	5		(13)		14		(12)
Non-investment portfolio gains (losses) (4)	1,159		2		1,150		26
Subtotal	1,164		(11)		1,164		14
Total net investment gains (losses)	$	1,605	$	231	$	1,739	$	(57)

__________________

(1)Changes in estimated fair value subsequent to purchase for equity securities still held as of the end of the periods included in net investment gains (losses) were $50 million and $113 million for the three months and six months ended June 30, 2021, respectively, and $63 million and ($193) million for the three months and six months ended June 30, 2020, respectively.

(2)Other gains (losses) included de-designated cash flow hedge gains of $19 million and $48 million for the three months and six months ended June 30, 2021, respectively, and $43 million and $55 million for the three months and six months ended June 30, 2020, respectively.

(3)Other gains (losses) included a leveraged lease gain of $81 million for both the three months and six months ended June 30, 2020.

(4)See Note 3 for information on the Company’s business dispositions.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were $10 million and $19 million for the three months and six months ended June 30, 2021, respectively, and $19 million and $70 million for the three months and six months ended June 30, 2020, respectively.

Fixed Maturity Securities AFS - Sales and Disposals and Credit Loss

Sales of securities are determined on a specific identification basis. Proceeds from sales or disposals and the components of net investment gains (losses) were as shown in the table below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In millions)
Proceeds	$	10,923	$	9,981	$	26,563	$	22,070
Gross investment gains	$	145	$	424	$	363	$	761
Gross investment (losses)	(132)		(266)		(391)		(384)
Net credit loss (provision) release	(8)		(8)		(34)		(223)
Net investment gains (losses)	$	5	$	150	$	(62)	$	154