The Company also uses interest rate swaptions, caps, and floors to manage interest rate risk. A swaption is an option to enter into a swap with a forward starting effective date. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. In an interest rate cap, the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price. Similarly, in an interest rate floor, the buyer receives payments at the end of each period in which the interest rate is below the agreed strike price. Swaptions, caps and floors are included in interest rate options.

In standardized exchange-traded interest rate futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced investments. The Company enters into exchange-traded futures with regulated futures commission’s merchants who are members of a trading exchange.

Total return swaps are contracts whereby the Company agrees with counterparties to exchange, at specified intervals, the difference between the return on an asset (or market index) and London Inter-Bank Offered Rate (“LIBOR”) plus an associated funding spread based on a notional amount. The Company generally uses total return swaps to hedge the effect of adverse changes in equity indices.

In standardized exchange-traded equity futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced equity indices. The Company enters into exchange-traded futures with regulated futures commission’s merchants who are members of a trading exchange.

Currency derivatives, including currency futures, options, forwards and swaps, are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell, and to hedge the currency risk associated with net investments in foreign operations and anticipated earnings of its foreign operations.

Under currency forwards, the Company agrees with counterparties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. As noted above, the Company uses currency forwards to mitigate the impact of changes in currency exchange rates on U.S. dollar-equivalent earnings generated by certain of its non-U.S. businesses, primarily its international insurance and investment operations. The Company executes forward sales of the hedged currency in exchange for U.S. dollars at a specified exchange rate. The maturities of these forwards correspond with the future periods in which the non-U.S. dollar-denominated earnings are expected to be generated.

Under currency swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party.

The Company writes credit default swaps to gain exposure similar to investment in public fixed maturity cash instruments. With these derivatives the Company sells credit protection on a single name reference, or certain index reference, and in return receives a quarterly premium. This premium or credit spread generally corresponds to the difference between the yield on the referenced name (or an index’s referenced names) public fixed maturity cash instruments and swap rates, at the time the agreement is executed. If there is an event of default by the referenced name or one of the referenced names in the index, as defined by the agreement, then the Company is obligated to pay the referenced amount of the contract to the counterparty and receive in return the referenced defaulted security or similar security or (in the case of a credit default index) pay the referenced amount less the auction recovery rate. See credit derivatives section for further discussion of guarantees. In addition to selling credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio.

“To Be Announced” (“TBA”) Forward Contracts. The Company uses TBA forward contracts to gain exposure to the investment risk and return of mortgage-backed securities. TBA transactions can help the Company enhance the return on its investment portfolio, and can provide a more liquid and cost-effective method of achieving these goals than purchasing or selling individual mortgage-backed pools. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. Additionally, pursuant to the Company’s mortgage dollar roll program, TBAs or mortgage-backed securities are transferred to counterparties with a corresponding agreement to repurchase them at a future date. These transactions do not qualify as secured borrowings and are accounted for as derivatives.

Loan Commitments. In its mortgage operations, the Company enters into commitments to fund commercial mortgage loans at specified interest rates and other applicable terms within specified periods of time. These commitments are legally binding agreements to extend credit to a counterparty. Loan commitments for loans that will be held for sale are recognized as derivatives and recorded at fair value. The determination of the fair value of loan commitments accounted for as derivatives considers various factors including, among others, terms of the related loan, the intended exit strategy for the loans based upon either securitization valuation models or investor purchase commitments, prevailing interest rates, origination income or expense, and the value of service rights. Loan commitments that relate to the origination of mortgage loans that will be held for investment are not accounted for as derivatives and accordingly are not recognized in the Company’s financial statements. See Note 23 for additional information.

Embedded Derivatives. The Company sells certain products (for example, variable annuities) which may include guaranteed benefit features that are accounted for as embedded derivatives. These embedded derivatives are marked to market through “Realized investment gains (losses), net” based on the change in value of the underlying contractual guarantees, which are determined using valuation models. The Company maintains a portfolio of derivative instruments that is intended to offset certain risks related to the above products’ features. The derivatives may include, but are not limited to equity options, equity futures, total return swaps, interest rate swaptions, caps, floors and other instruments.

Synthetic Guarantees. The Company sells synthetic GICs, through both full service and investment-only sales channels, to investment vehicles primarily used by qualified defined contribution pension plans. The synthetic GICs are issued in respect of assets that are owned by the trustees of such plans, who invest the assets according to the contract terms agreed to with the Company. The contracts establish participant balances and credit interest thereon. The participant balances are supported by the underlying assets. In connection with certain participant-initiated withdrawals, the contract guarantees that after all underlying assets are liquidated, any remaining participant balances will be paid by the Company. Under U.S. GAAP, these contracts are accounted for as derivatives and recorded at fair value.

The table below provides a summary of the gross notional amount and fair value of derivatives contracts by the primary underlying risks, excluding embedded derivatives and associated reinsurance recoverables. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements and cash collateral. This netting impact results in total derivative assets of $867 million and $1,148 million as of December 31, 2019 and 2018, respectively, and total derivative liabilities of $831 million and $127 million as of December 31, 2019 and 2018, respectively, reflected in the Consolidated Statements of Financial Position.



	December 31, 2019							December 31, 2018
Primary Underlying Risk/ Instrument Type	Gross		Fair Value					Gross		Fair Value
Primary Underlying Risk/ Instrument Type	Notional		Assets		Liabilities			Notional		Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	3,257	$	628	$	(73	)	$	3,885	$	305	$	(67	)
Interest Rate Forwards	205		4		(1		)	600		26		0
Foreign Currency
Foreign Currency Forwards	1,461		22		(57		)	722		26		(2		)
Currency/Interest Rate
Foreign Currency Swaps	22,746		1,467		(302		)	20,724		1,520		(358		)
Total Derivatives Designated as Hedge Accounting Instruments	$	27,669	$	2,121	$	(433	)	$	25,931	$	1,877	$	(427	)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	141,162	$	10,249	$	(4,861	)	$	140,963	$	5,792	$	(3,435	)
Interest Rate Futures	17,095		4		(38		)	13,991		23		(2		)
Interest Rate Options	16,496		339		(238		)	24,002		147		(314		)
Interest Rate Forwards	2,218		18		(3		)	5,049		72		0
Foreign Currency
Foreign Currency Forwards	26,604		208		(214		)	19,849		246		(138		)
Foreign Currency Options	0		0		0			2		0		0
Currency/Interest Rate
Foreign Currency Swaps	13,874		740		(345		)	13,784		773		(421		)
Credit
Credit Default Swaps	798		21		0			5,207		33		(23		)
Equity
Equity Futures	1,802		0		(3		)	1,141		0		(8		)
Equity Options	32,657		679		(765		)	58,693		384		(554		)
Total Return Swaps	18,218		6		(636		)	17,309		1,131		(86		)
Other
Other(1)	1,258		0		0			508		0		0
Synthetic GICs	80,009		1		0			79,215		2		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	352,191	$	12,265	$	(7,103	)	$	379,713	$	8,603	$	(4,981	)
Total Derivatives(2)(3)	$	379,860	$	14,386	$	(7,536	)	$	405,644	$	10,480	$	(5,408	)



Balance Sheet Line Item in which Hedged Item is Recorded	Carrying Amount of the Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)
	(in millions)
Fixed maturities, available-for-sale, at fair value	$	389		$	64
Commercial mortgage and other loans	$	23		$	2
Policyholders’ account balances	$	(1,376	)	$	(107	)
Future policy benefits	$	(676	)	$	(172	)

Most of the Company’s derivatives do not qualify for hedge accounting for various reasons. For example: (i) derivatives that economically hedge embedded derivatives do not qualify for hedge accounting because changes in the fair value of the embedded derivatives are already recorded in net income; (ii) derivatives that are utilized as macro hedges of the Company’s exposure to various risks typically do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedge accounting rules; and (iii) synthetic GIC, which are product standalone derivatives, do not qualify as hedging instruments under hedge accounting rules.

The following table presents recognized derivative instruments (excluding embedded derivatives and associated reinsurance recoverables), and repurchase and reverse repurchase agreements that are offset in the Consolidated Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Consolidated Statements of Financial Position.



	December 31, 2019
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position			Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)			Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives(1)	$	14,303	$	(13,519	)	$	784	$	(607	)	$	177
Securities purchased under agreement to resell	1,012		0			1,012		(1,012		)	0
Total Assets	$	15,315	$	(13,519	)	$	1,796	$	(1,619	)	$	177
Offsetting of Financial Liabilities:
Derivatives(1)	$	7,528	$	(6,705	)	$	823	$	(244	)	$	579
Securities sold under agreement to repurchase	9,681		0			9,681		(9,681		)	0
Total Liabilities	$	17,209	$	(6,705	)	$	10,504	$	(9,925	)	$	579



	December 31, 2018
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position			Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)			Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives(1)	$	10,407	$	(9,331	)	$	1,076	$	(614	)	$	462
Securities purchased under agreement to resell	986		0			986		(986		)	0
Total Assets	$	11,393	$	(9,331	)	$	2,062	$	(1,600	)	$	462
Offsetting of Financial Liabilities:
Derivatives(1)	$	5,387	$	(5,281	)	$	106	$	(45	)	$	61
Securities sold under agreement to repurchase	9,950		0			9,950		(9,950		)	0
Total Liabilities	$	15,337	$	(5,281	)	$	10,056	$	(9,995	)	$	61

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above, see “—Counterparty Credit Risk” below. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset. For additional information on the Company’s accounting policy for securities repurchase and resale agreements, see Note 2.

The primary derivative instruments used by the Company in its fair value, cash flow and net investment hedge accounting relationships are interest rate swaps, currency swaps and currency forwards. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, and equity derivatives in any of its fair value, cash flow or net investment hedge accounting relationships.



	Year Ended December 31, 2019
	Realized Investment Gains (Losses)			Net Investment Income			Other Income (Loss)			Interest Expense		Interest Credited To Policyholders’ Account Balances			Policyholders’ Benefits			AOCI(1)




	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	(14	)	$	(7	)	$	0		$	0	$	194		$	155		$	0
Currency	0			0			0			0		0			0			0
Total gains (losses) on derivatives designated as hedge instruments	(14		)	(7		)	0			0		194			155			0
Gains (losses) on the hedged item:
Interest Rate	11			20			0			0		(186		)	(140		)	0
Currency	1			3			0			0		0			0			0
Total gains (losses) on hedged item	12			23			0			0		(186		)	(140		)	0
Total gains (losses) on fair value hedges net of hedged item	(2		)	16			0			0		8			15			0
Cash flow hedges
Interest Rate	58			0			0			0		0			0			(25		)
Currency	6			0			0			0		0			0			(62		)
Currency/Interest Rate	130			282			(97		)	0		0			0			99
Total gains (losses) on cash flow hedges	194			282			(97		)	0		0			0			12
Net investment hedges
Currency	0			0			0			0		0			0			4
Currency/Interest Rate	0			0			0			0		0			0			0
Total gains (losses) on net investment hedges	0			0			0			0		0			0			4
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	4,533			0			0			0		0			0			0
Currency	14			0			5			0		0			0			0
Currency/Interest Rate	394			0			0			0		0			0			0
Credit	123			0			0			0		0			0			0
Equity	(4,057		)	0			0			0		0			0			0
Other	0			0			0			0		0			0			0
Embedded Derivatives	(2,705		)	0			0			0		0			0			0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,698		)	0			5			0		0			0			0
Total	$	(1,506	)	$	298		$	(92	)	$	0	$	8		$	15		$	16



	Year Ended December 31, 2018(2)
	Realized Investment Gains (Losses)			Net Investment Income			Other Income (Loss)			Interest Expense			Interest Credited To Policyholders’ Account Balances			Policyholders’ Benefits			AOCI(1)




	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	20		$	(9	)	$	0		$	0		$	(65	)	$	35		$	0
Currency	6			0			0			0			0			0			0
Total gains (losses) on derivatives designated as hedge instruments	26			(9		)	0			0			(65		)	35			0
Gains (losses) on the hedged item:
Interest Rate	(27		)	31			0			0			79			(31		)	0
Currency	(5		)	3			0			0			0			0			0
Total gains (losses) on hedged item	(32		)	34			0			0			79			(31		)	0
Total gains (losses) on fair value hedges net of hedged item	(6		)	25			0			0			14			4			0
Cash flow hedges
Interest Rate	2			0			0			(1		)	0			0			32
Currency	7			0			0			0			0			0			20
Currency/Interest Rate	69			217			257			0			0			0			798
Total gains (losses) on cash flow hedges	78			217			257			(1		)	0			0			850
Net investment hedges
Currency	0			0			0			0			0			0			6
Currency/Interest Rate	0			0			0			0			0			0			0
Total gains (losses) on net investment hedges	0			0			0			0			0			0			6
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,226		)	0			0			0			0			0			0
Currency	342			0			(1		)	0			0			0			0
Currency/Interest Rate	364			0			3			0			0			0			0
Credit	(55		)	0			0			0			0			0			0
Equity	1,121			0			0			0			0			0			0
Other	0			0			0			0			0			0			0
Embedded Derivatives	966			0			0			0			0			0			0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	1,512			0			2			0			0			0			0
Total	$	1,584		$	242		$	259		$	(1	)	$	14		$	4		$	856



	Year Ended December 31, 2017(2)
	Realized Investment Gains (Losses)			Net Investment Income			Other Income (Loss)			Interest Expense			Interest Credited To Policyholders’ Account Balances			Policyholders’ Benefits		AOCI(1)




	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	16		$	(19	)	$	0		$	0		$	(1	)	$	0	$	0
Currency	(6		)	0			0			0			0			0		0
Total gains (losses) on derivatives designated as hedge instruments	10			(19		)	0			0			(1		)	0		0
Gains (losses) on the hedged item:
Interest Rate	(18		)	37			0			0			0			0		0
Currency	6			5			0			0			0			0		0
Total gains (losses) on hedged item	(12		)	42			0			0			0			0		0
Total gains (losses) on fair value hedges net of hedged item	(2		)	23			0			0			(1		)	0		0
Cash flow hedges
Interest Rate	0			0			0			(3		)	0			0		7
Currency	0			0			0			0			0			0		(3		)
Currency/Interest Rate	98			189			(303		)	0			0			0		(1,359		)
Total gains (losses) on cash flow hedges	98			189			(303		)	(3		)	0			0		(1,355		)
Net investment hedges
Currency	0			0			0			0			0			0		(9		)
Currency/Interest Rate	0			0			0			0			0			0		0
Total gains (losses) on net investment hedges	0			0			0			0			0			0		(9		)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	1,161			0			0			0			0			0		0
Currency	(340		)	0			0			0			0			0		0
Currency/Interest Rate	(348		)	0			(5		)	0			0			0		0
Credit	13			0			0			0			0			0		0
Equity	(2,498		)	0			0			0			0			0		0
Other	0			0			0			0			0			0		0
Embedded Derivatives	644			0			0			0			0			0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,368		)	0			(5		)	0			0			0		0
Total	$	(1,272	)	$	212		$	(308	)	$	(3	)	$	(1	)	$	0	$	(1,364	)

__________



	(in millions)
Balance, December 31, 2016	$	1,316
Amount recorded in AOCI
Interest Rate	5
Currency	(3		)
Currency/Interest Rate	(1,375		)
Total amount recorded in AOCI	(1,373		)
Amount reclassified from AOCI to income
Interest Rate	2
Currency	0
Currency/Interest Rate	16
Total amount reclassified from AOCI to income	18
Balance, December 31, 2017	$	(39	)
Amount recorded in AOCI
Interest Rate	33
Currency	27
Currency/Interest Rate	1,341
Total amount recorded in AOCI	1,401
Amount reclassified from AOCI to income
Interest Rate	(1		)
Currency	(7		)
Currency/Interest Rate	(543		)
Total amount reclassified from AOCI to income	(551		)
Balance, December 31, 2018	$	811
Cumulative effect adjustment from the adoption of ASU 2017-12(1)	9
Amount recorded in AOCI
Interest Rate	33
Currency	(56		)
Currency/Interest Rate	414
Total amount recorded in AOCI	391
Amount reclassified from AOCI to income
Interest Rate	(58		)
Currency	(6		)
Currency/Interest Rate	(315		)
Total amount reclassified from AOCI to income	(379		)
Balance, December 31, 2019	$	832

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Consolidated Statements of Comprehensive Income; these amounts are then reclassified to earnings when the hedged item affects earnings. Using December 31, 2019 values, it is estimated that a pre-tax gain of approximately $261 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending December 31, 2020.

The exposures the Company is hedging with these qualifying cash flow hedges include the variability of future cash flows from forecasted transactions denominated in foreign currencies, the purchases of invested assets, and the receipt or payment of variable interest on existing financial instruments. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions is 10 years.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. In addition, there were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

Credit derivatives, where the Company has written credit protection on a single name reference, had outstanding notional amounts of $100 million and $110 million as of December 31, 2019 and 2018, respectively. These credit derivatives are reported at fair value as an asset of $1 million as of both December 31, 2019 and 2018. As of December 31, 2019, the notional amount of these credit derivatives had the following NAIC ratings: $36 million in NAIC 1; $60 million in NAIC 2; and $4 million in NAIC 3. The Company has also written credit protection on certain index references with notional amounts of $692 million and $4,953 million, reported at fair value as an asset of $20 million and $10 million as of December 31, 2019 and 2018, respectively. As of December 31, 2019, the notional amount of these credit derivatives had the following NAIC ratings: $50 million in NAIC 1; $570 million in NAIC 3; and $72 million in NAIC 6. NAIC designations are based on the lowest rated single name reference included in the index.

In addition to writing credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio. As of December 31, 2019 and 2018, the Company had $6 million and $145 million of outstanding notional amounts, reported at fair value as a liability of $0 million and $1 million, respectively.

The Company is exposed to losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. The Company manages credit risk by: (i) entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties governed by master netting agreements, as applicable; (ii) trading through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

Substantially all of the Company’s derivative agreements have zero thresholds which require daily full collateralization by the party in a liability position. In addition, certain of the Company’s derivative agreements contain credit-risk related contingent features; if the credit rating of one of the parties to the derivative agreement is to fall below a certain level, the party with positive fair value could request termination at the then fair value or demand immediate full collateralization from the party whose credit rating fell and is in a net liability position.