Leases

12 Months Ended

Dec. 31, 2019

LEASES

The Company occupies leased office space and other facilities in many locations under various long-term leases and has entered into numerous leases covering the long-term use of computers and other equipment. The leases, depending on their specific terms, are classified as either operating or finance with the vast majority of leases falling under the operating classification. The leases in the Company’s portfolio have remaining lease terms from less than one year to 29 years, some of which include options to extend the leases for up to 17 years, and some of which include options to terminate the leases within 8 years. An analysis of all economic and non-economic factors associated with leases containing certain options, including factors such as the existence of cancellation penalties, leasehold improvements made to the underlying assets and location of the underlying assets, is conducted to determine whether those leases are reasonably certain to renew, and hence, should be included in the lease term that is used to establish the right-of-use assets and lease liabilities for those arrangements.

The Company does not have residual guarantees associated with its lessee arrangements, nor are there any restrictions or covenants associated with its lease arrangements.

Lessee

Supplemental balance sheet information related to leases where the Company is the lessee is included below. Right-of-use assets and lease liabilities are included within “Other assets” and “Other liabilities” respectively.



	December 31, 2019
	($ in millions)
Operating Leases:

Right-of-use assets	$	554
Lease liabilities	$	594

Weighted average remaining lease term	6 years
Weighted average discount rate	2.46		%

Maturities of operating lease liabilities are as follows:



	December 31, 2019
	(in millions)
2020	$	152
2021	143
2022	104
2023	74
2024	65
Thereafter	111
Total lease payments	649
Less imputed interest	(55		)
Total	$	594

Lease expense is included in “General and administrative expenses.” The expense was comprised of operating lease costs and short-term lease costs of $138 million and $101 million for the twelve months ended December 31, 2019, respectively. Short-term lease costs relate to those leases with terms of twelve months or less that do not include an option to purchase the underlying asset that is reasonably certain of exercise.

Future minimum lease payments under non-cancelable operating and capital leases along with associated sub-lease income prior to the adoption of ASU 2016-02, Leases (Topic 842) are as follows:



	December 31, 2018
	Operating and Capital Leases(1)		Sub-lease Income
	(in millions)
2019	$	168	$	1
2020	133		1
2021	106		1
2022	82		0
2023	58		0
2024 and thereafter	138		0
Total	$	685	$	3

__________


(1)	Future minimum lease payments under capital leases were $26 million as of December 31, 2018.

Rental expense, net of sub-lease income were $265 million and $258 million for the years ended December 31, 2018 and 2017, respectively.

Lessor

The Company directly owns real estate properties within its investment portfolio. Such real estate is leased to third-parties, with the Company serving as the lessor. The terms of the leases vary depending on property type (e.g., commercial or residential). In most cases, the lessee has an option to renew the lease contract based on market rates but does not have an option to purchase the property. The terms of the leases may also include provisions for the use of common areas. Such non-lease components are not separately accounted for by the Company, as a result of applying the practical expedient discussed in Note 2. Lease income included in “Net investment income” was $182 million for the twelve months ended December 31, 2019.

Operating Leases, Lessor