10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

 For the Transition Period from              to             

Commission File Number 001-16707

Prudential Financial, Inc.

(Exact Name of Registrant as Specified in its Charter) 

New Jersey	22-3703799
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

751 Broad Street

Newark, NJ 07102

(973) 802-6000

(Address and Telephone Number of Registrant’s Principal Executive Offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Trading Symbols(s)	Name of Each Exchange on Which Registered
Common Stock, Par Value $.01	PRU	New York Stock Exchange
5.625% Junior Subordinated Notes	PRS	New York Stock Exchange
4.125% Junior Subordinated Notes	PFH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of the Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐  No  x

As of October 31, 2020, 396 million shares of the registrant’s Common Stock (par value $0.01) were outstanding.

TABLE OF CONTENTS

		Page
PART I FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Unaudited Interim Consolidated Statements of Financial Position as of September 30, 2020 and December 31, 2019	1
	Unaudited Interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019	2
	Unaudited Interim Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019	3
	Unaudited Interim Consolidated Statements of Equity for the three and nine months ended September 30, 2020 and 2019	4
	Unaudited Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	6
	Notes to Unaudited Interim Consolidated Financial Statements	7
	1. Business and Basis of Presentation	7
	2. Significant Accounting Policies and Pronouncements	8
	3. Investments	15
	4. Variable Interest Entities	30
	5. Derivatives and Hedging	31
	6. Fair Value of Assets and Liabilities	41
	7. Closed Block	56
	8. Income Taxes	58
	9. Short-Term and Long-Term Debt	59
	10. Employee Benefit Plans	61
	11. Equity	63
	12. Earnings Per Share	66
	13. Segment Information	68
	14. Commitments and Contingent Liabilities	73
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	79
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	156
Item 4.	Controls and Procedures	157
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	158
Item 1A.	Risk Factors	158
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	159
Item 6.	Exhibits	161
GLOSSARY		162
SIGNATURES		164

Forward-Looking Statements

Certain of the statements included in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Prudential Financial, Inc. and its subsidiaries. There can be no assurance that future developments affecting Prudential Financial, Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (1) the ongoing impact of the COVID-19 pandemic on the global economy, financial markets and our business; (2) losses on investments or financial contracts due to deterioration in credit quality or value, or counterparty default; (3) losses on insurance products due to mortality experience, morbidity experience or policyholder behavior experience that differs significantly from our expectations when we price our products; (4) changes in interest rates, equity prices and foreign currency exchange rates that may (a) adversely impact the profitability of our products, the value of separate accounts supporting these products or the value of assets we manage, (b) result in losses on derivatives we use to hedge risk or increase collateral posting requirements and (c) limit opportunities to invest at appropriate returns; (5) guarantees within certain of our products which are market sensitive and may decrease our earnings or increase the volatility of our results of operations or financial position; (6) liquidity needs resulting from (a) derivative collateral market exposure, (b) asset/liability mismatches, (c) the lack of available funding in the financial markets or (d) unexpected cash demands due to severe mortality calamity or lapse events; (7) financial or customer losses, or regulatory and legal actions, due to inadequate or failed processes or systems, external events, and human error or misconduct such as (a) disruption of our systems and data, (b) an information security breach, (c) a failure to protect the privacy of sensitive data, (d) reliance on third-parties or (e) labor and employment matters; (8) changes in the regulatory landscape, including related to (a) financial sector regulatory reform, (b) changes in tax laws, (c) fiduciary rules and other standards of care, (d) U.S. state insurance laws and developments regarding group-wide supervision, capital and reserves, (e) insurer capital standards outside the U.S. and (f) privacy and cybersecurity regulation; (9) technological changes which may adversely impact companies in our investment portfolio or cause insurance experience to deviate from our assumptions; (10) an inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (11) ratings downgrades; (12) market conditions that may adversely affect the sales or persistency of our products; (13) competition; (14) reputational damage; (15) the costs, effects, timing, or success of our plans to accelerate our strategy; and (16) costs associated with the acquisition of Assurance IQ, LLC and its integration into our strategy. Prudential Financial, Inc. does not undertake to update any particular forward-looking statement included in this document. See “Risk Factors” included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and the Annual Report on Form 10-K for the year ended December 31, 2019 for discussion of certain risks relating to our businesses and investment in our securities.

i

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Financial Position

September 30, 2020 and December 31, 2019 (in millions, except share amounts)

	September 30, 2020		December 31, 2019
ASSETS
Fixed maturities, available-for-sale, at fair value (amortized cost: 2020-$346,511; 2019-$346,574; 2020-net of $152 allowance for credit losses)(1)	$	400,816	$	391,096
Fixed maturities, held-to-maturity, at amortized cost (2020-net of $9 allowance for credit losses; fair value: 2020-$2,264; 2019-$2,302)(1)(2)	1,901		1,933
Fixed maturities, trading, at fair value (amortized cost: 2020-$4,353; 2019-$3,917)(1)	4,371		3,884
Assets supporting experience-rated contractholder liabilities, at fair value(1)	23,961		21,597
Equity securities, at fair value (cost: 2020-$5,395; 2019-$5,560)(1)	7,025		7,522
Commercial mortgage and other loans (net of $235 and $121 allowance for credit losses; includes $915 and $228 of loans measured at fair value under the fair value option at September 30, 2020 and December 31, 2019, respectively)(1)(2)	64,541		63,559
Policy loans	11,502		12,096
Other invested assets (2020-net of $2 allowance for credit losses; includes $5,949 and $5,646 of assets measured at fair value at September 30, 2020 and December 31, 2019, respectively)(1)(2)	16,921		15,606
Short-term investments (2020-net of $1 allowance for credit losses)	10,015		5,467
Total investments	541,053		522,760
Cash and cash equivalents(1)	20,658		16,327
Accrued investment income(1)	3,129		3,330
Deferred policy acquisition costs(2)	18,599		19,912
Value of business acquired	1,131		1,110
Other assets (2020-net of $9 allowance for credit losses)(1)(2)	21,536		20,832
Separate account assets	305,483		312,281
TOTAL ASSETS	$	911,589	$	896,552
LIABILITIES AND EQUITY
LIABILITIES
Future policy benefits	$	303,733	$	293,527
Policyholders’ account balances	159,346		152,110
Policyholders’ dividends(2)	8,978		6,988
Securities sold under agreements to repurchase	10,874		9,681
Cash collateral for loaned securities	3,071		4,213
Income taxes(2)	12,111		11,378
Short-term debt	1,113		1,933
Long-term debt	20,169		18,646
Other liabilities (2020-net of $19 allowance for credit losses)(1)(2)	18,579		20,802
Notes issued by consolidated variable interest entities (includes $775 and $800 measured at fair value under the fair value option at September 30, 2020 and December 31, 2019, respectively)(1)	1,242		1,274
Separate account liabilities	305,483		312,281
Total liabilities	844,699		832,833
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 14)
EQUITY
Preferred Stock ($.01 par value; 10,000,000 shares authorized; none issued)	0		0
Common Stock ($.01 par value; 1,500,000,000 shares authorized; 666,305,189 shares issued as of both September 30, 2020 and December 31, 2019)	6		6
Additional paid-in capital	25,563		25,532
Common Stock held in treasury, at cost (270,873,244 and 267,472,781 shares at September 30, 2020 and December 31, 2019, respectively)	(19,725)		(19,453)
Accumulated other comprehensive income (loss)	30,001		24,039
Retained earnings	30,372		32,991
Total Prudential Financial, Inc. equity	66,217		63,115
Noncontrolling interests	673		604
Total equity	66,890		63,719
TOTAL LIABILITIES AND EQUITY	$	911,589	$	896,552

__________

(1)See Note 4 for details of balances associated with variable interest entities.

(2)September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

See Notes to Unaudited Interim Consolidated Financial Statements

1

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2020 and 2019 (in millions, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
REVENUES
Premiums	$	7,482	$	6,937	$	22,839	$	22,972
Policy charges and fee income	1,464		1,519		4,476		4,463
Net investment income	4,446		4,438		12,834		13,044
Asset management and service fees	1,120		1,038		3,144		3,137
Other income (loss)	992		320		(125)		2,217
Realized investment gains (losses), net	(79)		853		(2,164)		(249)
Total revenues	15,425		15,105		41,004		45,584
BENEFITS AND EXPENSES
Policyholders’ benefits	8,312		7,722		25,768		25,037
Interest credited to policyholders’ account balances	1,151		1,106		3,375		3,729
Dividends to policyholders	554		667		1,008		1,681
Amortization of deferred policy acquisition costs	638		591		1,882		1,808
General and administrative expenses	3,323		3,294		10,194		9,588
Total benefits and expenses	13,978		13,380		42,227		41,843
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURES	1,447		1,725		(1,223)		3,741
Total income tax expense (benefit)	(50)		332		7		726
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURES	1,497		1,393		(1,230)		3,015
Equity in earnings of operating joint ventures, net of taxes	10		32		62		85
NET INCOME (LOSS)	1,507		1,425		(1,168)		3,100
Less: Income (loss) attributable to noncontrolling interests	20		7		25		42
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.	$	1,487	$	1,418	$	(1,193)	$	3,058
EARNINGS PER SHARE
Basic earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc.	$	3.72	$	3.47	$	(3.06)	$	7.45
Diluted earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc.	$	3.70	$	3.44	$	(3.06)	$	7.35

See Notes to Unaudited Interim Consolidated Financial Statements

2

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Comprehensive Income

Three and Nine Months Ended September 30, 2020 and 2019 (in millions)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
NET INCOME (LOSS)	$	1,507	$	1,425	$	(1,168)	$	3,100
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments for the period	329		(174)		122		(66)
Net unrealized investment gains (losses)	(1,853)		4,776		6,894		21,571
Defined benefit pension and postretirement unrecognized periodic benefit (cost)	74		23		218		104
Total	(1,450)		4,625		7,234		21,609
Less: Income tax expense (benefit) related to other comprehensive income (loss)	(620)		1,051		1,265		4,961
Other comprehensive income (loss), net of taxes	(830)		3,574		5,969		16,648
Comprehensive income (loss)	677		4,999		4,801		19,748
Less: Comprehensive income (loss) attributable to noncontrolling interests	26		5		32		45
Comprehensive income (loss) attributable to Prudential Financial, Inc.	$	651	$	4,994	$	4,769	$	19,703

See Notes to Unaudited Interim Consolidated Financial Statements

3

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Equity

Three and Nine Months Ended September 30, 2020 (in millions)

	Prudential Financial, Inc. Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock Held In Treasury		Accumulated Other Comprehensive Income (Loss)		Total Prudential Financial, Inc. Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2019	$	6	$	25,532	$	32,991	$	(19,453)	$	24,039	$	63,115	$	604	$	63,719
Cumulative effect of adoption of accounting changes(1)					(99)						(99)				(99)
Common Stock acquired							(500)				(500)				(500)
Contributions from noncontrolling interests													31		31
Distributions to noncontrolling interests													(11)		(11)
Stock-based compensation programs			(26)				112				86				86
Dividends declared on Common Stock					(445)						(445)				(445)
Comprehensive income:
Net income (loss)					(271)						(271)		1		(270)
Other comprehensive income (loss), net of tax									(1,439)		(1,439)		0		(1,439)
Total comprehensive income (loss)											(1,710)		1		(1,709)
Balance, March 31, 2020	6		25,506		32,176		(19,841)		22,600		60,447		625		61,072
Common Stock acquired
Contributions from noncontrolling interests													4		4
Distributions to noncontrolling interests													(23)		(23)
Stock-based compensation programs			7				56				63				63
Dividends declared on Common Stock					(441)						(441)				(441)
Comprehensive income:
Net income (loss)					(2,409)						(2,409)		4		(2,405)
Other comprehensive income (loss), net of tax									8,237		8,237		1		8,238
Total comprehensive income (loss)											5,828		5		5,833
Balance, June 30, 2020	6		25,513		29,326		(19,785)		30,837		65,897		611		66,508
Common Stock acquired
Contributions from noncontrolling interests													50		50
Distributions to noncontrolling interests													(14)		(14)
Consolidations (deconsolidations) of noncontrolling interests													0		0
Stock-based compensation programs			50				60				110				110
Dividends declared on Common Stock					(441)						(441)				(441)
Comprehensive income:
Net income (loss)					1,487						1,487		20		1,507
Other comprehensive income (loss), net of tax									(836)		(836)		6		(830)
Total comprehensive income (loss)											651		26		677
Balance, September 30, 2020	$	6	$	25,563	$	30,372	$	(19,725)	$	30,001	$	66,217	$	673	$	66,890

__________

(1)Includes the impact from the adoption of ASU 2016-13. See Note 2.

See Notes to Unaudited Interim Consolidated Financial Statements

4

PRUDENTIAL FINANCIAL, INC.
Unaudited Interim Consolidated Statements of Equity—Continued
Three and Nine Months Ended September 30, 2019 (in millions)
	Prudential Financial, Inc. Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock Held In Treasury		Accumulated Other Comprehensive Income (Loss)		Total Prudential Financial, Inc. Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2018	$	6	$	24,828	$	30,470	$	(17,593)	$	10,906	$	48,617	$	414	$	49,031
Cumulative effect of adoption of accounting changes(1)					(21)				7		(14)				(14)
Common Stock acquired							(500)				(500)				(500)
Contributions from noncontrolling interests													26		26
Distributions to noncontrolling interests													(4)		(4)
Stock-based compensation programs			(46)				131				85				85
Dividends declared on Common Stock					(415)						(415)				(415)
Comprehensive income:
Net income (loss)					932						932		5		937
Other comprehensive income (loss), net of tax									6,305		6,305		(1)		6,304
Total comprehensive income (loss)											7,237		4		7,241
Balance, March 31, 2019	6		24,782		30,966		(17,962)		17,218		55,010		440		55,450
Common Stock acquired							(500)				(500)				(500)
Contributions from noncontrolling interests													25		25
Distributions to noncontrolling interests													(16)		(16)
Consolidations (deconsolidations) of noncontrolling interests													8		8
Stock-based compensation programs			43				46				89				89
Dividends declared on Common Stock					(411)						(411)				(411)
Comprehensive income:
Net income (loss)					708						708		30		738
Other comprehensive income (loss), net of tax									6,764		6,764		6		6,770
Total comprehensive income (loss)											7,472		36		7,508
Balance, June 30, 2019	6		24,825		31,263		(18,416)		23,982		61,660		493		62,153
Common Stock acquired							(1,000)				(1,000)				(1,000)
Exchangeable Surplus Notes conversion			502								502				502
Contributions from noncontrolling interests													54		54
Distributions to noncontrolling interests													(36)		(36)
Stock-based compensation programs			24				30				54				54
Dividends declared on Common Stock					(412)						(412)				(412)
Comprehensive income:
Net income (loss)					1,418						1,418		7		1,425
Other comprehensive income (loss), net of tax									3,576		3,576		(2)		3,574
Total comprehensive income (loss)											4,994		5		4,999
Balance, September 30, 2019	$	6	$	25,351	$	32,269	$	(19,386)	$	27,558	$	65,798	$	516	$	66,314

__________

(1)Includes the impact from the adoption of ASU 2017-08 and 2017-12. See Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.

See Notes to Unaudited Interim Consolidated Financial Statements

5

PRUDENTIAL FINANCIAL, INC.

Unaudited Interim Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2020 and 2019 (in millions)

	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,168)	$	3,100
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Realized investment (gains) losses, net	2,164		249
Policy charges and fee income	(1,995)		(2,117)
Interest credited to policyholders’ account balances	3,375		3,729
Depreciation and amortization	448		352
(Gains) losses on assets supporting experience-rated contractholder liabilities, net	(393)		(832)
Change in:
Deferred policy acquisition costs	(206)		(414)
Future policy benefits and other insurance liabilities	7,656		7,718
Income taxes	(331)		(245)
Derivatives, net	6,477		5,225
Other, net	(3,146)		(1,125)
Cash flows from (used in) operating activities	12,881		15,640
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	31,989		38,356
Fixed maturities, held-to-maturity	76		84
Fixed maturities, trading	444		284
Assets supporting experience-rated contractholder liabilities	22,534		11,631
Equity securities	1,974		2,087
Commercial mortgage and other loans	3,629		4,483
Policy loans	1,862		1,717
Other invested assets	1,376		1,074
Short-term investments	35,401		27,675
Payments for the purchase/origination of:
Fixed maturities, available-for-sale	(39,692)		(48,162)
Fixed maturities, trading	(869)		(733)
Assets supporting experience-rated contractholder liabilities	(24,390)		(11,731)
Equity securities	(2,025)		(2,094)
Commercial mortgage and other loans	(3,913)		(6,807)
Policy loans	(1,700)		(1,440)
Other invested assets	(2,089)		(1,667)
Short-term investments	(40,009)		(28,704)
Dispositions, net of cash disposed	1,454		0
Derivatives, net	434		1,170
Other, net	(225)		(339)
Cash flows from (used in) investing activities	(13,739)		(13,116)
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholders’ account deposits	33,268		21,140
Policyholders’ account withdrawals	(26,944)		(19,734)
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities	50		89
Cash dividends paid on Common Stock	(1,325)		(1,237)
Net change in financing arrangements (maturities 90 days or less)	(56)		(33)
Common Stock acquired	(500)		(1,940)
Common Stock reissued for exercise of stock options	106		107
Proceeds from the issuance of debt (maturities longer than 90 days)	2,948		2,923
Repayments of debt (maturities longer than 90 days)	(2,113)		(1,338)
Proceeds from notes issued by consolidated VIEs	0		925
Repayments of notes issued by consolidated VIEs	(19)		(638)
Other, net	(349)		94
Cash flows from (used in) financing activities	5,066		358
Effect of foreign exchange rate changes on cash balances	122		56
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	4,330		2,938
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR	16,474		15,495
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	20,804	$	18,433
NON-CASH TRANSACTIONS DURING THE PERIOD
Treasury Stock shares issued for stock-based compensation programs	$	147	$	174
Conversion of surplus notes into Common Stock	$	0	$	502
Significant Pension Risk Transfer transactions:
Assets received, excluding cash and cash equivalents	$	317	$	445
Liabilities assumed	584		447
Net cash received	$	267	$	2
RECONCILIATION TO THE UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Cash and cash equivalents	$	20,658	$	18,289
Restricted cash and restricted cash equivalents (included in “Other assets”)	146		144
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	20,804	$	18,433

See Notes to Unaudited Interim Consolidated Financial Statements

6

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements

1. BUSINESS AND BASIS OF PRESENTATION

Prudential Financial, Inc. (“Prudential Financial”) and its subsidiaries (collectively, “Prudential” or the “Company”) provide a wide range of insurance, investment management, and other financial products and services to both individual and institutional customers throughout the United States and in many other countries. Principal products and services provided include life insurance, annuities, retirement-related services, mutual funds and investment management.

The Company’s principal operations are comprised of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the U.S. Workplace Solutions, U.S. Individual Solutions, and Assurance IQ divisions), the International Businesses, the Closed Block division, and the Company’s Corporate and Other operations. The U.S. Workplace Solutions division consists of the Retirement and Group Insurance businesses, the U.S. Individual Solutions division consists of the Individual Annuities and Individual Life businesses, and the Assurance IQ division consists of the Assurance IQ business. In October 2019, the Company completed the acquisition of Assurance IQ, LLC (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. The Company’s Corporate and Other operations include corporate items and initiatives that are not allocated to business segments and businesses that have been or will be divested or placed in run-off, excluding the Closed Block division.

Basis of Presentation

The Unaudited Interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). The Unaudited Interim Consolidated Financial Statements include the accounts of Prudential Financial, entities over which the Company exercises control, including majority-owned subsidiaries and minority-owned entities such as limited partnerships in which the Company is the general partner and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. See Note 4 for additional information on the Company’s consolidated variable interest entities. Intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments necessary for a fair statement of the financial position and results of operations have been made. All such adjustments are of a normal, recurring nature. Interim results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining deferred policy acquisition costs (“DAC”) and related amortization; policyholders’ account balances related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and fixed annuity products; value of business acquired (“VOBA”) and its amortization; amortization of deferred sales inducements (“DSI”); measurement of goodwill and any related impairment; valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”); future policy benefits including guarantees; pension and other postretirement benefits; provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

COVID-19

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Beginning in the first quarter of 2020, the outbreak of the novel coronavirus (“COVID-19”) has resulted in extreme stress and disruption in the global economy and financial markets, and has adversely impacted, and may continue to adversely impact, our results of operations, financial condition and cash flows. Due to the highly uncertain nature of these conditions, it is not possible to estimate the ultimate impacts at this time. The risks may have manifested, and may continue to manifest, in our financial statements in the areas of, among others, i) investments: increased risk of loss on our investments due to default or deterioration in credit quality or value; ii) insurance liabilities and related balances: potential changes to assumptions regarding investment returns, mortality, morbidity and policyholder behavior which are reflected in our insurance liabilities and certain related balances (e.g., DAC, VOBA, etc.); and iii) goodwill: the macroeconomic environment may also result in the need to recognize an impairment of goodwill which could negatively impact our results of operations and financial condition. We cannot predict what impact the COVID-19 pandemic will ultimately have on the global economy, markets or our businesses.

Business Dispositions

The Prudential Life Insurance Company of Korea, Ltd.

On August 31, 2020, Prudential International Insurance Holdings, Ltd. (“PIIH”), a subsidiary of Prudential Financial, successfully completed the sale of The Prudential Life Insurance Company of Korea, Ltd. (“POK”) to KB Financial Group Inc., for cash consideration of approximately 2.3 trillion Korean Won, equal to approximately U.S. $1.9 billion.

The after-tax loss on the sale of POK was approximately $800 million, including approximately $700 million of which was recorded during the second quarter of 2020 at the time the Company reported its investment in POK as “held for sale”, and approximately $100 million of which was recognized in the third quarter of 2020 reflective of final balances at the completion of the sale.

Prudential Life Insurance Company of Taiwan Inc.

On August 11, 2020, PIIH entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Taishin Financial Holding Co, Ltd. (the “Buyer”), pursuant to which PIIH has agreed to sell to the Buyer all of the issued and outstanding capital stock of Prudential Life Insurance Company of Taiwan Inc. (“POT”), the Company’s insurance business in Taiwan, for cash consideration of approximately 5.5 billion New Taiwan Dollars, equal to approximately U.S. $190 million at then current exchange rates, to be paid at closing, and contingent consideration with a fair value of approximately $26 million as of September 30, 2020. The fair value of the contingent consideration is tied to the level of yields for the 10-year Taiwanese Government bond two years after the signing of the transaction and can result in a maximum payout of $100 million if yields increase by 40 basis points.

The Share Purchase Agreement contains customary warranties and covenants of PIIH and the Buyer. The Company expects the transaction to close in 2021, subject to regulatory approval and the satisfaction of customary closing conditions.

In the third quarter of 2020, the Company is reporting its investment in POT as “held for sale” and recognized an estimated $300 million after-tax charge to earnings to adjust the carrying value of POT to the fair market value reflected in the purchase price. The ultimate after-tax loss will be based on balances at the closing date and could vary materially from the charge recorded in the third quarter.

The Company intends to use the proceeds of the transaction for general corporate purposes.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the current fiscal year

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

and/or those that have been issued but not yet adopted as of September 30, 2020, and as of the date of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.

Adoption of ASU 2016-13

The Company adopted ASU 2016-13, and related ASUs, effective January 1, 2020 using the modified retrospective method for certain financial assets carried at amortized cost and certain off-balance sheet exposures. The modified retrospective method results in a cumulative effect adjustment to opening retained earnings. The Company adopted the guidance related to fixed maturities, available-for-sale on a prospective basis.

This ASU requires the use of a new current expected credit loss (“CECL”) model to account for expected credit losses on certain financial assets reported at amortized cost (e.g., loans held for investment, fixed maturities held-to-maturity, reinsurance receivables, etc.) and certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans and certain loan commitments). The guidance requires an entity to estimate lifetime credit losses related to such financial assets and credit exposures based on relevant information about past events, current conditions, and reasonable and supportable forecasts that may affect the collectability of the reported amounts. The standard also modifies the OTTI guidance for fixed maturities, available-for-sale requiring the use of an allowance rather than a direct write-down of the investment.

The impacts of this ASU on the Company’s Consolidated Financial Statements primarily include (1) A Cumulative Effect Adjustment Upon Adoption; (2) Changes to the Presentation of the Consolidated Statements of Financial Position and Consolidated Statements of Operations; and (3) Changes to Accounting Policies. Each of these impacts is described below. This section is meant to serve as an update to, and should be read in conjunction with, Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(1) Cumulative Effect Adjustment Upon Adoption

Summary of Transition Impact on the Consolidated Statements of Financial Position
Upon Adoption on January 1, 2020
	Increase/(Decrease)
	(in millions)
Fixed maturities, held-to-maturity	$	(9)
Commercial mortgage and other loans	(115)
Other invested assets	(1)
Deferred policy acquisition costs	9
Other assets	(6)
Total assets	$	(122)
Policyholders' dividends	$	(14)
Other liabilities	21
Income taxes	(30)
Total liabilities	(23)
Retained earnings	(99)
Total equity	(99)
Total liabilities and equity	$	(122)

The prospective adoption of the portions of the standard related to fixed maturities, available-for-sale resulted in no impact to opening retained earnings.

(2) Changes to the Presentation of the Consolidated Statements of Financial Position and Consolidated Statements of Operations

The allowance for credit losses is presented parenthetically on relevant line items in the Consolidated Statements of Financial Position. In the Consolidated Statements of Operations, realized investment gains (losses), net are presented on one

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

line item and will no longer reflect the breakout of OTTI on fixed maturity securities; OTTI on fixed maturity securities transferred to other comprehensive income (“OCI”); and other realized investment gains (losses), net. The presentation of this detail in prior periods is immaterial.

(3) Changes to Accounting Policies

This section has been updated to include the following changes in our accounting policies resulting from the adoption of ASU 2016-13.

Fixed maturities, available-for-sale

Fixed maturities, available-for-sale (“AFS debt securities”) are reported at fair value in the Statements of Financial Position. Interest income, and amortization of premium and accretion of discount are included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions relating to the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of impairments recognized in earnings and OCI. For mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is impaired or purchased with credit deterioration. For impaired mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively only if subsequent favorable or adverse changes in expected cash flows are not reflected in the allowance for credit losses. Prior to the adoption of this standard, the effective yield was adjusted prospectively regardless of whether the investment was impaired or not.

AFS debt securities with unrealized losses are reviewed quarterly to determine whether the amortized cost basis of the security is recoverable. In evaluating whether the amortized cost basis is recoverable, the Company considers several factors including, but not limited to the extent of the decline and the reasons for the decline in value (credit events, currency or interest-rate related, including general credit spread widening), and the financial condition of the issuer.

When an AFS debt security is in an unrealized loss position and (1) the Company has the intent to sell the AFS debt security, or (2) it is more likely than not the Company will be required to sell the AFS debt security before its anticipated recovery, or (3) the Company has deemed the AFS debt security to be uncollectable, the amortized cost basis of the AFS debt security is written down to fair value and any previously recognized allowance is reversed. The impairment is reported in “Realized investment gains (losses), net.” The new cost basis is not adjusted for subsequent increases in estimated fair value.

For an AFS debt security in an unrealized loss position that does not meet these conditions, the Company analyzes its ability to recover the amortized cost by comparing the net present value of projected future cash flows (the “net present value”) with the amortized cost of the security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the AFS debt security at the date of acquisition. The Company may use the estimated fair value of collateral, if any, as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment, an allowance for losses is recognized in earnings for the difference between amortized cost and the net present value and is limited to the difference between amortized cost and fair value of the AFS debt security. Any difference between the fair value and the net present value of the debt security at the impairment measurement date remains in “Other comprehensive income (loss).” Changes in the allowance for losses are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, any impairments on AFS debt securities were reported as an adjustment to the amortized cost basis of the security. Subsequent to the impairment, the AFS debt security was treated as if it were newly acquired at the date of impairment, and any increases in cash flows expected to be collected were accreted into net investment income over the life of the investment.

Fixed maturities, held-to-maturity

Fixed maturities, held-to-maturity are reported in the Statements of Financial Position at amortized cost net of the CECL allowance. The CECL allowance is generally determined based on probability of default and loss given default assumptions according to sector, credit quality and remaining time to maturity. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Prior to the adoption of this standard, fixed maturities, held-to-maturity deemed to be OTTI were written down to the net present value of expected cash flows. Any difference between the fair value and the net present value of the debt security at the impairment measurement date was recorded in “Other comprehensive income (loss).”

Interest income, and amortization of premium and accretion of discount are included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated timing and amount of cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of impairment recognized in earnings and OCI. For mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is impaired or purchased with credit deterioration. For impaired mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively only if subsequent favorable or adverse changes in expected cash flows are not reflected in the allowance for credit losses.

Prior to the adoption of this standard, the effective yield was adjusted prospectively regardless of whether the investment was impaired or not.

Commercial mortgage and other loans

Commercial mortgage and other loans are reported in the Statements of Financial Position at amortized cost net of the CECL allowance. Additionally, certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans, and certain unfunded mortgage loan commitments where the Company cannot unconditionally cancel the commitment) are also subject to a CECL allowance.

The CECL allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets or off-balance sheet credit exposures. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, and other collateralized and uncollateralized loans.

For commercial mortgage and agricultural mortgage loans (and related unfunded commitments where the Company cannot unconditionally cancel the commitment), the allowance is calculated using an internally developed CECL model.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions, and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate. Information about certain key inputs is detailed below.

Key factors in determining the internal credit ratings for commercial mortgage and agricultural mortgage loans include loan-to-value and debt-service-coverage ratios. Other factors include amortization, loan term, and estimated market value growth rate and volatility for the property type and region. The loan-to-value ratio compares the carrying amount of the loan to the fair value of the underlying property or properties collateralizing the loan and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the carrying amount of the loan exceeds the collateral value. A loan-to-value ratio less than 100% indicates an excess of collateral value over the carrying amount of the loan. The debt-service-coverage ratio is a property’s net operating income as a percentage of its debt service payments. Debt-service-coverage ratios less than 1.0 times indicate that a property’s operations do not generate enough income to cover the loan’s current debt payments. A debt-service-coverage ratio greater than 1.0 times indicates an excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company’s periodic review of the commercial mortgage and agricultural mortgage loan portfolios, which includes an internal appraisal of the underlying collateral value. The Company’s periodic review also includes a credit re-rating process, whereby the internal credit rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary credit quality rating system. See Note 3 for additional information related to the loan-to-value ratios and debt-service-coverage ratios related to the Company’s commercial mortgage and agricultural mortgage loan portfolios. Generally, every loan is re-rated at least annually.

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Annual expected loss rates are based on historical default and loss experience factors. Using average lives, the annual expected loss rates are converted into life-of-loan loss expectations.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. The change in allowance is reported in “Realized investment gains (losses), net.” As it relates to unfunded commitments that are in scope of this guidance, the CECL allowance is reported in “Other liabilities,” and the change in the allowance is reported in “Realized investment gains (losses), net.”

When a commercial mortgage or other loan is deemed to be uncollectible, any allowance is reversed and a direct write-down of the carrying amount of the loan is recorded through “Realized investment gains (losses), net.” The carrying amount of the loan is not adjusted for subsequent recoveries in value.

The CECL allowance for other collateralized and uncollateralized loans carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, the impairments on commercial mortgage and other loans were collectively reviewed at a portfolio level for impairment based on probable incurred but not specifically identified losses with any such losses reflected in an allowance for credit losses. When a loan was individually identified to be impaired, the loan was individually evaluated for an allowance. Changes in these allowances were reported in “Realized investment gains (losses), net.” Additionally, an allowance for credit losses was not required on unfunded loan commitments.

As further described in Note 14, the Company’s PGIM business provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities (“GSEs”). The Company has agreed to indemnify the GSEs for a portion of the credit risk associated with certain of the mortgages it services. Management has established a CECL allowance that factors in historical loss information, current conditions and reasonable and supportable forecasts. The allowance also considers the remaining lives of the loans subject to the indemnification. The CECL allowance is included in “Other liabilities” and changes in the CECL allowance are reported in “Realized investment gains (losses), net.” Prior to the adoption of this standard, a credit loss allowance was not required.

Reinsurance Recoverables

Reinsurance recoverables are reported on the Statements of Financial Position in “Other Assets” net of the CECL allowance. The CECL allowance considers the credit quality of the reinsurance counterparty and is generally determined based on the probability of default and loss given default assumptions, after considering any applicable collateral arrangements. Additions to or releases of the allowance are reported in “Policyholders’ benefits.”

Prior to the adoption of this standard, an allowance for credit losses for reinsurance recoverables was established only when it was deemed probable that a reinsurer may fail to make payments to us in a timely manner.

Trade Receivables

Trade receivables related to Assurance IQ are reported in the Statements of Financial Position in “Other assets” net of the CECL allowance. The CECL allowance considers the credit quality of the counterparties and is generally determined based on probability of default and loss given default assumptions. Additions to or releases of the allowance are reported in “General and administrative expenses.” Prior to the adoption of this standard, the reserve was limited to an allowance for doubtful accounts.

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Other ASUs adopted during the nine months ended September 30, 2020

Standard	Description	Effective date and method of adoption	Effect on the financial statements or other significant matters
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment	This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test, which measures a goodwill impairment by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill. Under the ASU, a goodwill impairment should be recorded for the amount by which the carrying amount of a reporting unit exceeds its fair value (capped by the total amount of goodwill allocated to the reporting unit).	January 1, 2020 using the prospective method.	The adoption of the ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	This ASU provides optional relief for certain contracts impacted by reference rate reform. The standard permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The ASU also temporarily (until December 31, 2022) allows hedge relationships to continue without de-designation upon changes due to reference rate reform.	March 12, 2020 to December 31, 2022 using the prospective method.	This ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements. The Company made the election under ASU 2020-04 for all applicable contracts as they converted from the current reference rate to the new reference rate.

ASU issued but not yet adopted as of September 30, 2020 — ASU 2018-12

ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the FASB on August 15, 2018 and is expected to have a significant impact on the Consolidated Financial Statements and Notes to the Consolidated Financial Statements. In October 2019, the FASB issued ASU 2019-09, Financial Services - Insurance (Topic 944): Effective Date to affirm its decision to defer the effective date of ASU 2018-12 to January 1, 2022 (with early adoption permitted), representing a one year extension from the original effective date of January 1, 2021. As a result of the COVID-19 pandemic, in November 2020 the FASB issued ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application to defer for an additional one year the effective date of ASU 2018-12 from January 1, 2022 to January 1, 2023, and to provide transition relief to facilitate the early adoption of the ASU. The transition relief would allow large calendar-year public companies that early adopt ASU 2018-12 to apply the guidance either as of January 1, 2020 or January 1, 2021 (and record transition adjustments as of January 1, 2020 or January 1, 2021, respectively) in the 2022 financial statements. Companies that do not early adopt ASU 2018-12 would apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the 2023 financial statements. ASU 2018-12 will impact, at least to some extent, the accounting and disclosure requirements for all long-duration insurance and investment contracts issued by the Company. Outlined below are four key areas of change, although there are other less significant changes not noted below. In addition to the impacts to the balance sheet upon adoption, the Company also expects an impact to how earnings emerge thereafter.

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

ASU 2018-12 Amended Topic	Description	Method of adoption	Effect on the financial statements or other significant matters
Cash flow assumptions used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products	Requires an entity to review, and if necessary, update the cash flow assumptions used to measure the liability for future policy benefits, for both changes in future assumptions and actual experience, at least annually using a retrospective update method with a cumulative catch-up adjustment recorded in a separate line item in the Consolidated Statements of Operations.	An entity may choose one of two adoption methods for the liability for future policy benefits: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in Accumulated other comprehensive income (loss) (“AOCI”) or (2) a full retrospective transition method.	The options for method of adoption and the impacts of such methods are under assessment.
Discount rate assumption used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products	Requires discount rate assumptions to be based on an upper-medium grade fixed income instrument yield, which will be updated each quarter with the impact recorded through OCI. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the discount rate assumptions.	As noted above, an entity may choose either a modified retrospective transition method or full retrospective transition method for the liability for future policy benefits. Under either method, for balance sheet remeasurement purposes, the liability for future policy benefits will be remeasured using current discount rates as of either the beginning of the prior year (if early adoption is elected) or the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.	Upon adoption, under either transition method, there will be an adjustment to AOCI as a result of remeasuring in-force contract liabilities using current upper-medium grade fixed income instrument yields. The adjustment upon adoption will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The magnitude of such adjustment is currently being assessed.
Amortization of deferred acquisition costs (DAC) and other balances	Requires DAC and other balances, such as unearned revenue reserves and DSI, to be amortized on a constant level basis over the expected term of the related contract, independent of expected profitability.	An entity may apply one of two adoption methods: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) if an entity chooses a full retrospective transition method for its liability for future policy benefits, as described above, it is required to also use a full retrospective transition method for DAC and other balances.	The options for method of adoption and the impacts of such methods are under assessment. Under the modified retrospective transition method, the Company would not expect a significant impact to the balance sheet, other than the impact of the removal of any related amounts in AOCI.
Market Risk Benefits (MRB)	Requires an entity to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value, and record MRB assets and liabilities separately on the Consolidated Statements of Financial Position. Changes in fair value of market risk benefits are recorded in net income, except for the portion of the change in MRB liabilities attributable to changes in an entity’s non-performance risk (“NPR”) which is recognized in OCI.	An entity shall adopt the guidance for market risk benefits using the retrospective transition method, which includes a cumulative effect adjustment on the balance sheet as of either the beginning of prior year (if early adoption is elected) or the beginning of the earliest period presented. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the balance of the market risk benefits upon adoption.	Upon adoption, the Company expects an impact to retained earnings for the difference between the fair value and carrying value of benefits not currently measured at fair value (e.g., guaranteed minimum death benefits on variable annuities) and an impact from reclassifying the cumulative effect of changes in NPR from retained earnings to AOCI. The magnitude of such adjustments is currently being assessed.

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

3. INVESTMENTS

Fixed Maturity Securities

The following tables set forth the composition of fixed maturity securities (excluding investments classified as trading), as of the dates indicated:

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	31,095	$	11,040	$	23	$	0	$	42,112
Obligations of U.S. states and their political subdivisions	10,555		2,052		4		0		12,603
Foreign government bonds	90,915		16,317		195		1		107,036
U.S. public corporate securities	92,988		16,259		454		64		108,729
U.S. private corporate securities(1)	35,846		3,586		192		29		39,211
Foreign public corporate securities	25,131		3,408		185		24		28,330
Foreign private corporate securities	27,934		1,785		485		30		29,204
Asset-backed securities(2)	14,070		168		104		0		14,134
Commercial mortgage-backed securities	15,096		1,263		6		4		16,349
Residential mortgage-backed securities(3)	2,881		228		1		0		3,108
Total fixed maturities, available-for-sale(1)	$	346,511	$	56,106	$	1,649	$	152	$	400,816

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Amortized Cost, Net of Allowance
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	915	$	265	$	0	$	1,180	$	0	$	915
Foreign public corporate securities	637		66		0		703		9		628
Foreign private corporate securities	85		2		0		87		0		85
Residential mortgage-backed securities(3)	273		21		0		294		0		273
Total fixed maturities, held-to-maturity(4)	$	1,910	$	354	$	0	$	2,264	$	9	$	1,901

__________

(1)Excludes notes with amortized cost of $6,466 million (fair value, $6,594 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, credit cards and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Excludes notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

15

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCI(4)
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	30,625	$	5,195	$	161	$	35,659	$	0
Obligations of U.S. states and their political subdivisions	10,068		1,437		8		11,497		0
Foreign government bonds	98,356		20,761		63		119,054		(34)
U.S. public corporate securities	87,566		11,030		257		98,339		(6)
U.S. private corporate securities(1)	34,410		2,243		120		36,533		0
Foreign public corporate securities	26,841		3,054		70		29,825		(1)
Foreign private corporate securities	27,619		1,201		580		28,240		0
Asset-backed securities(2)	13,067		147		40		13,174		(77)
Commercial mortgage-backed securities	14,978		610		14		15,574		0
Residential mortgage-backed securities(3)	3,044		159		2		3,201		(1)
Total fixed maturities, available-for-sale(1)	$	346,574	$	45,837	$	1,315	$	391,096	$	(119)

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	891	$	282	$	0	$	1,173
Foreign public corporate securities	649		64		0		713
Foreign private corporate securities	83		2		0		85
Residential mortgage-backed securities(3)	310		21		0		331
Total fixed maturities, held-to-maturity(5)	$	1,933	$	369	$	0	$	2,302

__________

(1)Excludes notes with amortized cost of $4,751 million (fair value, $4,757 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, home equity and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Represents the amount of unrealized losses remaining in AOCI, from the impairment measurement date. Amount excludes $362 million of net unrealized gains on impaired available-for-sale securities and $1 million of net unrealized gains on impaired held-to-maturity securities relating to changes in the value of such securities subsequent to the impairment measurement date.

(5)Excludes notes with amortized cost of $4,998 million (fair value, $5,401 million), which have been offset with the associated debt under a netting agreement.

16

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following table sets forth the fair value and gross unrealized losses on available-for-sale fixed maturity securities without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the date indicated:

	September 30, 2020
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	1,068	$	23	$	0	$	0	$	1,068	$	23
Obligations of U.S. states and their political subdivisions	200		4		0		0		200		4
Foreign government bonds	5,548		190		44		5		5,592		195
U.S. public corporate securities	6,939		261		1,332		174		8,271		435
U.S. private corporate securities	2,452		105		847		86		3,299		191
Foreign public corporate securities	2,022		126		367		52		2,389		178
Foreign private corporate securities	3,442		105		3,311		376		6,753		481
Asset-backed securities	5,145		48		4,742		56		9,887		104
Commercial mortgage-backed securities	160		4		94		2		254		6
Residential mortgage-backed securities	148		1		0		0		148		1
Total fixed maturities, available-for-sale	$	27,124	$	867	$	10,737	$	751	$	37,861	$	1,618

The following table sets forth the fair value and gross unrealized losses on fixed maturity securities aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the date indicated:

	December 31, 2019
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities(1):
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	4,950	$	161	$	267	$	0	$	5,217	$	161
Obligations of U.S. states and their political subdivisions	273		8		0		0		273		8
Foreign government bonds	2,332		60		126		3		2,458		63
U.S. public corporate securities	3,944		85		2,203		172		6,147		257
U.S. private corporate securities	2,283		44		1,563		76		3,846		120
Foreign public corporate securities	1,271		23		496		47		1,767		70
Foreign private corporate securities	1,466		33		5,666		547		7,132		580
Asset-backed securities	3,979		12		4,433		28		8,412		40
Commercial mortgage-backed securities	1,193		10		164		4		1,357		14
Residential mortgage-backed securities	207		1		88		1		295		2
Total	$	21,898	$	437	$	15,006	$	878	$	36,904	$	1,315

17

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

__________ 

(1)As of December 31, 2019, there were no securities classified as held-to-maturity in a gross unrealized loss position.

As of September 30, 2020, the gross unrealized losses on fixed maturity available-for-sale securities without an allowance were composed of $970 million related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $648 million related to other than high or highest quality securities based on NAIC or equivalent rating. As of September 30, 2020, the $751 million of gross unrealized losses of twelve months or more were concentrated in the Company’s corporate securities within the energy, finance and utility sectors.

As of December 31, 2019, the gross unrealized losses on fixed maturity securities were composed of $973 million related to “1” highest quality or “2” high quality securities based on the NAIC or equivalent rating and $342 million related to other than high or highest quality securities based on NAIC or equivalent rating. As of December 31, 2019, the $878 million of gross unrealized losses of twelve months or more were concentrated in the Company’s corporate securities within the energy, consumer non-cyclical and finance sectors.

In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at September 30, 2020. These conclusions were based on a detailed analysis of the underlying credit and cash flows on each security. Gross unrealized losses are primarily attributable to general credit spread widening, increases in interest rates, foreign currency exchange rate movements and the financial condition or near-term prospects of the issuer. As of September 30, 2020, 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 basis.

The following table sets forth the amortized cost or amortized cost, net of allowance and fair value of fixed maturities by contractual maturities, as of the date indicated:

	September 30, 2020
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost, Net of Allowance		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	13,497	$	14,096	$	117	$	118
Due after one year through five years	50,428		53,969		0		0
Due after five years through ten years	66,321		74,393		600		676
Due after ten years(1)	184,218		224,767		911		1,176
Asset-backed securities	14,070		14,134		0		0
Commercial mortgage-backed securities	15,096		16,349		0		0
Residential mortgage-backed securities	2,881		3,108		273		294
Total	$	346,511	$	400,816	$	1,901	$	2,264

__________

(1)Excludes available-for-sale notes with amortized cost of $6,466 million (fair value, $6,594 million) and held-to-maturity notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed and residential mortgage-backed securities are shown separately in the table above, as they do not have a single maturity date.

The following table sets forth the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on write-downs, impairments and the allowance for credit losses of fixed maturities, for the periods indicated:

18

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	4,284	$	7,190	$	14,654	$	24,011
Proceeds from maturities/prepayments	7,181		5,315		17,603		14,507
Gross investment gains from sales and maturities	578		565		1,451		1,276
Gross investment losses from sales and maturities	(129)		(62)		(339)		(345)
OTTI recognized in earnings(2)	N/A		(143)		N/A		(242)
Write-downs recognized in earnings(3)	(134)		N/A		(289)		N/A
(Addition to) release of allowance for credit losses(4)	86		N/A		(152)		N/A
Fixed maturities, held-to-maturity:
Proceeds from maturities/prepayments(5)	$	14	$	47	$	77	$	84
(Addition to) release of allowance for credit losses(4)	0		N/A		0		N/A

__________ 

(1)Includes $268 million and $162 million of non-cash related proceeds due to the timing of trade settlements for the nine months ended September 30, 2020 and 2019, respectively.

(2)For the three and nine months ended September 30, 2019, amounts exclude the portion of OTTI amounts remaining in OCI, representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.

(3)For the three and nine months ended September 30, 2020, amounts represent write-downs of credit adverse securities, write-downs on securities approaching maturity related to foreign exchange movements and securities actively marketed for sale.

(4)Effective January 1, 2020, credit losses on available-for-sale and held-to-maturity fixed maturity securities are recorded within the “allowance for credit losses.”

(5)Includes $1 million and less than $1 million of non-cash related proceeds due to the timing of trade settlements for the nine months ended September 30, 2020 and 2019, respectively.

The following tables set forth the activity in the allowance for credit losses for fixed maturity securities, as of the date indicated: 

	Three Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	38	$	199	$	0	$	1	$	0	$	238
Additions to allowance for credit losses not previously recorded	0		1		33		0		0		0		34
Reductions for securities sold during the period	0		0		(8)		0		0		0		(8)
Additions (reductions) on securities with previous allowance	0		0		(12)		0		3		0		(9)
Write-downs charged against the allowance	0		(38)		(65)		0		0		0		(103)
Balance, end of period	$	0	$	1	$	147	$	0	$	4	$	0	$	152

19

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Nine Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of year	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Additions to allowance for credit losses not previously recorded	0		39		238		0		1		0		278
Reductions for securities sold during the period	0		0		(36)		0		0		0		(36)
Additions (reductions) on securities with previous allowance	0		0		10		0		3		0		13
Write-downs charged against the allowance	0		(38)		(65)		0		0		0		(103)
Balance, end of period	$	0	$	1	$	147	$	0	$	4	$	0	$	152

	Three Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9
Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

	Nine Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of year	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Cumulative effect of adoption of ASU 2016-13	0		0		9		0		0		0		9
Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

See Note 2 for additional information about the Company’s methodology for developing our allowance and expected losses.

For the nine months ended September 30, 2020, the increase in the allowance for credit losses on available-for-sale securities was primarily related to adverse projected cash flows on public and private corporate securities.

20

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The Company did not have any fixed maturity securities purchased with credit deterioration, as of September 30, 2020.

Assets Supporting Experience-Rated Contractholder Liabilities

The following table sets forth the composition of “Assets supporting experience-rated contractholder liabilities,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value
	(in millions)
Short-term investments and cash equivalents	$	1,103	$	1,103	$	277	$	277
Fixed maturities:
Corporate securities	14,060		14,909		13,143		13,603
Commercial mortgage-backed securities	1,845		1,946		1,845		1,896
Residential mortgage-backed securities(1)	1,064		1,126		1,134		1,158
Asset-backed securities(2)	1,691		1,716		1,639		1,662
Foreign government bonds	889		898		802		814
U.S. government authorities and agencies and obligations of U.S. states	358		438		341		397
Total fixed maturities(3)	19,907		21,033		18,904		19,530
Equity securities	1,603		1,825		1,465		1,790
Total assets supporting experience-rated contractholder liabilities(4)	$	22,613	$	23,961	$	20,646	$	21,597

__________ 

(1)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(2)Includes collateralized loan obligations, auto loans, education loans, home equity and other asset types. Collateralized loan obligations at fair value were $1,133 million and $1,060 million as of September 30, 2020 and December 31, 2019, respectively, all of which were rated AAA.

(3)As a percentage of amortized cost, 94% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of both September 30, 2020 and December 31, 2019.

(4)As a percentage of amortized cost, 79% and 77% of the portfolio consisted of public securities as of September 30, 2020 and December 31, 2019, respectively.

The net change in unrealized gains (losses) from assets supporting experience-rated contractholder liabilities still held at period end, recorded within “Other income (loss),” was $255 million and $99 million during the three months ended September 30, 2020 and 2019, respectively, and $397 million and $868 million during the nine months ended September 30, 2020 and 2019, respectively.

Equity Securities

The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $324 million and $52 million during the three months ended September 30, 2020 and 2019, respectively, and $(332) million and $632 million during the nine months ended September 30, 2020 and 2019, respectively.

Concentrations of Financial Instruments

The Company monitors its concentrations of financial instruments and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any single issuer.

As of the dates indicated, the Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s equity included securities of the U.S. government and certain U.S. government agencies and securities guaranteed by the U.S. government, as well as the securities disclosed below:

21

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Japanese government and government agency securities:
Fixed maturities, available-for-sale	$	77,749	$	90,480	$	74,118	$	89,546
Fixed maturities, held-to-maturity	892		1,148		869		1,143
Fixed maturities, trading	24		24		23		23
Assets supporting experience-rated contractholder liabilities	826		831		653		664
Total	$	79,491	$	92,483	$	75,663	$	91,376

	September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in South Korean government and government agency securities:
Fixed maturities, available-for-sale	$	26	$	34	$	10,823	$	13,322
Assets supporting experience-rated contractholder liabilities	15		16		15		16
Total	$	41	$	50	$	10,838	$	13,338

The decrease in South Korean government and government agency securities from December 31, 2019 to September 30, 2020 was due to the sale of POK which was completed in August 2020.

22

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Commercial Mortgage and Other Loans

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amount (in millions)		% of Total		Amount (in millions)		% of Total
Commercial mortgage and agricultural property loans by property type:
Office	$	12,677	19.9	%	$	13,462	21.4	%
Retail	7,677		12.0		8,379		13.3
Apartments/Multi-Family	18,385		28.8		17,348		27.6
Industrial	13,639		21.4		13,226		21.1
Hospitality	2,390		3.7		2,415		3.9
Other	5,051		7.9		4,533		7.2
Total commercial mortgage loans	59,819		93.7		59,363		94.5
Agricultural property loans	4,015		6.3		3,472		5.5
Total commercial mortgage and agricultural property loans	63,834		100.0	%	62,835		100.0	%
Allowance for credit losses	(227)				(117)
Total net commercial mortgage and agricultural property loans	63,607				62,718
Other loans:
Uncollateralized loans	723				656
Residential property loans	104				124
Other collateralized loans	115				65
Total other loans	942				845
Allowance for credit losses	(8)				(4)
Total net other loans	934				841
Total net commercial mortgage and other loans(1)	$	64,541			$	63,559

__________ 

(1)Includes loans held for sale which are carried at fair value and are collateralized primarily by apartment complexes. As of September 30, 2020 and December 31, 2019, the net carrying value of these loans was $915 million and $228 million, respectively.

As of September 30, 2020, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States (with the largest concentrations in California (27%), Texas (9%) and New York (8%)) and included loans secured by properties in Europe (7%), Asia (2%) and Australia (1%).

23

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following tables set forth the activity in the allowance for credit losses for commercial mortgage and other loans, as of the dates indicated:

	Three Months Ended September 30, 2020
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance, beginning of period	$	230	$	8	$	0	$	3	$	4	$	245
Addition to (release of) allowance for expected losses	(5)		1		0		0		1		(3)
Write-downs charged against the allowance	(7)		0		0		0		0		(7)
Other	0		0		0		0		0		0
Balance, end of period	$	218	$	9	$	0	$	3	$	5	$	235

	Nine Months Ended September 30, 2020
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance at December 31, 2019	$	114	$	3	$	0	$	0	$	4	$	121
Cumulative effect of adoption of ASU 2016-13	110		5		0		0		0		115
Addition to (release of) allowance for expected losses	1		1		0		0		1		3
Write-downs charged against the allowance	(7)		0		0		0		0		(7)
Other	0		0		0		3		0		3
Balance at September 30, 2020	$	218	$	9	$	0	$	3	$	5	$	235

See Note 2 for additional information about the Company’s methodology for developing our allowance and expected losses.

For the nine months ended September 30, 2020, the increase in the allowance for credit losses on commercial mortgage and other loans was primarily related to the cumulative effect of adoption of ASU 2016-13.

The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses, as of the date indicated:

24

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	September 30, 2020
	Amortized Cost by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
	(in millions)
Commercial Mortgage Loans
Loan-to-Value Ratio:
0%-59.99%	$	650	$	2,824	$	3,105	$	3,309	$	3,381	$	17,616	$	0	$	30,885
60%-69.99%	1,480		4,152		3,437		2,913		2,801		4,282		0		19,065
70%-79.99%	1,744		3,138		2,530		1,010		613		654		0		9,689
80% or greater	0		10		0		18		24		128		0		180
Total	$	3,874	$	10,124	$	9,072	$	7,250	$	6,819	$	22,680	$	0	$	59,819
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	3,759	$	9,490	$	8,590	$	7,009	$	6,525	$	21,045	$	0	$	56,418
1.0 - 1.2x	114		518		453		241		286		1,499		0		3,111
Less than 1.0x	1		116		29		0		8		136		0		290
Total	$	3,874	$	10,124	$	9,072	$	7,250	$	6,819	$	22,680	$	0	$	59,819
Agricultural Property Loans
Loan-to-Value Ratio:
0%-59.99%	$	724	$	482	$	360	$	531	$	397	$	1,320	$	0	$	3,814
60%-69.99%	87		72		39		3		0		0		0		201
70%-79.99%	0		0		0		0		0		0		0		0
80% or greater	0		0		0		0		0		0		0		0
Total	$	811	$	554	$	399	$	534	$	397	$	1,320	$	0	$	4,015
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	801	$	553	$	398	$	471	$	377	$	1,303	$	0	$	3,903
1.0 - 1.2x	10		0		1		59		5		5		0		80
Less than 1.0x	0		1		0		4		15		12		0		32
Total	$	811	$	554	$	399	$	534	$	397	$	1,320	$	0	$	4,015

Commercial mortgage loans
	December 31, 2019
	Debt Service Coverage Ratio
	>1.2X		1.0X to <1.2X		< 1.0X		Total
	(in millions)
Loan-to-Value Ratio:
0%-59.99%	$	31,027	$	701	$	217	$	31,945
60%-69.99%	17,090		1,145		42		18,277
70%-79.99%	8,020		719		28		8,767
80% or greater	209		143		22		374
Total commercial mortgage loans	$	56,346	$	2,708	$	309	$	59,363

25

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Agricultural property loans
	December 31, 2019
	Debt Service Coverage Ratio
	>1.2X		1.0X to <1.2X		< 1.0X		Total
	(in millions)
Loan-to-Value Ratio:
0%-59.99%	$	3,289	$	57	$	14	$	3,360
60%-69.99%	112		0		0		112
70%-79.99%	0		0		0		0
80% or greater	0		0		0		0
Total agricultural property loans	$	3,401	$	57	$	14	$	3,472

See Note 2 for additional information about the Company’s commercial mortgage and other loans credit quality monitoring process.

The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status, as of the dates indicated:

	September 30, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	59,794	$	0	$	24	$	1	$	25	$	59,819	$	27
Agricultural property loans	4,014		0		0		1		1		4,015		15
Residential property loans	102		1		0		1		2		104		1
Other collateralized loans	115		0		0		0		0		115		0
Uncollateralized loans	723		0		0		0		0		723		0
Total	$	64,748	$	1	$	24	$	3	$	28	$	64,776	$	43

 __________

(1)As of September 30, 2020, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

	December 31, 2019
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	59,363	$	0	$	0	$	0	$	0	$	59,363	$	44
Agricultural property loans	3,458		1		0		13		14		3,472		13
Residential property loans	121		1		0		2		3		124		2
Other collateralized loans	65		0		0		0		0		65		0
Uncollateralized loans	656		0		0		0		0		656		0
Total	$	63,663	$	2	$	0	$	15	$	17	$	63,680	$	59

__________

(1)As of December 31, 2019, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

26

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Loans on non-accrual status recognized interest income of $2 million for both the three months and nine months ended September 30, 2020, respectively, and $17 million of these loans did not have a related allowance for credit losses as of September 30, 2020.

The Company did not have any significant losses on commercial mortgage and other loans purchased with credit deterioration as of September 30, 2020.

Other Invested Assets

The following table sets forth the composition of “Other invested assets,” as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	4,139	$	3,625
Hedge funds	2,333		1,947
Real estate-related	1,409		1,372
Subtotal equity method	7,881		6,944
Fair value:
Private equity	1,679		1,705
Hedge funds	1,965		2,172
Real estate-related	333		336
Subtotal fair value	3,977		4,213
Total LPs/LLCs	11,858		11,157
Real estate held through direct ownership(1)	2,517		2,388
Derivative instruments	1,201		877
Other(2)	1,345		1,184
Total other invested assets	$	16,921	$	15,606

_________ 

(1)As of September 30, 2020 and December 31, 2019, real estate held through direct ownership had mortgage debt of $436 million and $537 million, respectively.

(2)Primarily includes strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding the Company’s holdings in the Federal Home Loan Banks of New York and Boston, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the date indicated:

	September 30, 2020
	(in millions)
Fixed maturities	$	2,586
Equity securities	17
Commercial mortgage and other loans	203
Policy loans	289
Other invested assets	28
Short-term investments and cash equivalents	6
Total accrued investment income	$	3,129

There were $3 million and $15 million of write-downs on accrued investment income for the three and nine months ended September 30, 2020, respectively.

27

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Investment Income

The following table sets forth “Net investment income” by investment type, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities, available-for-sale(1)	$	3,113	$	3,191	$	9,292	$	9,429
Fixed maturities, held-to-maturity(1)	59		58		176		173
Fixed maturities, trading	32		37		100		109
Assets supporting experience-rated contractholder liabilities	179		191		527		558
Equity securities	36		38		119		119
Commercial mortgage and other loans	608		636		1,866		1,863
Policy loans	147		160		450		463
Other invested assets	415		251		693		727
Short-term investments and cash equivalents	30		123		182		356
Gross investment income	4,619		4,685		13,405		13,797
Less: investment expenses	(173)		(247)		(571)		(753)
Net investment income	$	4,446	$	4,438	$	12,834	$	13,044

__________ 

(1)Includes income on credit-linked notes which are reported on the same financial statement line item as related surplus notes, as conditions are met for right to offset.

Realized Investment Gains (Losses), Net

The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities(1)	$	401	$	360	$	671	$	689
Commercial mortgage and other loans	41		20		65		34
Investment real estate	5		38		15		38
LPs/LLCs	8		2		2		(1)
Derivatives	(537)		433		(2,926)		(1,010)
Other	3		0		9		1
Realized investment gains (losses), net	$	(79)	$	853	$	(2,164)	$	(249)

__________ 

(1)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.

28

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Unrealized Gains (Losses) on Investments within AOCI

The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Fixed maturity securities, available-for-sale—with OTTI(1)	$ N/A		$	243
Fixed maturity securities, available-for-sale—all other(1)	N/A		44,279
Fixed maturity securities, available-for-sale with an allowance	(23)		N/A
Fixed maturity securities, available-for-sale without an allowance	54,480		N/A
Derivatives designated as cash flow hedges(2)	1,407		832
Other investments(3)	(20)		(15)
Net unrealized gains (losses) on investments	$	55,844	$	45,339

__________ 

(1)Effective January 1, 2020, per ASU 2016-13, fixed maturity securities, available-for-sale are no longer required to be disclosed “with OTTI” and “all other.”

(2)For additional information on cash flow hedges, see Note 5.

(3)As of September 30, 2020, there were no net unrealized losses on held-to-maturity securities that were previously transferred from available-for-sale. Includes net unrealized gains on certain joint ventures that are strategic in nature and are included in “Other assets.”

Repurchase Agreements and Securities Lending

In the normal course of business, the Company sells securities under agreements to repurchase and enters into securities lending transactions. The following table sets forth the composition of “Securities sold under agreements to repurchase,” as of the dates indicated:

	September 30, 2020						December 31, 2019
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	9,944	$	553	$	10,497	$	9,431	$	0	$	9,431
Residential mortgage-backed securities	377		0		377		250		0		250
Total securities sold under agreements to repurchase(1)	$	10,321	$	553	$	10,874	$	9,681	$	0	$	9,681

__________ 

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

29

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following table sets forth the composition of “Cash collateral for loaned securities,” which represents the liability to return cash collateral received for the following types of securities loaned, as of the dates indicated:

	September 30, 2020						December 31, 2019
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	0	$	0	$	9	$	0	$	9
Obligations of U.S. states and their political subdivisions	108		0		108		33		0		33
Foreign government bonds	353		0		353		244		0		244
U.S. public corporate securities	2,161		0		2,161		2,996		0		2,996
Foreign public corporate securities	425		0		425		762		0		762
Commercial mortgage-backed securities	0		0		0		2		0		2
Equity securities	24		0		24		167		0		167
Total cash collateral for loaned securities(1)	$	3,071	$	0	$	3,071	$	4,213	$	0	$	4,213

__________ 

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

4. VARIABLE INTEREST ENTITIES

In the normal course of its activities, the Company enters into relationships with various special-purpose entities and other entities that are deemed to be variable interest entities (“VIEs”). For additional information, see Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Consolidated Variable Interest Entities

The table below reflects the carrying amount and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported. The liabilities primarily comprise obligations under debt instruments issued by the VIEs. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs.

	Consolidated VIEs for which the Company is the Investment Manager(1)				Other Consolidated VIEs(1)
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
	(in millions)
Fixed maturities, available-for-sale	$	107	$	104	$	290	$	285
Fixed maturities, held-to-maturity	85		83		863		839
Fixed maturities, trading	1,081		1,112		0		0
Assets supporting experience-rated contractholder liabilities	0		0		1		4
Equity securities	44		47		0		0
Commercial mortgage and other loans	976		883		0		0
Other invested assets	2,502		2,199		152		89
Cash and cash equivalents	140		166		0		0
Accrued investment income	6		4		4		4
Other assets	424		450		689		689
Total assets of consolidated VIEs	$	5,365	$	5,048	$	1,999	$	1,910
Other liabilities	$	291	$	304	$	11	$	13
Notes issued by consolidated VIEs(2)	1,242		1,274		0		0
Total liabilities of consolidated VIEs	$	1,533	$	1,578	$	11	$	13

30

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

 __________

(1)Total assets of consolidated VIEs reflect $2,892 million and $2,668 million as of September 30, 2020 and December 31, 2019, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.

(2)Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company. As of September 30, 2020, the maturities of these obligations were between 3 and 9 years.

Unconsolidated Variable Interest Entities

The Company has determined that it is not the primary beneficiary of certain VIEs for which it is the investment manager. The Company’s maximum exposure to loss resulting from its relationship with unconsolidated VIEs for which it is the investment manager is limited to its investment in the VIEs, which was $1,098 million and $1,021 million at September 30, 2020 and December 31, 2019, respectively. These investments are reflected in “Fixed maturities, available-for-sale,” “Fixed maturities, trading,” “Equity securities” and “Other invested assets.” There are no liabilities associated with these unconsolidated VIEs on the Company’s Unaudited Interim Consolidated Statements of Financial Position.

In the normal course of its activities, the Company will invest in limited partnerships and limited liability companies (“LPs/LLCs”), which include hedge funds, private equity funds and real estate-related funds and may or may not be VIEs. The Company’s maximum exposure to loss on these investments, both VIEs and non-VIEs, is limited to the amount of its investment. The Company classifies these investments as “Other invested assets” and its maximum exposure to loss associated with these entities was $11,858 million and $11,157 million as of September 30, 2020 and December 31, 2019, respectively.

In addition, in the normal course of its activities, the Company will invest in structured investments including VIEs for which it is not the investment manager. These structured investments typically invest in fixed income investments and are managed by third-parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited to the amount of its investment. See Note 3 for details regarding the carrying amounts and classification of these assets. The Company has not provided material financial or other support that was not contractually required to these structures. The Company has determined that it is not the primary beneficiary of these structures due to the fact that it does not control these entities.

5. DERIVATIVES AND HEDGING

Types of Derivative and Hedging Instruments

The Company utilizes various derivatives and hedging instruments to manage its risk. Commonly used derivative and non-derivative hedging instruments include, but are not necessarily limited to:

•Interest rate contracts: futures, swaps, forwards, options, caps and floors

•Equity contracts: futures, options and total return swaps

•Foreign exchange contracts: futures, options, forwards, swaps, and foreign currency debt instruments

•Credit contracts: single and index reference credit default swaps

Other types of financial contracts that the Company accounts for as derivatives are:

•To-be-announced (“TBA”) forward contracts, loan commitments, embedded derivatives and synthetic guaranteed investment contracts (“GICs”).

For detailed information on these contracts and the related strategies, see Note 5 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Primary Risks Managed by Derivatives

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 $1,190 million and $867 million as of September 30, 2020 and December 31, 2019, respectively, and total derivative liabilities of $573 million and $831 million as of September 30, 2020 and December 31, 2019, respectively, reflected in the Unaudited Interim Consolidated Statements of Financial Position.

31

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Primary Underlying Risk /Instrument Type	September 30, 2020						December 31, 2019
			Fair Value						Fair Value
	Gross Notional		Assets		Liabilities		Gross Notional		Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	3,101	$	1,128	$	(100)	$	3,257	$	628	$	(73)
Interest Rate Forwards	249		11		(2)		205		4		(1)
Foreign Currency
Foreign Currency Forwards	2,194		51		(48)		1,461		22		(57)
Currency/Interest Rate
Foreign Currency Swaps	21,885		2,023		(246)		22,746		1,467		(302)
Total Derivatives Designated as Hedge Accounting Instruments	$	27,429	$	3,213	$	(396)	$	27,669	$	2,121	$	(433)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	151,469	$	20,256	$	(10,295)	$	141,162	$	10,249	$	(4,861)
Interest Rate Futures	16,651		12		(77)		17,095		4		(38)
Interest Rate Options	13,418		1,353		(257)		16,496		339		(238)
Interest Rate Forwards	3,077		22		0		2,218		18		(3)
Foreign Currency
Foreign Currency Forwards	36,539		746		(517)		26,604		208		(214)
Foreign Currency Options	0		0		0		0		0		0
Currency/Interest Rate
Foreign Currency Swaps	14,164		814		(355)		13,874		740		(345)
Credit
Credit Default Swaps	1,667		10		(23)		798		21		0
Equity
Equity Futures	7,742		7		(31)		1,802		0		(3)
Equity Options	46,829		854		(403)		32,657		679		(765)
Total Return Swaps	24,407		134		(409)		18,218		6		(636)
Other
Other(1)	1,262		0		0		1,258		0		0
Synthetic GICs	84,088		1		0		80,009		1		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	401,313	$	24,209	$	(12,367)	$	352,191	$	12,265	$	(7,103)
Total Derivatives(2)(3)	$	428,742	$	27,422	$	(12,763)	$	379,860	$	14,386	$	(7,536)

__________

(1)“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.

(2)Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $24,153 million and $14,035 million as of September 30, 2020 and December 31, 2019, respectively, primarily included in “Future policy benefits.”

(3)Recorded in “Other invested assets” and “Other liabilities” on the Unaudited Interim Consolidated Statements of Financial Position.

32

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

As of September 30, 2020, the following amounts were recorded on the Unaudited Interim Consolidated Statements of Financial Position related to the carrying amount of the hedged assets (liabilities) and cumulative basis adjustments included in the carrying amount for fair value hedges.

	September 30, 2020				December 31, 2019
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)		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	$	402	$	86	$	389	$	64
Commercial mortgage and other loans	$	21	$	2	$	23	$	2
Policyholders’ account balances	$	(1,686)	$	(376)	$	(1,376)	$	(107)
Future policy benefits	$	(1,248)	$	(410)	$	(676)	$	(172)

__________

(1)There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.

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 GICs, which are product standalone derivatives, do not qualify as hedging instruments under hedge accounting rules.

Offsetting Assets and Liabilities

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 Unaudited Interim 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 Unaudited Interim Consolidated Statements of Financial Position.

	September 30, 2020
	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)	$	27,270	$	(26,232)	$	1,038	$	(569)	$	469
Securities purchased under agreement to resell	641		0		641		(641)		0
Total assets	$	27,911	$	(26,232)	$	1,679	$	(1,210)	$	469
Offsetting of Financial Liabilities:
Derivatives(1)	$	12,757	$	(12,190)	$	567	$	(140)	$	427
Securities sold under agreement to repurchase	10,874		0		10,874		(10,874)		0
Total liabilities	$	23,631	$	(12,190)	$	11,441	$	(11,014)	$	427

33

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	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

__________

(1)    Amounts exclude the excess of collateral received/pledged from/to the counterparty.

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 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

Cash Flow, Fair Value and Net Investment Hedges

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

The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, including the offset of the hedged item in fair value hedge relationships.

34

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30, 2020
	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	$	5	$	(2)	$	0	$	0	$	(35)	$	(37)	$	0
Currency	(1)		0		0		0		0		15		0
Total gains (losses) on derivatives designated as hedge instruments	4		(2)		0		0		(35)		(22)		0
Gains (losses) on the hedged item:
Interest Rate	(6)		4		0		0		49		48		0
Currency	0		0		0		0		0		(15)		0
Total gains (losses) on hedged item	(6)		4		0		0		49		33		0
Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		(1)		2
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(1)		2
Total gains (losses) on fair value hedges net of hedged item	(2)		2		0		0		14		10		2
Cash flow hedges
Interest Rate	19		0		0		0		0		0		(15)
Currency	0		0		0		0		0		0		(65)
Currency/Interest Rate	55		78		(210)		0		0		0		(1,011)
Total gains (losses) on cash flow hedges	74		78		(210)		0		0		0		(1,091)
Net investment hedges
Currency	(6)		0		142		0		0		0		(143)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(6)		0		142		0		0		0		(143)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,163)		0		0		0		0		0		0
Currency	(44)		0		2		0		0		0		0
Currency/Interest Rate	(394)		0		(3)		0		0		0		0
Credit	(15)		0		0		0		0		0		0
Equity	(2,243)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	3,254		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(604)		0		(1)		0		0		0		0
Total	$	(538)	$	80	$	(69)	$	0	$	14	$	10	$	(1,232)

35

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Nine Months Ended September 30, 2020
	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	$	(24)	$	(6)	$	0	$	0	$	295	$	242	$	0
Currency	1		0		0		0		0		17		0
Total gains (losses) on derivatives designated as hedge instruments	(23)		(6)		0		0		295		259		0
Gains (losses) on the hedged item:
Interest Rate	23		13		0		0		(269)		(222)		0
Currency	(1)		1		0		0		0		(17)		0
Total gains (losses) on hedged item	22		14		0		0		(269)		(239)		0
Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		(1)		(1)
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(1)		(1)
Total gains (losses) on fair value hedges net of hedged item	(1)		8		0		0		26		19		(1)
Cash flow hedges
Interest Rate	27		0		0		0		0		0		29
Currency	4		0		0		0		0		0		27
Currency/Interest Rate	121		239		(17)		0		0		0		519
Total gains (losses) on cash flow hedges	152		239		(17)		0		0		0		575
Net investment hedges
Currency	(6)		0		142		0		0		0		(133)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(6)		0		142		0		0		0		(133)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,829		0		0		0		0		0		0
Currency	186		0		(5)		0		0		0		0
Currency/Interest Rate	337		0		(1)		0		0		0		0
Credit	(56)		0		0		0		0		0		0
Equity	(2,028)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	(9,339)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(3,070)		0		(6)		0		0		0		0
Total	$	(2,925)	$	247	$	119	$	0	$	26	$	19	$	441

36

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30, 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	$	(10)	$	(2)	$	0	$	0	$	115	$	102	$	0
Currency	1		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(9)		(2)		0		0		115		102		0
Gains (losses) on the hedged item:
Interest Rate	10		5		0		0		(116)		(103)		0
Currency	(1)		1		0		0		0		0		0
Total gains (losses) on hedged item	9		6		0		0		(116)		(103)		0
Total gains (losses) on fair value hedges net of hedged item	0		4		0		0		(1)		(1)		0
Cash flow hedges
Interest Rate	56		1		0		0		0		0		(38)
Currency	3		0		0		0		0		0		4
Currency/Interest Rate	57		70		140		0		0		0		601
Total gains (losses) on cash flow hedges	116		71		140		0		0		0		567
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	3,356		0		0		0		0		0		0
Currency	158		0		5		0		0		0		0
Currency/Interest Rate	364		0		2		0		0		0		0
Credit	4		0		0		0		0		0		0
Equity	(133)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(3,427)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	322		0		7		0		0		0		0
Total	$	438	$	75	$	147	$	0	$	(1)	$	(1)	$	576

37

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Nine Months Ended September 30, 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	$	(24)	$	(5)	$	0	$	0	$	283	$	233	$	0
Currency	2		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(22)		(5)		0		0		283		233		0
Gains (losses) on the hedged item:
Interest Rate	21		16		0		0		(280)		(222)		0
Currency	(1)		2		0		0		0		0		0
Total gains (losses) on hedged item	20		18		0		0		(280)		(222)		0
Total gains (losses) on fair value hedges net of hedged item	(2)		13		0		0		3		11		0
Cash flow hedges
Interest Rate	55		1		0		0		0		0		(16)
Currency	5		0		0		0		0		0		9
Currency/Interest Rate	96		207		135		0		0		0		771
Total gains (losses) on cash flow hedges	156		208		135		0		0		0		764
Net investment hedges
Currency	0		0		0		0		0		0		12
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		12
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,090		0		0		0		0		0		0
Currency	242		0		4		0		0		0		0
Currency/Interest Rate	568		0		2		0		0		0		0
Credit	107		0		0		0		0		0		0
Equity	(2,560)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(6,607)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,160)		0		6		0		0		0		0
Total	$	(1,006)	$	221	$	141	$	0	$	3	$	11	$	776

_________

(1)Net change in AOCI, excluding changes related to net investment hedges using non-derivative instruments of ($17) million for both the three and nine months ended September 30, 2020, and $0 million for both the three and nine months ended September 30, 2019.

38

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:

	(in millions)
Balance, December 31, 2019	$	832
Amount recorded in AOCI
Interest Rate	56
Currency	31
Currency/Interest Rate	862
Total amount recorded in AOCI	949
Amount reclassified from AOCI to income
Interest Rate	(27)
Currency	(4)
Currency/Interest Rate	(343)
Total amount reclassified from AOCI to income	(374)
Balance, September 30, 2020	$	1,407

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Unaudited Interim Consolidated Statements of Comprehensive Income; these amounts are then reclassified to earnings when the hedged item affects earnings. Using September 30, 2020 values, it is estimated that a pre-tax gain of approximately $271 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending September 30, 2021.

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.

For net investment hedges, in addition to derivatives, the Company uses foreign currency denominated debt to hedge the risk of change in the net investment in a foreign subsidiary due to changes in exchange rates. For effective net investment hedges, the amounts, before applicable taxes, recorded in the cumulative translation adjustment within AOCI were ($160) million and ($150) million for the three and nine months ended September 30, 2020, respectively, and $9 million and $12 million for the three and nine months ended September 30, 2019, respectively.

Credit Derivatives

The following table provides a summary of the notional and fair value of written credit protection. The Company’s maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is equal to the notional amounts. These credit derivatives have maturities of less than 27 years for index references.

39

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	September 30, 2020
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(2)	50		0		0		0		577		6		600		2		0		0		0		0		1,227		8
Total	$	50	$	0	$	0	$	0	$	577	$	6	$	600	$	2	$	0	$	0	$	0	$	0	$	1,227	$	8

	December 31, 2019
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	36	$	0	$	60	$	1	$	4	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	100	$	1
Index reference(2)	50		0		0		0		570		13		0		0		0		0		72		7		692		20
Total	$	86	$	0	$	60	$	1	$	574	$	13	$	0	$	0	$	0	$	0	$	72	$	7	$	792	$	21

_________

(1)The NAIC rating designations are based on availability and the lowest ratings among Moody's Investors Service, Inc. ("Moody's"), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, a NAIC 6 rating is used.

(2)Single name credit default swaps may reference to the credit of corporate debt, sovereign debt, and structured finance. Index references 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 September 30, 2020 and December 31, 2019, the Company had $440 million and $6 million of outstanding notional amounts and reported at fair value as a liability of $21 million and $0 million, respectively. 

Counterparty Credit Risk

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 over-the-counter (“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.

As of September 30, 2020, there were no net liability derivative positions with counterparties with credit risk-related contingent features. All derivatives have been appropriately collateralized by the Company or the counterparty in accordance with the terms of the derivative agreements.

40

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

6. FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Measurement—Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1—Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities.

Level 2—Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs.

Level 3—Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value.

For a discussion of Company’s valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 6 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Assets and Liabilities by Hierarchy Level—The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.

41

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	As of September 30, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	41,980	$	132	$		$	42,112
Obligations of U.S. states and their political subdivisions	0		12,599		4				12,603
Foreign government bonds	0		107,026		10				107,036
U.S. corporate public securities	0		108,346		383				108,729
U.S. corporate private securities(2)	0		37,245		1,966				39,211
Foreign corporate public securities	0		28,170		160				28,330
Foreign corporate private securities	0		26,610		2,594				29,204
Asset-backed securities(3)	0		13,593		541				14,134
Commercial mortgage-backed securities	0		16,335		14				16,349
Residential mortgage-backed securities	0		3,097		11				3,108
Subtotal	0		395,001		5,815				400,816
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		209		0				209
Obligations of U.S. states and their political subdivisions	0		229		0				229
Foreign government bonds	0		876		22				898
Corporate securities	0		14,331		578				14,909
Asset-backed securities(3)	0		1,607		109				1,716
Commercial mortgage-backed securities	0		1,945		1				1,946
Residential mortgage-backed securities	0		1,126		0				1,126
Equity securities	1,582		243		0				1,825
All other(4)	80		882		110				1,072
Subtotal	1,662		21,448		820				23,930
Fixed maturities, trading	0		4,131		240				4,371
Equity securities	5,118		1,097		673				6,888
Commercial mortgage and other loans	0		915		0				915
Other invested assets(5)	115		27,307		782		(26,232)		1,972
Short-term investments	1,124		6,833		183				8,140
Cash equivalents	3,686		8,398		1				12,085
Other assets	0		0		332				332
Separate account assets(6)(7)	46,517		234,126		1,801				282,444
Total assets	$	58,222	$	699,256	$	10,647	$	(26,232)	$	741,893
Future policy benefits(8)	$	0	$	0	$	23,340	$		$	23,340
Policyholders’ account balances	0		0		1,549				1,549
Other liabilities	110		12,251		0		(12,190)		171
Notes issued by consolidated VIEs	0		0		775				775
Total liabilities	$	110	$	12,251	$	25,664	$	(12,190)	$	25,835

42

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	As of December 31, 2019
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	35,554	$	105	$		$	35,659
Obligations of U.S. states and their political subdivisions	0		11,493		4				11,497
Foreign government bonds	0		119,032		22				119,054
U.S. corporate public securities	0		97,959		380				98,339
U.S. corporate private securities(2)	0		34,749		1,784				36,533
Foreign corporate public securities	0		29,756		69				29,825
Foreign corporate private securities	0		27,237		1,003				28,240
Asset-backed securities(3)	0		12,238		936				13,174
Commercial mortgage-backed securities	0		15,574		0				15,574
Residential mortgage-backed securities	0		3,189		12				3,201
Subtotal	0		386,781		4,315				391,096
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		185		0				185
Obligations of U.S. states and their political subdivisions	0		212		0				212
Foreign government bonds	0		790		24				814
Corporate securities	0		12,966		637				13,603
Asset-backed securities(3)	0		1,593		69				1,662
Commercial mortgage-backed securities	0		1,896		0				1,896
Residential mortgage-backed securities	0		1,158		0				1,158
Equity securities	1,505		285		0				1,790
All other(4)	0		261		0				261
Subtotal	1,505		19,346		730				21,581
Fixed maturities, trading	0		3,597		287				3,884
Equity securities	5,813		939		633				7,385
Commercial mortgage and other loans	0		228		0				228
Other invested assets(5)	6		14,379		567		(13,519)		1,433
Short-term investments	1,806		1,975		155				3,936
Cash equivalents	2,079		6,796		131				9,006
Other assets	0		0		113				113
Separate account assets(6)(7)	46,574		240,433		1,717				288,724
Total assets	$	57,783	$	674,474	$	8,648	$	(13,519)	$	727,386
Future policy benefits(8)	$	0	$	0	$	12,831	$		$	12,831
Policyholders’ account balances	0		0		1,316				1,316
Other liabilities	41		7,495		105		(6,705)		936
Notes issued by consolidated VIEs	0		0		800				800
Total liabilities	$	41	$	7,495	$	15,052	$	(6,705)	$	15,883

__________

(1)“Netting” amounts represent cash collateral of $14,042 million and $6,814 million as of September 30, 2020 and December 31, 2019, respectively.

(2)Excludes notes with fair value of $6,594 million (carrying amount of $6,466 million) and $4,757 million (carrying amount of $4,751 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.

(3)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(4)All other represents cash equivalents and short-term investments.

43

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(5)Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of September 30, 2020 and December 31, 2019, the fair values of such investments were $3,977 million and $4,213 million respectively.

(6)Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets. As of September 30, 2020 and December 31, 2019, the fair value of such investments was $23,039 million and $23,557 million, respectively.

(7)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(8)As of September 30, 2020, the net embedded derivative liability position of $23.3 billion includes $0.3 billion of embedded derivatives in an asset position and $23.7 billion of embedded derivatives in a liability position. As of December 31, 2019, the net embedded derivative liability position of $12.8 billion includes $0.7 billion of embedded derivatives in an asset position and $13.5 billion of embedded derivatives in a liability position.

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities—The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities.

	As of September 30, 2020
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	3,491	Discounted  cash flow(5)	Discount rate	0.50%	30%	5.03%	Decrease
			Market comparables	EBITDA multiples(4)	6.5X	15.0X	9.1X	Increase
			Liquidation	Liquidation value	15.06%	77.34%	53.84%	Increase
Equity securities	$	231	Discounted cash flow(5)	Discount rate	0.5%	20%		Decrease
			Market comparables	EBITDA multiples(4)	1X	8.8X	3.3X	Increase
			Net Asset Value	Share price	$1	$1,414	$509	Increase
Separate account assets-commercial mortgage loans(6)	$	797	Discounted cash flow	Spread	1.68%	3.29%	1.90%	Decrease
Liabilities:
Future policy benefits(7)	$	23,340	Discounted cash flow	Lapse rate(9)	1%	20%		Decrease
				Spread over LIBOR(10)	0.09%	1.59%		Decrease
				Utilization rate(11)	39%	96%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	15%		Decrease
				Equity volatility curve	18%	26%		Increase
Policyholders’ account balances(8)	$	1,549	Discounted cash flow	Lapse rate(9)	1%	42%		Decrease
				Spread over LIBOR(10)	0.09%	1.59%		Decrease
				Mortality rate(13)	0%	24%		Decrease
				Equity volatility curve	6%	38%		Increase

44

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	As of December 31, 2019
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	1,424	Discounted  cash flow(5)	Discount rate	0.49%	20%	7.41%	Decrease
			Market comparables	EBITDA multiples(4)	5.7X	9.2X	7.3X	Increase
			Liquidation	Liquidation value	14.25%	83.61%	59.47%	Increase
Equity securities	$	210	Discounted cash flow(5)	Discount rate	10%	30%		Decrease
			Market comparables	EBITDA multiples(4)	1X	10.1X	5.4X	Increase
			Net Asset Value	Share price	$5	$1,353	$451	Increase
Separate account assets-commercial mortgage loans(6)	$	796	Discounted cash flow	Spread	1.11%	1.85%	1.26%	Decrease
Liabilities:
Future policy benefits(7)	$	12,831	Discounted cash flow	Lapse rate(9)	1%	18%		Decrease
				Spread over LIBOR(10)	0.10%	1.23%		Decrease
				Utilization rate(11)	43%	97%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	15%		Decrease
				Equity volatility curve	13%	23%		Increase
Policyholders’ account balances(8)	$	1,316	Discounted cash flow	Lapse rate(9)	1%	42%		Decrease
				Spread over LIBOR(10)	0.10%	1.23%		Decrease
				Mortality rate(13)	0%	24%		Decrease
				Equity volatility curve	6%	25%		Increase

__________ 

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

(2)Includes assets classified as fixed maturities available-for-sale, assets supporting experience-rated contractholder liabilities and fixed maturities trading.

(3)Excludes notes which have been offset with the associated payables under a netting agreement.

(4)Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.

(5)These investments typically use a range of discount rates (10% to 20%), therefore presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(6)Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Unaudited Interim Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Unaudited Interim Consolidated Statements of Operations.

(7)Future policy benefits primarily represent general account liabilities for the living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(8)Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

45

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(9)Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these embedded derivatives.

(10)The spread over the London Inter-Bank Offered Rate (“LIBOR”) swap curve represents the premium added to the proxy for the risk-free rate (LIBOR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements, living benefit guarantees, and index-linked interest crediting guarantees are insurance liabilities and are therefore senior to debt.

(11)The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(12)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of September 30, 2020 and December 31, 2019, the minimum withdrawal rate assumption is 76% and 78% respectively. As of September 30, 2020 and December 31, 2019, the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(13)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 45 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age, and duration. A mortality improvement assumption is also incorporated into the overall mortality table.

Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another or multiple inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities—The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term, and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. During weaker economic cycles, as the expectations of default increases, credit spreads widen, which results in a decrease in fair value.

Asset-Backed Securities—Interrelationships may exist between the prepayment rate, the default rate and/or loss severity, depending on specific market conditions. In stronger economic cycles, prepayment rates are generally driven by overall market interest rates and accompanied by lower default rates and loss severity. During weaker economic cycles, prepayments may decline, as default rates and loss severity increase. Additionally, the impact of these factors on average life varies with the structure and subordination. Generally, a change in the assumption used for the probability of default would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

Future Policy Benefits—The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent that more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Changes in Level 3 Assets and Liabilities—The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.

46

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	122	$	0	$	10	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	21		1		0		0		0		0		0		0		(12)		10		1
Corporate securities(3)	4,904		215		165		(8)		0		(160)		(23)		113		(103)		5,103		193
Structured securities(4)	801		5		96		0		0		(147)		1		68		(258)		566		4
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	624		5		1		0		0		(6)		(22)		0		(24)		578		3
Structured securities(4)	99		1		19		0		0		(9)		0		1		(1)		110		1
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	7		0		107		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	236		0		(1)		(1)		0		0		1		4		1		240		1
Equity securities	594		67		15		(3)		0		(4)		5		0		(1)		673		66
Other invested assets	658		3		101		0		1		2		9		8		0		782		4
Short-term investments	44		(1)		145		0		0		(5)		0		0		0		183		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	377		(64)		19		0		0		0		0		0		0		332		(62)
Separate account assets(5)	1,684		84		65		(5)		0		(14)		0		10		(23)		1,801		87
Liabilities:
Future policy benefits	(26,439)		3,339		0		0		(331)		0		91		0		0		(23,340)		3,069
Policyholders’ account balances(6)	(1,441)		(34)		0		0		(74)		0		0		0		0		(1,549)		(6)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(741)		(34)		0		0		0		0		0		0		0		(775)		(34)

	Three Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	3	$	0	$	0	$	217	$	1	$	(12)	$	0	$	0	$	210
Assets supporting experience-rated contractholder liabilities	0		4		0		0		2		0		4		0		0
Other assets:
Fixed maturities, trading	0		0		0		0		0		0		1		0		0
Equity securities	0		67		0		0		0		0		66		0		0
Other invested assets	0		3		0		0		0		0		4		0		0
Short-term investments	(1)		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	(64)		0		0		0		0		(62)		0		0		0
Separate account assets(5)	0		0		84		0		0		0		0		87		0
Liabilities:
Future policy benefits	3,339		0		0		0		0		3,069		0		0		0
Policyholders’ account balances	(34)		0		0		0		0		(6)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		(34)		0		0		0		0		(34)		0		0

47

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	105	$	0	$	27	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	22		0		0		0		0		0		0		1		(13)		10		0
Corporate securities(3)	3,236		33		584		(126)		0		(490)		(22)		2,136		(248)		5,103		19
Structured securities(4)	948		2		484		(17)		0		(444)		156		160		(723)		566		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	637		(22)		5		(9)		0		(71)		(22)		92		(32)		578		(25)
Structured securities(4)	69		(1)		174		0		0		(19)		0		1		(114)		110		3
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	0		0		114		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	287		(16)		21		(33)		0		0		9		19		(47)		240		(16)
Equity securities	633		9		43		(13)		0		(4)		6		0		(1)		673		6
Other invested assets	567		7		182		0		5		(2)		15		8		0		782		9
Short-term investments	155		1		189		0		0		(115)		(47)		0		0		183		0
Cash equivalents	131		0		0		0		0		0		(130)		0		0		1		0
Other assets	113		164		55		0		0		0		0		0		0		332		165
Separate account assets(5)	1,717		58		169		(26)		0		(47)		0		43		(113)		1,801		70
Liabilities:
Future policy benefits	(12,831)		(9,630)		0		0		(972)		0		93		0		0		(23,340)		(9,940)
Policyholders’ account balances(6)	(1,316)		38		0		0		(271)		0		0		0		0		(1,549)		80
Other liabilities	(105)		105		0		0		0		0		0		0		0		0		105
Notes issued by consolidated VIEs	(800)		25		0		0		0		0		0		0		0		(775)		25

	Nine Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	(112)	$	0	$	0	$	141	$	6	$	(118)	$	0	$	0	$	137
Assets supporting experience-rated contractholder liabilities	0		(25)		0		0		2		0		(22)		0		0
Other assets:
Fixed maturities, trading	0		(17)		0		0		1		0		(16)		0		0
Equity securities	0		9		0		0		0		0		6		0		0
Other invested assets	0		7		0		0		0		1		8		0		0
Short-term investments	1		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	164		0		0		0		0		165		0		0		0
Separate account assets(5)	0		0		58		0		0		0		0		70		0
Liabilities:
Future policy benefits	(9,630)		0		0		0		0		(9,940)		0		0		0
Policyholders’ account balances	38		0		0		0		0		80		0		0		0
Other liabilities	0		105		0		0		0		0		105		0		0
Notes issued by consolidated VIEs	0		25		0		0		0		0		25		0		0

48

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	94	$	0	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	24		(2)		0		0		0		0		0		0		0		22		(2)
Corporate securities(3)	2,792		(26)		509		(7)		0		(203)		(1)		136		(21)		3,179		(25)
Structured securities(4)	861		4		439		(1)		0		(74)		(14)		5		(45)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	26		0		0		0		0		0		0		0		0		26		0
Corporate securities(3)	553		(5)		103		0		0		(27)		0		36		0		660		(8)
Structured securities(4)	57		0		22		0		0		(4)		0		0		0		75		0
Equity securities	1		0		0		0		0		0		0		0		0		1		0
All other activity	1		0		3		0		0		(1)		0		0		0		3		0
Other assets:
Fixed maturities, trading	296		(3)		16		(6)		0		0		(1)		2		0		304		(3)
Equity securities	624		15		27		(20)		0		(1)		(2)		0		0		643		7
Other invested assets	436		0		28		0		0		0		0		0		0		464		0
Short-term investments	288		0		127		0		0		(121)		0		0		0		294		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	98		71		10		0		0		0		0		0		0		179		73
Separate account assets(5)	1,708		9		54		(88)		0		(62)		0		43		(4)		1,660		8
Liabilities:
Future policy benefits	(12,723)		(3,417)		0		0		(314)		0		2		0		0		(16,452)		(3,570)
Policyholders’ account balances(6)	(1,047)		(79)		0		0		(62)		0		0		0		0		(1,188)		(66)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(816)		9		0		0		0		0		0		0		0		(807)		9

	Three Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(25)	$	0	$	0	$	(3)	$	4	$	(27)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		(8)		0		0		3		0		(8)		0
Other assets:
Fixed maturities, trading	0		(3)		0		0		0		0		(3)		0
Equity securities	3		12		0		0		0		0		7		0
Other invested assets	0		0		0		0		0		0		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	71		0		0		0		0		73		0		0
Separate account assets(5)	0		0		8		0		1		0		0		8
Liabilities:
Future policy benefits	(3,417)		0		0		0		0		(3,570)		0		0
Policyholders’ account balances	(79)		0		0		0		0		(66)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	9		0		0		0		0		9		0		0

49

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	81	$	0	$	18	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	5		0		0		0		0		(1)		0		0		0		4		0
Foreign government	125		0		0		0		0		0		(1)		9		(111)		22		(2)
Corporate securities(3)	2,685		(16)		1,116		(36)		0		(807)		(2)		319		(80)		3,179		(51)
Structured securities(4)	1,339		29		870		(48)		0		(406)		(7)		755		(1,357)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	225		0		0		0		0		(3)		(196)		0		0		26		0
Corporate securities(3)	444		5		144		0		0		(170)		196		46		(5)		660		(2)
Structured securities(4)	149		1		28		0		0		(29)		0		0		(74)		75		1
Equity securities	1		1		0		(1)		0		0		0		0		0		1		1
All other activity	0		0		6		0		0		(3)		0		0		0		3		0
Other assets:
Fixed maturities, trading	206		(14)		90		(20)		0		0		2		41		(1)		304		(15)
Equity securities	671		39		73		(44)		0		(75)		2		1		(24)		643		30
Other invested assets	263		(1)		246		0		0		(42)		(2)		0		0		464		(1)
Short-term investments	89		0		553		0		0		(348)		0		0		0		294		0
Cash equivalents	77		0		1		0		0		(77)		0		0		0		1		0
Other assets	25		127		27		0		0		0		0		0		0		179		127
Separate account assets(5)	1,534		134		282		(105)		0		(112)		0		43		(116)		1,660		122
Liabilities:
Future policy benefits	(8,926)		(6,627)		0		0		(902)		0		3		0		0		(16,452)		(6,870)
Policyholders’ account balances(6)	(56)		(958)		0		0		(171)		0		(3)		0		0		(1,188)		(938)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(595)		8		0		0		(858)		638		0		0		0		(807)		8

	Nine Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(38)	$	0	$	0	$	37	$	14	$	(53)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		1		0		0		6		0		0		0
Other assets:
Fixed maturities, trading	0		(15)		0		0		1		0		(15)		0
Equity securities	3		36		0		0		0		0		30		0
Other invested assets	(1)		0		0		0		0		(1)		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	127		0		0		0		0		127		0		0
Separate account assets(5)	0		0		131		0		3		0		0		122
Liabilities:
Future policy benefits	(6,627)		0		0		0		0		(6,870)		0		0
Policyholders’ account balances	(958)		0		0		0		0		(938)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	8		0		0		0		0		8		0		0

50

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

__________

(1)“Other,” for the period ended September 30, 2020 primarily represent the sale of POK, reclassifications of certain assets between reporting categories and foreign currency translation. For September 30, 2019, “Other” primarily represent reclassifications of certain assets between reporting categories and foreign currency translation.

(2)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(4)Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.

(5)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(6)Issuances and settlements for Policyholders’ account balances are presented net in the rollforward.

(7)Effective January 1, 2020, the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period were added prospectively due to adoption of ASU 2018-13. Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

Derivative Fair Value Information

The following tables present the balances of derivative assets and liabilities measured at fair value on a recurring basis, as of the date indicated, by primary underlying risk. These tables include NPR and exclude embedded derivatives and associated reinsurance recoverables. The derivative assets and liabilities shown below are included in “Other invested assets” or “Other liabilities” in the tables contained within the sections “—Assets and Liabilities by Hierarchy Level” and “—Changes in Level 3 Assets and Liabilities,” above.

	As of September 30, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	12	$	22,770	$	1	$		$	22,783
Currency	0		797		0				797
Credit	0		10		0				10
Currency/Interest Rate	0		2,837		0				2,837
Equity	102		893		0				995
Other	0		0		0				0
Netting(1)							(26,232)		(26,232)
Total derivative assets	$	114	$	27,307	$	1	$	(26,232)	$	1,190
Derivative Liabilities:
Interest Rate	$	77	$	10,654	$	0	$		$	10,731
Currency	0		565		0				565
Credit	0		23		0				23
Currency/Interest Rate	0		601		0				601
Equity	31		812		0				843
Other	0		0		0				0
Netting(1)							(12,190)		(12,190)
Total derivative liabilities	$	108	$	12,655	$	0	$	(12,190)	$	573

51

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	As of December 31, 2019
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	4	$	11,238	$	1	$		$	11,243
Currency	0		230		0				230
Credit	0		21		0				21
Currency/Interest Rate	0		2,207		0				2,207
Equity	2		683		0				685
Other	0		0		0				0
Netting(1)							(13,519)		(13,519)
Total derivative assets	$	6	$	14,379	$	1	$	(13,519)	$	867
Derivative Liabilities:
Interest Rate	$	38	$	5,176	$	0	$		$	5,214
Currency	0		271		0				271
Credit	0		0		0				0
Currency/Interest Rate	0		647		0				647
Equity	3		1,401		0				1,404
Other	0		0		0				0
Netting(1)							(6,705)		(6,705)
Total derivative liabilities	$	41	$	7,495	$	0	$	(6,705)	$	831

__________ 

(1)“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreement.

Changes in Level 3 derivative assets and liabilities—The following tables provide a summary of the changes in fair value of Level 3 derivative assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income, attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

52

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	2		(1)		0		0		0		0		0		0		0		1		(1)

______ 

(1)Total realized and unrealized gains (losses) as well as unrealized gains (losses) for assets still held at the end of the period are recorded in “Realized investment gains (losses), net.”

(2)Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.

Nonrecurring Fair Value Measurements—The following tables represent information for assets measured at fair value on a nonrecurring basis. The fair value measurement is nonrecurring as these assets are measured at fair value only when there is a triggering event (e.g., an evidence of impairment). Assets included in the table are those that were impaired during the respective reporting periods and that are still held as of the reporting date. The estimated fair values for these amounts were determined using significant unobservable inputs (Level 3).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Realized investment gains (losses) net:
Commercial mortgage loans(1)	$	3	$	1	$	0	$	1
Mortgage servicing rights(2)	$	5	$	(3)	$	(24)	$	(5)

	September 30, 2020		December 31, 2019
	(in millions)
Carrying value after measurement as of period end:
Commercial mortgage loans(1)	$	0	$	15
Mortgage servicing rights(2)	$	280	$	87

__________ 

(1)Commercial mortgage loans are valued based on discounted cash flows utilizing market rates or the fair value of the underlying real estate collateral.

(2)Mortgage servicing rights are valued using a discounted cash flow model. The model incorporates assumptions for servicing revenues, which are adjusted for expected prepayments, delinquency rates, escrow deposit income and estimated loan servicing expenses. The discount rates incorporated into the model are determined based on the estimated returns a market participant would require for this business including a liquidity and risk premium. This estimate includes available relevant data from any active market sales of mortgage servicing rights.

53

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Fair Value Option

The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made by the Company to help mitigate volatility in earnings that result from different measurement attributes. Electing the fair value option also allows the Company to achieve consistent accounting for certain assets and liabilities. Changes in fair value are reflected in “Realized investment gains (losses), net” for commercial mortgage and other loans and “Other income (loss)” for other assets and notes issued by consolidated VIEs. Changes in fair value due to instrument-specific credit risk are estimated using changes in credit spreads and quality ratings for the period reported. Interest income on commercial mortgage and other loans is included in “Net investment income.” Interest income on these loans is recorded based on the effective interest rate as determined at the closing of the loan.

The following tables present information regarding assets and liabilities where the fair value option has been elected.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Liabilities:
Notes issued by consolidated VIEs:
Changes in fair value	$	34	$	(9)	$	(25)	$	(8)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Commercial mortgage and other loans:
Interest income	$	4	$	5	$	10	$	16
Notes issued by consolidated VIEs:
Interest expense	$	10	$	11	$	32	$	33

	September 30, 2020		December 31, 2019
	(in millions)
Commercial mortgage and other loans(1):
Fair value as of period end	$	915	$	228
Aggregate contractual principal as of period end	$	896	$	224
Other assets:
Fair value as of period end	$	10	$	10
Notes issued by consolidated VIEs:
Fair value as of period end	$	775	$	800
Aggregate contractual principal as of period end	$	857	$	857

__________ 

(1)As of September 30, 2020, for loans for which the fair value option has been elected, there were no loans in non-accrual status and none of the loans were more than 90 days past due and still accruing.

Fair Value of Financial Instruments

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Unaudited Interim Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.

54

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	September 30, 2020
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(2)	$	0	$	2,177	$	87	$	2,264	$	1,901
Assets supporting experience-rated contractholder liabilities	31		0		0		31		31
Commercial mortgage and other loans	0		105		66,812		66,917		63,626
Policy loans	0		0		11,502		11,502		11,502
Other invested assets	0		177		0		177		177
Short-term investments	1,855		20		0		1,875		1,875
Cash and cash equivalents	7,919		654		0		8,573		8,573
Accrued investment income	0		3,129		0		3,129		3,129
Other assets	146		2,513		392		3,051		3,050
Total assets	$	9,951	$	8,775	$	78,793	$	97,519	$	93,864
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	37,425	$	72,888	$	110,313	$	107,498
Securities sold under agreements to repurchase	0		10,874		0		10,874		10,874
Cash collateral for loaned securities	0		3,071		0		3,071		3,071
Short-term debt	0		1,011		104		1,115		1,113
Long-term debt(3)	622		21,514		1,184		23,320		20,169
Notes issued by consolidated VIEs	0		0		467		467		467
Other liabilities	0		7,438		48		7,486		7,486
Separate account liabilities—investment contracts	0		79,329		23,653		102,982		102,982
Total liabilities	$	622	$	160,662	$	98,344	$	259,628	$	253,660

55

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	December 31, 2019
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(2)	$	0	$	2,217	$	85	$	2,302	$	1,933
Assets supporting experience-rated contractholder liabilities	16		0		0		16		16
Commercial mortgage and other loans	0		107		65,558		65,665		63,331
Policy loans	0		0		12,096		12,096		12,096
Other invested assets	0		36		0		36		36
Short-term investments	1,492		39		0		1,531		1,531
Cash and cash equivalents	6,278		1,043		0		7,321		7,321
Accrued investment income	0		3,330		0		3,330		3,330
Other assets	147		2,526		643		3,316		3,315
Total assets	$	7,933	$	9,298	$	78,382	$	95,613	$	92,909
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	32,940	$	69,216	$	102,156	$	101,241
Securities sold under agreements to repurchase	0		9,681		0		9,681		9,681
Cash collateral for loaned securities	0		4,213		0		4,213		4,213
Short-term debt	0		1,748		205		1,953		1,933
Long-term debt(3)	1,950		18,188		1,186		21,324		18,646
Notes issued by consolidated VIEs	0		0		474		474		474
Other liabilities	0		6,403		579		6,982		6,982
Separate account liabilities—investment contracts	0		77,134		24,407		101,541		101,541
Total liabilities	$	1,950	$	150,307	$	96,067	$	248,324	$	244,711

__________ 

(1)Carrying values presented herein differ from those in the Company’s Unaudited Interim Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or are out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.

(2)Excludes notes with fair value of $5,814 million (carrying amount of $4,998 million) and $5,401 million (carrying amount of $4,998 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.

(3)Includes notes with fair value of $12,408 million (carrying amount of $11,464 million) and $10,158 million (carrying amount of $9,749 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated receivables under a netting agreement.

7. CLOSED BLOCK

On December 18, 2001, the date of demutualization, The Prudential Insurance Company of America (“PICA”) established a closed block for certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders’ dividends on these products, (collectively the “Closed Block”), and ceased offering these participating products. The recorded assets and liabilities were allocated to the Closed Block at their historical carrying amounts. The Closed Block forms the principal component of the Closed Block division. For additional information on the Closed Block, see Note 15 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

As of September 30, 2020 and December 31, 2019, the Company recognized a policyholder dividend obligation of $2,611 million and $2,816 million, respectively, to Closed Block policyholders for the excess of actual cumulative earnings over expected cumulative earnings. Additionally, accumulated net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block have been reflected as a policyholder dividend obligation of $5,530 million and $3,332 million at September 30, 2020 and December 31, 2019, respectively, to be paid to Closed Block policyholders unless offset by future experience, with a corresponding amount reported in AOCI.

56

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Closed Block liabilities and assets designated to the Closed Block, as well as maximum future earnings to be recognized from these liabilities and assets, are as follows:

	September 30, 2020		December 31, 2019
	(in millions)
Closed Block liabilities
Future policy benefits	$	46,918	$	47,613
Policyholders’ dividends payable	754		717
Policyholders’ dividend obligation	8,141		6,149
Policyholders’ account balances	4,894		4,973
Other Closed Block liabilities	3,224		4,049
Total Closed Block liabilities	63,931		63,501
Closed Block assets
Fixed maturities, available-for-sale, at fair value	41,973		41,146
Fixed maturities, trading, at fair value	257		256
Equity securities, at fair value	2,074		2,245
Commercial mortgage and other loans	8,419		8,629
Policy loans	4,106		4,264
Other invested assets	3,418		3,333
Short-term investments	79		227
Total investments	60,326		60,100
Cash and cash equivalents	385		191
Accrued investment income	459		456
Other Closed Block assets	141		93
Total Closed Block assets	61,311		60,840
Excess of reported Closed Block liabilities over Closed Block assets	2,620		2,661
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	5,473		3,280
Allocated to policyholder dividend obligation	(5,530)		(3,332)
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$	2,563	$	2,609

Information regarding the policyholder dividend obligation is as follows:

	Nine Months Ended September 30, 2020
	(in millions)
Balance, December 31, 2019	$	6,149
Cumulative effect adjustment from the adoption of ASU 2016-13(1)	(13)
Impact from earnings allocable to policyholder dividend obligation	(192)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	2,197
Balance, September 30, 2020	$	8,141

__________

(1)See Note 2 for more information.

57

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Closed Block revenues and benefits and expenses are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Revenues
Premiums	$	459	$	510	$	1,457	$	1,618
Net investment income	586		591		1,649		1,732
Realized investment gains (losses), net	18		351		266		456
Other income (loss)	242		31		(43)		356
Total Closed Block revenues	1,305		1,483		3,329		4,162
Benefits and Expenses
Policyholders’ benefits	641		659		2,013		2,148
Interest credited to policyholders’ account balances	32		33		96		97
Dividends to policyholders	532		649		955		1,617
General and administrative expenses	81		88		248		266
Total Closed Block benefits and expenses	1,286		1,429		3,312		4,128
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes	19		54		17		34
Income tax expense (benefit)	4		39		(30)		(14)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes	$	15	$	15	$	47	$	48

8. INCOME TAXES

The Company uses a full year projected effective tax rate approach to calculate year-to-date taxes. In addition, certain items impacting total income tax expense are recorded in the periods in which they occur. The projected effective tax rate is the ratio of projected “Total income tax expense” divided by projected “Income before income taxes and equity in earnings of operating joint ventures.” Taxes attributable to operating joint ventures are recorded within “Equity in earnings of operating joint ventures, net of taxes.” The interim period tax expense (or benefit) is the difference between the year-to-date income tax provision and the amounts reported for the previous interim periods of the fiscal year.

The Company’s income tax provision, on a consolidated basis, amounted to an income tax expense of $7 million, or (0.6)% of income (loss) before income taxes and equity in earnings of operating joint ventures, in the first nine months of 2020, compared to an income tax expense of $726 million, or 19.4%, in the first nine months of 2019. The Company’s current and prior effective tax rates differ from the U.S. statutory rate of 21% primarily due to non-taxable investment income, tax credits, foreign earnings taxed at higher rates than the U.S. statutory rate, and the items discussed below.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted into law. One provision of the CARES Act amends the Tax Cuts and Jobs Act (“TCJA”) and allows companies with net operating losses (“NOLs”) originating in 2018, 2019 or 2020 to carry back those losses for five years. The Company has incorporated into the full year projected effective tax rate an income tax benefit of $325 million that would result from carrying the estimated 2020 NOL back to tax years that have a 35% tax rate. The projected tax benefit related to the NOL carryback was partially offset by an incremental Global Intangible Low-Taxed Income (“GILTI”) tax expense of $13 million driven primarily by projected overall domestic losses (“ODLs”) which resulted in a reduced GILTI foreign tax credit. These amounts are estimates and will change if the amount of, and sources of, 2020 net taxable income are different from forecast. The inclusion of these two amounts in the full year projected effective tax rate results in a projected negative effective tax rate for the year, which when applied to the year-to-date pre-tax loss resulted in a $38 million increase to our income tax expense for the first nine months of 2020. The first nine months of 2020 also include a $47 million reduction in income tax expense recorded as a discrete item from the carryback of 2018 NOL and related ODL.

On July 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations which will allow an annual election to exclude from the U.S. tax return certain GILTI amounts when the taxes paid by a foreign affiliate exceed 18.9% (90% of U.S. statutory rate of 21%) of the GILTI amount for that foreign affiliate (the “high-tax exception”). These regulations are effective for the 2021 taxable year with an election to apply to any taxable year beginning after 2017. In many of the countries in which we operate, including Japan, there are differences between local tax rules used to determine the tax base

58

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

and the U.S. tax principles used to determine GILTI. Also, our Japan affiliates have a different tax year than the U.S. calendar tax year used to determine GILTI. Therefore, while many of the countries, including Japan, have a statutory tax rate above the 18.9% threshold, separate affiliates may not meet the 18.9% threshold each year and, as such, may not qualify for this exclusion. The Company plans to make the high-tax exception election for the 2020 tax year and reflected the impact of the election in its full year projected effective tax rate used to calculate year-to-date taxes for the first nine months of 2020. The Company is in the process of reviewing and estimating the impacts of the regulations for the 2018 and 2019 tax years.

The Treasury Department and the IRS also issued Proposed Regulations on July 20th which would require that, if a high-tax exception election is made with respect to GILTI in any year, an election having the same effect must also be made with regard to income taxed under Subpart F of the Tax Code. Such an election under Subpart F of the Tax Code would apply to the Full Inclusion election made by the Company for its insurance operations in Brazil, thereby increasing the tax rate applied to our Brazil insurance operations. The Proposed Regulations will be effective for taxable years beginning after they are issued in final form.

9. SHORT-TERM AND LONG-TERM DEBT

Short-term Debt

The table below presents the Company’s short-term debt as of the dates indicated:

	September 30, 2020			December 31, 2019
	($ in millions)
Commercial paper:
Prudential Financial	$	25		$	25
Prudential Funding, LLC	455			524
Subtotal commercial paper	480			549
Current portion of long-term debt:
Senior Notes	529			1,179
Mortgage Debt	97			192
Surplus notes subject to set-off arrangements (1)	250			0
Subtotal current portion of long-term debt	876			1,371
Other(2)	7			13
Subtotal	1,363			1,933
Less: assets under set-off arrangements(1)	250			0
Total short-term debt(3)	$	1,113		$	1,933
Supplemental short-term debt information:
Portion of commercial paper borrowings due overnight	$	224		$	224
Daily average commercial paper outstanding for the quarter ended	$	1,733		$	1,702
Weighted average maturity of outstanding commercial paper, in days	14			6
Weighted average interest rate on outstanding commercial paper	0.11		%	1.61		%

_________

(1)     The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes.

(2)    Includes $7 million drawn on a revolving line of credit held by a subsidiary at September 30, 2020.

(3) Includes Prudential Financial debt of $553 million and $1,204 million at September 30, 2020 and December 31, 2019, respectively.

Prudential Financial and certain subsidiaries have access to external sources of liquidity, including membership in the Federal Home Loan Banks, commercial paper programs and contingent financing facilities in the form of a put option agreement and facility agreement. The Company also maintains syndicated, unsecured committed credit facilities as an alternative source of liquidity. At September 30, 2020, no amounts were drawn on these credit facilities. For additional information on these sources of liquidity, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Federal Home Loan Bank of New York (“FHLBNY”)

59

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

In the first quarter of 2020, PICA issued $3.6 billion in funding agreements under the FHLBNY facility. As of September 30, 2020, $3.0 billion of funding agreements remain outstanding under this facility with maturities ranging from five months to seven years and rates from 0.430% to 1.925%. These funding agreements are reflected as “Policyholders’ account balances” on the Consolidated Statements of Financial Position and as such are not included in the foregoing table. For additional information on this facility, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Facility Agreement for Senior Debt Issuance

In May 2020, Prudential Financial entered into a ten-year facility agreement with a Delaware trust upon the completion of the sale of $1.5 billion of trust securities by that Delaware trust in a Rule 144A private placement. The trust invested the proceeds from the sale of the trust securities in a portfolio of principal and/or interest strips of U.S. Treasury securities. The facility agreement provides Prudential Financial the right to issue and sell to the trust from time to time up to $1.5 billion of 2.850% senior notes due May 15, 2030 and receive in exchange a corresponding amount of the U.S. Treasury securities held by the trust. In return, the Company agreed to pay a semi-annual facility fee to the trust at a rate of 2.175% per annum applied to the maximum amount of senior notes that the Company could issue and sell to the trust. The facility agreement with the trust provides Prudential Financial with a source of liquid assets in exchange for notes and is similar to the Company’s existing put option agreement in respect of $1.5 billion of senior notes that expires in 2023.

The right to issue senior notes described above will be exercised automatically in full upon the Company’s failure to make certain payments to the trust, such as paying the facility fee or reimbursing the trust for its expenses, if the Company’s failure to pay is not cured within 30 days, and upon an event involving its bankruptcy. The Company is also required to exercise this issuance right if its consolidated stockholders’ equity, calculated in accordance with U.S. GAAP but excluding AOCI, falls below $9.0 billion, subject to adjustment in certain cases. Prior to any involuntary exercise of the issuance right, the Company has the right to repurchase any of its senior notes then held by the trust in exchange for U.S. Treasury securities. Finally, Prudential Financial may redeem any outstanding senior notes, in whole or in part, prior to February 15, 2030, at a redemption price equal to the greater of par or a make-whole price, or thereafter, redeem the senior notes, in whole or in part, at par.

Long-term Debt

The table below presents the Company’s long-term debt as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Fixed-rate obligations:
Surplus notes	$	343	$	342
Surplus notes subject to set-off arrangements(1)	8,884		7,484
Senior notes	11,577		10,084
Mortgage debt(2)	67		104
Floating-rate obligations:
Line of credit	300		300
Surplus notes subject to set-off arrangements(1)	2,330		2,265
Mortgage debt(3)	271		241
Junior subordinated notes(4)	7,611		7,575
Subtotal	31,383		28,395
Less: assets under set-off arrangements(1)	11,214		9,749
Total long-term debt(5)	$	20,169	$	18,646

 __________    

(1)The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes included in long-term debt.

(2)Includes $43 million and $43 million of debt denominated in foreign currency at September 30, 2020 and December 31, 2019, respectively.

(3)Includes $29 million and $53 million of debt denominated in foreign currency at September 30, 2020 and December 31, 2019, respectively.

(4)Includes Prudential Financial debt of $7,552 million and $7,518 million at September 30, 2020 and December 31, 2019, respectively. Also includes subsidiary debt of $59 million and $57 million denominated in foreign currency at September 30, 2020 and December 31, 2019, respectively.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

(5)Includes Prudential Financial debt of $18,956 million and $17,430 million at September 30, 2020 and December 31, 2019, respectively.

At September 30, 2020 and December 31, 2019, the Company was in compliance with all debt covenants related to the borrowings in the table above.

Junior Subordinated Notes. In August 2020, Prudential Financial issued $1.3 billion of junior subordinated notes in public offerings including $800 million of 3.700% fixed-to-fixed reset rate junior subordinated notes maturing in October 2050 (the “2050 notes”) and $500 million of 4.125% fixed rate junior subordinated notes maturing in September 2060 (the “2060 notes”). The notes are considered hybrid capital securities that receive enhanced equity treatment from certain of the rating agencies. Interest on the 2050 notes is payable at a fixed rate of 3.700% until a reset date of October 1, 2030, from which date the interest rate will equal the then-current five-year Treasury rate plus 3.035%. Interest on the 2060 notes is fixed for the life of the notes at 4.125%.

Prudential Financial may redeem either or both series of notes in whole, upon the occurrence of a “tax event,” or a “regulatory capital event” at par, or upon the occurrence of a “rating agency event” at 102% of par, in each case, plus accrued and unpaid interest. Prudential Financial may also redeem the 2050 notes at par, in whole or in part, during the three-month period prior to, and including, October 1, 2030 or any subsequent interest reset date, and may redeem the 2060 notes at par, in whole or in part, on or after September 1, 2025, in each case, plus accrued and unpaid interest.

In September 2020, Prudential Financial redeemed all of the $710 million outstanding principal amount of its 5.70% junior subordinated notes due in 2053 and all of the $575 million outstanding principal amount of its 5.75% junior subordinated notes due in 2052, in each case at par, plus accrued and unpaid interest, and recognized the remaining unamortized bond issuance costs of $30 million related to these notes in net income.

Surplus Notes. In March 2020, Prudential Legacy Insurance Company of New Jersey issued $800 million of surplus notes under its $4 billion reserve financing facility. As of September 30, 2020, an aggregate of $900 million of surplus notes was outstanding under the facility and no credit-linked note payments have been required. For additional information on this facility, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

In June 2020, the Company established a new $1.2 billion captive financing facility to finance non-economic reserves required under Guideline AXXX. Similar to the Company’s other captive financing facilities, a captive reinsurance subsidiary may issue surplus notes under the facility in exchange for credit-linked notes issued by a special-purpose affiliate that are held to support non-economic reserves. The credit-linked notes are redeemable for cash upon the occurrence of a liquidity stress event affecting the captive and external counterparties have agreed to fund these payments. Prudential Arizona Reinsurance Universal Company issued $700 million of surplus notes under this facility in June 2020. As of September 30, 2020, an aggregate of $700 million of surplus notes was outstanding under the facility and no credit-linked note payments have been required.

Senior Notes. As of September 30, 2020, the outstanding balance of the Company’s senior notes was $12.1 billion, an increase of $0.8 billion from December 31, 2019. The increase is due to the issuance of $1.5 billion of medium-term notes in March 2020: $500 million with an interest rate of 1.5% maturing in March 2026, $500 million with an interest rate of 2.1% maturing in March 2030, and $500 million with an interest rate of 3.0% maturing in March 2040, offset by $651 million of debt maturities in June 2020.

10. EMPLOYEE BENEFIT PLANS

Pension and Other Postretirement Plans

The Company has funded and non-funded non-contributory defined benefit pension plans (“Pension Benefits”), which cover substantially all of its employees. For some employees, benefits are based on final average earnings and length of service, while benefits for other employees are based on an account balance that takes into consideration age, service and earnings during their career.

61

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The Company provides certain health care and life insurance benefits for its retired employees, their beneficiaries and covered dependents (“Other Postretirement Benefits”). The health care plan is contributory; the life insurance plan is non-contributory. Substantially all of the Company’s U.S. employees may become eligible to receive Other Postretirement Benefits if they retire after age 55 with at least 10 years of service or under certain circumstances after age 50 with at least 20 years of continuous service.

Net periodic (benefit) cost included in “General and administrative expenses” includes the following components:

	Three Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	80	$	73	$	6	$	5
Interest cost	108		122		15		20
Expected return on plan assets	(201)		(204)		(25)		(24)
Amortization of prior service cost	(1)		(1)		2		1
Amortization of actuarial (gain) loss, net	65		54		4		6
Settlements	(1)		4		0		0
Special termination benefits(1)(2)	5		2		0		0
Net periodic (benefit) cost	$	55	$	50	$	2	$	8
	Nine Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	241	$	218	$	18	$	16
Interest cost	323		368		47		59
Expected return on plan assets	(604)		(612)		(75)		(71)
Amortization of prior service cost	(3)		(3)		5		3
Amortization of actuarial (gain) loss, net	196		162		12		18
Settlements	3		52		0		0
Special termination benefits(1)(2)	7		3		0		0
Net periodic (benefit) cost	$	163	$	188	$	7	$	25

__________ 

(1)For 2020 certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination or participation in the Voluntary Separation Program that was offered to eligible U.S.-based employees in 2019.

(2)For 2019 certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination.

62

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

11. EQUITY

The changes in the number of shares of Common Stock issued, held in treasury and outstanding, are as follows for the periods indicated:

	Common Stock
	Issued	Held In Treasury	Outstanding
	(in millions)
Balance, December 31, 2019	666.3	267.5	398.8
Common Stock issued	0.0	0.0	0.0
Common Stock acquired	0.0	6.7	(6.7)
Stock-based compensation programs(1)	0.0	(3.3)	3.3
Balance, September 30, 2020	666.3	270.9	395.4

__________ 

(1)Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.

In December 2019, Prudential Financial’s Board of Directors (the “Board”) authorized the Company to repurchase at management’s discretion up to $2.0 billion of its outstanding Common Stock during the period from January 1, 2020 through December 31, 2020. As of September 30, 2020, 6.7 million shares of the Company’s Common Stock were repurchased under this authorization at a total cost of $500 million. The Company suspended Common Stock repurchases under the existing repurchase authorization beginning April 1, 2020 and does not intend to resume share repurchases this year as the duration and severity of the pandemic and its effect on the economy remain uncertain. The Company will evaluate the resumption of share repurchases as informed by the market environment and any alternative opportunities for capital deployment.

The timing and amount of share repurchases are determined by management based upon market conditions and other considerations, and repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Securities Exchange Act of 1934 (the “Exchange Act”). Numerous factors could affect the timing and amount of any future repurchases under the share repurchase authorization, including increased capital needs of the Company due to changes in regulatory capital requirements, opportunities for growth and acquisitions, and the effect of adverse market conditions on the segments.

Dividends declared per share of Common Stock are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Dividends declared per share of Common Stock	$	1.10	$	1.00	$	3.30	$	3.00

Accumulated Other Comprehensive Income (Loss)

AOCI represents the cumulative OCI items that are reported separate from net income and detailed on the Unaudited Interim Consolidated Statements of Comprehensive Income. The balance of and changes in each component of AOCI as of and for the nine months ended September 30, 2020 and 2019, are as follows:

	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2019	$	(536)	$	28,112	$	(3,537)	$	24,039
Change in OCI before reclassifications	69		7,939		8		8,016
Amounts reclassified from AOCI	46		(1,045)		210		(789)
Income tax benefit (expense)	73		(1,289)		(49)		(1,265)
Balance, September 30, 2020	$	(348)	$	33,717	$	(3,368)	$	30,001

63

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2018	$	(564)	$	14,745	$	(3,275)	$	10,906
Change in OCI before reclassifications	(74)		22,759		(76)		22,609
Amounts reclassified from AOCI	5		(1,188)		180		(1,003)
Income tax benefit (expense)	20		(4,956)		(25)		(4,961)
Cumulative effect of adoption of ASU 2017-12	0		7		0		7
Balance, September 30, 2019	$	(613)	$	31,367	$	(3,196)	$	27,558

__________

(1)Includes cash flow hedges of $1,407 million and $832 million as of September 30, 2020 and December 31, 2019, respectively, and $1,584 million and $811 million as of September 30, 2019 and December 31, 2018, respectively, and fair value hedges of $(1) million and $0 million as of September 30, 2020 and December 31, 2019, respectively.

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

	Three Months Ended September 30,				Nine Months Ended September 30,				Affected line item in Consolidated Statements of Operations
	2020		2019		2020		2019
	(in millions)
Amounts reclassified from AOCI(1)(2):
Foreign currency translation adjustment:
Foreign currency translation adjustments	$	(2)	$	0	$	(7)	$	(5)	Realized investment gains (losses), net
Foreign currency translation adjustments	(39)		0		(39)		0		Other income (loss)
Total foreign currency translation adjustment	(41)		0		(46)		(5)
Net unrealized investment gains (losses):
Cash flow hedges—Interest rate	19		57		27		56		(3)
Cash flow hedges—Currency	0		3		4		5		(3)
Cash flow hedges—Currency/Interest rate	(77)		267		343		438		(3)
Net unrealized investment gains (losses) on available-for-sale securities	401		360		671		689
Total net unrealized investment gains (losses)	343		687		1,045		1,188		(4)
Amortization of defined benefit pension items:
Prior service cost	(1)		0		(2)		0		(5)
Actuarial gain (loss)	(69)		(60)		(208)		(180)		(5)
Total amortization of defined benefit pension items	(70)		(60)		(210)		(180)
Total reclassifications for the period	$	232	$	627	$	789	$	1,003

__________

(1)All amounts are shown before tax.

(2)Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.

(3)See Note 5 for additional information on cash flow hedges.

(4)See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.

(5)See Note 10 for information on employee benefit plans.

64

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Net Unrealized Investment Gains (Losses)

Net unrealized investment gains (losses) on available-for-sale fixed maturity securities and certain other invested assets and other assets are included in the Company’s Unaudited Interim Consolidated Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from “Other comprehensive income (loss)” those items that are included as part of “Net income (loss)” for a period that had been part of “Other comprehensive income (loss)” in earlier periods. The amounts for the periods indicated below, split between amounts related to available-for-sale fixed maturity securities on which an allowance for credit losses has been recognized, and all other net unrealized investment gains (losses), are as follows:

Net Unrealized Investment Gains (Losses) on Available-for-sale Fixed Maturity Securities on which an allowance for credit losses has been recognized

	Net Unrealized Gains (Losses) on Investments		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Deferred Income Tax (Liability) Benefit		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
December 31, 2019(1)	$	0	$	0	$	0	$	0	$	0	$	0
Net investment gains (losses) on investments arising during the period	41								(8)		33
Reclassification adjustment for (gains) losses included in net income	23								(4)		19
Increase (Decrease) due to non-credit related losses recognized in AOCI during the period	(87)								17		(70)
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables			2						0		2
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables					0				0		0
Impact of net unrealized investment (gains) losses on policyholders’ dividends							(3)		1		(2)
Balance, September 30, 2020	$	(23)	$	2	$	0	$	(3)	$	6	$	(18)

__________

(1)Allowance for credit losses on available-for-sale fixed maturity securities effective January 1, 2020.

 All Other Net Unrealized Investment Gains (Losses) in AOCI

65

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Net Unrealized Gains (Losses) on Investments(1)		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Deferred Income Tax (Liability) Benefit		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
December 31, 2019(2)	$	45,339	$	(1,585)	$	(2,909)	$	(3,366)	$	(9,367)	$	28,112
Net investment gains (losses) on investments arising during the period	11,509								(2,232)		9,277
Reclassification adjustment for (gains) losses included in net income	(1,068)								207		(861)
Reclassification due to allowance for credit losses recorded during the period	87								(17)		70
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables			336						(68)		268
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables					(1,764)				357		(1,407)
Impact of net unrealized investment (gains) losses on policyholders’ dividends							(2,182)		458		(1,724)
Balance, September 30, 2020	$	55,867	$	(1,249)	$	(4,673)	$	(5,548)	$	(10,662)	$	33,735

__________

(1)Includes cash flow and fair value hedges. See Note 5 for information on cash flow and fair value hedges.

(2)Includes net unrealized gains (losses) for which an OTTI loss had been previously recognized.

12. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of the basic and diluted per share computations of Common Stock based on the consolidated earnings of Prudential Financial for the periods indicated is as follows:

	Three Months Ended September 30,
	2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	1,507				$	1,425
Less: Income (loss) attributable to noncontrolling interests	20					7
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	18					15
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,469	395.3	$	3.72	$	1,403	404.1	$	3.47
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	18				$	15
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	18					15
Stock options			0.3					1.0
Deferred and long-term compensation programs			1.5					1.2
Exchangeable Surplus Notes	0		0.0			1		2.2
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,469	397.1	$	3.70	$	1,404	408.5	$	3.44

66

PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Nine Months Ended September 30,
	2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	(1,168)				$	3,100
Less: Income (loss) attributable to noncontrolling interests	25					42
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	16					33
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	(1,209)	395.6	$	(3.06)	$	3,025	406.2	$	7.45
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	16				$	33
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	16					33
Stock options			0.0					1.1
Deferred and long-term compensation programs			0.0					1.1
Exchangeable Surplus Notes	0		0.0			12		4.8
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	(1,209)	395.6	$	(3.06)	$	3,037	413.2	$	7.35

__________ 

(1)For the nine months ended September 30, 2020, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because dilutive shares and dilutive earnings per share are not applicable when a net loss is reported. As a result of the net loss attributable to Prudential Financial available to holders of Common Stock for the nine months ended September 30, 2020, all potential stock options and compensation programs were considered antidilutive.

Unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and included in the computation of earnings per share pursuant to the two-class method. Under this method, earnings attributable to Prudential Financial are allocated between Common Stock and the participating awards, as if the awards were a second class of stock. During periods of net income available to holders of Common Stock, the calculation of earnings per share excludes the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. In the event of a net loss available to holders of Common Stock, undistributed earnings are not allocated to participating securities and the denominator excludes the dilutive impact of these securities as they do not share in the losses of the Company. Undistributed earnings allocated to participating unvested share-based payment awards for the three months ended September 30, 2020 and 2019, as applicable, were based on 4.9 million and 4.5 million of such awards, respectively, and for the nine months ended September 30, 2020 and 2019, as applicable, were based on 5.0 million and 4.6 million of such awards, respectively, weighted for the period they were outstanding.

Stock options and shares related to deferred and long-term compensation programs that are considered antidilutive are excluded from the computation of diluted earnings per share. Stock options are considered antidilutive based on application of the treasury stock method or in the event of a net loss available to holders of Common Stock. Shares related to deferred and long-term compensation programs are considered antidilutive in the event of a net loss available to holders of Common Stock. For the periods indicated, the number of stock options and shares related to deferred and long-term compensation programs that were considered antidilutive and were excluded from the computation of diluted earnings per share, weighted for the portion of the period they were outstanding, are as follows:

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30,
	2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	3.2	$	84.17	1.4	$	101.57
Antidilutive stock options due to net loss available to holders of Common Stock	0.0			0.0
Antidilutive shares based on application of the treasury stock method	0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	0.0			0.0
Total antidilutive stock options and shares	3.4			1.4

	Nine Months Ended September 30,
	2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	3.4	$	80.64	1.2	$	103.35
Antidilutive stock options due to net loss available to holders of Common Stock	0.4			0.0
Antidilutive shares based on application of the treasury stock method	0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	1.6			0.0
Total antidilutive stock options and shares	5.6			1.2

In September 2009, the Company issued $500 million of surplus notes with an interest rate of 5.36% per annum which were exchangeable at the option of the note holders for shares of Common Stock. In August 2019, as a result of the note holders’ exercise of the exchange option, the Company issued approximately 6.2 million shares of Common Stock at an exchange rate equal to 12.3877 shares of Common Stock per each $1,000 principal amount of surplus notes. The Company’s obligations under the surplus notes are now satisfied. In calculating diluted earnings per share under the if-converted method, for the three and nine months ended September 30, 2019, the potential shares that would be issued assuming a hypothetical exchange, weighted for the period the notes were outstanding, are added to the denominator, and the related interest expense, net of tax, is excluded from the numerator, if the overall effect is dilutive.

13. SEGMENT INFORMATION

Segments

The Company’s principal operations are comprised of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the U.S. Workplace Solutions, U.S. Individual Solutions, and Assurance IQ divisions), the International Businesses, the Closed Block division, and the Company’s Corporate and Other operations. The U.S. Workplace Solutions division consists of the Retirement and Group Insurance businesses, the U.S. Individual Solutions division consists of the Individual Annuities and Individual Life businesses, and the Assurance IQ division consists of the Assurance IQ business. In October 2019, the Company completed the acquisition of Assurance IQ, LLC (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. Divested and Run-off Businesses are comprised of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. The Company’s Corporate and Other operations include corporate items and initiatives that are not allocated to business segments and businesses that have been or will be divested or placed in run-off, excluding the Closed Block division.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Adjusted Operating Income

The Company analyzes the operating performance of each segment using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of operating joint ventures” or “Net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss used by the Company’s chief operating decision maker to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below. Adjusted operating income is calculated by adjusting each segment’s “Income (loss) before income taxes and equity in earnings of operating joint ventures” for the following items:

•Realized investment gains (losses), net, and related adjustments;

•Charges related to realized investment gains (losses), net;

•Market experience updates;

•Divested and Run-off Businesses;

•Other adjustments; and

•Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests.

These items are important to an understanding of overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of adjusted operating income may differ from that used by other companies. The Company, however, believes that the presentation of adjusted operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses. For additional information on these reconciling items, see Note 22 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The Company has historically reflected the results of its variable annuities hedging programs in adjusted operating income over time. Beginning with the second quarter of 2020, these impacts are excluded from adjusted operating income which the Company believes enhances the understanding of underlying performance trends.

Reconciliation of adjusted operating income to net income (loss)

The table below reconciles “Adjusted operating income before income taxes” to “Income (loss) before income taxes and equity in earnings of operating joint ventures”:

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Adjusted operating income before income taxes by segment:	(in millions)
PGIM	$	370	$	232	$	858	$	710
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	372		302		898		1,020
Group Insurance	22		90		71		224
Total U.S. Workplace Solutions division	394		392		969		1,244
U.S. Individual Solutions division:
Individual Annuities(1)	408		459		1,030		1,393
Individual Life	101		59		17		29
Total U.S. Individual Solutions division	509		518		1,047		1,422
Assurance IQ division(2):
Assurance IQ	(30)		0		(69)		0
Total Assurance IQ division	(30)		0		(69)		0
Total U.S. Businesses	873		910		1,947		2,666
International Businesses(3)	775		721		2,162		2,364
Corporate and Other	(455)		(281)		(1,338)		(1,028)
Total segment adjusted operating income before income taxes	1,563		1,582		3,629		4,712
Reconciling items:
Realized investment gains (losses), net, and related adjustments(4)	223		331		(2,746)		(882)
Charges related to realized investment gains (losses), net	(70)		(92)		(353)		(149)
Market experience updates(5)	(134)		(314)		(1,016)		(515)
Divested and Run-off Businesses:
Closed Block division	8		45		(15)		5
Other Divested and Run-off Businesses(3)	(132)		207		(725)		641
Other adjustments(6)	(12)		0		65		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	1		(34)		(62)		(71)
Income (loss) before income taxes and equity in earnings of operating joint ventures per Unaudited Interim Consolidated Financial Statements	$	1,447	$	1,725	$	(1,223)	$	3,741

________

(1)Individual Annuities segment results reflect DAC as if the Individual Annuities business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.

(2)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(3)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(4)Prior period amounts have been updated to conform to current period presentation.

(5)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(6)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Reconciliation of select financial information

The tables below present certain financial information for the Company’s segments and its Corporate and Other operations, including assets by segment and revenues by segment on an adjusted operating income basis, and the reconciliation of the segment totals to amounts reported in the Consolidated Financial Statements.

	September 30, 2020		December 31, 2019
Assets by segment:	(in millions)
PGIM	$	48,507	$	47,655
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	205,878		198,153
Group Insurance	43,851		43,712
Total U.S. Workplace Solutions division	249,729		241,865
U.S. Individual Solutions division:
Individual Annuities	193,509		189,040
Individual Life	104,036		96,072
Total U.S. Individual Solutions division	297,545		285,112
Assurance IQ division(1):
Assurance IQ	2,621		2,639
Total Assurance IQ division	2,621		2,639
Total U.S. Businesses	549,895		529,616
International Businesses(2)	224,932		213,335
Corporate and Other(2)	26,433		44,619
Closed Block division	61,822		61,327
Total assets per Unaudited Interim Consolidated Financial Statements	$	911,589	$	896,552

 __________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the carrying amount of assets of POK are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the carrying amount of assets of POT are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues on an adjusted operating income basis:	(in millions)
PGIM	$	1,066	$	855	$	2,801	$	2,651
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	2,690		2,261		8,119		8,486
Group Insurance	1,457		1,438		4,352		4,340
Total U.S. Workplace Solutions division	4,147		3,699		12,471		12,826
U.S. Individual Solutions division:
Individual Annuities	1,148		1,251		3,249		3,774
Individual Life	1,609		1,529		4,702		4,519
Total U.S. Individual Solutions division	2,757		2,780		7,951		8,293
Assurance IQ division(1):
Assurance IQ	75		0		194		0
Total Assurance IQ division	75		0		194		0
Total U.S. Businesses	6,979		6,479		20,616		21,119
International Businesses(2)	5,481		5,216		16,201		15,734
Corporate and Other	(190)		(177)		(545)		(512)
Total revenues on an adjusted operating income basis	13,336		12,373		39,073		38,992
Reconciling items:
Realized investment gains (losses), net, and related adjustments(3)	392		491		(2,290)		(6)
Charges related to realized investment gains (losses), net	(40)		(62)		(121)		(187)
Market experience updates(4)	(58)		(67)		(406)		(74)
Divested and Run-off Businesses:
Closed Block division	1,301		1,482		3,318		4,157
Other Divested and Run-off Businesses(2)	511		928		1,411		2,813
Other adjustments(5)	0		0		105		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(17)		(40)		(86)		(111)
Total revenues per Unaudited Interim Consolidated Financial Statements	$	15,425	$	15,105	$	41,004	$	45,584

__________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(3)Prior period amounts have been updated to conform to current period presentation.

(4)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(5)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.

Intersegment revenues

Management has determined the intersegment revenues with reference to market rates. Intersegment revenues are eliminated in consolidation in Corporate and Other operations. The PGIM segment revenues include intersegment revenues, primarily consisting of asset-based management and administration fees, as follows: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
PGIM segment intersegment revenues	$	215	$	197	$	640	$	571

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

Segments may also enter into internal derivative contracts with other segments. For adjusted operating income, each segment accounts for the internal derivative results consistent with the manner in which that segment accounts for other similar external derivatives.

Asset management and service fees

The table below presents asset management and service fees, predominantly related to investment management activities, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Asset-based management fees	$	930	$	881	$	2,644	$	2,596
Performance-based incentive fees	43		10		73		108
Other fees	147		147		427		433
Total asset management and service fees	$	1,120	$	1,038	$	3,144	$	3,137

14. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments and Guarantees

Commercial Mortgage Loan Commitments

	September 30, 2020		December 31, 2019
	(in millions)
Total outstanding mortgage loan commitments	$	1,701	$	2,129
Portion of commitment where prearrangement to sell to investor exists	$	959	$	751

In connection with the Company’s commercial mortgage operations, it originates commercial mortgage loans. Commitments for loans that will be held for sale are recognized as derivatives and recorded at fair value. In certain of these transactions, the Company pre-arranges that it will sell the loan to an investor, including to government sponsored entities as discussed below, after the Company funds the loan. The above amount includes unfunded commitments that are not unconditionally cancellable. For related credit exposure, there was an allowance for credit losses of $1 million as of September 30, 2020, which is a change of $(1) million for the three and nine months ended September 30, 2020.

Commitments to Purchase Investments (excluding Commercial Mortgage Loans)

	September 30, 2020		December 31, 2019
	(in millions)
Expected to be funded from the general account and other operations outside the separate accounts	$	8,968	$	7,372
Expected to be funded from separate accounts	$	120	$	49

The Company has other commitments to purchase or fund investments, some of which are contingent upon events or circumstances not under the Company’s control, including those at the discretion of the Company’s counterparties. The Company anticipates a portion of these commitments will ultimately be funded from its separate accounts. The above amount includes unfunded commitments that are not unconditionally cancellable. There were no related charges for credit losses for the three and nine months ended September 30, 2020.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

 Indemnification of Securities Lending and Securities Repurchase Transactions

	September 30, 2020		December 31, 2019
	(in millions)
Indemnification provided to certain clients for securities lending and securities repurchase transactions(1)	$	7,328	$	5,071
Fair value of related collateral associated with above indemnifications(2)	$	7,480	$	5,204
Accrued liability associated with guarantee	$	0	$	0

__________ 

(1)Includes $34 million and $38 million related to securities repurchase transactions as of September 30, 2020 and December 31, 2019, respectively.

(2)Includes $34 million and $37 million related to securities repurchase transactions as of September 30, 2020 and December 31, 2019, respectively.

In the normal course of business, the Company may facilitate securities lending or securities repurchase transactions on behalf of certain client accounts (collectively, “the accounts”). In certain of these arrangements, the Company has provided an indemnification to the accounts to hold them harmless against losses caused by counterparty (i.e., borrower) defaults associated with such transactions facilitated by the Company. In securities lending transactions, collateral is provided by the counterparty to the accounts at the inception of the transaction in an amount at least equal to 102% of the fair value of the loaned securities and the collateral is maintained daily to equal at least 102% of the fair value of the loaned securities. In securities repurchase transactions, collateral is provided by the counterparty to the accounts at the inception of the transaction in an amount at least equal to 95% of the fair value of the securities subject to repurchase and the collateral is maintained daily to equal at least 95% of the fair value of the securities subject to repurchase. The Company is only at risk if the counterparty to the transaction defaults and the value of the collateral held is less than the value of the securities loaned to, or subject to repurchase from, such counterparty. The Company believes the possibility of any payments under these indemnities is remote.

Credit Derivatives Written

As discussed further in Note 5, the Company writes credit derivatives under which the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the defaulted security or similar security.

Guarantees of Asset Values

	September 30, 2020		December 31, 2019
	(in millions)
Guaranteed value of third-parties’ assets	$	84,088	$	80,009
Fair value of collateral supporting these assets	$	88,425	$	81,604
Asset (liability) associated with guarantee, carried at fair value	$	1	$	1

Certain contracts underwritten by the Retirement segment include guarantees related to financial assets owned by the guaranteed party. These contracts are accounted for as derivatives and carried at fair value. The collateral supporting these guarantees is not reflected on the Unaudited Interim Consolidated Statements of Financial Position.

Indemnification of Serviced Mortgage Loans

	September 30, 2020		December 31, 2019
	(in millions)
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company	$	2,451	$	2,113
First-loss exposure portion of above	$	718	$	622
Accrued liability associated with guarantees(1)	$	39	$	19

__________

(1)As of September 30, 2020, the accrued liability associated with guarantees includes an allowance for credit losses of $18 million, which is a change of $1 million and $0 million for the three and nine months ended September 30, 2020, respectively.

As part of the commercial mortgage activities of the Company’s PGIM segment, the Company provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities, such as Fannie Mae and Freddie Mac. The Company has agreed to indemnify the government sponsored entities for a portion of the credit risk associated with

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

certain of the mortgages it services through a delegated authority arrangement. Under these arrangements, the Company originates multi-family mortgages for sale to the government sponsored entities based on underwriting standards they specify, and makes payments to them for a specified percentage share of losses they incur on certain loans serviced by the Company. The Company’s percentage share of losses incurred generally varies from 4% to 20% of the loan balance, and is typically based on a first-loss exposure for a stated percentage of the loan balance, plus a shared exposure with the government sponsored entity for any losses in excess of the stated first-loss percentage, subject to a contractually specified maximum percentage. The Company determines the liability related to this exposure using historical loss experience, and the size and remaining life of the asset. The Company serviced $19,411 million and $16,878 million of mortgages subject to these loss-sharing arrangements as of September 30, 2020 and December 31, 2019, respectively, all of which are collateralized by first priority liens on the underlying multi-family residential properties. As of September 30, 2020, these mortgages had a weighted-average debt service coverage ratio of 1.89 times and a weighted-average loan-to-value ratio of 62%. As of December 31, 2019, these mortgages had a weighted average debt service coverage ratio of 1.88 times and a weighted-average loan-to-value ratio of 61%. The Company had no losses related to indemnifications that were settled for both the nine months ended September 30, 2020 and 2019.

Other Guarantees

	September 30, 2020		December 31, 2019
	(in millions)
Other guarantees where amount can be determined	$	52	$	55
Accrued liability for other guarantees and indemnifications	$	0	$	0

The Company is also subject to other financial guarantees and indemnity arrangements. The Company has provided indemnities and guarantees related to acquisitions, dispositions, investments and other transactions that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. Included above reflects $9 million and $12 million as of September 30, 2020 and December 31, 2019, respectively, of yield maintenance guarantees related to certain investments the Company sold. The Company does not expect to make any payments on these guarantees and is not carrying any liabilities associated with these guarantees.

Since certain of these obligations are not subject to limitations, it is not possible to determine the maximum potential amount due under these guarantees. The accrued liabilities identified above do not include retained liabilities associated with sold businesses. 

Assurance IQ Contingent Consideration Liability

On October 10, 2019, the Company completed its acquisition of Assurance IQ, a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Pursuant to the merger agreement, contingent consideration as well as additional compensation awards are payable in 2023 in a mix of approximately 25% cash and 75% Prudential Financial Common Stock, contingent upon Assurance IQ’s achievement of certain targets for gross revenues net of associated selling expenses (“Variable Profits”) over the period from January 1, 2020 through December 31, 2022 as follows:

•If Variable Profits are less than $900 million, no additional amount is payable.

•If Variable Profits are greater than $1,300 million, an additional amount of $1,150 million is payable.

•If Variable Profits are greater than $900 million but less than or equal to $1,300 million, an additional amount is payable equal to the product of (i) the quotient of (A) an amount equal to (1) Variable Profits achieved minus (2) $900 million divided by (B) $400 million and (ii) $1,150 million.

Payment of the additional amount may be accelerated if the Company violates certain provisions of the merger agreement requiring it to take or refrain from taking certain actions, including with respect to the management and operation of Assurance IQ.

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Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The contingent consideration liability referred to above is reported at fair value. Fair value is determined based on the present value of expected payments under the arrangement described above, using an internally developed option pricing model based on a number of assumptions, including certain unobservable assumptions for future Variable Profits and the future price of Prudential Financial Common Stock. The fair value of the liability is updated each reporting period, with changes in fair value reported within “Other income.” The fair value of the contingent consideration liability was zero as of September 30, 2020 and $105 million as of December 31, 2019 (see Note 6 for additional information). The stock-based component of contingent consideration impacts the share count for purposes of calculating the Company’s diluted earnings per share when Assurance IQ’s actual Variable Profits achieved as of the end of the reporting period is in excess of $900 million, as if the contingent consideration performance period ended on the applicable reporting date. The number of shares issued as part of the contingent consideration payable in 2023 will be based on a $83.71 price per share.

Contingent Liabilities

On an ongoing basis, the Company and its regulators review its operations including, but not limited to, sales and other customer interface procedures and practices, and procedures for meeting obligations to its customers and other parties. These reviews may result in the modification or enhancement of processes or the imposition of other action plans, including concerning management oversight, sales and other customer interface procedures and practices, and the timing or computation of payments to customers and other parties. In certain cases, if appropriate, the Company may offer customers or other parties remediation and may incur charges, including the cost of such remediation, administrative costs and regulatory fines.

The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see “—Litigation and Regulatory Matters” below.

It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company’s financial position.

Litigation and Regulatory Matters

The Company is subject to legal and regulatory actions in the ordinary course of its businesses. Pending legal and regulatory actions include proceedings relating to aspects of the Company’s businesses and operations that are specific to it and proceedings that are typical of the businesses in which it operates, including in both cases businesses that have been either divested or placed in wind down status. Some of these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain.

The Company establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed, including matters discussed below. The Company estimates that as of September 30, 2020, the aggregate range of reasonably possible losses in excess of accruals established for those litigation and regulatory matters for which such an estimate currently can be made is less than $250 million. Any estimate is not an indication of expected loss, if any, or the Company’s maximum possible loss exposure on such matters. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews.

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

The following discussion of litigation and regulatory matters provides an update of those matters discussed in Note 23 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and should be read in conjunction with the complete descriptions provided in the Form 10-K.

Individual Annuities, Individual Life, and Group Insurance

Broderick v. PICA, et al.

In September 2020, the parties filed a Joint Stipulation of Dismissal with Prejudice. This matter is closed.

Behfarin v. Pruco Life

In June 2020, the court issued an order: (i) granting plaintiffs’ motion for certification of the settlement class; (ii) approving the proposed nationwide class settlement agreement; (iii) approving the class notice; (iv) awarding attorneys’ fees and costs to plaintiffs and a reduced incentive award to Behfarin; and (v) dismissing the action with prejudice, but maintaining jurisdiction over the settlement.

Securities Litigation

City of Warren v. PFI, et al

In March 2020, the court issued an order consolidating this action with Donald P. Crawford v. PFI, et al. under the caption In re Prudential Financial, Inc. Securities Litigation. In June 2020, plaintiffs filed an amended complaint and added Robert M. Falzon, PFI’s vice chairman, as an individual defendant. In August 2020, the Company filed a motion to dismiss the amended complaint.

Donald P. Crawford v. PFI, et al.

In March 2020, the court issued an order consolidating this action with City of Warren v. PFI, et al. under the caption In re Prudential Financial, Inc. Securities Litigation. Case updates are consolidated with the City of Warren action.

Pekin Police Pension Fund v. Charles F. Lowrey, et al.

In September 2020, a shareholder derivative complaint entitled Pekin Police Pension Fund, Derivatively on Behalf of Prudential Financial, Inc. v. Charles F. Lowrey, et al., was filed in the United States District Court for the District of New Jersey (the “Derivative Complaint”) against PFI as a “nominal” defendant, PFI’s chairman and chief executive officer, vice chairman, chief financial officer, certain former officers of PFI, and all of the current outside directors of PFI’s Board. The Derivative Complaint asserts claims for federal securities law violations, breach of fiduciary duty, waste of corporate assets, and unjust enrichment, and alleges that: (i) the Company's reserve assumptions failed to account for adversely developing mortality experience in the Individual Life business segment; (ii) the Company's reserves were insufficient to satisfy its future policy benefit liabilities; (iii) the Company materially understated its liabilities and overstated net income due to flawed assumptions in calculating mortality experience; and (iv) the individual defendants breached their duty of care and loyalty to the Company by allowing the alleged improper activity.

Daniel Plaut v. Prudential Financial, Inc.

In October 2020, a shareholder derivative complaint entitled Daniel Plaut, Derivatively on Behalf of Prudential Financial, Inc. v. Charles F. Lowrey, et al., was filed in the Superior Court of New Jersey, Law Division, Essex County (the “Derivative Complaint”) against PFI as a “nominal” defendant, PFI’s chairman and chief executive officer, vice chairman, and all of the current outside directors of PFI’s Board. The Derivative Complaint asserts claims for breach of fiduciary duty, unjust enrichment, and abuse of control and alleges that: (i) the Company's reserve assumptions failed to account for adversely developing mortality experience in the Individual Life business segment; (ii) the Company's reserves were insufficient to satisfy its future policy benefit liabilities; (iii) the Company materially understated its liabilities and overstated net income due to flawed assumptions in calculating mortality experience; and (iv) the individual defendants engaged in corporate misconduct, mismanagement and waste through their participation in the alleged wrongdoing.

Shareholder Demands

In January 2020, the Board of Directors received a shareholder demand letter containing allegations: (i) of wrongdoing similar to those alleged in the City of Warren and Crawford complaints; and (ii) that certain of the Company’s current and former directors and executive officers breached their fiduciary duties of loyalty, due care and candor. The demand letter requests that the Board of Directors investigate and commence legal proceedings against the named individuals to recover for

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PRUDENTIAL FINANCIAL, INC.

Notes to Unaudited Interim Consolidated Financial Statements—(Continued)

the Company’s benefit the damages purportedly sustained by the Company as a result of the alleged breaches. In February 2020, the Board of Directors authorized the creation of a special committee to investigate the allegations set forth in the shareholder demand letter. In April 2020, the Company received additional shareholder demands raising allegations similar to those contained in the January 2020 demand, and may be subject prospectively to additional activity relating to these matters.

Other Matters

Cho v. PICA, et al.

In September 2020, plaintiff filed an amended complaint and added as individual defendants certain PFI officers and current and former members of the Company’s Administrative Committee and Investment Oversight Committee.

LIBOR Litigation

Prudential Investment Portfolios 2, f/k/a Dryden Core Investment Fund, o/b/o Prudential Core Short-Term Bond Fund and Prudential Core Taxable Money Market Fund v. Bank of America Corporation, et al.

In May 2020, the court issued two orders approving stipulations dismissing with prejudice Prudential’s claims against Barclays Bank PLC, Barclays Capital Inc., and Barclays PLC. In August 2020, the court issued two orders approving stipulations dismissing with prejudice Prudential’s claims against Deutsche Bank AG. In October 2020, the court issued orders approving stipulations dismissing with prejudice Prudential’s claims against JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC, f/k/a/ J.P. Morgan Securities Inc., Bank of America Corporation, Bank of America, N.A., and Merrill Lynch, Pierce, Fenner & Smith Inc., f/k/a Banc of America Securities LLC.

Summary

The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company’s results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of the Company’s litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company’s financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company’s financial position.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE OF CONTENTS

	Page
Overview	80
COVID-19	80
Regulatory Developments	83
Impact of a Low Interest Rate Environment	84
Results of Operations	87
Consolidated Results of Operations	87
Segment Results of Operations	88
Segment Measures	91
Impact of Foreign Currency Exchange Rates	91
Accounting Policies & Pronouncements	94
Results of Operations by Segment	96
PGIM	96
U.S. Businesses	100
Retirement	101
Group Insurance	103
Individual Annuities	105
Individual Life	110
Assurance IQ	112
International Businesses	113
Corporate and Other	118
Divested and Run-off Businesses	119
Closed Block Division	119
Income Taxes	121
Experience-Rated Contractholder Liabilities, Assets Supporting Experience-Rated Contractholder Liabilities and Other Related Investments	121
Valuation of Assets and Liabilities	122
General Account Investments	124
Liquidity and Capital Resources	145
Ratings	156
Off-Balance Sheet Arrangements	156

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the consolidated financial condition of Prudential Financial, Inc. (“Prudential,” “Prudential Financial,” “PFI,” or “the Company”) as of September 30, 2020, compared with December 31, 2019, and its consolidated results of operations for the three and nine months ended September 30, 2020 and 2019. You should read the following analysis of our consolidated financial condition and results of operations in conjunction with the MD&A, the “Risk Factors” section, and the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as the statements under “Forward-Looking Statements,” the “Risk Factors” section, and the Unaudited Interim Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

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Overview

Prudential Financial, a financial services leader with approximately $1.648 trillion of assets under management as of September 30, 2020, has operations primarily in the United States of America (“U.S.”), Asia, Europe and Latin America. Through our subsidiaries and affiliates, we offer a wide array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. We offer these products and services to individual and institutional customers through one of the largest distribution networks in the financial services industry.

Our principal operations consist of PGIM (our global investment management business), our U.S. Businesses (consisting of our U.S. Workplace Solutions, U.S. Individual Solutions, and Assurance IQ divisions), our International Businesses, the Closed Block division, and our Corporate and Other operations. The U.S. Workplace Solutions division consists of our Retirement and Group Insurance businesses, the U.S. Individual Solutions division consists of our Individual Annuities and Individual Life businesses, and the Assurance IQ division consists of our Assurance IQ business. In October 2019, we completed the acquisition of Assurance IQ, LLC (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs (see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information). The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. Divested and Run-off Businesses consist of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under generally accepted accounting principles in the United States of America (“U.S. GAAP”). Our Corporate and Other operations include corporate items and initiatives that are not allocated to business segments and businesses that have been or will be divested or placed in run-off, excluding the Closed Block division.

Our strategy centers on our mix of high-quality protection, retirement and investment management businesses which creates growth potential due to earnings diversification and the opportunity to provide customers with integrated cross-business solutions, as well as capital benefits from a balanced risk profile. We are well positioned to meet the needs of customers and tap into significant market opportunities through our U.S. Businesses, PGIM (our global investment management business) and our International Businesses.

We attribute financing costs to each segment based on the amount of financing used by each segment, excluding financing costs associated with corporate debt which are reflected in our Corporate and Other operations. The net investment income of each segment includes earnings on the amount of capital that management believes is necessary to support the risks of that segment.

COVID-19

Beginning in the first quarter of 2020, the outbreak of the 2019 novel coronavirus (“COVID-19”) created extreme stress and disruption in the global economy and financial markets and elevated mortality and morbidity experience for the global population. These events impacted our results of operations in the current period and are expected to drive future impacts to our results of operations. The Company has taken several measures to manage the impacts of this crisis. The actual and expected impacts of these events and other items are included in the following update:

•Outlook

PGIM. Our global investment management business, PGIM, is focused on maintaining strong investment performance while leveraging the scale of its approximately $1.4 trillion of assets under management through its distinctive multi-manager model. Despite this COVID-19 environment since first quarter, PGIM has experienced favorable equity market and credit conditions, strong performance, continued positive flows across both institutional and retail investors, gains from our seed capital and co-investments and increased levels of production and profitability from the agency business demonstrating the counter cyclical nature of the business. There remain risks to earnings across the asset management industry, including PGIM, if economic conditions remain unstable, markets decline or credit spreads widen. The economic downturn could also have further impacts on real estate prices as well as transaction volumes in certain private asset classes. Adverse changes in market conditions could lead to lower fee-based revenues, incentive fees taking longer to be realized and losses emerging in our co- and seed investment portfolio. We believe PGIM’s uniquely diversified global platform is well positioned to be resilient in the face of market and industry headwinds. Underpinning our growth strategy is our ability to continue to deliver robust investment performance, and to attract and retain high-caliber investment talent.

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U.S. Businesses:

U.S. Workplace Solutions. In our Retirement business, account values in our full-service business are impacted by capital market movements and by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides qualified individuals the ability to withdraw from defined contribution plans and individual retirement accounts up to $100,000 penalty-free, with the withdrawal taxed over a three-year period (unless otherwise elected by the individual). Market conditions are also likely to continue to impact Retirement sales volume. We continue to maintain pricing discipline to ensure we are achieving appropriate returns in the current market, including in our funded pension risk transfer business. Given many of the products in our institutional investment products business assume longevity risk, elevated levels of mortality resulting from COVID-19 may continue to contribute to a higher level of underwriting gains in this business. In our Group Insurance business, we expect COVID-19 to continue to contribute to elevated levels of mortality resulting in increased life insurance claims in the near-term. In both Retirement and Group Insurance, COVID-19 may contribute to heightened interest over time in the solutions we offer to help improve the financial wellness of individuals at the workplace; however, we expect near-term prospects to be slowed by the impact of social distancing on new business sales and the impact of employee financial hardships on utilization of workplace benefits.

U.S. Individual Solutions. In our Individual Life insurance business, we expect COVID-19 to continue to contribute to elevated levels of mortality, resulting in increased life insurance claims in the near-term. In our Individual Annuities business, we expect account values and fee income will continue to be impacted by capital market movements. Across our Individual Solutions businesses, we have taken pricing and product actions to ensure we realize appropriate returns for the current economic environment, and to diversify our product mix to further limit our sensitivity to interest rates, while maintaining a solid value proposition for our customers. These actions included the suspension in July 2020 of our single life guaranteed universal life product in our Individual Life business, and a pivot to less rate-sensitive products in our Individual Annuities business with the decision to discontinue sales of traditional variable annuities with guaranteed living benefits effective December 31, 2020. In addition, while our distribution platforms include a suite of digital, hybrid, and in-person options, mandated social distancing has limited in-person engagement between customers and financial professionals. Collectively, we expect the product actions we have taken and the constrained distribution environment to adversely impact our sales prospects in the near-term. Although our retail solutions are available to employees of our Workplace Solutions clients, we encourage employees to prioritize workplace benefits to enhance their financial wellness. We expect to offer our Individual Solutions products on the Assurance IQ platform over time in addition to the Individual Life product offering added in the second quarter of 2020.

Assurance IQ. We expect the impacts of COVID-19 on our Assurance IQ business to be limited, as this business does not have direct exposure to capital markets conditions or mortality, and its distribution is not dependent on in-person engagement with consumers; however, consumer financial hardships created by the current economic conditions could negatively impact persistency and expected sales levels.

International Businesses. Our International Businesses remain focused on meeting customers’ protection and financial needs and maintaining the underlying strength of our distribution channels. In the third quarter of 2020, we experienced an increase in sales in part as the significant restrictions on personal interactions that existed globally during portions of the first half of 2020 were reduced and customers, agents and third-party distributors adapted to greater use of virtual communications (see “—Results of Operations by Segment—International Insurance Division—International Insurance” for additional information). However, a reversal of the easing of COVID-19 restrictions on personal interactions may adversely impact our sales prospects in the near term. Through the third quarter of 2020, we have experienced a slightly elevated level of claims due to COVID-19 and higher expenses mostly related to supporting our captive agents which we expect will decrease over time. Going forward, we believe COVID-19 may contribute to heightened interest in protection products, particularly the death protection products that are at the core of our needs-based selling approach.

Corporate and Other Operations. In our Corporate and Other operations, if equity markets and interest rates decline through December 31, 2020, it will potentially result in higher expenses in the future associated with the Company’s pension and post retirement plans due to lower than expected returns on plan assets and increases in plan obligations.

•Results of Operations. For the three months and nine months ended September 30, 2020 we reported a net gain of $1,487 million and a net loss of $(1,193) million, respectively, as financial market conditions had a substantial effect on

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the reported results of our businesses. See “Results of Operations” and “Results of Operations by Segment” for a discussion of results for the third quarter and the first nine months of 2020.

•Liquidity. As of September 30, 2020, we had $6.1 billion in highly liquid assets at Prudential Financial. Since the beginning of the year, we took several steps to proactively manage liquidity, including refinancing $1.3 billion of junior subordinated debt to reduce our financing costs, entering into a $1.5 billion facility agreement with a Delaware trust to increase our alternative sources of liquidity and issuing $1.5 billion in senior debt in part to pre-fund 2020 and 2021 maturities. We suspended Common Stock repurchases beginning April 1, 2020 under our existing repurchase authorization, after repurchasing $500 million of shares of Prudential Financial’s Common Stock in the first quarter of 2020. We do not intend to resume share repurchases this year as the duration and severity of the pandemic and its effect on the economy remain uncertain. We will evaluate the resumption of share repurchases as informed by the market environment and any alternative opportunities for capital deployment. The impact of COVID-19 and related market dislocations could strain our existing liquidity and cause us to increase the use of our alternative sources of liquidity, which could result in increased financial leverage on our balance sheet and negatively impact our credit and financial strength ratings or ratings outlooks. See “Liquidity and Capital Resources—Liquidity” for a discussion of our liquidity.

•Capital Resources. As of September 30, 2020, all of our significant insurance subsidiaries maintained capital levels consistent with their ratings targets. However, market conditions could negatively impact the statutory capital of our insurance companies and constrain our overall capital flexibility, including as a result of credit migration and losses in our investment portfolio as discussed below. Adverse market conditions could require us to take additional management actions for our insurance subsidiaries to maintain capital consistent with their ratings objectives, which may include redeploying financial resources from internal sources, or using available external sources of capital or seeking additional sources. See “Liquidity and Capital Resources—Capital” for a discussion of our capital resources.

•Investment Portfolio. Net unrealized gains (losses) on fixed maturity investments (excluding securities classified as trading) were a net unrealized gain of $54,811 million as of September 30, 2020, compared to a net unrealized gain of $44,891 million as of December 31, 2019. Gross unrealized gains increased from $46,206 million as of December 31, 2019 to $56,460 million as of September 30, 2020 and gross unrealized losses increased from $1,315 million to $1,649 million for the same period. The increase in gross unrealized gains was primarily due to a decrease in U.S. interest rates, while the increase in gross unrealized losses was primarily due to credit spread widening and liquidity concerns. The continued impact of COVID-19 on the global economy and corporate credit may continue to result in negative credit migration and possible losses in our investment portfolio. Due to the highly uncertain nature of these conditions, it is not possible to estimate the overall impacts at this time. The sectors most impacted by the COVID-19 crisis include energy, consumer cyclical and retail related investments (see “—General Account Investments” for additional information). During 2020, approximately 1.4% of total invested assets were modified to allow for limited forbearance. Under the terms of forbearance, the borrower is allowed to defer a portion of current year principal and/or interest payments for a short period (e.g., 6 months). These deferrals accrue additional interest and do not have a material impact on our investment value.

•Sales and Flows. See “Segment Results of Operations” for a discussion of sales and flows in each of our segments.

•Underwriting Results. See “Segment Results of Operations” for a discussion of mortality experience in each of our segments.

In the third quarter of 2020, we estimate that COVID-19 had a net negative impact on our underwriting results reflecting unfavorable mortality impacts in our Group Insurance and Individual Life businesses partially offset by favorable mortality impacts in our Retirement business. Going forward, we estimate that our net underwriting results will be adversely impacted by approximately $70 million for every incremental 100,000 fatalities in the U.S. However, the ultimate impact on our underwriting results will depend on factors such as age, geographic location, and insured versus uninsured populations among the fatalities.

•Expenses. We expect higher expenses of approximately $155 million in 2020 from costs associated with COVID-19, including approximately $40 million incurred in the third quarter of 2020 and approximately $25 million expected in the fourth quarter of 2020. These higher expenses are primarily related to agent compensation, as well as technology and third-party vendor capabilities related to remote work functionality and protecting our employees’ health. However, we also expect cost savings associated with COVID-19 of approximately $90 million in 2020, including approximately $30 million of cost savings realized in the third quarter of 2020 and approximately $20 million expected to be realized in the fourth quarter of 2020. These cost savings are from lower travel and entertainment costs.

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We have provided, and in some cases continue to provide, a number of customer accommodations in response to the COVID-19 pandemic, including extending grace periods for premium payments, expediting claim payments and withdrawal requests, waiving certain claims payment requirements, waiving certain transaction fees, waiving interest on policy loans and wiring funds at the Company’s expense.

•Risk Management. Prudential has a robust risk management framework that seeks to ensure we can fulfill our customer, regulatory, and other stakeholder obligations under a range of stress scenarios by maintaining the appropriate balance between the Company’s resources and risks. We evaluate the Company’s exposure to stress under four lenses (economic, STAT, GAAP, and liquidity).

Our risk management framework incorporates severe to very severe stresses across equities, interest rates, credit migration and defaults, currencies and pandemics. This framework includes a specific “pandemic and sell-off” scenario with a mortality calamity (1.5 extra deaths per 1,000 lives in the first year) based on a modern-day interpretation of the 1918 Spanish Flu experience that is aligned with most regulatory frameworks. The stress scenario assumes an even distribution of increased mortality across the population, while current COVID-19 mortality is sharply skewed toward older ages. As the COVID-19 event continues to unfold, we continue to update our analysis and take management actions in response to this specific event. As of September 30, 2020 the COVID-19 pandemic has not reached the most severe levels included in the Company’s stress testing.

In addition, we expect the impact of COVID-19-related claims to be moderated by the balance between our mortality exposure (such as in our individual and group life businesses) and our longevity exposure (such as in our retirement business).

•Risk Factors. The COVID-19 pandemic has adversely impacted our results of operations, financial position, investment portfolio, new business opportunities and operations, and these impacts are expected to continue. For additional information on the risks to our business posed by the COVID-19 pandemic, see “Risk Factors.”

•Business Continuity. One of the main impacts of the COVID-19 pandemic has been executing our business continuity protocols to ensure our employees are safe and able to serve our customers. This included effectively transitioning the vast majority of our employees to remote work arrangements.

We believe all of our businesses can sustain remote work and social distancing for an indefinite period while ensuring that critical business operations are sustained. In addition, we are managing COVID-19-related impacts on third-party provided services, and do not anticipate significant interruption in critical operations.

•CARES Act and Other Regulatory Developments. In March 2020 Congress enacted the CARES Act, which provides $2 trillion in economic stimulus to taxpayers, small businesses, and corporations through various grant and loan programs, tax provisions and regulatory relief. One provision of the CARES Act amends the Tax Cuts and Jobs Act (“TCJA”) and allows companies with net operating losses (“NOLs”) originating in 2018, 2019 or 2020 to carry back those losses for five years. See Note 8 to the Unaudited Interim Financial Statements for more information.

Other governments and regulators, including the Japan Financial Services Agency (“FSA”), the National Association of Insurance Commissioners (“NAIC”) and state insurance regulators, have implemented, or are considering, a number of actions in response to the crisis, including delaying implementation of certain regulatory changes, temporarily waiving certain regulatory requirements and requiring or requesting insurers to waive premium payments and policy provisions and exclusions for certain periods of time.

The Company is not aware of any new or proposed government mandates that could materially impact the Company’s solvency or liquidity position.

Regulatory Developments

DOL Fiduciary Rules

In June 2020, the DOL announced that it is proposing a new exemption to replace the previously vacated “best interest contract exemption.” This proposed exemption would allow fiduciaries meeting the requirements of the exemption to receive compensation, including as a result of advice to roll over assets from a qualified plan to an Individual Retirement Account (“IRA”), and to purchase from or sell certain investments to qualified plans and IRAs. The DOL also reinstated the prior

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investment advice regulation and other existing exemptions and provided its current interpretation of the pre-2016 fiduciary investment advice regulation. We cannot predict what impact the newly proposed exemption or interpretative guidance will have on the Company.

Impact of a Low Interest Rate Environment

As a global financial services company, market interest rates are a key driver of our results of operations and financial condition. Changes in interest rates can affect our results of operations and/or our financial condition in several ways, including favorable or adverse impacts to:

•investment-related activity, including: investment income returns, net interest margins, net investment spread results, new money rates, mortgage loan prepayments and bond redemptions;

•insurance reserve levels, market experience true-ups and amortization of both deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”);

•customer account values, including their impact on fee income;

•fair value of, and possible impairments on, intangible assets such as goodwill;

•product offerings, design features, crediting rates and sales mix; and

•policyholder behavior, including surrender or withdrawal activity.

For more information on interest rate risks, see “Risk Factors” in this Quarterly Report on Form 10-Q and “Risk Factors—Market Risk” included in our Annual Report on Form 10-K for the year ended December 31, 2019.

See below for discussions related to the current interest rate environments in our two largest markets, the U.S. and Japan; the composition of our insurance liabilities and policyholder account balances; and the hypothetical impacts to our investment results if these interest rate environments are sustained.

U.S. Operations excluding the Closed Block Division

Interest rates in the U.S. have experienced a sustained period of historically low levels with certain benchmarks reaching significant lows. While market conditions and events make uncertain the timing, amount and impact of any monetary policy decisions by the Federal Reserve, changes in interest rates may impact our reinvestment yields, primarily for our investments in fixed maturity securities and commercial mortgage loans. As interest rates decline, our reinvestment yield may be below our overall portfolio yield, resulting in an unfavorable impact to earnings. Conversely, as interest rates rise, our reinvestment yield may exceed the overall portfolio yield resulting in a favorable impact to earnings.

For the general account supporting our U.S. Individual Solutions division, U.S. Workplace Solutions division and our Corporate and Other operations, we estimate annual principal payments and prepayments that we would be required to reinvest to be approximately 5.7% of the fixed maturity security and commercial mortgage loan portfolios through 2021. The portion of the general account attributable to these operations has approximately $243 billion of such assets (based on net carrying value) as of September 30, 2020. The average portfolio yield for fixed maturity securities and commercial mortgage loans is approximately 4.0% as of September 30, 2020.

Included in the $243 billion of fixed maturity securities and commercial mortgage loans are approximately $162 billion that are subject to call or redemption features at the issuer’s option and have a weighted average interest rate of approximately 4%. Of this $162 billion, approximately 53% contain provisions for prepayment premiums. If we reinvest scheduled payments or prepayments (not subject to a prepayment fee) at rates below the current portfolio yield, including in some cases at rates below those guaranteed under our insurance contracts, future operating results will be impacted to the extent we do not, or are unable to, reduce crediting rates on in-force blocks of business, or effectively utilize other asset/liability management strategies described below, in order to maintain current net interest margins.

The following table sets forth the insurance liabilities and policyholder account balances of our U.S. Operations excluding the Closed Block Division, by type, for the date indicated:

	As of September 30, 2020
	(in billions)
Long-duration insurance products with fixed and guaranteed terms	$	155
Contracts with adjustable crediting rates subject to guaranteed minimums	61
Participating contracts where investment income risk ultimately accrues to contractholders	14
Total	$	230

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The $155 billion above relates to long-duration products such as group annuities, structured settlements and other insurance products that have fixed and guaranteed terms, for which underlying assets may have to be reinvested at interest rates that are lower than portfolio rates. We seek to mitigate the impact of a prolonged low interest rate environment on these contracts through asset/liability management, as discussed further below.

The $61 billion above relates to contracts with crediting rates that may be adjusted over the life of the contract, subject to guaranteed minimums. Although we may have the ability to lower crediting rates for those contracts above guaranteed minimums, our willingness to do so may be limited by competitive pressures. The following table sets forth the related account values by range of guaranteed minimum crediting rates and the related range of the difference, in basis points (“bps”), between rates being credited to contractholders as of September 30, 2020, and the respective guaranteed minimums. 

	Account Values with Adjustable Crediting Rates Subject to Guaranteed Minimums:
	At guaranteed minimum			1-49 bps above guaranteed minimum			50-99 bps above guaranteed minimum			100-150 bps above guaranteed minimum			Greater than 150 bps above guaranteed minimum			Total
	($ in billions)
Range of Guaranteed Minimum Crediting Rates:
Less than 1.00%	$	0.8		$	1.3		$	0.3		$	0.0		$	0.0		$	2.4
1.00% - 1.99%	1.1			15.0			2.7			2.0			1.2			22.0
2.00% - 2.99%	1.3			1.0			2.0			1.1			1.2			6.6
3.00% - 4.00%	27.9			0.6			0.1			0.2			0.2			29.0
Greater than 4.00%	0.9			0.0			0.0			0.0			0.0			0.9
Total(1)	$	32.0		$	17.9		$	5.1		$	3.3		$	2.6		$	60.9
Percentage of total	53		%	30		%	8		%	5		%	4		%	100		%

 __________

(1)Includes approximately $0.62 billion related to contracts that impose a market value adjustment if the invested amount is not held to maturity.

The remaining $14 billion of insurance liabilities and policyholder account balances in these operations relates to participating contracts for which the investment income risk is expected to ultimately accrue to contractholders. The crediting rates for these contracts are periodically adjusted based on the return earned on the related assets.

Assuming a hypothetical scenario where the average 10-year U.S. Treasury rate is 0.65% (which is reasonably consistent with recent rates) for the period from October 1, 2020 through September 30, 2021 (and credit spreads remain unchanged from average levels experienced during the third quarter 2020), we estimate that the unfavorable impact to net investment income of reinvesting activities, including scheduled maturities and estimated prepayments of fixed maturities and commercial mortgage and other loans (excluding assets supporting participating contracts) would be between $100 million and $140 million for the period from October 1, 2020 through September 30, 2021.

In order to mitigate the unfavorable impact that a low interest rate environment has on our net interest margins, we employ a proactive asset/liability management program, which includes strategic asset allocation and hedging strategies within a disciplined risk management framework. These strategies seek to match the characteristics of our products, and to closely approximate the interest rate sensitivity of the assets with the estimated interest rate sensitivity of the product liabilities. Our asset/liability management program also helps manage duration gaps, currency and other risks between assets and liabilities through the use of derivatives. We adjust this dynamic process as products change, as customer behavior changes and as changes in the market environment occur. As a result, our asset/liability management process has permitted us to manage the interest rate risk associated with our products through several market cycles. Our interest rate exposure is also mitigated by our business mix, which includes lines of business for which fee-based and insurance underwriting earnings play a more prominent role in product profitability.

Closed Block Division

Substantially all of the $61 billion of general account assets in the Closed Block division support obligations and liabilities relating to the Closed Block policies only. See Note 7 to the Unaudited Interim Consolidated Financial Statements for additional information on the Closed Block.

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International Insurance Operations

While our international insurance operations have experienced a low interest rate environment for many years, the current reinvestment yields for certain blocks of business in our international insurance operations are generally lower than the current portfolio yield supporting these blocks of business. In recent years, the Bank of Japan’s monetary policy has resulted in even lower and, at times, negative yields for certain tenors of government bonds. Our international insurance operations employ a proactive asset/liability management program in order to mitigate, to the extent possible, the unfavorable impact that the current interest rate environment has on our net interest margins. In conjunction with this program, we have not purchased negative yielding assets to support the portfolio and we continue to purchase long-term bonds with tenors of 30 years or greater. Additionally, our diverse product portfolio in terms of currency mix and premium payment structure allows us to further mitigate the negative impact from this low interest rate environment. We regularly examine our product offerings and their profitability. As a result, we have repriced certain products, adjusted commissions for certain products and have discontinued sales of other products that do not meet our profit expectations. The impact of these actions and the introduction of certain new products, has resulted in an increase in sales of U.S. dollar-denominated products relative to products denominated in other currencies. For additional information on sales within our international insurance operations, see “—International Businesses—Sales Results,” below.

The following table sets forth the insurance liabilities and policyholder account balances of our Japanese operations, by type, for the date indicated:

	As of September 30, 2020
	(in billions)
Insurance products with fixed and guaranteed terms	$	136
Contracts with a market value adjustment if invested amount is not held to maturity	26
Contracts with adjustable crediting rates subject to guaranteed minimums	11
Total	$	173

The $136 billion above is primarily comprised of long-duration insurance products that have fixed and guaranteed terms, for which underlying assets may have to be reinvested at interest rates that are lower than current portfolio yields. The remaining insurance liabilities and policyholder account balances include $26 billion related to contracts that impose a market value adjustment if the invested amount is not held to maturity and $11 billion related to contracts with crediting rates that may be adjusted over the life of the contract, subject to guaranteed minimums. Most of the current crediting rates on these contracts, however, are at or near contractual minimums. Although we have the ability in some cases to lower crediting rates for those contracts that are above guaranteed minimum crediting rates, the majority of this business has interest crediting rates that are determined by formula.

Assuming a hypothetical scenario where the average 30-year Japanese Government Bond yield is 0.60% and the 10-year U.S. Treasury rate is 0.65% (which is reasonably consistent with recent rates) for the period from October 1, 2020 through September 30, 2021 (and credit spreads remain unchanged from average levels experienced during the third quarter 2020), we estimate that the unfavorable impact to net investment income of reinvesting activities, including scheduled maturities and estimated prepayments of fixed maturities and commercial mortgage and other loans (excluding assets supporting participating contracts) would be between $40 million and $80 million for the period from October 1, 2020 through September 30, 2021.

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Results of Operations

Consolidated Results of Operations

The following table summarizes net income (loss) for the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Revenues	$	15,425	$	15,105	$	41,004	$	45,584
Benefits and expenses	13,978		13,380		42,227		41,843
Income (loss) before income taxes and equity in earnings of operating joint ventures	1,447		1,725		(1,223)		3,741
Income tax expense (benefit)	(50)		332		7		726
Income (loss) before equity in earnings of operating joint ventures	1,497		1,393		(1,230)		3,015
Equity in earnings of operating joint ventures, net of taxes	10		32		62		85
Net income (loss)	1,507		1,425		(1,168)		3,100
Less: Income attributable to noncontrolling interests	20		7		25		42
Net income (loss) attributable to Prudential Financial, Inc.	$	1,487	$	1,418	$	(1,193)	$	3,058

Three Month Comparison. The $69 million increase in “Net income (loss) attributable to Prudential Financial, Inc.” for the third quarter of 2020 compared to the third quarter of 2019 reflected the following notable items:

•$711 million favorable variance, on a pre-tax basis, reflecting the net impact from changes in the value of our embedded derivatives and related hedge positions associated with certain variable annuities (see “Results of Operations by Segment—U.S. Businesses—U.S. Individual Solutions Division—Individual Annuities—Variable Annuity Risks and Risk Mitigants” for additional information);

•$382 million favorable variance reflecting a tax benefit in the current period compared to a tax expense in the prior year period; and

•$307 million favorable variance, on a pre-tax basis, from investment related activities that are primarily within “Other income (loss)” for PFI excluding our Divested and Run-off Businesses. These favorable impacts were primarily driven by unrealized gains (losses) from fixed maturity securities designated as trading.

Partially offsetting these increases in “Net income (loss) attributable to Prudential Financial, Inc.” was the following item:

•$1,219 million unfavorable variance, on a pre-tax basis, from realized investment gains and losses for PFI excluding the Divested and Run-off Businesses, and excluding the impact of the hedging program associated with certain variable annuities discussed above (see “General Account Investments” for additional information).

Nine Month Comparison. The $4,251 million decrease in “Net income (loss) attributable to Prudential Financial, Inc.” for the first nine months of 2020 compared to the first nine months of 2019 reflected the following notable items:

•$1,386 million unfavorable variance, on a pre-tax basis, from a loss in the current period from our Divested and Run-off Businesses compared to a gain in the prior year period (see “Results of Operations by Segment—Divested and Run-off Businesses” for additional information);

•$1,083 million unfavorable variance, on a pre-tax basis, from lower adjusted operating income from our business segments (see “Segment Results of Operations” for additional information);

•$1,096 million unfavorable variance, on a pre-tax basis, from realized investment gains and losses for PFI excluding Divested and Run-off Businesses, and excluding the impact of the hedging program associated with certain variable annuities discussed below (see “General Account Investments” for additional information);

•$589 million unfavorable variance, on a pre-tax basis, reflecting the net impact from changes in the value of our embedded derivatives and related hedge positions associated with certain variable annuities (see “Results of Operations by Segment—U.S. Businesses—U.S. Individual Solutions Division—Individual Annuities—Variable Annuity Risks and Risk Mitigants” for additional information); and

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•$526 million unfavorable variance, on a pre-tax basis, from investment related activities that are primarily within “Other income (loss)” for PFI excluding our Divested and Run-off Businesses. These unfavorable impacts were primarily driven by unrealized gains (losses) from equity securities.

Partially offsetting these decreases in “Net income (loss) attributable to Prudential Financial, Inc.” was the following item:

•$719 million favorable variance from a lower tax expense.

Segment Results of Operations

We analyze the performance of our segments and Corporate and Other operations using a measure of segment profitability called adjusted operating income. See “—Segment Measures” for a discussion of adjusted operating income and its use as a measure of segment operating performance.

Summary of Results of Operations by Segment

Shown below are the adjusted operating income contributions of each segment and Corporate and Other operations for the periods indicated and a reconciliation of this segment measure of performance to “Income (loss) before income taxes and equity in earnings of operating joint ventures” as presented in the Unaudited Interim Consolidated Statements of Operations.

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Adjusted operating income before income taxes by segment:
PGIM	$	370	$	232	$	858	$	710
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	372		302		898		1,020
Group Insurance	22		90		71		224
Total U.S. Workplace Solutions division	394		392		969		1,244
U.S. Individual Solutions division:
Individual Annuities	408		459		1,030		1,393
Individual Life	101		59		17		29
Total U.S. Individual Solutions division	509		518		1,047		1,422
Assurance IQ division(1):
Assurance IQ	(30)		0		(69)		0
Total Assurance IQ division	(30)		0		(69)		0
Total U.S. Businesses	873		910		1,947		2,666
International Businesses(2)	775		721		2,162		2,364
Corporate and Other	(455)		(281)		(1,338)		(1,028)
Total segment adjusted operating income before income taxes	1,563		1,582		3,629		4,712
Reconciling items:
Realized investment gains (losses), net, and related adjustments(3)	223		331		(2,746)		(882)
Charges related to realized investment gains (losses), net(4)	(70)		(92)		(353)		(149)
Market experience updates(5)	(134)		(314)		(1,016)		(515)
Divested and Run-off Businesses(6):
Closed Block division	8		45		(15)		5
Other Divested and Run-off Businesses(2)	(132)		207		(725)		641
Other adjustments(7)	(12)		0		65		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(8)	1		(34)		(62)		(71)
Consolidated income (loss) before income taxes and equity in earnings of operating joint ventures	$	1,447	$	1,725	$	(1,223)	$	3,741

__________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

(3)Represents “Realized investment gains (losses), net,” and related adjustments. See “—General Account Investments” and Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information. Prior period amounts have been updated to conform to current period presentation.

(4)Includes charges that represent the impact of realized investment gains (losses), net, on the amortization of DAC and other costs, and on changes in reserves. Also includes charges resulting from payments related to market value adjustment features of certain of our annuity products and the impact of realized investment gains (losses), net, on the amortization of unearned revenue reserves.

(5)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

(6)Represents the contribution to income (loss) of Divested and Run-off Businesses that have been or will be sold or exited, including businesses that have been placed in wind down, but that did not qualify for “discontinued operations” accounting treatment under U.S. GAAP. See “—Divested and Run-off Businesses.”

(7)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

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(8)Equity in earnings of operating joint ventures are included in adjusted operating income but excluded from “Income (loss) before income taxes and equity in earnings of operating joint ventures” as they are reflected on an after-tax U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests are excluded from adjusted operating income but included in “Income (loss) before income taxes and equity in earnings of operating joint ventures” as they are reflected on a U.S. GAAP basis as a separate line in the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests represent the portion of earnings from consolidated entities that relates to the equity interests of minority investors.

Segment results for the period presented above reflect the following:

PGIM. Results for both the third quarter of 2020 and the first nine months of 2020 increased in comparison to the prior year periods, primarily reflecting increases in asset management fees and other related revenues, partially offset by higher expenses.

Retirement. Results for the third quarter of 2020 increased in comparison to the prior year period, primarily reflecting higher net investment spread results and higher reserve gains. Results for the first nine months of 2020 decreased in comparison to the prior year period, primarily reflecting an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results increased compared to the prior year period, primarily driven by higher reserve gains, partially offset by lower net investment spread results.

Group Insurance. Results for the third quarter of 2020 decreased in comparison to the prior year period, primarily reflecting lower underwriting results in our group life business, partially offset by higher underwriting results in our group disability business. Results for the first nine months of 2020 decreased in comparison to the prior year period, primarily reflecting lower underwriting results in our group life business and lower net investment spread results.

Individual Annuities. Results for the third quarter of 2020 decreased in comparison to the prior year period, primarily driven by lower fee income, net of distribution expenses and other associated costs, partially offset by higher net investment spread results. Results for the first nine months of 2020 decreased in comparison to the prior year period, including an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results decreased primarily driven by lower fee income, net of distribution expenses and other associated costs.

Individual Life. Results for the third quarter of 2020 increased in comparison to the prior year period, primarily reflecting higher net investment spread results and lower expenses. Results for the first nine months of 2020 decreased in comparison to the prior year period, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results decreased primarily reflecting lower underwriting results, lower net investment spread results, and the absence of a favorable impact from changes in market conditions on estimates of profitability in the prior year period (which beginning with the second quarter of 2019 is excluded from adjusted operating income). These decreases were partially offset by lower expenses.

Assurance IQ. The acquisition of Assurance IQ was completed in October 2019. Results for both the third quarter and the first nine months of 2020 include revenues, net of marketing and distribution expenses, operating expenses and amortization expenses related to intangible assets recognized as part of purchase accounting (see Note 1 and Note 10 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information).

International Businesses. Results for the third quarter of 2020 increased in comparison to the prior year period, inclusive of a favorable net impact from foreign currency exchange rates, primarily reflecting lower expenses and favorable underwriting results including business growth, partially offset by lower earnings from our joint venture investments and lower net investment spread results. Results for the first nine months of 2020 decreased in comparison to the prior year periods, inclusive of an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Excluding this item, results decreased driven by lower net investment spread results and lower earnings from our joint venture investments, partially offset by favorable underwriting results including business growth.

Corporate and Other. Results for both the third quarter and the first nine months of 2020 reflected increased losses in comparison to the prior year periods, primarily reflecting higher net charges from other corporate activities, lower investment income and higher interest expense on debt. The results for the third quarter reflected lower income from pension and employee benefit plans, while the results for the first nine months of 2020 reflected higher income from pension and employee benefit plans.

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Closed Block Division. Results for both the third quarter and the first nine months of 2020 decreased in comparison to the prior year periods, primarily driven by a decrease in the policyholder dividend obligation as a result of lower net investment activity results.

Segment Measures

Adjusted Operating Income. In managing our business, we analyze our segments’ operating performance using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of operating joint ventures” or “Net income (loss)” as determined in accordance with U.S. GAAP, but is the measure of segment profit or loss we use to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is our measure of segment performance. The adjustments to derive adjusted operating income are important to an understanding of our overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and our definition of adjusted operating income may differ from that used by other companies. However, we believe that the presentation of adjusted operating income as we measure it for management purposes enhances the understanding of our results of operations by highlighting the results from ongoing operations and the underlying profitability of our businesses.

See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information on the presentation of segment results and our definition of adjusted operating income.

Annualized New Business Premiums. In managing our Individual Life, Group Insurance and International Businesses, we analyze annualized new business premiums, which do not correspond to revenues under U.S. GAAP. Annualized new business premiums measure the current sales performance of the business, while revenues primarily reflect the renewal persistency of policies written in prior years and net investment income, in addition to current sales. Annualized new business premiums include 10% of first year premiums or deposits from single pay products. No other adjustments are made for limited pay contracts.

The amount of annualized new business premiums for any given period can be significantly impacted by several factors, including but not limited to: addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in tax laws, changes in regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective, and then fluctuate in the other direction following such changes.

Assets Under Management. In managing our PGIM business, we analyze assets under management (which do not correspond directly to U.S. GAAP assets) because the principal source of revenues is fees based on assets under management. Assets under management represent the fair market value or account value of assets which we manage directly for institutional clients, retail clients, and for our general account, as well as assets invested in our products that are managed by third-party managers.

Account Values. In managing our Individual Annuities and Retirement businesses, we analyze account values, which do not correspond to U.S. GAAP assets. Net sales (redemptions) in our Individual Annuities business and net additions (withdrawals) in our Retirement business do not correspond to revenues under U.S. GAAP, but are used as a relevant measure of business activity.

Impact of Foreign Currency Exchange Rates

Foreign currency exchange rate movements and related hedging strategies

As a U.S.-based company with significant business operations outside the U.S., particularly in Japan, we are subject to foreign currency exchange rate movements that could impact our U.S. dollar (“USD”)-equivalent earnings and shareholder return on equity. Our USD-equivalent earnings could be materially affected by currency fluctuations from period to period, even if earnings on a local currency basis are relatively constant. Our USD-equivalent equity is impacted as the value of our investment in international operations may also fluctuate based on changes in foreign currency exchange rates. We seek to mitigate these impacts through various hedging strategies, including the use of derivative contracts and by holding USD-denominated assets in certain of our foreign subsidiaries.

In order to reduce earnings volatility from foreign currency exchange rate movements, we enter into forward currency derivative contracts to effectively fix the currency exchange rates for a portion of our prospective non-USD-denominated earnings streams. This forward currency hedging program is primarily associated with our insurance operation in Japan.

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In order to reduce equity volatility from foreign currency exchange rate movements, we primarily utilize a yen hedging strategy that calibrates the hedge level to preserve the relative contribution of our yen-based business to the Company’s overall return on equity on a leverage neutral basis. We implement this hedging strategy utilizing a variety of instruments, including USD-denominated assets, foreign currency derivative contracts, and dual currency and synthetic dual currency investments held locally in our Japanese insurance subsidiaries. The total hedge level may vary based on our periodic assessment of the relative contribution of our yen-based business to the Company’s overall return on equity.

The table below presents the aggregate amount of instruments that serve to hedge the impact of foreign currency exchange movements on our USD-equivalent shareholder return on equity from our Japanese insurance subsidiaries as of the dates indicated.

	September 30, 2020		December 31, 2019
	(in billions)
Foreign currency hedging instruments:
Hedging USD-equivalent earnings:
Forward currency contracts (notional amount outstanding)	$	0.4	$	0.6
Hedging USD-equivalent equity:
USD-denominated assets held in yen-based entities(1)	10.4		13.1
Dual currency and synthetic dual currency investments(2)	0.6		0.6
Total USD-equivalent equity foreign currency hedging instruments	11.0		13.7
Total foreign currency hedges	$	11.4	$	14.3

__________

(1)Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding. Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $64.2 billion and $57.8 billion as of September 30, 2020 and December 31, 2019, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.

(2)Dual currency and synthetic dual currency investments are held by our yen-based entities in the form of fixed maturities and loans with a yen-denominated principal component and USD-denominated interest income. The amounts shown represent the present value of future USD-denominated cash flows.

The USD-denominated investments that hedge the impact of foreign currency exchange rate movements on USD-equivalent earnings and shareholder return on equity from our Japanese insurance operations are reported within yen-based entities and, as a result, foreign currency exchange rate movements will impact their value reported within our yen-based Japanese insurance entities. We seek to mitigate the risk that future unfavorable foreign currency exchange rate movements will decrease the value of these USD-denominated investments reported within our yen-based Japanese insurance entities, and therefore negatively impact their equity and regulatory solvency margins, by having our Japanese insurance operations enter into currency hedging transactions. Those hedges are with a subsidiary of Prudential Financial. These hedging strategies have the economic effect of moving the change in value of these USD-denominated investments due to foreign currency exchange rate movements from our Japanese yen-based entities to our USD-based entities.

These USD-denominated investments also pay a coupon which is generally higher than what a similar yen-denominated investment would pay. The incremental impact of this higher yield on our USD-denominated investments, as well as our dual currency and synthetic dual currency investments, will vary over time, and is dependent on the duration of the underlying investments as well as interest rate environments in both the U.S. and Japan at the time of the investments.

Impact of intercompany foreign currency exchange rate arrangements on segment results of operations

The financial results of our International Businesses and PGIM reflect the impact of intercompany arrangements with our Corporate and Other operations pursuant to which these segments’ non-USD-denominated earnings are translated at fixed currency exchange rates. Results of our Corporate and Other operations include differences between the translation adjustments recorded by the segments at the fixed currency exchange rate versus the actual average rate during the period. In addition, specific to our International Businesses where we hedge certain currencies, the results of our Corporate and Other operations also include the impact of any gains or losses recorded from the forward currency contracts that settled during the period, which include the impact of any over or under hedging of actual earnings that differ from projected earnings.

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For International Businesses, the fixed currency exchange rates are generally determined in connection with a foreign currency income hedging program designed to mitigate the impact of exchange rate changes on the segment’s expected USD-equivalent earnings. Pursuant to this program, our Corporate and Other operations execute forward currency contracts with third-parties to sell the net exposure of projected earnings for certain currencies in exchange for USD at specified exchange rates. The maturities of these contracts correspond with the future periods (typically on a three-year rolling basis) in which the identified non-USD-denominated earnings are expected to be generated. In establishing the level of non-USD-denominated earnings that will be hedged through this program, we exclude the anticipated level of USD-denominated earnings that will be generated by USD-denominated products and investments. For the nine months ended September 30, 2020, approximately 5% of the segment’s earnings were yen-based and, as of September 30, 2020, we have hedged 100%, 97% and 61% of expected yen-based earnings for 2020, 2021 and 2022, respectively. To the extent currently unhedged, our International Businesses’ future expected USD-equivalent of yen-based earnings will be impacted by yen exchange rate movements.

As a result of these arrangements, our International Businesses’ results for 2020 and 2019 reflect the impact of translating yen-denominated earnings at fixed currency exchange rates of 104 and 105 yen per USD, respectively. We expect our 2021 results to reflect the impact of translating yen-denominated earnings at a fixed currency exchange rate of 103 yen per USD. Since determination of the fixed currency exchange rates for a given year is impacted by changes in foreign currency exchange rates over time, the segment’s future earnings will ultimately be impacted by these changes in exchange rates.

For PGIM and certain other currencies within our International Businesses, the fixed currency exchange rates for the current year are predetermined during the third quarter of the prior year using forward currency exchange rates.

The table below presents, for the periods indicated, the increase (decrease) to revenues and adjusted operating income for the International Businesses, PGIM and Corporate and Other operations, reflecting the impact of these intercompany arrangements.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Segment impacts of intercompany arrangements:
International Businesses(3)	$	15	$	6	$	46	$	32
PGIM	(3)		1		(1)		4
Impact of intercompany arrangements(1)	12		7		45		36
Corporate and Other:
Impact of intercompany arrangements(1)(3)	(12)		(7)		(45)		(36)
Settlement gains (losses) on forward currency contracts(2)(3)	15		14		57		43
Net benefit (detriment) to Corporate and Other	3		7		12		7
Net impact on consolidated revenues and adjusted operating income	$	15	$	14	$	57	$	43

__________ 

(1)Represents the difference between non-USD-denominated earnings translated on the basis of weighted average monthly currency exchange rates versus fixed currency exchange rates determined in connection with the foreign currency income hedging program.

(2)As of September 30, 2020 and 2019, the total notional amounts of these forward currency contracts within our Corporate and Other operations were $1.0 billion and $1.6 billion, respectively, of which $0.4 billion and $0.8 billion, respectively, were related to our Japanese insurance operations. Prior period total notional amount of these forward currency contracts has been updated to conform to current period presentation.

(3)Excludes impacts related to POK. Prior period amounts have been updated to conform to current period presentation. Effective second quarter of 2020, the intercompany arrangement for the Korean won between our International Businesses and Corporate and Other operations was terminated and the related hedges were repurposed in relation to the anticipated sale of POK. Effective second quarter of 2020, Korean won-denominated earnings for 2020 and 2019 that were translated at fixed currency exchange rates of 1,090 and 1,110 Korean won per USD, respectively, are excluded from the International Businesses and are included in the Divested and Run-off Businesses included in Corporate and Other. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

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Impact of products denominated in non-local currencies on U.S. GAAP earnings

While our international insurance operations offer products denominated in local currency, several also offer products denominated in non-local currencies, most notably our Japanese operations, which offer USD- and Australian dollar (“AUD”)-denominated products. The non-local currency-denominated insurance liabilities related to these products are supported by investments denominated in corresponding currencies, including a significant portion designated as available-for-sale. While the impact from foreign currency exchange rate movements on these non-local currency-denominated assets and liabilities is economically matched, differences in the accounting for changes in the value of these assets and liabilities due to changes in foreign currency exchange rate movements have historically resulted in volatility in U.S. GAAP earnings.

In 2015, we implemented a structure in Gibraltar Life’s operations that disaggregated the USD- and AUD-denominated businesses into separate divisions, each with its own functional currency that aligns with the underlying products and investments. The result of this alignment was to reduce differences in the accounting for changes in the value of these assets and liabilities that arise due to changes in foreign currency exchange rate movements. For the USD- and AUD-denominated assets that were transferred under this structure, the net cumulative unrealized investment gains associated with foreign exchange remeasurement that were recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) totaled $2.4 billion and $2.7 billion as of September 30, 2020 and December 31, 2019, respectively, and will be recognized in earnings within “Realized investment gains (losses), net” over time as these assets mature or are sold. Absent the sale of any of these assets prior to their stated maturity, approximately 3% of the $2.4 billion balance as of September 30, 2020 will be recognized throughout the remainder of 2020, approximately 13% will be recognized in 2021, and the remaining balance will be recognized from 2022 through 2051.

Highly inflationary economy in Argentina

Our insurance operations in Argentina, Prudential of Argentina (“POA”), have historically utilized the Argentine peso as the functional currency given it is the currency of the primary economic environment in which the entity operates. During 2018, Argentina experienced a cumulative inflation rate that exceeded 100% over a 3-year period. As a result, Argentina’s economy was deemed to be highly inflationary resulting in reporting changes effective July 1, 2018. Under U.S. GAAP, the financial statements of a foreign entity in a highly inflationary economy are to be remeasured as if its functional currency (formerly the Argentine peso) is the reporting currency of its parent reporting entity (the USD) on a prospective basis. While this changed how the results of POA are remeasured and/or translated into USD, the impact to our financial statements was not material nor is it expected to be material in future periods given the relative size of our POA operations. It should also be noted that due to the macroeconomic environment in Argentina, substantially all of POA’s balance sheet consists of USD-denominated product liabilities supported by USD-denominated assets. As a result, this accounting change serves to reduce the remeasurement impact reflected in net income given that the functional currency and currency in which the assets and liabilities are denominated will be more closely aligned.

Accounting Policies & Pronouncements

Application of Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews estimates and assumptions used in the preparation of financial statements. If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, the Company’s results of operations and financial position as reported in the Unaudited Interim Consolidated Financial Statements could change significantly.

Management believes the accounting policies relating to the following areas are most dependent on the application of estimates and assumptions and require management’s most difficult, subjective, or complex judgments:

•DAC, deferred sales inducements (“DSI”) and VOBA;

•Policyholder liabilities;

•Goodwill;

•Valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”);

•Pension and other postretirement benefits;

•Taxes on income; and

•Reserves for contingencies, including reserves for losses in connection with unresolved legal matters.

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Market Performance - Equity and Interest Rate Assumptions 

DAC, DSI and VOBA associated with the variable and universal life policies of our Individual Life and International Businesses segments and the variable and fixed annuity contracts of our Individual Annuities and International Businesses segments are generally amortized over the expected lives of these policies in proportion to total gross profits. Total gross profits include both actual gross profits and estimates of gross profits for future periods. The quarterly adjustments for market performance reflect the impact of changes to our estimate of total gross profits to reflect actual fund performance and market conditions. A significant portion of gross profits for our variable annuity contracts and, to a lesser degree, our variable life contracts are dependent upon the total rate of return on assets held in separate account investment options. This rate of return influences the fees we earn on variable annuity and variable life contracts, costs we incur associated with the guaranteed minimum death and guaranteed minimum income benefit features related to our variable annuity contracts and expected claims to be paid on variable life contracts, as well as other sources of profit. Returns that are higher than our expectations for a given period produce higher than expected account balances, which increase the future fees we expect to earn on variable annuity and variable life contracts and decrease the future costs we expect to incur associated with the guaranteed minimum death and guaranteed minimum income benefit features related to our variable annuity contracts and expected claims to be paid on variable life contracts. The opposite occurs when returns are lower than our expectations. The changes in future expected gross profits are used to recognize a cumulative adjustment to all prior periods’ amortization.

Furthermore, the calculation of the estimated liability for future policy benefits related to certain insurance products includes an estimate of associated revenues and expenses that are dependent on both historical market performance as well as estimates of market performance in the future. Similar to DAC, DSI and VOBA described above, these liabilities are subject to quarterly adjustments for experience including market performance, in addition to annual adjustments resulting from our annual reviews of assumptions.

The weighted average rate of return assumptions used in developing estimated market returns consider many factors specific to each product type, including asset durations, asset allocations and other factors. With regard to equity market assumptions, the near-term future rate of return assumption used in evaluating DAC, DSI and VOBA and liabilities for future policy benefits for certain of our products, primarily our domestic variable annuity and domestic and international variable life insurance products, is generally updated each quarter and is derived using a reversion to the mean approach, a common industry practice. Under this approach, we consider historical equity returns and adjust projected equity returns over an initial future period of five years (the “near-term”) so that equity returns converge to the long-term expected rate of return. If the near-term projected future rate of return is greater than our near-term maximum future rate of return of 15.0%, we use our maximum future rate of return. As of September 30, 2020, our domestic variable annuities and variable life insurance businesses assume an 8.0% long-term equity expected rate of return and a 3.5% near-term mean reversion equity expected rate of return, and our international variable life insurance business assumes a 4.8% long-term equity expected rate of return and a 3.9% near-term mean reversion equity expected rate of return.

With regard to interest rate assumptions used in evaluating DAC, DSI and VOBA and liabilities for future policy benefits for certain of our products, we update the long-term and near-term future rates used to project fixed income returns annually and quarterly, respectively. As a result of our 2020 annual reviews and update of assumptions and other refinements, we reduced our long-term expectation of the (i) 10-year U.S. Treasury rate by 50 basis points and now grade to a rate of 3.25% over ten years, and (ii) 10-year Japanese Government Bond yield by 30 basis points and now grade to a rate of 1.00% over ten years. As part of our quarterly market experience updates, we update our near-term projections of interest rates to reflect changes in current rates.

For a discussion of the impact that could result from changes in certain key assumptions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Accounting Policies and Pronouncements—Sensitivities for Insurance Assets and Liabilities” in our Annual Report on Form 10-K for the year ended December 31, 2019.

Future Adoption of New Accounting Pronouncements

ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the Financial Accounting Standards Board (“FASB”) on August 15, 2018 and is expected to have a significant impact on the Consolidated Financial Statements and Notes to the Consolidated Financial Statements. In October 2019, the FASB issued ASU 2019-09, Financial Services - Insurance (Topic 944): Effective Date to affirm its decision to defer the effective date of ASU 2018-12 to January 1, 2022 (with early adoption permitted), representing a one year extension from the original effective date of January 1, 2021. As a result of the COVID-19 pandemic, in November 2020 the FASB issued ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application to defer for an additional one year the effective date of ASU 2018-12 from January 1, 2022 to January 1, 2023, and to provide transition relief to facilitate the

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early adoption of the ASU. The transition relief would allow large calendar-year public companies that early adopt ASU 2018-12 to apply the guidance either as of January 1, 2020 or January 1, 2021 (and record transition adjustments as of January 1, 2020 or January 1, 2021, respectively) in the 2022 financial statements. Companies that do not early adopt ASU 2018-12 would apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the 2023 financial statements. ASU 2018-12 will impact, at least to some extent, the accounting and disclosure requirements for all long-duration insurance and investment contracts issued by the Company. In addition to the impacts to the balance sheet upon adoption, the Company also expects an impact to how earnings emerge thereafter. See Note 2 to the Unaudited Interim Consolidated Financial Statements for a more detailed discussion of ASU 2018-12, as well as other accounting pronouncements issued but not yet adopted and newly adopted accounting pronouncements.

Results of Operations by Segment

PGIM

Operating Results

The following table sets forth PGIM’s operating results for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Operating results(1):
Revenues	$	1,066	$	855	$	2,801	$	2,651
Expenses	696		623		1,943		1,941
Adjusted operating income	370		232		858		710
Realized investment gains (losses), net, and related adjustments	(2)		0		1		1
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	15		(7)		(27)		28
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	383	$	225	$	832	$	739

 __________

(1)Certain of PGIM’s investment activities are based in currencies other than the U.S. dollar and are therefore subject to foreign currency exchange rate risk. The financial results of PGIM include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on PGIM’s U.S. dollar-equivalent earnings. For more information related to this intercompany arrangement, see “—Results of Operations—Impact of Foreign Currency Exchange Rates,” above.

Adjusted Operating Income

Three Month Comparison. Adjusted operating income increased $138 million, primarily reflecting an increase in asset management fees, net of related expenses, due to higher average assets under management as a result of market appreciation and fixed income inflows. The increase also reflected an increase in other related revenues, net of related expenses, primarily due to higher co- and seed investment results driven by strong underlying investment performance, higher commercial mortgage origination revenue driven by higher loan production and profitability, and higher net performance-based incentive fees. These increases were partially offset by a decrease in service, distribution and other revenues primarily reflecting the absence of fees in the current year period related to the Wells Fargo agreement (see the “Revenues by type” table in “—Revenues and Expenses,” below).

Nine Month Comparison. Adjusted operating income increased $148 million, primarily reflecting an increase in asset management fees, net of related expenses, due to higher average assets under management as a result of market appreciation and fixed income inflows. The increase also reflected an increase in other related revenues, net of related expenses, primarily due to higher co- and seed investment results driven by strong underlying investment performance and higher commercial mortgage origination revenue driven by higher loan production and profitability. These increases were partially offset by a decrease in service, distribution and other revenues primarily reflecting the absence of fees in the current year period related to the Wells Fargo agreement.

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Revenues and Expenses

The following table sets forth PGIM’s revenues, presented on a basis consistent with the table above under “—Operating Results,” by type.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Revenues by type:
Asset management fees by source:
Institutional customers	$	345	$	323	$	998	$	954
Retail customers(1)	262		223		718		652
General account	143		130		417		385
Total asset management fees	750		676		2,133		1,991
Other related revenues by source:
Incentive fees	43		10		78		108
Transaction fees	5		5		13		17
Co- and seed investments	50		3		87		57
Commercial mortgage(2)	67		32		126		83
Total other related revenues	165		50		304		265
Service, distribution and other revenues(3)	151		129		364		395
Total revenues	$	1,066	$	855	$	2,801	$	2,651

__________

(1)Consists of fees from: individual mutual funds and variable annuities and variable life insurance separate account assets; funds invested in proprietary mutual funds through our defined contribution plan products; and third-party sub-advisory relationships. Revenues from fixed annuities and the fixed-rate accounts of variable annuities and variable life insurance are included in the general account.

(2)Includes mortgage origination revenues from our commercial mortgage origination and servicing business.

(3)Prior period amount includes payments from Wells Fargo under an agreement dated as of July 30, 2004, implementing arrangements with respect to money market mutual funds in connection with the combination of our retail securities brokerage and clearing operations with those of Wells Fargo. The agreement extended for ten years from the Wachovia Securities joint venture termination date of December 31, 2009 to December 31, 2019. The revenue from Wells Fargo under this agreement was $15 million for the three months ended September 30, 2019 and $45 million for the nine months ended September 30, 2019.

Three Month Comparison. Revenues increased $211 million. Asset management fees increased primarily reflecting higher average assets under management as a result of market appreciation and fixed income inflows. Other related revenues increased primarily reflecting higher co- and seed investment results driven by strong underlying investment performance, higher commercial mortgage origination revenue driven by higher loan production and profitability, and higher performance-based incentive fees. Service, distribution and other revenues increased primarily reflecting higher revenues from certain consolidated funds (which were fully offset by higher expenses related to noncontrolling interests in these funds), partially offset by the absence of fees in the current year period related to the Wells Fargo agreement.

Expenses increased $73 million. Expenses for service, distribution and other revenues increased primarily driven by higher revenues associated with certain consolidated funds as discussed above. Also contributing to the increase were higher variable expenses associated with an increase in performance-based incentive fee revenues as well as higher overall segment earnings, and higher expenses due to certain long-term employee compensation plans tied to performance factors. Partially offsetting these increases were lower expenses driven by a decrease in travel and entertainment due to COVID-19.

Nine Month Comparison. Revenues increased $150 million. Asset management fees increased primarily reflecting higher average assets under management as a result of market appreciation and fixed income inflows. Other related revenues increased primarily reflecting higher co- and seed investment results driven by strong underlying investment performance and higher commercial mortgage origination revenue driven by higher loan production and profitability, partially offset by lower performance-based incentive fees. Service, distribution and other revenues decreased primarily reflecting the absence of fees in the current year period related to the Wells Fargo agreement.

Expenses increased $2 million. Higher variable expenses reflecting higher overall segment earnings, which were largely offset by lower expenses associated with lower performance-based incentive fee revenues, and a decrease in travel and entertainment due to COVID-19.

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Assets Under Management

The following table sets forth assets under management by asset class and source as of the dates indicated.

	September 30, 2020		December 31, 2019		September 30, 2019
	(in billions)
Assets Under Management(1) (at fair value):
Institutional customers:
Public equity	$	53.5	$	57.1	$	52.9
Public fixed income	458.4		418.6		410.5
Real estate	48.8		49.1		48.4
Private credit and other alternatives	25.0		23.5		23.8
Multi-asset	5.3		4.5		4.2
Institutional customers(2)	591.0		552.8		539.8
Retail customers:
Public equity	121.3		104.2		100.0
Public fixed income	163.5		138.7		130.0
Real estate	1.8		2.0		1.9
Private credit and other alternatives	0.6		0.5		0.5
Multi-asset	55.8		60.2		58.9
Retail customers(3)	343.0		305.6		291.3
General account:
Public equity	4.2		4.4		4.2
Public fixed income	359.1		328.6		333.2
Real estate	68.1		66.0		64.7
Private credit and other alternatives	77.7		73.5		72.5
Multi-asset	0.0		0.1		0.1
General account	509.1		472.6		474.7
Total PGIM assets under management(4)	$	1,443.1	$	1,331.0	$	1,305.8
Assets under management within other reporting segments(4)(5)	$	205.0	$	219.9	$	213.0
Total PFI assets under management	$	1,648.1	$	1,550.9	$	1,518.8

__________

(1)Prior period amounts have been updated to conform to current period presentation. “Public equity” represents stock ownership interest in a corporation or partnership (excluding hedge funds) or real estate investment trust. “Public fixed income” represents debt instruments that pay interest and usually have a maturity (excluding mortgages). “Real estate” includes direct real estate equity and real estate mortgages. “Private credit and other alternatives” includes private credit, private equity, hedge funds, agricultural debt and equity and other alternative strategies. “Multi-asset” includes funds or products that invest in more than one asset class balancing equity and fixed income funds and target date funds.

(2)Consists of third-party institutional assets and group insurance contracts.

(3)Consists of individual mutual funds and variable annuities and variable life insurance separate account assets; funds invested in proprietary mutual funds through our defined contribution plan products; and third-party sub-advisory relationships. Fixed annuities and the fixed-rate accounts of variable annuities and variable life insurance are included in the general account.

(4)Effective first quarter of 2020, certain assets have been reclassified from the U.S. Individual Solutions division to PGIM.

(5)Primarily include certain assets related to annuity and variable life products in our U.S. Individual Solutions division, retirement and group life products in our U.S. Workplace Solutions division and certain general account assets of our International Businesses. These assets are not directly managed by PGIM, but rather are invested in non-proprietary funds or are managed by either the divisions themselves or our Chief Investment Officer Organization.

PGIM’s assets under management increased $137 billion and $112 billion in comparison to the prior year quarter and prior year end, respectively, reflecting market appreciation and public fixed income inflows, partially offset by public equity outflows.

The following table sets forth the component changes in PGIM’s assets under management by asset source for the periods indicated.

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	Three Months Ended September 30,				Nine Months Ended September 30,				Twelve Months Ended September 30,
	2020		2019		2020		2019		2020
	(in billions)
Institutional Customers:
Beginning assets under management	$	571.2	$	534.9	$	552.8	$	493.5	$	539.8
Net additions (withdrawals), excluding money market activity:
Third-party	2.0		(2.2)		0.5		(7.2)		1.2
Third-party via affiliates(1)	0.1		(0.4)		(1.0)		0.1		(0.9)
Total	2.1		(2.6)		(0.5)		(7.1)		0.3
Market appreciation (depreciation)(2)	17.0		10.0		29.8		50.9		41.2
Other increases (decreases)(3)	0.7		(2.5)		8.9		2.5		9.7
Ending assets under management	591.0		539.8		591.0		539.8		591.0
Retail Customers(4):
Beginning assets under management	320.2		287.9		305.6		260.2		291.3
Net additions (withdrawals), excluding money market activity:
Third-party	5.3		3.0		13.4		4.5		14.6
Third-party via affiliates(1)	(3.7)		(1.4)		(6.8)		(8.2)		(8.8)
Total	1.6		1.6		6.6		(3.7)		5.8
Market appreciation (depreciation)(2)	21.0		2.0		30.4		34.9		44.9
Other increases (decreases)(3)	0.2		(0.2)		0.4		(0.1)		1.0
Ending assets under management	343.0		291.3		343.0		291.3		343.0
General Account:
Beginning assets under management	503.1		459.8		472.6		427.8		474.7
Net additions (withdrawals), excluding money market activity:
Third-party	0.0		0.0		0.0		0.0		0.0
Affiliated	2.1		(0.4)		2.9		1.2		7.8
Total	2.1		(0.4)		2.9		1.2		7.8
Market appreciation (depreciation)(2)	5.0		10.6		22.4		39.0		20.3
Other increases (decreases)(3)	(1.1)		4.7		11.2		6.7		6.3
Ending assets under management	509.1		474.7		509.1		474.7		509.1
Total assets under management(4)	$	1,443.1	$	1,305.8	$	1,443.1	$	1,305.8	$	1,443.1

__________

(1)Represents assets that PGIM manages for the benefit of other reporting segments within the Company. Additions and withdrawals of these assets are attributable to third-party product inflows and outflows in other reporting segments.

(2)Includes income reinvestment, where applicable.

(3)Includes the effect of foreign exchange rate changes, net money market activity and the impact of acquired business. The impact from foreign currency fluctuations, which primarily impact the general account, resulted in a gain of $3.4 billion and a loss of $0.5 billion for the three months ended September 30, 2020 and 2019, respectively, and a gain of $2.7 billion and $0.2 billion for the nine months ended September 30, 2020 and 2019, respectively; and a gain of $3.0 billion for the twelve months ended September 30, 2020.

(4)Prior period amounts have been updated to conform to current period presentation.

Co- and Seed Investments

The following table sets forth PGIM’s co- and seed investments at carrying value (including the value of derivative instruments used to mitigate equity market and currency risk) by asset class and source as of the dates indicated.

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	September 30, 2020		December 31, 2019
	(in millions)
Co-Investments(1):
Public fixed income	$	467	$	462
Real estate	154		228
Private credit and other alternatives	22		19
Seed Investments(1):
Public equity	717		671
Public fixed income	349		325
Real estate	32		34
Private credit and other alternatives	74		59
Multi-asset	65		74
Total	$	1,880	$	1,872

__________

(1)Prior period amounts have been updated to conform to current period presentation. For more information, see the “Assets Under Management” table above.

The increase of $8 million in co- and seed investments was primarily driven by strong equity and fixed income seed investment performance, partially offset by a significant liquidation of a real estate co-investment.

U.S. Businesses

Operating Results

The following table sets forth the operating results for our U.S. Businesses for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30, 2020
	2020		2019		2020		2019
	(in millions)
Adjusted operating income before income taxes:
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	$	372	$	302	$	898	$	1,020
Group Insurance	22		90		71		224
Total U.S. Workplace Solutions division	394		392		969		1,244
U.S. Individual Solutions division:
Individual Annuities	408		459		1,030		1,393
Individual Life	101		59		17		29
Total U.S. Individual Solutions division	509		518		1,047		1,422
Assurance IQ division(1):
Assurance IQ	(30)		0		(69)		0
Total Assurance IQ division	(30)		0		(69)		0
Total U.S. Businesses	873		910		1,947		2,666
Reconciling Items:
Realized investment gains (losses), net, and related adjustments(2)	571		(40)		(1,857)		(1,811)
Charges related to realized investment gains (losses), net	(63)		(123)		(328)		(90)
Market experience updates(3)	(130)		(306)		(974)		(476)
Other adjustments(4)	(12)		0		65		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	1		0		2		1
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	1,240	$	441	$	(1,145)	$	290

________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Prior period amounts have been updated to conform to current period presentation.

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(3)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

(4)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

Three Month Comparison. Adjusted operating income for our U.S. Businesses decreased by $37 million primarily due to:

•Lower fee income, net of distribution expenses and other associated costs, in our Individual Annuities business; and

•Lower underwriting results primarily driven by COVID-19 related net mortality experience.

•Partially offsetting these decreases were higher net investment spread results driven by higher income on non-coupon investments.

Nine Month Comparison. Adjusted operating income for our U.S. Businesses decreased by $719 million primarily due to:

•Lower fee income, net of distribution expenses and other associated costs, in our Individual Annuities business;

•Lower net investment spread results driven by lower income on non-coupon investments;

•An unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements; and

•Lower underwriting results primarily driven by COVID-19 related net mortality experience.

•Partially offsetting these decreases were lower expenses, including those associated with cost savings initiatives.

U.S. Businesses—U.S. Workplace Solutions Division

Retirement

Operating Results

The following table sets forth Retirement’s operating results for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Operating results:
Revenues	$	2,690	$	2,261	$	8,119	$	8,486
Benefits and expenses	2,318		1,959		7,221		7,466
Adjusted operating income	372		302		898		1,020
Realized investment gains (losses), net, and related adjustments(1)	98		200		93		368
Charges related to realized investment gains (losses), net	6		(10)		(5)		1
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	1		0		2		1
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	477	$	492	$	988	$	1,390

__________ 

(1)Prior period amounts have been updated to conform to current period presentation.

Adjusted Operating Income

Three Month Comparison. Adjusted operating income increased $70 million, primarily driven by higher net investment spread results and higher reserve gains. The increase in net investment spread results primarily reflected higher income on non-coupon investments and the impact of lower crediting rates, partially offset by lower reinvestment yields. The higher contribution from reserve experience was primarily driven by COVID-19 related mortality gains.

Nine Month Comparison. Adjusted operating income decreased $122 million, including an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2020 included a net charge of

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$22 million from these updates primarily driven by an increase in expected benefit payments, while results for 2019 included a net benefit of $154 million from these updates, primarily driven by a reduction in expected benefit payments. Excluding this item, adjusted operating income increased $54 million, primarily driven by higher reserve gains, partially offset by lower net investment spread results. The higher contribution from reserve experience was primarily driven by COVID-19 related mortality gains. The decrease in net investment spread results primarily reflected lower income on non-coupon investments and lower reinvestment yields, partially offset by the impact of lower crediting rates.

Revenues, Benefits and Expenses

Three Month Comparison. Revenues increased $429 million. This increase primarily reflected higher pension risk transfer premiums with corresponding offsets in policyholders’ benefits, as discussed below. This increase also reflected higher net investment income, primarily driven by higher income on non-coupon investments, partially offset by lower reinvestment yields.

Benefits and expenses increased $359 million. Policyholders’ benefits, including the change in policy reserves, increased primarily related to the increase in pension risk transfer premiums discussed above, partially offset by more favorable reserve experience primarily driven by COVID-19 related mortality gains.

Nine Month Comparison. Revenues decreased $367 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $373 million. This decrease primarily reflected lower pension risk transfer premiums with corresponding offsets in policyholders’ benefits, as discussed below. This decrease also reflected lower net investment income, primarily reflecting lower income on non-coupon investments and lower reinvestment yields.

Benefits and expenses decreased $245 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses decreased $427 million. Policyholders’ benefits, including the change in policy reserves, decreased primarily related to the decrease in pension risk transfer premiums discussed above, as well as more favorable reserve experience primarily driven by COVID-19 related mortality gains.

Account Values

Account values are a significant driver of our operating results, and are primarily driven by net additions (withdrawals) and the impact of market changes. The income we earn on most of our fee-based products varies with the level of fee-based account values, since many policy fees are determined by these values. The investment income and interest we credit to policyholders on our spread-based products varies with the level of general account values. To a lesser extent, changes in account values impact our pattern of amortization of DAC and VOBA and general and administrative expenses. The following table shows the changes in the account values and net additions (withdrawals) of Retirement’s products for the periods indicated. Net additions (withdrawals) are plan sales and participant deposits or additions, as applicable, minus plan and participant withdrawals and benefits. Account values include both internally- and externally-managed client balances as the total balances drive revenue for the Retirement business. For more information on internally-managed balances, see “—PGIM.”

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	Three Months Ended September 30,				Nine Months Ended September 30,				Twelve Months Ended September 30,
	2020		2019		2020		2019		2020
	(in millions)
Full Service:
Beginning total account value	$	266,433	$	262,133	$	272,448	$	231,669	$	259,946
Deposits and sales	14,705		7,458		29,112		28,072		37,434
Withdrawals and benefits	(9,465)		(10,758)		(25,173)		(27,122)		(33,757)
Change in market value, interest credited and interest income and other activity	13,337		1,113		8,623		27,327		21,387
Ending total account value	$	285,010	$	259,946	$	285,010	$	259,946	$	285,010
Institutional Investment Products:
Beginning total account value	$	231,142	$	215,978	$	227,596	$	200,759	$	217,580
Additions(1)	2,780		5,235		14,218		22,526		22,793
Withdrawals and benefits	(4,189)		(4,626)		(13,226)		(12,436)		(17,533)
Change in market value, interest credited and interest income	1,944		2,406		7,379		7,876		8,592
Other(2)	3,019		(1,413)		(1,271)		(1,145)		3,264
Ending total account value	$	234,696	$	217,580	$	234,696	$	217,580	$	234,696

__________

(1)Additions primarily include: group annuities calculated based on premiums received; funding agreements issued; unfunded longevity reinsurance contracts calculated as the present value of future projected benefits; and investment-only stable value contracts calculated as the fair value of customers’ funds held in a client-owned trust.

(2)“Other” activity includes the effect of foreign exchange rate changes associated with our British pounds sterling denominated longevity reinsurance business and changes in asset balances for externally-managed accounts. For the three months ended September 30, 2020 and 2019, “Other” activity also includes $869 million in receipts offset by $831 million in payments and $1,418 million in receipts offset by $1,024 million in payments, respectively, and for the nine months ended September 30, 2020 and 2019, includes $6,235 million in receipts offset by $6,107 million in payments and $2,822 million in receipts offset by $2,218 million in payments, respectively, related to funding agreements backed by commercial paper which typically have maturities of less than 90 days.

The increase in Full Service account values for the three months, nine months and twelve months ended September 30, 2020 primarily reflected favorable changes in the market value of customer funds and net deposits and sales.

Institutional Investment Products account values for the three months ended September 30, 2020 reflected an increase in other activity, primarily driven by the positive impacts of foreign exchange rate changes, and a favorable change in the market value of account assets, partially offset by net withdrawals driven by pension risk transfer activity. Account values for the nine months ended September 30, 2020 reflected a favorable change in the market value of account assets and net additions driven by collateralized funding agreements and investment-only stable value accounts, which were partially offset by pension risk transfer activity. Account values for the twelve months ended September 30, 2020 reflected a favorable change in the market value of account values, net additions driven by collateralized funding agreements, pension risk transfer activity and investment-only stable value accounts, and an increase in other activity primarily driven by the positive impacts of foreign exchange rate changes.

Group Insurance

Operating Results

The following table sets forth Group Insurance’s operating results and benefits and administrative operating expense ratios for the periods indicated.

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	($ in millions)
Operating results:
Revenues	$	1,457		$	1,438		$	4,352		$	4,340
Benefits and expenses	1,435			1,348			4,281			4,116
Adjusted operating income	22			90			71			224
Realized investment gains (losses), net, and related adjustments	4			0			75			9
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	26		$	90		$	146		$	233
Benefits ratio(1)(4):
Group life(2)	93.9		%	84.7		%	91.8		%	88.0		%
Group disability(2)	73.5		%	79.4		%	74.5		%	73.1		%
Total Group Insurance(2)	89.4		%	83.5		%	88.0		%	84.7		%
Administrative operating expense ratio(3)(4):
Group life	12.2		%	13.1		%	12.1		%	12.3		%
Group disability	25.2		%	22.0		%	25.4		%	24.3		%
Total Group Insurance	15.1		%	15.2		%	15.0		%	14.9		%

__________ 

(1)Ratio of policyholder benefits to earned premiums plus policy charges and fee income.

(2)Benefit ratios for the nine months ended September 30, 2020 and 2019 reflect the impact of our annual reviews and update of assumptions and other refinements. Excluding these impacts, the group life, group disability and total Group Insurance benefit ratios were 91.9%, 75.0% and 88.2% for the nine months ended September 30, 2020, respectively, and 87.4%, 76.2% and 85.0% for the nine months ended September 30, 2019, respectively.

(3)Ratio of general and administrative expenses (excluding commissions) to gross premiums plus policy charges and fee income.

(4)The benefit and administrative ratios are measures used to evaluate profitability and efficiency.

Adjusted Operating Income

Three Month Comparison. Adjusted operating income decreased $68 million, primarily reflecting lower underwriting results in our group life business driven by unfavorable claim experience mostly due to COVID-19 impacts on non-experience-rated contracts, partially offset by more favorable underwriting results in our group disability business driven by a favorable impact from claim experience on long-term disability products.

Nine Month Comparison. Adjusted operating income decreased $153 million, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for both 2020 and 2019 included a net benefit from this update of $11 million and $9 million, respectively. Excluding this item, adjusted operating income decreased $155 million, primarily reflecting lower underwriting results in our group life business driven by unfavorable claim experience mostly due to COVID-19 impacts on non-experience-rated contracts. The decrease also reflected lower net investment spread results driven by lower income on non-coupon investments.

Revenues, Benefits and Expenses

Three Month Comparison. Revenues increased $19 million. The increase primarily reflected higher premiums and policy charges and fee income driven by growth in our group life business, partially offset by lower net investment income driven by lower income on non-coupon investments, with partial offsets in interest credited to policyholder account balances, as discussed below.

Benefits and expenses increased $87 million. The increase primarily reflected higher policyholders’ benefits and changes in reserves, including increases in our group life business mostly due to COVID-19 impacts, partially offset by decreases in our group disability business driven by a favorable impact from claim experience on long-term disability products. The increase was also partially offset by lower interest credited to policyholder account balances, with partial offsets in net investment income, as discussed above.

Nine Month Comparison. Revenues increased $12 million. Excluding the impact from our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $19 million. The decrease primarily reflected lower

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net investment income driven by lower income on non-coupon investments, with partial offsets in interest credited to policyholder account balances, as discussed below. Partially offsetting the decrease were higher premiums and policy charges and fee income driven by growth in our group life business.

Benefits and expenses increased $165 million. Excluding the impact from our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses increased $136 million. The increase primarily reflected higher policyholders’ benefits and changes in reserves, including increases in our group life business mostly due to COVID-19 impacts. The increase was partially offset by lower interest credited to policyholder account balances, with partial offsets in net investment income, as discussed above.

Sales Results

The following table sets forth Group Insurance’s annualized new business premiums, as defined under “—Segment Measures” above, for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Annualized new business premiums(1):
Group life	$	46	$	42	$	227	$	233
Group disability	17		18		143		153
Total	$	63	$	60	$	370	$	386

__________ 

(1)Amounts exclude new premiums resulting from rate changes on existing policies, from additional coverage under our Servicemembers’ Group Life Insurance contract and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts.

Total annualized new business premiums for the three months ended September 30, 2020 increased $3 million compared to the prior year period, driven by higher sales in our group life business. Total annualized new business premiums for the nine months ended September 30, 2020 decreased $16 million compared to the prior year period, driven by lower sales in our group life and group disability businesses. Sales levels reflect pricing competitiveness and reduced levels of client case movement within the large market.

U.S. Businesses—U.S. Individual Solutions Division

Individual Annuities

Operating Results

The following table sets forth Individual Annuities’ operating results for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Operating results:
Revenues	$	1,148	$	1,251	$	3,249	$	3,774
Benefits and expenses	740		792		2,219		2,381
Adjusted operating income	408		459		1,030		1,393
Realized investment gains (losses), net, and related adjustments	518		(408)		(2,525)		(2,633)
Charges related to realized investment gains (losses), net	(166)		(84)		(67)		106
Market experience updates(1)	(58)		(120)		(686)		(130)
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	702	$	(153)	$	(2,248)	$	(1,264)

________

(1)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

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Adjusted Operating Income

Three Month Comparison. Adjusted operating income decreased $51 million primarily driven by lower fee income, net of distribution expenses and other associated costs, due to unfavorable impacts from our living benefit guarantees, certain products reaching contractual milestones for fee tier reduction, and lower average separate account values. This decrease was partially offset by higher net investment spread results primarily reflecting a higher level of invested assets net of lower reinvestment yields.

Nine Month Comparison. Adjusted operating income decreased $363 million, including an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2020 included a $136 million net charge from these updates primarily driven by unfavorable impacts related to a decrease in long-term interest rate assumptions. Results for 2019 included a $12 million net charge from these updates. Excluding this item, adjusted operating income decreased $239 million primarily driven by lower fee income, net of distribution expenses and other associated costs, due to unfavorable impacts from our living benefit guarantees, certain products reaching contractual milestones for fee tier reduction, and lower average account values.

Revenues, Benefits and Expenses

Three Month Comparison. Revenues decreased $103 million primarily driven by lower policy charges and fee income reflecting unfavorable impacts from our living benefit guarantees resulting from declining interest rates, certain products reaching contractual milestones for fee tier reduction, and lower average separate account values resulting from net outflows which were partially offset by market appreciation. Also contributing to the decrease were lower premiums resulting from a decrease in single premium immediate annuity sales, with offsets in policyholders’ benefits as discussed below. These decreases were partially offset by higher asset management and services fees and other income related to lower capital hedge costs.

Benefits and expenses decreased $52 million primarily driven by lower interest expense on collateral amounts related to investment activities, and lower policyholders’ benefits, including changes in reserves, due to lower reserve provisions resulting from a decrease in single premium immediate annuity sales, with offsets in premiums, as discussed above.

Nine Month Comparison. Revenues decreased $525 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues decreased $393 million. The decrease was primarily driven by lower policy charges and fee income reflecting unfavorable impacts from our living benefit guarantees resulting from declining interest rates, certain products reaching contractual milestones for fee tier reductions, and lower average account values resulting from net outflows which were partially offset by market appreciation. Also contributing to the decrease were lower premiums resulting from a decrease in single premium immediate annuity sales, with offsets in policyholders’ benefits as discussed below. These decreases were partially offset by higher asset management and services fees and other income as a result of lower capital hedge costs.

Benefits and expenses decreased $162 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses decreased $154 million primarily driven by lower policyholders’ benefits, including changes in reserves, due to lower reserve provisions resulting from a decrease in single premium immediate annuity sales, with offsets in premiums, as discussed above.

Account Values

Account values are a significant driver of our operating results. Since most fees are determined by the level of separate account assets, fee income varies primarily based on the level of account values. Additionally, our fee income generally drives other items such as the pattern of amortization of DAC and other costs. Account values are driven by net flows from new business sales, surrenders, withdrawals and benefit payments, policy charges and the impact of positive or negative market value changes. The annuity industry’s competitive and regulatory landscapes, which have been dynamic over the last few years, may impact our net flows, including new business sales. The following table sets forth account value information for the periods indicated.

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	Three Months Ended September 30,				Nine Months Ended September 30,				Twelve Months Ended September 30,
	2020		2019		2020		2019		2020
	(in millions)
Total Individual Annuities(1):
Beginning total account value	$	159,276	$	165,313	$	169,681	$	151,080	$	164,698
Sales	1,562		2,657		4,835		7,639		6,916
Full surrenders and death benefits	(1,811)		(2,568)		(5,740)		(6,905)		(8,209)
Sales, net of full surrenders and death benefits	(249)		89		(905)		734		(1,293)
Partial withdrawals and other benefit payments	(1,205)		(1,229)		(3,750)		(3,694)		(5,219)
Net flows	(1,454)		(1,140)		(4,655)		(2,960)		(6,512)
Change in market value, interest credited and other activity	7,270		1,448		1,806		19,310		9,569
Policy charges	(894)		(923)		(2,634)		(2,732)		(3,557)
Ending total account value	$	164,198	$	164,698	$	164,198	$	164,698	$	164,198

__________

(1)Includes gross variable and fixed annuities sold as retail investment products. Investments sold through defined contribution plan products are included with such products within our Retirement business. Variable annuity account values were $158.6 billion and $160.1 billion as of September 30, 2020 and 2019, respectively. Fixed annuity account values were $5.6 billion and $4.6 billion as of September 30, 2020 and 2019, respectively.

The decrease in sales, net of full surrenders and death benefits, for both the three and nine months ended September 30, 2020 in comparison to the prior year periods, reflects lower gross sales driven by benefit rate reductions and pricing actions in response to capital market pressures, and lower full surrenders driven by general uncertainty around COVID-19 as well as recent market volatility.

The slight decrease in account values for the twelve months ended September 30, 2020 was driven by net outflows and policy charges on contractholder accounts, largely offset by market value appreciation.

Risks and Risk Mitigants

The following is a summary of certain risks associated with Individual Annuities’ products, certain strategies in mitigating those risks including any updates to those strategies since the previous year-end, and the related financial results. For a more detailed description of these items and their related accounting treatment, refer to the complete descriptions provided in our Annual Report on Form 10-K for the year ended December 31, 2019.

Fixed Annuity Risks and Risk Mitigants. The primary risk exposures of our fixed annuity products relate to investment risks we bear for providing customers a minimum guaranteed interest rate or an index-linked interest rate required to be credited to the customer’s account value, including interest rate fluctuations and/or sustained periods of low interest rates, and credit risk related to the underlying investments. We manage these risk exposures primarily through our investment strategies and product design features which include credit rate resetting subject to the minimum guaranteed interest rate as well as surrender charges applied during the early years of the contract that help to provide protection for premature withdrawals. In addition, a portion of our fixed products has a market value adjustment provision that provides protection of lapse in the case of rising interest rates. We also manage these risk exposures through external reinsurance for certain of our fixed annuity products.

Variable Annuity Risks and Risk Mitigants. The primary risk exposures of our variable annuity contracts relate to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including capital markets assumptions such as equity market returns, interest rates and market volatility, along with actuarial assumptions such as contractholder mortality, the timing and amount of annuitization and withdrawals, and contract lapses. For these risk exposures, achievement of our expected returns is subject to the risk that actual experience will differ from the assumptions used in the original pricing of these products. We manage our exposure to certain risks driven by fluctuations in capital markets primarily through a combination of i) Product Design Features, ii) Asset Liability Management Strategy, and iii) Capital Hedge Program as discussed below. We also manage these risk exposures through external reinsurance for certain of our variable annuity products.

i.Product Design Features:

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A portion of the variable annuity contracts that we offer include an automatic rebalancing feature, also referred to as an asset transfer feature. This feature is implemented at the contract level, and transfers assets between certain variable investment sub-accounts selected by the annuity contractholder and, depending on the benefit feature, a fixed-rate account in the general account or a bond fund sub-account within the separate accounts. The objective of the automatic rebalancing feature is to reduce our exposure to equity market risk and market volatility. Other product design features we utilize include, among others, asset allocation restrictions, minimum issuance age requirements and certain limitations on the amount of contractholder purchase payments, as well as a required minimum allocation to our general account for certain of our products. We continue to introduce products that diversify our risk profile and have incorporated provisions in product design allowing frequent revisions of key pricing elements for certain of our products. In addition, there is diversity in our fee arrangements, as certain fees are primarily based on the benefit guarantee amount, the contractholder account value and/or premiums, which helps preserve certain revenue streams when market fluctuations cause account values to decline.

ii.Asset Liability Management (“ALM”) Strategy (including fixed income instruments and derivatives):

We employ an ALM strategy that utilizes a combination of both traditional fixed income instruments and derivatives to help defray potential claims associated with our variable annuity living benefit guarantees. The economic liability we manage with this ALM strategy consists of expected living benefit claims under less severe market conditions, which are managed using an ALM strategy through the accumulation of fixed income and derivative instruments, and potential living benefit claims resulting from more severe market conditions, which are hedged using derivative instruments. For our Prudential Defined Income (“PDI”) variable annuity, we utilize fixed income instruments to help defray potential claims. For the portion of our ALM strategy executed with derivatives, we enter into a range of exchange-traded and over-the-counter (“OTC”) equity and interest rate derivatives, including, but not limited to: equity and treasury futures; total return and interest rate swaps; and options including equity options, swaptions, and floors and caps. The intent of this strategy is to more efficiently manage the capital and liquidity associated with these products while continuing to mitigate fluctuations in net income due to movements in capital markets.

Under our ALM strategy, the difference between the change in value of our hedging instruments and the change in value of the portion of the economic liability that is being hedged, has historically been reflected in adjusted operating income over time. Beginning with the second quarter of 2020, this impact is excluded from adjusted operating income which the Company believes enhances the understanding of underlying performance trends.

The valuation of the economic liability we seek to defray excludes certain items that are included within the U.S. GAAP liability, such as non-performance risk (“NPR”) (in order to maximize protection irrespective of the possibility of our own default), as well as risk margins (required by U.S. GAAP but different from our best estimate) and valuation methodology differences. The following table provides a reconciliation between the liability reported under U.S. GAAP and the economic liability we manage through our ALM strategy as of the periods indicated:

	September 30, 2020		December 31, 2019
	(in millions)
U.S. GAAP liability, including NPR, net of reinsurance recoverables(1)	$	22,881	$	12,612
NPR adjustment, net of reinsurance recoverables(1)	5,941		3,522
Subtotal	28,822		16,134
Adjustments including risk margins and valuation methodology differences	(7,406)		(4,385)
Economic liability managed through the ALM strategy	$	21,416	$	11,749

________

(1)Prior period amounts have been updated to conform to current period presentation.

As of September 30, 2020, the fair value of our fixed income instruments and derivative assets exceed the economic liability within the entities in which the risks reside.

iii. Capital Hedge Program:

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We employ a capital hedge program to protect a portion of the overall capital position of the variable annuities business against its exposure to the equity markets. The capital hedge program is conducted using equity derivatives which include equity call and put options, total return swaps and futures contracts. The changes in value of these derivatives have historically been recognized in adjusted operating income over the expected duration of the capital hedge program. Beginning with the second quarter of 2020, changes in value of these derivatives are excluded from adjusted operating income which the Company believes enhances the understanding of underlying performance trends.

Results excluded from adjusted operating income

The following table provides the net impact to the Unaudited Interim Consolidated Statements of Operations from the results excluded from adjusted operating income, which is primarily driven by the changes in the U.S. GAAP embedded derivative liability and hedge positions under the ALM strategy, and the related amortization of DAC and other costs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Results excluded from adjusted operating income(2)	(in millions)(1)
Change in value of U.S. GAAP liability, pre-NPR(3)	$	3,852	$	(4,451)	$	(11,219)	$	(6,716)
Change in the NPR adjustment	(597)		1,197		2,420		324
Change in fair value of hedge assets, excluding capital hedges(4)	(2,391)		2,756		6,214		4,021
Change in fair value of capital hedges(5)	(360)		(15)		(113)		(647)
Other	14		105		173		385
Realized investment gains (losses), net, and related adjustments	518		(408)		(2,525)		(2,633)
Market experience updates(6)	(58)		(120)		(686)		(130)
Charges related to realized investment gains (losses), net	(166)		(84)		(67)		106
Total results excluded from adjusted operating income(7)	$	294	$	(612)	$	(3,278)	$	(2,657)

__________

(1)Positive amount represents income; negative amount represents a loss.

(2)Includes the impact of annual reviews and update of assumptions and other refinements.

(3)Represents the change in the liability (excluding NPR) for our variable annuities living benefit guarantees which is measured utilizing a valuation methodology that is required under U.S. GAAP. This liability includes such items as risk margins which are required by U.S. GAAP but not included in our best estimate of the liability.

(4)Represents the change in fair value of the derivatives utilized to hedge potential claims associated with our variable annuity living benefit guarantees.

(5)Represents the changes in fair value of equity derivatives of the capital hedge program intended to protect a portion of the overall capital position of the variable annuities business against its exposure to the equity markets.

(6)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(7)Excludes amounts from the changes in fair value of fixed income instruments recorded in OCI (versus net income): a loss of $33 million and gain of $587 million for the three months ended September 30, 2020 and 2019, respectively; and a gain of $1,668 million and $1,237 million for the nine months ended September 30, 2020 and 2019, respectively.

For the three months ended September 30, 2020, the gain of $294 million primarily reflected favorable living benefit results. These results were driven by a favorable impact related to the portions of the U.S. GAAP liability before NPR (excluded from our hedge target) driven by tightening of credit spreads and favorable equity market performance, and gains from duration management swaps associated with the living benefit results. These gains were partially offset by an unfavorable NPR adjustment, losses associated with our capital hedge program, and unfavorable hedge breakage driven by credit spreads tightening. These net gains were partially offset by a charge related to the amortization of DAC and other costs.

For the nine months ended September 30, 2020, the loss of $3,278 million primarily reflected unfavorable living benefit results. These results were driven by an unfavorable impact related to the portions of the U.S. GAAP liability before NPR (excluded from our hedge target) driven by declining interest rates, widening of credit spreads, and unfavorable equity market performance. Also contributing to the results were unfavorable hedge breakage driven by equity market volatility partially offset by credit spreads widening, and losses from duration management swaps associated with the living benefit results. Partially offsetting these losses was a favorable NPR adjustment. A charge related to the amortization of DAC and other costs also contributed to the results.

For the three months ended September 30, 2019, the loss of $612 million primarily reflected unfavorable living benefit results. These results were driven by an unfavorable impact related to the portions of the U.S. GAAP liability before NPR (excluded from our hedge target) driven by declining interest rates and widening of credit spreads, and losses from duration

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management swaps associated with the living benefit results. Partially offsetting these losses was a favorable NPR adjustment. A charge related to the amortization of DAC and other costs also contributed to the results.

For the nine months ended September 30, 2019, the loss of $2,657 million primarily reflected unfavorable living benefit results. These results were driven by an unfavorable impact related to the portions of the U.S. GAAP liability before NPR (excluded from our hedge target) driven by declining interest rates partially offset by favorable equity market performance, losses from duration management swaps associated with the living benefit results, and losses associated with our capital hedge program. Partial offsets to these losses were a favorable NPR adjustment. These net losses were partially offset by a benefit related to the amortization of DAC and other costs.

Product Specific Risks and Risk Mitigants

As noted above, the risks associated with our products are mitigated through product design features, including automatic rebalancing, as well as through our ALM strategy and external reinsurance. The following table sets forth the risk management profile of our living benefit guarantees and guaranteed minimum death benefit (“GMDB”) features as of the periods indicated.

	September 30, 2020				December 31, 2019				September 30, 2019
	Account Value		% of Total		Account Value		% of Total		Account Value		% of Total
	($ in millions)
Living benefit/GMDB features(1):
Both ALM strategy and automatic rebalancing(2)(3)	$	104,815	66	%	$	111,535	68	%	$	108,457	68	%
ALM strategy only(3)	6,955		4	%	7,703		5	%	7,586		5	%
Automatic rebalancing only	634		1	%	732		1	%	747		1	%
External reinsurance(4)	2,944		2	%	3,150		2	%	3,055		2	%
PDI	17,888		11	%	16,296		9	%	15,624		9	%
Other products	2,306		1	%	2,457		1	%	2,396		1	%
Total living benefit/GMDB features	$	135,542			$	141,873			$	137,865
GMDB features and other(5)	23,104		15	%	23,055		14	%	22,265		14	%
Total variable annuity account value	$	158,646			$	164,928			$	160,130

__________

(1)All contracts with living benefit guarantees also contain GMDB features, which cover the same insured contract.

(2)Contracts with living benefits that are included in our ALM strategy and that have an automatic rebalancing feature.

(3)Excludes PDI which is presented separately within this table.

(4)Represents contracts subject to a reinsurance transaction with an external counterparty covering certain new Highest Daily Lifetime Income (“HDI”) v.3.0 business for the period April 1, 2015 through December 31, 2016. These contracts with living benefits also have an automatic rebalancing feature.

(5)Includes contracts that have a GMDB feature and do not have an automatic rebalancing feature.

Individual Life

Operating Results

The following table sets forth Individual Life’s operating results for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Operating results:
Revenues	$	1,609	$	1,529	$	4,702	$	4,519
Benefits and expenses	1,508		1,470		4,685		4,490
Adjusted operating income	101		59		17		29
Realized investment gains (losses), net, and related adjustments	(49)		168		500		445
Charges related to realized investment gains (losses), net	97		(29)		(256)		(197)
Market experience updates(1)	(72)		(186)		(288)		(346)
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	77	$	12	$	(27)	$	(69)

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__________

(1)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

    Adjusted Operating Income

Three Month Comparison. Adjusted operating income increased $42 million, primarily reflecting higher net investment spread results, driven by higher income on non-coupon investments, and lower expenses from cost savings initiatives.

Nine Month Comparison. Adjusted operating income decreased $12 million, including a favorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2020 included a $92 million net charge from these updates, mainly driven by unfavorable impacts related to a decrease in long-term interest rate assumptions. Results for 2019 included a $208 million net charge from these updates, mainly driven by unfavorable impacts related to mortality assumptions. Excluding this item, adjusted operating income decreased $128 million, primarily reflecting lower underwriting results, driven by an unfavorable impact from mortality experience, net of reinsurance, primarily attributable to COVID-19 related claims, and the absence of a favorable impact from changes in market conditions on estimates of profitability in the prior year period, which beginning with the second quarter of 2019 is excluded from adjusted operating income. Also contributing to the decrease were lower net investment spread results driven by lower income on non-coupon investments and lower investment yields, partially offset by business growth. These decreases were partially offset by lower expenses from cost savings initiatives.

Revenues, Benefits and Expenses

Three Month Comparison. Revenues increased $80 million. This increase was primarily driven by higher policy charges and fee income driven by business growth, and higher net investment income due to higher average invested assets resulting from business growth and higher income on non-coupon investments, partially offset by lower investment yields.

Benefits and expenses increased $38 million. This increase was primarily driven by higher policyholders’ benefits, including changes in reserves, due to business growth. The increase was partially offset by lower general and administrative expenses, net of capitalization, reflecting lower expenses, as discussed above.

Nine Month Comparison. Revenues increased $183 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, revenues increased $112 million. This increase was primarily driven by higher policy charges and fee income driven by business growth, and higher net investment income due to higher average invested assets resulting from business growth, partially offset by lower income on non-coupon investments and lower investment yields.

Benefits and expenses increased $195 million. Excluding the impact of our annual reviews and update of assumptions and other refinements, as discussed above, benefits and expenses increased $240 million. This increase reflected higher policyholders’ benefits, including changes in reserves, driven by an unfavorable impact from mortality experience, net of reinsurance, primarily attributable to COVID-19 related claims, as well as higher interest credited to account balances driven by business growth. Also contributing to the increase was the absence of a favorable impact from changes in market conditions on estimates of profitability in the prior year period, as discussed above. The increase also reflected higher general and administrative expenses, net of capitalization, reflecting increased VOBA amortization, partially offset by lower other expenses, as discussed above.

111

Sales Results

The following table sets forth Individual Life’s annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, by distribution channel and product, for the periods indicated.

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
	Prudential Advisors		Third- Party		Total		Prudential Advisors		Third- Party		Total
	(in millions)
Term Life	$	6	$	28	$	34	$	7	$	42	$	49
Guaranteed Universal Life(1)	1		19		20		2		22		24
Other Universal Life(1)	3		17		20		9		26		35
Variable Life	22		76		98		20		47		67
Total	$	32	$	140	$	172	$	38	$	137	$	175
	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
	Prudential Advisors		Third- Party		Total		Prudential Advisors		Third- Party		Total
	(in millions)
Term Life	$	19	$	95	$	114	$	21	$	132	$	153
Guaranteed Universal Life(1)	4		79		83		6		63		69
Other Universal Life(1)	15		58		73		29		84		113
Variable Life	64		209		273		55		129		184
Total	$	102	$	441	$	543	$	111	$	408	$	519

__________

(1)Single pay life premiums and excess (unscheduled) premiums are included in annualized new business premiums based on a 10% credit and represented approximately 5% and 4% of Guaranteed Universal Life and 2% and 8% of Other Universal Life annualized new business premiums for the three months ended September 30, 2020 and 2019, respectively, and approximately 9% and 6% of Guaranteed Universal Life and 7% and 13% of Other Universal Life annualized new business premiums for the nine months ended September 30, 2020 and 2019, respectively. Prior period percentages have been updated to conform to current period presentation.

Total annualized new business premiums for the third quarter of 2020 decreased $3 million compared to the prior year period, primarily driven by lower sales of term life products due to pricing actions and lower sales of other universal life products due to the absence of large case activity in the third quarter of 2020. The decrease was partially offset by higher sales of variable life products as a result of product design and pricing actions. Total annualized new business premiums for the first nine months of 2020 increased $24 million compared to the prior year period, primarily driven by higher sales of variable life products, as discussed above, and higher sales of guaranteed universal life products. The increase was partially offset by lower sales of term life products, as discussed above, and lower sales of other universal life products due to the absence of large case activity in the second and third quarters of 2020.

U.S. Businesses—Assurance IQ Division

Assurance IQ

Operating Results

The following table sets forth Assurance IQ’s operating results for the periods indicated.

	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	(in millions)
Operating results:
Revenues	$	75	$	194
Expenses	105		263
Adjusted operating income	(30)		(69)
Other adjustments(1)	(12)		65
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	(42)	$	(4)

 __________

112

(1)“Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

Adjusted Operating Income

The acquisition of Assurance IQ was completed in October 2019. Adjusted operating income for the third quarter and the first nine months of 2020 was $(30) million and $(69) million, respectively, reflecting revenues, net of marketing and distribution expenses, primarily related to our health (Health Under 65) and life insurance product lines. Results for both periods also included operating expenses, including certain expenses incurred in the third quarter in preparation for the fourth quarter 2020 annual Medicare enrollment period, and amortization expenses related to intangible assets recognized as part of purchase accounting (see Note 1 and Note 10 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information).

Revenues and Expenses

Revenues for the third quarter and the first nine months of 2020 were $75 million and $194 million, respectively, primarily reflecting commissions and marketing referral revenues from our health (Health Under 65) and life insurance product lines. Expenses for the third quarter and the first nine months of 2020 were $105 million and $263 million, respectively, driven by marketing and distribution costs, general and administrative operating expenses including certain expenses incurred in the third quarter in preparation for the fourth quarter 2020 annual Medicare enrollment period, and amortization expenses related to intangible assets.

International Businesses

Business Update

•In August 2020, we successfully completed the sale of The Prudential Life Insurance Company of Korea, Ltd. (“POK”) to KB Financial Group Inc., for cash consideration of approximately 2.3 trillion Korean Won, equal to approximately $1.9 billion. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information. Effective in the second quarter of 2020, the results of this business and the impact of its sale were reflected in the Divested and Run-off Businesses that are included in Corporate and Other, and all prior period amounts have been updated to conform to the current period presentation. See “—Divested and Run-off Businesses.”

•In August 2020, we entered into a definitive agreement with Taishin Financial Holding Co, Ltd., a Taiwanese financial services provider, to sell Prudential Life Insurance Company of Taiwan Inc. (“POT”) for cash consideration of approximately $190 million at then current exchange rates, to be paid at closing, and contingent consideration with a fair value of approximately $26 million at September 30, 2020. The transaction is consistent with our strategic focus internationally on Japan and higher-growth emerging markets around the world. The transaction is expected to close in 2021, subject to regulatory approvals and customary closing conditions. In the third quarter of 2020, we reported our investment in POT as “held for sale” and recognized an approximately $300 million after-tax charge to earnings to adjust the carrying value of POT to the fair market value reflected in the purchase price (see Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information). Effective in the third quarter of 2020, the results of this business and the impact of the anticipated sale are reflected in the Divested and Run-off Businesses that are included in Corporate and Other, and all prior period amounts have been updated to conform to the current period presentation. We intend to use the proceeds of the transaction for general corporate purposes.

Operating Results

The results of our International Businesses’ operations are translated on the basis of weighted average monthly exchange rates, inclusive of the effects of the intercompany arrangement discussed in “—Results of Operations—Impact of Foreign Currency Exchange Rates” above. To provide a better understanding of operating performance within the International Businesses, where indicated below, we have analyzed our results of operations excluding the effect of the year over year change in foreign currency exchange rates. Our results of operations, excluding the effect of foreign currency fluctuations, were derived by translating foreign currencies to USD at uniform exchange rates for all periods presented, including for constant dollar information discussed below. The exchange rate used was Japanese yen at a rate of 104 yen per USD, which was determined in connection with the foreign currency income hedging program discussed in “—Results of Operations—Impact of Foreign Currency Exchange Rates” above. In addition, for constant dollar information discussed below, activity denominated in USD is generally reported based on the amounts as transacted in USD. Annualized new business premiums presented on a constant exchange rate basis in the “Sales Results” section below reflect translation based on these same uniform exchange rates.

113

The following table sets forth the International Businesses’ operating results for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Operating results(1):
Revenues:
Life Planner	$	2,548	$	2,336	$	7,591	$	7,228
Gibraltar Life and Other	2,933		2,880		8,610		8,506
Total revenues	5,481		5,216		16,201		15,734
Benefits and expenses:
Life Planner	2,134		2,039		6,513		6,140
Gibraltar Life and Other	2,572		2,456		7,526		7,230
Total benefits and expenses	4,706		4,495		14,039		13,370
Adjusted operating income:
Life Planner	414		297		1,078		1,088
Gibraltar Life and Other	361		424		1,084		1,276
Total adjusted operating income	775		721		2,162		2,364
Realized investment gains (losses), net, and related adjustments(2)	168		439		843		1,203
Charges related to realized investment gains (losses), net	(11)		(4)		(33)		(7)
Market experience updates(3)	3		(1)		(39)		(32)
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	8		(28)		(22)		(86)
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	943	$	1,127	$	2,911	$	3,442

__________

(1)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

(2)Prior period amounts have been updated to conform to current period presentation.

(3)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

Adjusted Operating Income

Three Month Comparison. Adjusted operating income from our Life Planner operations increased $117 million, including a net favorable impact of $4 million from currency fluctuations, inclusive of the currency hedging program discussed above. Excluding this item, adjusted operating income from our Life Planner operations increased $113 million, primarily reflecting lower expenses driven by the absence of updates to legal reserves incurred in the prior year period. Also contributing to the increase were favorable underwriting results due to the growth of business in force in our Japan and Brazil operations, favorable policyholder experience and a favorable impact from mortality experience.

Adjusted operating income from our Gibraltar Life and Other operations decreased $63 million, including a net unfavorable impact of $2 million from currency fluctuations, inclusive of the currency hedging program discussed above. Excluding this item, adjusted operating income from our Gibraltar Life and Other operations decreased $61 million, primarily reflecting lower earnings from our joint venture investments, as well as higher expenses driven by costs associated with COVID-19 (see “Overview—COVID-19”). Also contributing to the decrease were lower net investment spread results driven by lower reinvestment yields, partially offset by higher income on non-coupon investments. These decreases were partially offset by favorable underwriting results due to the growth of business in force and a favorable impact from mortality experience.

114

Nine Month Comparison. Adjusted operating income from our Life Planner operations decreased $10 million, including a net favorable impact of $3 million from currency fluctuations, inclusive of the currency hedging program discussed above. Both periods also include the impact of our annual reviews and update of assumptions and other refinements, which resulted in a $42 million net charge in 2020 compared to a $5 million net benefit in 2019. The net charge in 2020 was primarily driven by unfavorable impacts related to a decrease in long-term interest rate assumptions.

Excluding these items, adjusted operating income from our Life Planner operations increased $34 million primarily reflecting favorable underwriting results due to the growth of business in force in our Japan and Brazil operations and favorable policyholder experience, partially offset by an unfavorable impact from mortality experience. Also contributing to the increase were lower expenses primarily driven by the absence of updates to legal reserves incurred in the prior year period, partially offset by higher costs related to business growth and business initiatives. These increases were partially offset by lower net investment spread results primarily driven by lower reinvestment yields.

Adjusted operating income from our Gibraltar Life and Other operations decreased $192 million, including a net unfavorable impact of $6 million from currency fluctuations, inclusive of the currency hedging program discussed above. Both periods also include the impact of our annual reviews and update of assumptions and other refinements, which resulted in a $52 million net charge in 2020 compared to a $7 million net benefit in 2019. The net charge in 2020 was primarily driven by updates of reserves reflecting the impact of a decrease in long-term interest rate assumptions, as well as other refinements.

Excluding these items, adjusted operating income from our Gibraltar Life and Other operations decreased $127 million, primarily reflecting lower earnings from our joint venture investments, as well as higher expenses driven by costs associated with COVID-19 (see “Overview—COVID-19”). Also contributing to the decrease were lower net investment spread results driven by lower reinvestment yields, partially offset by higher income on non-coupon investments. These decreases were partially offset by favorable underwriting results driven by the growth of business in force and a favorable impact from mortality experience.

Revenues, Benefits and Expenses

Three Month Comparison. Revenues from our Life Planner operations increased $212 million, including a net unfavorable impact of $38 million from currency fluctuations. Excluding this item, revenues increased $250 million, primarily driven by higher premiums and policy charges and fee income attributable to the growth of business in force, and higher net investment results driven by higher income on non-coupon investments, partially offset by lower reinvestment yields.

Benefits and expenses of our Life Planner operations increased $95 million, including a net favorable impact of $42 million from currency fluctuations. Excluding this item, benefits and expenses increased $137 million, primarily reflecting higher policyholders’ benefits, including changes in reserves, driven by the growth of business in force. This increase was partially offset by lower expenses primarily driven by the absence of updates to legal reserves incurred in the prior year period.

Revenues from our Gibraltar Life and Other operations increased $53 million, including a net favorable impact of $16 million from currency fluctuations. Excluding this item, revenues increased $37 million, primarily reflecting higher premiums driven by the growth of business in force. Partially offsetting the increase were lower other income driven by an unfavorable impact from our joint venture investments, and lower net reinvestment results driven by lower investment yields, partially offset by higher income on non-coupon investments.

Benefits and expenses of our Gibraltar Life and Other operations increased $116 million, including a net unfavorable impact of $18 million from currency fluctuations. Excluding this item, benefits and expenses increased $98 million, primarily driven by higher policyholders’ benefits, including changes in reserves, driven by the growth of business in force.

Nine Month Comparison. Revenues from our Life Planner operations increased $363 million, including a net unfavorable impact of $92 million from currency fluctuations and a net benefit of $33 million from our annual reviews and update of assumptions and other refinements. Excluding these items, revenues increased $422 million, primarily driven by higher premiums and policy charges and fee income attributable to the growth of business in force.

Benefits and expenses of our Life Planner operations increased $373 million, including a net favorable impact of $95 million from currency fluctuations and a net charge of $80 million from our annual reviews and update of assumptions and other refinements. Excluding these items, benefits and expenses increased $388 million, primarily reflecting higher policyholders’ benefits, including changes in reserves, driven by the growth of business in force, as well as an unfavorable impact from mortality experience. These increases were partially offset by lower expenses primarily driven by the absence of updates to legal reserves incurred in the prior year period.

115

Revenues from our Gibraltar Life and Other operations increased $104 million, including a net favorable impact of $36 million from currency fluctuations and a net charge of $9 million from our annual reviews and update of assumptions and other refinements. Excluding these items, revenues increased $77 million, primarily driven by higher premiums attributable to the growth of business in force. The increase was partially offset by lower other income driven by an unfavorable impact from our joint venture investments, and lower net investment results driven by lower reinvestment yields, partially offset by higher income on non-coupon investments.

Benefits and expenses of our Gibraltar Life and Other operations increased $296 million, including a net unfavorable impact of $42 million from currency fluctuations and a net charge of $50 million from our annual reviews and update of assumptions and other refinements. Excluding these items, benefits and expenses increased $204 million, primarily driven by higher policyholders’ benefits, including changes in reserves, driven by the growth of business in force.

Sales Results

The following table sets forth annualized new business premiums, as defined under “—Results of Operations—Segment Measures” above, on an actual and constant exchange rate basis for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Annualized new business premiums(1):
On an actual exchange rate basis:
Life Planner	$	381	$	250	$	839	$	833
Gibraltar Life and Other	407		312		911		931
Total	$	788	$	562	$	1,750	$	1,764
On a constant exchange rate basis:
Life Planner	$	395	$	251	$	871	$	839
Gibraltar Life and Other	408		313		915		936
Total	$	803	$	564	$	1,786	$	1,775

__________

(1)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

The amount of annualized new business premiums and the sales mix in terms of types and currency denomination of products for any given period can be significantly impacted by several factors, including but not limited to: the addition of new products, discontinuation of existing products, changes in credited interest rates for certain products and other product modifications, changes in premium rates, changes in interest rates or fluctuations in currency markets, changes in tax laws, changes in life insurance regulations or changes in the competitive environment. Sales volume may increase or decrease prior to certain of these changes becoming effective, and then fluctuate in the other direction following such changes.

Our diverse product portfolio in Japan, in terms of currency mix and premium payment structure, allows us to adapt to changing market and competitive dynamics, including the extremely low interest rate environment. We regularly examine our product offerings and their related profitability and, as a result, we have repriced or discontinued sales of certain products that do not meet our profit expectations. The impact of these actions, coupled with the introduction of certain new products, has generally resulted in an increase in sales of products denominated in USD relative to products denominated in other currencies.

The table below presents annualized new business premiums on a constant exchange rate basis, by product and distribution channel, for the periods indicated.

116

	Three Months Ended September 30, 2020										Three Months Ended September 30, 2019
	Life		Accident & Health		Retirement(1)		Annuity		Total		Life		Accident & Health		Retirement(1)		Annuity		Total
	(in millions)
Life Planner(2)	$	199	$	19	$	177	$	0	$	395	$	130	$	18	$	103	$	0	$	251
Gibraltar Life and Other:
Life Consultants	$	122	$	9	$	25	$	12	$	168	$	95	$	10	$	23	$	24	$	152
Banks(3)	152		0		6		9		167		107		0		9		3		119
Independent Agency	43		1		28		1		73		18		1		21		2		42
Subtotal	317		10		59		22		408		220		11		53		29		313
Total	$	516	$	29	$	236	$	22	$	803	$	350	$	29	$	156	$	29	$	564

__________

(1)Includes retirement income, endowment and savings variable universal life.

(2)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

(3)Single pay life annualized new business premiums, which include 10% of first year premiums, and 3-year limited pay annualized new business premiums, which include 100% of new business premiums, represented 1% and 74%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the three months ended September 30, 2020, and 2% and 68%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the three months ended September 30, 2019.

Three Month Comparison. Annualized new business premiums, on a constant exchange rate basis, from our Life Planner operations increased $144 million, primarily driven by higher sales of USD-denominated products ahead of pricing increases in August 2020, as well as an increase in sales activities resulting from easing of COVID-19 restrictions on personal interactions and a greater use of technology (see “Overview—COVID-19”).

Annualized new business premiums, on a constant exchange rate basis, from our Gibraltar Life and Other operations increased $95 million. Bank channel and Independent Agency sales increased $48 million and $31 million, respectively, primarily driven by higher sales of USD-denominated products ahead of pricing increases in August 2020. Life Consultants sales also increased $16 million, reflecting higher sales of USD-denominated protection and endowment products ahead of pricing increases in August 2020, partially offset by lower sales of USD-denominated fixed annuity products driven by declines in crediting rates and lower Life Consultant headcount.

The table below presents annualized new business premiums on a constant exchange rate basis, by product and distribution channel, for the periods indicated.

	Nine Months Ended September 30, 2020										Nine Months Ended September 30, 2019
	Life		Accident & Health		Retirement(1)		Annuity		Total		Life		Accident & Health		Retirement(1)		Annuity		Total
	(in millions)
Life Planner(2)	$	448	$	54	$	369	$	0	$	871	$	460	$	70	$	308	$	1	$	839
Gibraltar Life and Other:
Life Consultants	$	263	$	25	$	49	$	51	$	388	$	266	$	31	$	65	$	125	$	487
Banks(3)	329		0		19		13		361		274		0		27		11		312
Independent Agency	83		4		76		3		166		68		7		48		14		137
Subtotal	675		29		144		67		915		608		38		140		150		936
Total	$	1,123	$	83	$	513	$	67	$	1,786	$	1,068	$	108	$	448	$	151	$	1,775

__________

(1)Includes retirement income, endowment and savings variable universal life.

(2)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

117

(3)Single pay life annualized new business premiums, which include 10% of first year premiums, and 3-year limited pay annualized new business premiums, which include 100% of new business premiums, represented 3% and 72%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the nine months ended September 30, 2020, and 1% and 67%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the nine months ended September 30, 2019.

Nine Month Comparison. Annualized new business premiums, on a constant exchange rate basis, from our Life Planner operations increased $32 million primarily driven by higher sales of USD-denominated products ahead of pricing increases in August 2020. The increase was partially offset by lower sales due to COVID-19 impacts, as well as lower sales of corporate term products in Japan driven by the corporate product tax rule change effective July 2019.

Annualized new business premiums, on a constant exchange rate basis, from our Gibraltar Life and Other operations decreased $21 million. Life Consultants sales decreased $99 million, primarily driven by COVID-19 impacts, as well as lower sales of USD-denominated fixed annuity products driven by declines in crediting rates and lower Life Consultant headcount. Bank channel sales increased $49 million, reflecting higher sales of USD-denominated protection products ahead of pricing increases in August 2020, partially offset by lower sales due to COVID-19 impacts. Independent Agency sales increased $29 million, reflecting higher sales of USD-denominated protection and endowment products ahead of pricing increases in August 2020, partially offset by lower sales of USD-denominated fixed annuity products.

Corporate and Other

Corporate and Other includes corporate operations, after allocations to our business segments, and Divested and Run-off Businesses other than those that qualify for “discontinued operations” accounting treatment under U.S. GAAP.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Operating results:
Interest expense on debt(1)	$	(233)	$	(210)	$	(678)	$	(649)
Investment income(1)	25		69		100		195
Pension and employee benefits	40		56		148		116
Other corporate activities(2)	(287)		(196)		(908)		(690)
Adjusted operating income	(455)		(281)		(1,338)		(1,028)
Realized investment gains (losses), net, and related adjustments	(514)		(68)		(1,733)		(275)
Charges related to realized investment gains (losses), net	4		35		8		(52)
Market experience updates(3)	(7)		(7)		(3)		(7)
Divested and Run-off Businesses(4)	(132)		207		(725)		641
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(23)		1		(15)		(14)
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	(1,127)	$	(113)	$	(3,806)	$	(735)

__________ 

(1)Prior period amounts have been updated to conform to current period presentation.

(2)Includes consolidating adjustments.

(3)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.

(4)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

Three Month Comparison. The loss from Corporate and Other operations, on an adjusted operating income basis, increased $174 million. Net charges from other corporate activities increased $91 million primarily driven by higher costs for deferred and long-term compensation plans tied to Company stock and equity market performance, and a charge related to the early extinguishment of debt in the current year period. Investment income decreased $44 million primarily driven by lower average invested assets and lower income on highly liquid assets due to lower investment yields. Interest expense on debt increased $23 million primarily reflecting higher average debt balances. Results from pension and employee benefits decreased $16 million primarily driven by an increase in employee health benefit costs.

118

Nine Month Comparison. The loss from Corporate and Other operations, on an adjusted operating income basis, increased $310 million. Net charges from other corporate activities increased $218 million primarily driven by increases to legal reserves. Investment income decreased $95 million primarily driven by lower average invested assets and lower income on highly liquid assets due to lower investment yields as well as lower income on non-coupon investments. Interest expense on debt increased $29 million primarily reflecting higher average debt balances. Results from pension and employee benefits increased $32 million primarily driven by a decrease in employee health benefit costs.

Divested and Run-off Businesses

Divested and Run-off Businesses Included in Corporate and Other

Income from our Divested and Run-off Businesses includes results from several businesses that have been or will be sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. The results of these Divested and Run-off Businesses are reflected in our Corporate and Other operations, but are excluded from adjusted operating income. A summary of the results of the Divested and Run-off Businesses reflected in our Corporate and Other operations is as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Long-Term Care	$	78	$	147	$	266	$	456
Other(1)	(210)		60		(991)		185
Total Divested and Run-off Businesses income (loss) excluded from adjusted operating income	$	(132)	$	207	$	(725)	$	641

__________

(1)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

Long-Term Care. Results for the third quarter of 2020 decreased compared to the prior year period driven by an unfavorable impact from changes in the market value of derivatives used for duration management, partially offset by a favorable impact from changes in the market value of equity securities, and higher income on non-coupon investments. Results for the first nine months of 2020 decreased compared to the prior year period, including an unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements. Results for 2020 included a $33 million net charge from these updates, while results for 2019 included a $9 million net charge from these updates. Excluding this item, results decreased primarily reflecting lower underwriting results driven by unfavorable policy experience and an increase in reserves as a result of an unlocking of assumptions in the first quarter of 2020 due to the decline in interest rates. Also contributing to the decrease was an unfavorable impact from changes in the market value of equity securities.

Other. Results for the third quarter and the first nine months of 2020 primarily reflect the results of POK and the impact of its sale which was completed in August 2020, as well as the results of POT and the impact of its anticipated sale. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.

Closed Block Division

The Closed Block division includes certain in-force traditional domestic participating life insurance and annuity products and assets that are used for the payment of benefits and policyholder dividends on these policies (collectively the “Closed Block”), as well as certain related assets and liabilities. We no longer offer these traditional domestic participating policies. See Note 7 to the Unaudited Interim Consolidated Financial Statements for additional information.

Each year, the Board of Directors of The Prudential Insurance Company of America (“PICA”) determines the dividends payable on participating policies for the following year based on the experience of the Closed Block, including investment income, net realized and unrealized investment gains (losses), mortality experience and other factors. Although the Closed Block experience for dividend action decisions is based upon statutory results, at the time the Closed Block was established, we developed, as required by U.S. GAAP, an actuarial calculation of the timing of the maximum future earnings from the policies included in the Closed Block. If actual cumulative earnings in any given period are greater than the cumulative earnings we

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expected, we record this excess as a policyholder dividend obligation. We will subsequently pay this excess to Closed Block policyholders as an additional dividend unless it is otherwise offset by future Closed Block performance that is less favorable than we originally expected. The policyholder dividends we charge to expense within the Closed Block division will include any change in our policyholder dividend obligation that we recognize for the excess of actual cumulative earnings in any given period over the cumulative earnings we expected in addition to the actual policyholder dividends declared by the Board of Directors of PICA.

As of September 30, 2020, the excess of actual cumulative earnings over the expected cumulative earnings was $2,611 million, which was recorded as a policyholder dividend obligation. Actual cumulative earnings, as required by U.S. GAAP, reflect the recognition of realized investment gains and losses in the current period, as well as changes in assets and related liabilities that support the Closed Block policies. Additionally, the accumulation of net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block has been reflected as a policyholder dividend obligation of $5,530 million at September 30, 2020, to be paid to Closed Block policyholders unless offset by future experience, with a corresponding amount reported in AOCI.

Operating Results

The following table sets forth the Closed Block division’s results for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
U.S. GAAP results:
Revenues	$	1,301	$	1,482	$	3,318	$	4,157
Benefits and expenses	1,293		1,437		3,333		4,152
Income (loss) before income taxes and equity in earnings of operating joint ventures	$	8	$	45	$	(15)	$	5

Income (loss) Before Income Taxes and Equity in Earnings of Operating Joint Ventures

Three Month Comparison. Income (loss) before income taxes and equity in earnings of operating joint ventures decreased $37 million. Net investment activity results decreased primarily reflecting a decrease in realized investment gains driven by unfavorable changes in the value of derivatives used in risk management activities, partially offset by an increase in other income driven by favorable changes in the value of equity securities. Net insurance activity results reflected a favorable comparative change driven by a decrease in the 2020 dividend scale and run-off of the business in force. As a result of the above and other variances, a $161 million increase in the policyholder dividend obligation was recorded in the third quarter of 2020, compared to a $227 million increase in the third quarter of 2019. If actual cumulative earnings fall below expected cumulative earnings in future periods, earnings volatility in the Closed Block division, which is primarily due to changes in investment results, may not be offset by changes in the cumulative earnings policyholder dividend obligation. For a discussion of the Closed Block division’s realized investment gains (losses), net, see “—General Account Investments.”

Nine Month Comparison. Income (loss) before income taxes and equity in earnings of operating joint ventures decreased $20 million. Net investment activity results decreased primarily reflecting a decrease in other income driven by unfavorable changes in the value of equity securities, and a decrease in realized investment gains driven by unfavorable changes in the fair value of derivatives used in risk management activities. Net insurance activity results reflected a favorable comparative change driven by a decrease in the 2020 dividend scale and run-off of the business in force. As a result of the above and other variances, a $192 million reduction in the policyholder dividend obligation was recorded in the first nine months of 2020, compared to a $334 million increase in the first nine months of 2019. If actual cumulative earnings fall below expected cumulative earnings in future periods, earnings volatility in the Closed Block division, which is primarily due to changes in investment results, may not be offset by changes in the cumulative earnings policyholder dividend obligation. For a discussion of the Closed Block division’s realized investment gains (losses), net, see “—General Account Investments.”

Revenues, Benefits and Expenses

Three Month Comparison. Revenues decreased $181 million primarily driven by a decrease in realized investment gains, and lower premiums due to runoff of policies in force, partially offset by an increase in other income, as discussed above.

Benefits and expenses decreased $144 million primarily driven by a decrease in dividends to policyholders, reflecting a decrease in the policyholder dividend obligation expense due to changes in cumulative earnings, as discussed above.

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Nine Month Comparison. Revenues decreased $839 million primarily driven by a decrease in other income, a decrease in net realized investment gains, and lower premiums due to runoff of policies in force, as discussed above.

Benefits and expenses decreased $819 million primarily driven by a decrease in dividends to policyholders, reflecting a decrease in the policyholder dividend obligation expense due to changes in cumulative earnings, as discussed above.

Income Taxes

For information regarding income taxes, see Note 8 to the Unaudited Interim Consolidated Financial Statements.

Experience-Rated Contractholder Liabilities,

Assets Supporting Experience-Rated Contractholder Liabilities and Other Related Investments

Certain products included in the Retirement and International Businesses segments are experience-rated in that investment results associated with these products are expected to ultimately accrue to contractholders. The majority of investments supporting these experience-rated products are carried at fair value. These investments are reflected on the Unaudited Interim Consolidated Statements of Financial Position as “Assets supporting experience-rated contractholder liabilities, at fair value.” Realized and unrealized gains (losses) for these investments are reported in “Other income (loss).” Interest and dividend income for these investments is reported in “Net investment income.” To a lesser extent, these experience-rated products are also supported by derivatives and commercial mortgage and other loans. The derivatives that support these experience-rated products are reflected on the Unaudited Interim Consolidated Statements of Financial Position as “Other invested assets” and are carried at fair value, and the realized and unrealized gains (losses) are reported in “Realized investment gains (losses), net.” The commercial mortgage and other loans that support these experience-rated products are carried at unpaid principal, net of unamortized discounts and an allowance for losses, and are reflected on the Unaudited Interim Consolidated Statements of Financial Position as “Commercial mortgage and other loans.” Gains (losses) on sales and changes in the valuation allowance for commercial mortgage and other loans are reported in “Realized investment gains (losses), net.”

Our Retirement segment has two types of experience-rated products that are supported by assets supporting experience-rated contractholder liabilities and other related investments. Fully participating products are those for which the entire return on underlying investments is passed back to the policyholders through a corresponding adjustment to the related liability, primarily classified in the Unaudited Interim Consolidated Statements of Financial Position as “Policyholders’ account balances.” The adjustment to the liability is based on changes in the fair value of all of the related assets, including commercial mortgage and other loans, which are carried at amortized cost, less any valuation allowance. Partially participating products are those for which only a portion of the return on underlying investments is passed back to the policyholders over time through changes to the contractual crediting rates. The crediting rates are typically reset semiannually, often subject to a minimum crediting rate, and returns are required to be passed back within ten years.

In our International Businesses, the experience-rated products are fully participating. As a result, the entire return on the underlying investments is passed back to policyholders through a corresponding adjustment to the related liability.

Adjusted operating income excludes net investment gains (losses) on assets supporting experience-rated contractholder liabilities, related derivatives and commercial mortgage and other loans. This is consistent with the exclusion of realized investment gains (losses) with respect to other investments supporting insurance liabilities managed on a consistent basis. In addition, to be consistent with the historical treatment of charges related to realized investment gains (losses) on investments, adjusted operating income also excludes the change in contractholder liabilities due to asset value changes in the pool of investments (including changes in the fair value of commercial mortgage and other loans) supporting these experience-rated contracts, which are reflected in “Interest credited to policyholders’ account balances.” The result of this approach is that adjusted operating income for these products includes net fee revenue and interest spread we earn on these experience-rated contracts, and excludes changes in fair value of the pool of investments, both realized and unrealized, that we expect will ultimately accrue to the contractholders.

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The following table sets forth the impact on results for the periods indicated of these items that are excluded from adjusted operating income:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Retirement:
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net(1)	$	77	$	106	$	556	$	750
Change in experience-rated contractholder liabilities due to asset value changes	(93)		(112)		(553)		(722)
Gains (losses), net, on experienced rated contracts(2)(3)	$	(16)	$	(6)	$	3	$	28
International Businesses:
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net	$	76	$	48	$	(97)	$	154
Change in experience-rated contractholder liabilities due to asset value changes	(76)		(48)		97		(154)
Gains (losses), net, on experienced rated contracts	$	0	$	0	$	0	$	0
Total:
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net(1)	$	153	$	154	$	459	$	904
Change in experience-rated contractholder liabilities due to asset value changes	(169)		(160)		(456)		(876)
Gains (losses), net, on experienced rated contracts(2)(3)	$	(16)	$	(6)	$	3	$	28

__________ 

(1)Prior period amounts have been reclassified to conform to current period presentation.

(2)Decreases to contractholder liabilities due to asset value changes are limited by certain floors and therefore do not reflect cumulative declines in recorded asset values of $3 million and $7 million as of September 30, 2020 and 2019, respectively. We have recovered and expect to recover in future periods these declines in recorded asset values through subsequent increases in recorded asset values or reductions in crediting rates on contractholder liabilities.

(3)Included in the amounts above related to the change in the liability to contractholders as a result of commercial mortgage and other loans are increases of $5 million and $7 million for the three months ended September 30, 2020 and 2019, respectively, and a decrease of $1 million and an increase of $62 million for the nine months ended September 30, 2020 and 2019, respectively. As prescribed by U.S. GAAP, changes in the fair value of commercial mortgage and other loans held for investment in our general account, other than when associated with impairments, are not recognized in income in the current period, while the impact of these changes in fair value are reflected as a change in the liability to fully participating contractholders in the current period.

The net impacts, for the Retirement segment, of changes in experience-rated contractholder liabilities and investment gains (losses) on assets supporting experience-rated contractholder liabilities and other related investments reflect timing differences between the recognition of the mark-to-market adjustments and the recognition of the recovery of these adjustments in future periods through subsequent increases in asset values or reductions in crediting rates on contractholder liabilities for partially participating products. These impacts also reflect the difference between the fair value of the underlying commercial mortgages and other loans and the amortized cost, less any valuation allowance, of these loans, as described above.

Valuation of Assets and Liabilities

Fair Value of Assets and Liabilities

The authoritative guidance related to fair value measurement establishes a framework that includes a three-level hierarchy used to classify the inputs used in measuring fair value. The level in the hierarchy within which the fair value falls is determined based on the lowest level input that is significant to the measurement. The fair values of assets and liabilities classified as Level 3 include at least one significant unobservable input in the measurement. See Note 6 to the Unaudited Interim Consolidated Financial Statements for an additional description of the valuation hierarchy levels as well as for the balances of assets and liabilities measured at fair value on a recurring basis by hierarchy level presented on a consolidated basis.

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis, as of the periods indicated, and the portion of such assets and liabilities that are classified in Level 3 of the valuation hierarchy. The table also provides details about these assets and liabilities excluding those held in the Closed Block division. We believe the amounts excluding the Closed Block division are most relevant to an understanding of our operations that are pertinent to investors in Prudential Financial because substantially all Closed Block division assets support obligations and liabilities relating to the Closed Block policies only. See Note 7 to the Unaudited Interim Consolidated Financial Statements for additional information on the Closed Block.

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	As of September 30, 2020								As of December 31, 2019
	PFI excluding Closed Block Division				Closed Block Division				PFI excluding Closed Block Division				Closed Block Division
	Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)		Total at Fair Value		Total Level 3(1)
	(in millions)
Fixed maturities, available-for- sale	$	358,569	$	4,771	$	42,247	$	1,044	$	349,720	$	3,570	$	41,376	$	745
Assets supporting experience-rated contractholder liabilities:
Fixed maturities	21,033		710		0		0		19,530		730		0		0
Equity securities	1,825		0		0		0		1,790		0		0		0
All other(2)	1,072		110		0		0		261		0		0		0
Subtotal	23,930		820		0		0		21,581		730		0		0
Fixed maturities, trading	4,115		229		256		11		3,628		275		256		12
Equity securities	4,814		589		2,074		84		5,140		557		2,245		76
Commercial mortgage and other loans	915		0		0		0		228		0		0		0
Other invested assets(3)	1,972		782		0		0		1,433		567		0		0
Short-term investments	8,082		172		58		11		3,789		119		147		36
Cash equivalents	11,741		1		344		0		8,855		99		151		32
Other assets	332		332		0		0		113		113		0		0
Separate account assets	282,444		1,801		0		0		288,724		1,717		0		0
Total assets	$	696,914	$	9,497	$	44,979	$	1,150	$	683,211	$	7,747	$	44,175	$	901
Future policy benefits	$	23,340	$	23,340	$	0	$	0	$	12,831	$	12,831	$	0	$	0
Policyholders’ account balances	1,549		1,549		0		0		1,316		1,316		0		0
Other liabilities(3)	163		0		8		0		928		105		8		0
Notes issued by consolidated variable interest entities (“VIEs”)	775		775		0		0		800		800		0		0
Total liabilities	$	25,827	$	25,664	$	8	$	0	$	15,875	$	15,052	$	8	$	0

__________

(1)Level 3 assets expressed as a percentage of total assets measured at fair value on a recurring basis for PFI excluding the Closed Block division and for the Closed Block division totaled 1.4% and 2.6%, respectively, as of September 30, 2020, and 1.1% and 2.0%, respectively, as of December 31, 2019.

(2)“All other” represents cash equivalents and short-term investments.

(3)“Other invested assets” and “Other liabilities” primarily include derivatives. The amounts include the impact of netting subject to master netting agreements.

The determination of fair value, which for certain assets and liabilities is dependent on the application of estimates and assumptions, can have a significant impact on our results of operations and may require the application of a greater degree of judgment depending on market conditions, as the ability to value assets and liabilities can be significantly impacted by a decrease in market activity or a lack of transactions executed in an orderly manner. The continued impact of the COVID-19 pandemic on the global economy may have adverse effects on the valuation of assets and liabilities. Due to the highly uncertain nature of these conditions, it is not possible to estimate the overall impacts at this time.

Fixed maturity securities included in Level 3 in our fair value hierarchy are generally priced based on internally-developed valuations or indicative broker quotes. For certain private fixed maturity and equity securities, the internal valuation models use significant unobservable inputs and, accordingly, such securities are included in Level 3 in our fair value hierarchy. Level 3 fixed maturity securities for PFI excluding the Closed Block division included approximately $1.5 billion of public fixed maturities as of September 30, 2020, with values primarily based on indicative broker quotes, and approximately $4.2 billion of private fixed maturities, with values primarily based on internally-developed models. Significant unobservable inputs used in their valuation included: issue specific spread adjustments, material non-public financial information, management judgment, estimation of future earnings and cash flows, default rate assumptions, liquidity assumptions and indicative quotes from market makers. Separate account assets included in Level 3 in our fair value hierarchy primarily include corporate securities and commercial mortgage loans.

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Embedded derivatives reported in “Future policy benefits” and “Policyholders’ account balances” that are included in level 3 of our fair value hierarchy represent general account liabilities pertaining to living benefit features of the Company’s variable annuity contracts and the index-linked interest credited features on certain life and annuity products. These are carried at fair value with changes in fair value included in “Realized investment gains (losses), net.” These embedded derivatives are valued using internally-developed models that require significant estimates and assumptions developed by management. Changes in these estimates and assumptions can have a significant impact on the results of our operations.

For additional information about the valuation techniques and the key estimates and assumptions used in our determination of fair value, see Note 6 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

General Account Investments

Portfolio Composition

Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, policy loans and non-coupon investments, which include equity securities and other invested assets such as limited partnerships and limited liability companies (“LPs/LLCs”), real estate held through direct ownership, derivative instruments and seed money investments in separate accounts. The composition of our general account reflects, within the discipline provided by our risk management approach, our need for competitive results and the selection of diverse investment alternatives available primarily through our PGIM segment. The size of our portfolio enables us to invest in asset classes that may be unavailable to the typical investor.

The following tables set forth the composition of our general account investment portfolio apportioned between PFI excluding the Closed Block division and the Closed Block division, as of the dates indicated:

	September 30, 2020
	PFI Excluding Closed Block Division				Closed Block Division		Total
	($ in millions)
Fixed maturities:
Public, available-for-sale, at fair value	$	301,402	63.6	%	$	29,949	$	331,351
Public, held-to-maturity, at amortized cost, net of allowance	1,689		0.4		0		1,689
Private, available-for-sale, at fair value	56,531		11.9		12,298		68,829
Private, held-to-maturity, at amortized cost, net of allowance	212		0.1		0		212
Fixed maturities, trading, at fair value	2,989		0.6		257		3,246
Assets supporting experience-rated contractholder liabilities, at fair value	23,961		5.1		0		23,961
Equity securities, at fair value	4,295		0.9		2,074		6,369
Commercial mortgage and other loans, at book value, net of allowance	55,186		11.7		8,419		63,605
Policy loans, at outstanding balance	7,396		1.6		4,106		11,502
Other invested assets, net of allowance(1)	10,011		2.1		3,418		13,429
Short-term investments, net of allowance	9,900		2.0		79		9,979
Total general account investments	473,572		100.0	%	60,600		534,172
Invested assets of other entities and operations(2)	6,881				0		6,881
Total investments	$	480,453			$	60,600	$	541,053

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	December 31, 2019
	PFI Excluding Closed Block Division				Closed Block Division		Total
	($ in millions)
Fixed maturities:
Public, available-for-sale, at fair value	$	296,382	64.9	%	$	29,011	$	325,393
Public, held-to-maturity, at amortized cost	1,705		0.4		0		1,705
Private, available-for-sale, at fair value	52,750		11.6		12,365		65,115
Private, held-to-maturity, at amortized cost	228		0.1		0		228
Fixed maturities, trading, at fair value	2,467		0.5		256		2,723
Assets supporting experience-rated contractholder liabilities, at fair value	21,597		4.7		0		21,597
Equity securities, at fair value	4,586		1.0		2,245		6,831
Commercial mortgage and other loans, at book value, net of allowance	54,671		12.0		8,629		63,300
Policy loans, at outstanding balance	7,832		1.7		4,264		12,096
Other invested assets(1)	9,210		2.0		3,334		12,544
Short-term investments	5,223		1.1		227		5,450
Total general account investments	456,651		100.0	%	60,331		516,982
Invested assets of other entities and operations(2)	5,778				0		5,778
Total investments	$	462,429			$	60,331	$	522,760

__________

(1)    Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments. For additional information regarding these investments, see “—Other Invested Assets” below.

(2)Includes invested assets of our investment management and derivative operations. Excludes assets of our investment management operations that are managed for third-parties and those assets classified as “Separate account assets” on our balance sheet. For additional information regarding these investments, see “—Invested Assets of Other Entities and Operations” below.

The increase in general account investments attributable to PFI excluding the Closed Block division in the first nine months of 2020 was primarily due to a decrease in interest rates in excess of credit spreads widening, net business inflows and the reinvestment of net investment income. For information regarding the methodology used in determining the fair value of our fixed maturities, see Note 6 to the Unaudited Interim Consolidated Financial Statements.

As of September 30, 2020 and December 31, 2019, 43% and 42%, respectively, of our general account investments attributable to PFI excluding the Closed Block division related to our Japanese insurance operations. The following table sets forth the composition of the investments of our Japanese insurance operations’ general account, as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Fixed maturities:
Public, available-for-sale, at fair value	$	150,762	$	142,220
Public, held-to-maturity, at amortized cost, net of allowance	1,689		1,705
Private, available-for-sale, at fair value	20,576		19,189
Private, held-to-maturity, at amortized cost, net of allowance	212		228
Fixed maturities, trading, at fair value	513		492
Assets supporting experience-rated contractholder liabilities, at fair value	2,846		2,777
Equity securities, at fair value	2,010		2,185
Commercial mortgage and other loans, at book value, net of allowance	19,505		19,138
Policy loans, at outstanding balance	3,291		2,859
Other invested assets(1)	2,870		2,187
Short-term investments	432		165
Total Japanese general account investments	$	204,706	$	193,145

__________ 

(1)Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments.

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The increase in general account investments related to our Japanese insurance operations in the first nine months of 2020 was primarily attributable to a decrease in interest rates in excess of credit spreads widening, the reinvestment of net investment income and net business inflows.

As of September 30, 2020, our Japanese insurance operations had $87.3 billion, at carrying value, of investments denominated in U.S. dollars, including $1.8 billion that were hedged to yen through third-party derivative contracts and $72.9 billion that support liabilities denominated in U.S. dollars, with the remainder as part of the hedging of foreign currency exchange rate exposure to U.S. dollar-equivalent equity. As of December 31, 2019, our Japanese insurance operations had $77.1 billion, at carrying value, of investments denominated in U.S. dollars, including $2.1 billion that were hedged to yen through third-party derivative contracts and $62.4 billion that support liabilities denominated in U.S. dollars, with the remainder as part of the hedging of foreign currency exchange rate exposure of U.S. dollar-equivalent equity. The $10.2 billion increase in the carrying value of U.S. dollar-denominated investments from December 31, 2019 was primarily attributable to a decrease in U.S. treasury bond rates, reinvestment of net investment income and portfolio growth as a result of net business inflows.

Our Japanese insurance operations had $9.7 billion and $9.9 billion, at carrying value, of investments denominated in Australian dollars that support liabilities denominated in Australian dollars as of September 30, 2020 and December 31, 2019, respectively. The $0.2 billion decrease in the carrying value of Australian dollar-denominated investments from December 31, 2019 was primarily attributable to the run off of the portfolio. For additional information regarding U.S. and Australian dollar investments held in our Japanese insurance operations and a discussion of our yen hedging strategy, see “—Results of Operations by Segment—Impact of Foreign Currency Exchange Rates” above.

Investment Results

The following tables set forth the investment results of our general account apportioned between PFI excluding the Closed Block division and the Closed Block division, for the periods indicated. The yields are based on net investment income as reported under U.S. GAAP and as such do not include certain interest-related items, such as settlements of duration management swaps which are included in “Realized investment gains (losses), net.”

2020 to 2019 Three Month Comparison

	Three Months Ended September 30, 2020
	PFI Excluding Closed Block Division and Japanese Operations				Japanese Insurance Operations				PFI Excluding Closed Block Division				Closed Block Division		Total(5)
	Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Amount		Amount
	($ in millions)
Fixed maturities(2)	4.55	%	$	1,859	2.80	%	$	986	3.74	%	$	2,845	$	398	$	3,243
Assets supporting experience-rated contractholder liabilities	3.09		161		2.21		15		2.99		176		0		176
Equity securities	3.32		19		1.17		6		2.34		25		11		36
Commercial mortgage and other loans	3.81		335		3.75		181		3.79		516		87		603
Policy loans	5.35		60		3.02		24		4.37		84		61		145
Short-term investments and cash equivalents	0.48		27		0.43		2		0.48		29		1		30
Gross investment income	3.96		2,461		2.86		1,214		3.52		3,675		558		4,233
Investment expenses	(0.13)		(65)		(0.14)		(60)		(0.13)		(125)		(31)		(156)
Investment income after investment expenses	3.83	%	2,396		2.72	%	1,154		3.39	%	3,550		527		4,077
Other invested assets(3)			138				85				223		55		278
Investment results of other entities and operations(4)			91				0				91		0		91
Total investment income			$	2,625			$	1,239			$	3,864	$	582	$	4,446

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	Three Months Ended September 30, 2019
	PFI Excluding Closed Block Division and Japanese Operations				Japanese Insurance Operations				PFI Excluding Closed Block Division				Closed Block Division		Total(5)
	Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Amount		Amount
	($ in millions)
Fixed maturities(2)	4.63	%	$	1,899	2.87	%	$	983	3.83	%	$	2,882	$	428	$	3,310
Assets supporting experience-rated contractholder liabilities	3.58		173		2.45		16		3.45		189		0		189
Equity securities	3.83		20		1.25		7		2.56		27		11		38
Commercial mortgage and other loans	4.09		344		4.11		190		4.10		534		96		630
Policy loans	5.43		66		3.94		28		4.88		94		66		160
Short-term investments and cash equivalents	2.53		100		4.82		7		2.61		107		10		117
Gross investment income	4.34		2,602		3.01		1,231		3.80		3,833		611		4,444
Investment expenses	(0.12)		(101)		(0.14)		(72)		(0.13)		(173)		(53)		(226)
Investment income after investment expenses	4.22	%	2,501		2.87	%	1,159		3.67	%	3,660		558		4,218
Other invested assets(3)			127				34				161		32		193
Investment results of other entities and operations(4)			27				0				27		0		27
Total investment income			$	2,655			$	1,193			$	3,848	$	590	$	4,438

__________ 

(1)For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for securities lending liabilities). A yield is not presented for other invested assets as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to other invested assets.

(2)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in other invested assets.

(3)Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments, fixed maturities classified as trading and other miscellaneous investments.

(4)Includes net investment income of our investment management operations.

(5)The total yield was 3.48% and 3.76% for the three months ended September 30, 2020 and 2019, respectively.

The decrease in investment income after investment expenses yield attributable to our general account investments, excluding both the Closed Block division and the Japanese insurance operations’ portfolio, for the three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily the result of lower fixed income reinvestment rates.

The decrease in investment income after investment expenses yield attributable to the Japanese insurance operations’ portfolio, for the three months ended September 30, 2020, compared to the three months ended September 30, 2019, was primarily the result of lower fixed income reinvestment rates.

Both the U.S. dollar-denominated and Australian dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts provide a yield that is substantially higher than the yield on comparable yen-denominated fixed maturities. The average amortized cost of U.S. dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts was approximately $55.3 billion and $50.5 billion for the three months ended September 30, 2020 and 2019, respectively. The majority of U.S. dollar-denominated fixed maturities support liabilities that are denominated in U.S. dollars. The average amortized cost of Australian dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts was approximately $8.1 billion and $8.6 billion for the three months ended September 30, 2020 and 2019, respectively. The majority of Australian dollar-denominated fixed maturities support liabilities that are denominated in Australian dollars. For additional information regarding U.S. and Australian dollar investments held in our Japanese insurance operations, see “—Results of Operations by Segment—Impact of Foreign Currency Exchange Rates” above.

2020 to 2019 Nine Month Comparison

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	Nine Months Ended September 30, 2020
	PFI Excluding Closed Block Division and Japanese Operations				Japanese Insurance Operations				PFI Excluding Closed Block Division				Closed Block Division		Total(5)
	Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Amount		Amount
	($ in millions)
Fixed maturities(2)	4.58	%	$	5,606	2.79	%	$	2,884	3.76	%	$	8,490	$	1,192	$	9,682
Assets supporting experience-rated contractholder liabilities	3.22		476		2.16		43		3.09		519		0		519
Equity securities	2.36		40		3.05		45		2.68		85		34		119
Commercial mortgage and other loans	3.95		1,035		3.87		550		3.92		1,585		269		1,854
Policy loans	5.36		186		3.42		78		4.59		264		185		449
Short-term investments and cash equivalents	0.92		158		0.95		12		0.93		170		6		176
Gross investment income	4.05		7,501		2.90		3,612		3.59		11,113		1,686		12,799
Investment expenses	(0.12)		(212)		(0.14)		(184)		(0.13)		(396)		(106)		(502)
Investment income after investment expenses	3.93	%	7,289		2.76	%	3,428		3.46	%	10,717		1,580		12,297
Other invested assets(3)			157				137				294		58		352
Investment results of other entities and operations(4)			185				0				185		0		185
Total investment income			$	7,631			$	3,565			$	11,196	$	1,638	$	12,834

	Nine Months Ended September 30, 2019
	PFI Excluding Closed Block Division and Japanese Operations				Japanese Insurance Operations				PFI Excluding Closed Block Division				Closed Block Division		Total(5)
	Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Amount		Amount
	($ in millions)
Fixed maturities(2)	4.67	%	$	5,634	2.86	%	$	2,875	3.85	%	$	8,509	$	1,273	$	9,782
Assets supporting experience-rated contractholder liabilities	3.61		513		2.26		43		3.45		556		0		556
Equity securities	2.72		42		2.72		41		2.72		83		36		119
Commercial mortgage and other loans	4.13		1,026		3.97		529		4.07		1,555		289		1,844
Policy loans	5.33		192		3.91		80		4.81		272		191		463
Short-term investments and cash equivalents	2.71		289		4.23		21		2.77		310		29		339
Gross investment income	4.38		7,696		3.00		3,589		3.82		11,285		1,818		13,103
Investment expenses	(0.13)		(310)		(0.14)		(211)		(0.13)		(521)		(162)		(683)
Investment income after investment expenses	4.25	%	7,386		2.86	%	3,378		3.69	%	10,764		1,656		12,420
Other invested assets(3)			297				137				434		71		505
Investment results of other entities and operations(4)			119				0				119		0		119
Total investment income			$	7,802			$	3,515			$	11,317	$	1,727	$	13,044

__________ 

(1)For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for securities lending liabilities). A yield is not presented for other invested assets as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to other invested assets.

(2)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in other invested assets.

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(3)Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments, fixed maturities classified as trading and other miscellaneous investments.

(4)Includes net investment income of our investment management operations.

(5)The total yield was 3.54% and 3.78% for the nine months ended September 30, 2020 and 2019, respectively.

The decrease in investment income after investment expenses yield attributable to our general account investments, excluding both the Closed Block division and the Japanese insurance operations’ portfolio, for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily the result of lower fixed income reinvestment rates.

The decrease in investment income after investment expenses yield attributable to the Japanese insurance operations’ portfolio, for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily the result of lower fixed income reinvestment rates.

Both the U.S. dollar-denominated and Australian dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts provide a yield that is substantially higher than the yield on comparable yen-denominated fixed maturities. The average amortized cost of U.S. dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts was approximately $53.3 billion and $47.4 billion for the nine months ended September 30, 2020 and 2019, respectively. The majority of U.S. dollar-denominated fixed maturities support liabilities that are denominated in U.S. dollars. The average amortized cost of Australian dollar-denominated fixed maturities that are not hedged to yen through third-party derivative contracts was approximately $8.0 billion and $8.7 billion for the nine months ended September 30, 2020 and 2019, respectively. The majority of Australian dollar-denominated fixed maturities support liabilities that are denominated in Australian dollars. For additional information regarding U.S. and Australian dollar investments held in our Japanese insurance operations, see “—Results of Operations by Segment—Impact of Foreign Currency Exchange Rates” above.

Realized Investment Gains and Losses

The following table sets forth “Realized investment gains (losses), net” of our general account apportioned between PFI excluding Closed Block division and the Closed Block division by investment type as well as “Charges related to realized investment gains (losses), net” and adjustments, for the periods indicated:

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
PFI excluding Closed Block Division:
Realized investment gains (losses), net:
Due to foreign exchange movements on securities approaching maturity(2)	$	(7)	$	(29)	$	(26)	$	(45)
Due to securities actively marketed for sale(2)	(2)		(3)		(83)		(4)
Due to credit or adverse conditions of the respective issuer(1)(3)	(97)		(94)		(97)		(136)
Allowance for credit losses on fixed maturities(1)(3)	89		N/A		(129)		N/A
Net gains (losses) on sales and maturities	329		319		784		691
Fixed maturity securities(4)	312		193		449		506
Commercial mortgage and other loans	2		6		8		(5)
Derivatives	(416)		222		(3,017)		(1,247)
OTTI losses on other invested assets recognized in earnings	0		(1)		(9)		(1)
Allowance for credit losses on other invested assets	0		N/A		0		N/A
Other net gains (losses)	1		39		22		44
Other	1		38		13		43
Subtotal	(101)		459		(2,547)		(703)
Investment results of other entities and operations(5)	4		44		117		(1)
Total — PFI excluding Closed Block Division	(97)		503		(2,430)		(704)
Related adjustments(6)	320		(172)		(316)		(178)
Realized investment gains (losses), net, and related adjustments(6)	223		331		(2,746)		(882)
Charges related to realized investment gains (losses), net	(70)		(92)		(353)		(149)
Realized investment gains (losses), net, and charges related to realized investment gains (losses), net and adjustments(6)	$	153	$	239	$	(3,099)	$	(1,031)
Closed Block Division:
Realized investment gains (losses), net:
Due to foreign exchange movements on securities approaching maturity(2)	$	(21)	$	(11)	$	(68)	$	(45)
Due to securities actively marketed for sale(2)	0		0		(9)		0
Due to credit or adverse conditions of the respective issuer(1)(3)	(6)		(6)		(6)		(12)
Allowance for credit losses on fixed maturities(1)(3)	(3)		N/A		(23)		N/A
Net gains (losses) on sales and maturities	121		185		329		241
Fixed maturity securities(4)	91		168		223		184
Commercial mortgage and other loans	2		0		2		0
Derivatives	(71)		182		49		275
OTTI losses on other invested assets recognized in earnings	0		0		0		0
Allowance for credit losses on other invested assets	0		N/A		0		N/A
Other net gains (losses)	(4)		0		(8)		(4)
Other	(4)		0		(8)		(4)
Subtotal — Closed Block Division	18		350		266		455
Consolidated PFI realized investment gains (losses), net	$	(79)	$	853	$	(2,164)	$	(249)

__________

(1)Represents circumstances where we believe credit events or other adverse conditions of the respective issuers have caused or will lead to a deficiency in the contractual cash flows related to the investment. The amount of the impairment or allowance recorded in earnings is the difference between the amortized cost of the debt security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment (2019) or allowance (2020).

(2)Represents the difference between the fair value of the debt security and the amortized cost at the time of the write-down.

(3)Beginning January 1, 2020, related to the implementation of ASU 2016-13, write-offs of credit adverse securities are reported as OTTI.

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(4)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.

(5)Includes “realized investment gains (losses), net” of our investment management operations.

(6)Prior period amounts have been updated to conform to current period presentation.

Three Month Comparison. Net gains on sales and maturities of fixed maturity securities were $329 million and $319 million for the third quarter of 2020 and 2019, respectively, primarily driven by the impact of foreign currency exchange rate movements on U.S. and Australian dollar-denominated securities that matured or were sold within our International Businesses segment and other sales of fixed maturity securities within our domestic segments driven by interest rate declines during the investment holding period.

Realized losses due to securities with credit or adverse conditions primarily reflected write-downs of restructured securities in the energy sector within corporate securities and foreign government securities along with other credit impairments related to securities that had liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers. These write-downs were largely offset by releases of the allowance for credit losses associated with certain of these securities. Fixed maturity credit impairments were $94 million in the third quarter of 2019 and were concentrated in the technology and utility sectors within corporate securities. These credit impairments were primarily related to securities with liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers.

Net realized losses on derivative instruments of $416 million for the third quarter of 2020 primarily included:

•$839 million of losses on capital hedges due to increases in equity indices;

•$289 million of losses on foreign currency hedges due to U.S. dollar depreciation versus the British pound, euro and Australian dollar; and

•$207 million of losses on interest rate derivatives due to increases in the swap and U.S. Treasury rates;

Partially offsetting these losses were:

•$883 million of gains on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts.

Net realized gains on derivative instruments of $222 million for the third quarter of 2019 primarily included:

•$880 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates;

•$451 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the euro and British pound; and

•$37 million of gains for fees earned on fee-based synthetic guaranteed investment contracts (“GICs”);

Partially offsetting these gains were:

•$1,136 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts; and

•$37 million of losses on capital hedges due to increases in equity indices.

For a discussion of living benefit guarantees and related hedge positions in our Individual Annuities segment, see “—Results of Operations by Segment—U.S. Businesses—U.S. Individual Solutions Division—Individual Annuities” above.

Related adjustments include the portions of “Realized investment gains (losses), net” that are included in adjusted operating income and the portions of “Other income (loss)” and “Net investment income” that are excluded from adjusted operating income. These adjustments are made to arrive at “Realized investment gains (losses), net, and related adjustments” which are excluded from adjusted operating income. Results for the third quarter of 2020 and 2019 reflected net related adjustments of positive $320 million and negative $172 million, respectively. Both periods’ results reflected changes in the fair value of equity securities as well as fixed income securities designated as trading, settlements on interest rate and currency derivatives and the impact of foreign currency exchange rate movements on certain non-local currency denominated assets and liabilities, for which the majority of the foreign currency exposure is hedged and offset in “Realized Investment gains (losses), net.”

Charges that relate to “Realized investment gains (losses), net” are also excluded from adjusted operating income and may be reflected as net charges or net benefits. Results for the third quarter of 2020 and 2019 reflected net related charges of $70

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million and $92 million, respectively. Both periods’ results were driven by the impact of derivative activity on the amortization of DAC, other costs and certain policyholder reserves.

Nine Month Comparison. Net gains on sales and maturities of fixed maturity securities were $784 million and $691 million for the first nine months of 2020 and 2019, respectively, primarily driven by the impact of foreign currency exchange rate movements on U.S. and Australian dollar-denominated securities that matured or were sold within our International Businesses segment and other sales of fixed maturity securities within our domestic segments from interest rate declines during the investment holding period.

The addition to the allowance for credit losses related to fixed maturity securities was $129 million in the first nine months of 2020 and was concentrated in the energy, communications and consumer cyclical sectors within corporate securities. This credit loss allowance was primarily related to securities with liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers. Fixed maturity credit impairments were $136 million in the first nine months of 2019 and were concentrated in the utility and technology sectors within corporate securities. These credit impairments were primarily related to securities with liquidity concerns, downgrades in credit, bankruptcy or other adverse financial conditions of the respective issuers.

Net realized losses on derivative instruments of $3,017 million for the first nine months of 2020 primarily included:

•$4,708 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts; and

•$1,071 million of losses on capital hedges due to increases in equity indices;

Partially offsetting these losses were:

•$2,000 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates;

•$608 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the British pound and due to USD interest rates declining more than foreign interest rates; and

•$102 million of gains for fees earned on fee-based synthetic GICs.

Net realized losses on derivative instruments of $1,247 million for the first nine months of 2019 primarily included:

•$3,555 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts; and

•$700 million of losses on capital hedges due to increases in equity indices;

Partially offsetting these losses were:

•$1,984 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates;

•$696 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the euro and British pound and Japanese yen appreciation;

•$109 million of gains for fees earned on fee-based synthetic GICs; and

•$108 million of gains on credit default swaps primarily due to credit spreads tightening.

For a discussion of living benefit guarantees and related hedge positions in our Individual Annuities segment, see “—Results of Operations by Segment—U.S. Businesses—U.S. Individual Solutions Division—Individual Annuities” above.

Results for the first nine months of 2020 and 2019 included net negative related adjustments of $316 million and $178 million, respectively. Both periods’ results reflected changes in the fair value of equity securities as well as fixed income securities designated as trading, settlements on interest rate and currency derivatives. Additionally, the results for the first nine months of 2019 included the impact of foreign currency exchange rate movements on certain non-local currency denominated assets and liabilities, for which the majority of the foreign currency exposure is hedged and offset in “Realized Investment gains (losses), net.”

Results for the first nine months of 2020 and 2019 reflected net related charges of $353 million and $149 million, respectively. Both periods’ results were driven by the impact of derivative activity on the amortization of DAC, other costs and certain policyholder reserves.

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Credit Losses

The level of credit losses generally reflects current and expected economic conditions and is expected to increase when economic conditions worsen and to decrease when economic conditions improve. Historically, the causes of credit losses have been specific to each individual issuer and have not directly resulted in credit losses to other securities within the same industry or geographic region. We may also realize additional credit and interest rate-related losses through sales of investments pursuant to our credit risk and portfolio management objectives.

We maintain separate monitoring processes for public and private fixed maturities and create watch lists to highlight securities that require special scrutiny and management. For private placements, our credit and portfolio management processes help ensure prudent controls over valuation and management. We have separate pricing and authorization processes to establish “checks and balances” for new investments. We apply consistent standards of credit analysis and due diligence for all transactions, whether they originate through our own in-house origination staff or through agents. Our regional offices closely monitor the portfolios in their regions. We set all valuation standards centrally, and we assess the fair value of all investments quarterly. Our public and private fixed maturity investment managers formally review all public and private fixed maturity holdings on a quarterly basis and more frequently when necessary to identify potential credit deterioration whether due to ratings downgrades, unexpected price variances and/or company or industry-specific concerns.

For LPs/LLCs accounted for using the equity method, the carrying value of these investments is written down or impaired to fair value when a decline in value is considered to be other-than-temporary. For additional information regarding our OTTI policies, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

COVID-19

A continued impact of COVID-19 on the global economy and corporate credit may result in losses and credit migration in our investment portfolio. Due to the highly uncertain nature of these conditions, it is not possible to estimate the overall impacts at this time. We believe our investment portfolio has been diligently constructed with a strong focus on ALM discipline, risk management, and capital preservation; and although certain industries will likely be more impacted by COVID-19 driven market conditions, we expect to benefit from our experience in managing highly specialized asset classes through multiple credit cycles. The following represents some of the sectors in our investment portfolio most impacted by COVID-19.

Energy Related Investments

As of September 30, 2020, PFI excluding the Closed Block division had energy related exposure with a market value of approximately $13 billion including a net unrealized gain of approximately $1 billion, which was reflected in AOCI. This $13 billion represented investments in public and private corporate fixed maturity securities (excluding trading securities) and was comprised of the midstream (41%), independent energy (25%), integrated energy (22%), oil field services (6%) and refining (6%) sub-sectors. As of September 30, 2020, the credit quality of energy sector fixed maturity securities was 79% investment grade and 21% below investment grade. Energy related investment realized losses were approximately $17 million, comprised of $59 million of write-downs, partially offset by a $42 million release of credit loss allowances for the three months ended September 30, 2020. Energy related investments realized losses were approximately $179 million, comprised of $114 million of write-downs and $65 million of additions to credit loss allowances for the nine months ended September 30, 2020. Our investments in the energy sector could experience future valuation declines or losses if energy prices maintain their recent levels or continue to decline for an extended period of time. Our assessment that securities are other-than temporarily impaired may change due to new developments, including those developments related to COVID-19.

Consumer Cyclical Related Investments

As of September 30, 2020, PFI excluding the Closed Block division had consumer cyclical related exposure with a market value of approximately $12 billion and a net unrealized gain of less than $1 billion, which was reflected in AOCI. This $12 billion represented investments in public and private corporate fixed maturity securities (excluding trading securities) and included exposures in retail (38%), automotive (17%), leisure (8%), restaurants (7%), gaming (4%) and lodging (2%). As of September 30, 2020, the credit quality of consumer cyclical sector fixed maturity securities was 77% investment grade and 23% below investment grade. The remaining exposure of less than $1 billion was comprised of private equity investments and real estate-related LPs/LLCs. For additional information regarding “—Retail Related Investments,” see below.

Retail Related Investments

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As of September 30, 2020, PFI excluding the Closed Block division had retail-related investments of approximately $13 billion consisting primarily of $6 billion of corporate fixed maturities of which 89% were investment grade (also included in “—Consumer Cyclical Related Investments”); $6 billion of commercial mortgage loans with a weighted-average loan-to-value ratio of approximately 50% and weighted-average debt service coverage ratio of 2.45 times; and $1 billion of real estate held through direct ownership and real estate-related LPs/LLCs. In addition, we held approximately $11 billion of commercial mortgage-backed securities, of which approximately 80% and 20% were rated AAA (super senior) and AA, respectively, and comprised of diversified collateral pools. Approximately 30% of the collateral pools were comprised of retail-related investments, with no pools solely collateralized by retail-related investments. For additional information regarding commercial mortgage-backed securities, see “—Fixed Maturity Securities—Fixed Maturity Securities Credit Quality” below.

Airline Related Investments

As of September 30, 2020, PFI excluding the Closed Block division had $0.1 billion of airline related corporate fixed maturities within the transportation sector of which 98% were investment grade.

General Account Investments of PFI excluding Closed Block Division

In the following sections, we provide details about our investment portfolio, excluding investments held in the Closed Block division. We believe the details of the composition of our investment portfolio excluding the Closed Block division are most relevant to an understanding of our operations that are pertinent to investors in Prudential Financial, Inc. because substantially all Closed Block division assets support obligations and liabilities relating to the Closed Block policies only. See Note 7 to the Unaudited Interim Consolidated Financial Statements for additional information on the Closed Block.

Fixed Maturity Securities

In the following sections, we provide details about our fixed maturity securities portfolio, which excludes fixed maturity securities classified as assets supporting experience-rated contractholder liabilities and classified as trading.

Fixed Maturity Securities and Unrealized Gains and Losses by Industry

The following table sets forth the composition of the portion of our fixed maturity, available-for-sale portfolio by industry category attributable to PFI excluding the Closed Block division and the associated gross unrealized gains and losses, as well as the allowance for credit losses, as of the dates indicated:

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	September 30, 2020										December 31, 2019
Industry(1)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses (5)		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Corporate securities:
Finance	$	36,035	$	4,344	$	130	$	0	$	40,249	$	34,710	$	2,796	$	85	$	37,421
Consumer non-cyclical	27,410		4,529		95		0		31,844		24,941		2,846		112		27,675
Utility	23,650		4,009		92		5		27,562		22,341		2,498		81		24,758
Capital goods	13,134		1,582		106		3		14,607		12,287		1,150		83		13,354
Consumer cyclical	10,949		1,286		109		26		12,100		10,871		994		45		11,820
Foreign agencies	5,226		896		45		0		6,077		5,649		928		10		6,567
Energy	12,086		1,047		319		65		12,749		12,922		1,126		186		13,862
Communications	5,949		1,206		53		30		7,072		5,916		939		34		6,821
Basic industry	5,974		768		26		0		6,716		5,866		497		38		6,325
Transportation	9,885		1,287		54		0		11,118		9,443		833		34		10,242
Technology	3,551		346		16		0		3,881		3,395		278		13		3,660
Industrial other	4,402		597		33		0		4,966		3,894		351		33		4,212
Total corporate securities	158,251		21,897		1,078		129		178,941		152,235		15,236		754		166,717
Foreign government(2)	90,335		16,188		191		0		106,332		97,880		20,658		63		118,475
Residential mortgage-backed(3)	2,764		220		1		0		2,983		2,955		154		1		3,108
Asset-backed	11,033		134		90		0		11,077		9,832		123		34		9,921
Commercial mortgage-backed	10,310		865		5		0		11,170		10,211		441		9		10,643
U.S. Government	26,064		9,431		26		0		35,469		24,938		4,511		94		29,355
State & Municipal	10,067		1,897		3		0		11,961		9,593		1,327		7		10,913
Total fixed maturities, available-for-sale(4)(5)	$	308,824	$	50,632	$	1,394	$	129	$	357,933	$	307,644	$	42,450	$	962	$	349,132

__________ 

(1)Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.

(2) As of September 30, 2020 and December 31, 2019, based on amortized cost, 86% and 76%, respectively, represent Japanese government bonds held by our Japanese insurance operations with no other individual country representing more than 4% and 11% of the balance, respectively.

(3) As of September 30, 2020 and December 31, 2019, based on amortized cost, 97% and more than 99% were rated A or higher, respectively.

(4) Excluded from the table above are securities held outside the general account in other entities and operations. For additional information regarding investments held outside the general account, see “—Invested Assets of Other Entities and Operations” below.

(5) Effective January 1, 2020, due to the implementation of ASU 2016-13, an allowance for credit losses is now presented for available-for-sale securities. Prior period amounts have been updated to exclude held-to-maturity securities to conform to current period presentation.

The increase in net unrealized gains from December 31, 2019 to September 30, 2020 was primarily due to a decrease in U.S. interest rates.

The following table sets forth the composition of the portion of our fixed maturity, held-to-maturity portfolio by industry category attributable to PFI excluding the Closed Block division and the associated gross unrealized gains and losses, as well as the allowance for credit losses, as of the dates indicated:

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	September 30, 2020										December 31, 2019
Industry(1)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Corporate securities:
Finance	$	637	$	66	$	0	$	703	$	9	$	628	$	64	$	0	$	692
Foreign agencies	0		0		0		0		0		21		0		0		21
Basic industry	85		2		0		87		0		83		2		0		85
Total corporate securities	722		68		0		790		9		732		66		0		798
Foreign government(2)	915		265		0		1,180		0		891		282		0		1,173
Residential mortgage-backed(3)	273		21		0		294		0		310		21		0		331
Total fixed maturities, held-to-maturity(4)	$	1,910	$	354	$	0	$	2,264	$	9	$	1,933	$	369	$	0	$	2,302

__________ 

(1)Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.

(2)As of both September 30, 2020 and December 31, 2019, based on amortized cost, 98% represent Japanese government bonds held by our Japanese insurance operations.

(3)As of September 30, 2020 and December 31, 2019, based on amortized cost, all were rated A or higher.

(4)Excluded from the table above are securities held outside the general account in other entities and operations. For additional information regarding investments held outside the general account, see “—Invested Assets of Other Entities and Operations” below.

Fixed Maturity Securities Credit Quality

The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the investments of insurers for statutory reporting purposes and assigns fixed maturity securities to one of six categories called “NAIC Designations.” In general, NAIC Designations of “1” highest quality, or “2” high quality, include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”) or BBB- or higher by Standard & Poor’s Rating Services (“S&P”). NAIC Designations of “3” through “6” generally include fixed maturities referred to as below investment grade, which include securities rated Ba1 or lower by Moody’s and BB+ or lower by S&P. The NAIC Designations for commercial mortgage-backed securities and non-agency residential mortgage-backed securities, including our asset-backed securities collateralized by sub-prime mortgages, are based on security level expected losses as modeled by an independent third-party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized.

As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the fixed maturity portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date. Pending receipt of SVO designations, the categorization of these securities by NAIC Designation is based on the expected ratings indicated by internal analysis.

Investments of our international insurance companies are not subject to NAIC guidelines. Investments of our Japanese insurance operations are regulated locally by the Financial Services Agency (“FSA”), an agency of the Japanese government. The FSA has its own investment quality criteria and risk control standards. Our Japanese insurance companies comply with the FSA’s credit quality review and risk monitoring guidelines. The credit quality ratings of the investments of our Japanese insurance companies are based on ratings assigned by nationally recognized credit rating agencies, including Moody’s and S&P, or rating equivalents based on ratings assigned by Japanese credit ratings agencies.

The following table sets forth our fixed maturity, available-for-sale portfolio by NAIC Designation or equivalent rating attributable to PFI excluding the Closed Block division, as of the dates indicated:

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	September 30, 2020										December 31, 2019
NAIC Designation(1)(2)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(3)		Allowance for Credit Losses(7)		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(3)		Fair Value
	(in millions)
1	$	224,784	$	41,261	$	436	$	0	$	265,609	$	232,039	$	35,923	$	287	$	267,675
2	65,941		8,416		376		0		73,981		59,114		5,198		384		63,928
Subtotal High or Highest Quality Securities(4)	290,725		49,677		812		0		339,590		291,153		41,121		671		331,603
3	11,289		673		272		10		11,680		10,033		854		93		10,794
4	4,935		147		186		19		4,877		4,914		248		98		5,064
5	1,484		94		86		22		1,470		1,280		196		83		1,393
6	391		41		38		78		316		264		31		17		278
Subtotal Other Securities(5)(6)	18,099		955		582		129		18,343		16,491		1,329		291		17,529
Total fixed maturities, available-for-sale(7)	$	308,824	$	50,632	$	1,394	$	129	$	357,933	$	307,644	$	42,450	$	962	$	349,132

__________ 

(1)Reflects equivalent ratings for investments of the international insurance operations.

(2)Includes, as of September 30, 2020 and December 31, 2019, 750 securities with amortized cost of $3,551 million (fair value, $3,639 million) and 796 securities with amortized cost of $3,073 million (fair value, $3,130 million), respectively, that have been categorized based on expected NAIC Designations pending receipt of SVO ratings.

(3)As of September 30, 2020, includes gross unrealized losses of $395 million on public fixed maturities and $187 million on private fixed maturities considered to be other than high or highest quality and, as of December 31, 2019, includes gross unrealized losses of $188 million on public fixed maturities and $103 million on private fixed maturities considered to be other than high or highest quality.

(4)On an amortized cost basis, as of September 30, 2020, includes $246,889 million of public fixed maturities and $43,836 million of private fixed maturities and, as of December 31, 2019, includes $248,179 million of public fixed maturities and $42,974 million of private fixed maturities.

(5)On an amortized cost basis, as of September 30, 2020, includes $9,291 million of public fixed maturities and $8,808 million of private fixed maturities and, as of December 31, 2019, includes $9,049 million of public fixed maturities and $7,442 million of private fixed maturities.

(6)On an amortized cost basis, as of September 30, 2020, securities considered below investment grade based on lowest of external rating agency ratings total $18,150 million, or 6% of the total fixed maturities, and include securities considered high or highest quality by the NAIC based on the rules described above.

(7)Effective January 1, 2020, due to the implementation of ASU 2016-13, an allowance for credit losses is now presented for available-for-sale securities. Prior period amounts have been updated to exclude held-to-maturity securities to conform to current period presentation.

The following table sets forth our fixed maturity, held-to-maturity portfolio by NAIC Designation or equivalent rating attributable to PFI excluding the Closed Block division, as of the dates indicated:

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	September 30, 2020										December 31, 2019
NAIC Designation(1)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(2)		Fair Value		Allowance for Credit Losses		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(2)		Fair Value
	(in millions)
1	$	1,715	$	332	$	0	$	2,047	$	5	$	1,743	$	351	$	0	$	2,094
2	195		22		0		217		4		190		18		0		208
Subtotal High or Highest Quality Securities(3)	1,910		354		0		2,264		9		1,933		369		0		2,302
3	0		0		0		0		0		0		0		0		0
4	0		0		0		0		0		0		0		0		0
5	0		0		0		0		0		0		0		0		0
6	0		0		0		0		0		0		0		0		0
Subtotal Other Securities	0		0		0		0		0		0		0		0		0
Total fixed maturities, held-to-maturity	$	1,910	$	354	$	0	$	2,264	$	9	$	1,933	$	369	$	0	$	2,302

__________ 

(1)Reflects equivalent ratings for investments of the international insurance operations.

(2)As of both September 30, 2020 and December 31, 2019, there were no gross unrealized losses on public fixed maturities and private fixed maturities considered to be other than high or highest quality.

(3)On an amortized cost basis, as of September 30, 2020, includes $1,698 million of public fixed maturities and $212 million of private fixed maturities and, as of December 31, 2019, includes $1,705 million of public fixed maturities and $228 million of private fixed maturities.

Asset-Backed and Commercial Mortgage-Backed Securities

The following table sets forth the amortized cost and fair value of asset-backed and commercial mortgage-backed securities within our fixed maturity available-for-sale portfolio attributable to PFI excluding the Closed Block division by credit quality, as of the dates indicated:

	September 30, 2020								December 31, 2019
	Asset-Backed Securities(2)				Commercial Mortgage-Backed Securities(3)				Asset-Backed Securities(2)				Commercial Mortgage-Backed Securities(3)
Lowest Rating Agency Rating(1)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
AAA	$	10,529	$	10,490	$	8,286	$	8,910	$	9,381	$	9,377	$	8,128	$	8,454
AA	350		363		2,011		2,247		288		304		2,068		2,173
A	35		36		4		5		5		6		6		7
BBB	3		3		9		8		12		12		9		9
BB and below	116		185		0		0		146		222		0		0
Total(4)	$	11,033	$	11,077	$	10,310	$	11,170	$	9,832	$	9,921	$	10,211	$	10,643

__________ 

(1)The table above provides ratings as assigned by nationally recognized rating agencies as of September 30, 2020, including S&P, Moody’s, Fitch Ratings, Inc. (“Fitch”) and Morningstar, Inc. (“Morningstar”).

(2)Includes collateralized loan obligations (“CLOs”), credit-tranched securities collateralized by auto loans, education loans, credit card and other asset types.

(3)As of both September 30, 2020 and December 31, 2019, based on amortized cost, 97% were securities with vintages of 2013 or later.

(4)Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading,” as well as securities held outside the general account in other entities and operations.

Included in “Asset-backed securities” above are investments in CLOs. The following table sets forth information pertaining to these investments in CLOs within our fixed maturity available-for-sale portfolio attributable to PFI excluding the Closed Block division, as of the dates indicated:

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	September 30, 2020				December 31, 2019
	Collateralized Loan Obligations
Lowest Rating Agency Rating(1)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
AAA	$	8,834	$	8,759	$	7,294	$	7,271
AA	0		0		0		0
A	0		0		0		0
BBB	0		0		0		0
BB and below	0		0		0		0
Total(2)(3)	$	8,834	$	8,759	$	7,294	$	7,271

__________ 

(1)The table above provides ratings as assigned by nationally recognized rating agencies as of September 30, 2020, including S&P, Moody’s, Fitch and Morningstar.

(2)There was no allowance for credit losses as of September 30, 2020.

(3)Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading,” as well as securities held outside the general account in other entities and operations.

Assets Supporting Experience-Rated Contractholder Liabilities

For information regarding the composition of “Assets supporting experience-rated contractholder liabilities,” see Note 3 to the Unaudited Interim Consolidated Financial Statements.

Commercial Mortgage and Other Loans

Investment Mix

    The following table sets forth the composition of our commercial mortgage and other loans portfolio attributable to PFI excluding the Closed Block division, as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Commercial mortgage and agricultural property loans	$	54,453	$	53,928
Uncollateralized loans	723		656
Residential property loans	104		124
Other collateralized loans	114		65
Total recorded investment gross of allowance(1)	55,394		54,773
Allowance for credit losses	(208)		(102)
Total net commercial mortgage and other loans(2)	$	55,186	$	54,671

__________

(1)As a percentage of recorded investment gross of allowance, more than 99% of these assets were current as of both September 30, 2020 and December 31, 2019.

(2)Excluded from the table above are commercial mortgage and other loans held outside the general account in other entities and operations. For additional information regarding commercial mortgage and other loans held outside the general account, see “—Invested Assets of Other Entities and Operations” below.

We originate commercial mortgage and agricultural property loans using a dedicated sales and underwriting staff through our various regional offices in the U.S. and international offices primarily in London and Tokyo. All loans are underwritten consistently to our standards using a proprietary quality rating system that has been developed from our industry experience in real estate and mortgage lending.

Uncollateralized loans primarily represent corporate loans which do not meet the definition of a security under authoritative accounting guidance.

Residential property loans primarily include Japanese recourse loans. Upon default of these recourse loans, we can make a claim against the personal assets of the property owner, in addition to the mortgaged property. These loans are also backed by third-party guarantors.

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Other collateralized loans include consumer loans.

Composition of Commercial Mortgage and Agricultural Property Loans

Our commercial mortgage and agricultural property loan portfolio strategy emphasizes diversification by property type and geographic location. The following tables set forth the breakdown of the gross carrying values of commercial mortgage and agricultural property loans attributable to PFI excluding the Closed Block division by geographic region and property type, as of the dates indicated:

	September 30, 2020				December 31, 2019
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
	($ in millions)
Commercial mortgage and agricultural property loans by region:
U.S. Regions(1):
Pacific	$	19,015	34.9	%	$	18,061	33.5	%
South Atlantic	8,491		15.6		8,943		16.6
Middle Atlantic	6,428		11.8		6,664		12.4
East North Central	3,226		5.9		3,413		6.3
West South Central	5,518		10.1		5,439		10.1
Mountain	2,273		4.2		2,442		4.5
New England	1,725		3.2		1,902		3.5
West North Central	477		0.9		454		0.8
East South Central	768		1.4		622		1.2
Subtotal-U.S.	47,921		88.0		47,940		88.9
Europe	4,111		7.6		3,781		7.0
Asia	982		1.8		886		1.6
Other	1,439		2.6		1,321		2.5
Total commercial mortgage and agricultural property loans	$	54,453	100.0	%	$	53,928	100.0	%

__________

(1)Regions as defined by the United States Census Bureau.

	September 30, 2020				December 31, 2019
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
	($ in millions)
Commercial mortgage and agricultural property loans by property type:
Industrial	$	12,610	23.1	%	$	12,224	22.7	%
Retail	5,993		11.0		6,524		12.1
Office	10,647		19.5		11,203		20.8
Apartments/Multi-Family	15,497		28.5		15,176		28.1
Agricultural properties	3,263		6.0		2,856		5.3
Hospitality	2,048		3.8		2,066		3.8
Other	4,395		8.1		3,879		7.2
Total commercial mortgage and agricultural property loans	$	54,453	100.0	%	$	53,928	100.0	%

Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage and agricultural property loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds

140

the collateral value. The debt service coverage ratio compares a property’s net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan’s current debt payments. A debt service coverage ratio greater than 1.0 times indicates an excess of net operating income over the debt service payments.

As of September 30, 2020, our commercial mortgage and agricultural property loans attributable to PFI excluding the Closed Block division had a weighted-average debt service coverage ratio of 2.47 times and a weighted-average loan-to-value ratio of 56%. As of September 30, 2020, 95% of commercial mortgage and agricultural property loans were fixed rate loans. For those commercial mortgage and agricultural property loans that were originated in 2020, the weighted-average debt service coverage ratio was 2.59 times, and the weighted-average loan-to-value ratio was 64%.

The values utilized in calculating these loan-to-value ratios are developed as part of our periodic review of the commercial mortgage and agricultural property loan portfolio, which includes an internal evaluation of the underlying collateral value. Our periodic review also includes a credit quality re-rating process, whereby we update the internal quality rating originally assigned at underwriting based on the proprietary quality rating system mentioned above. As discussed below, the internal credit quality rating is a key input in determining our allowance for credit losses.

For loans with collateral under construction, renovation or lease-up, a stabilized value and projected net operating income are used in the calculation of the loan-to-value and debt service coverage ratios. Our commercial mortgage and agricultural property loan portfolio included $2.4 billion and $1.8 billion of such loans as of September 30, 2020 and December 31, 2019, respectively. All else being equal, these loans are inherently riskier than those collateralized by properties that have already stabilized. As of September 30, 2020 and December 31, 2019, there were $1 million and $0 million, respectively, of allowances related to these loans. In addition, these unstabilized loans are included in the calculation of our portfolio reserve, as discussed below.

The following table sets forth the gross carrying value of our commercial mortgage and agricultural property loans attributable to PFI excluding the Closed Block division by loan-to-value and debt service coverage ratios, as of the date indicated: 

	September 30, 2020
	Debt Service Coverage Ratio
	> 1.2x		1.0x to < 1.2x		< 1.0x		Total Commercial Mortgage and Agricultural Property Loans
Loan-to-Value Ratio	(in millions)
0%-59.99%	$	27,912	$	743	$	102	$	28,757
60%-69.99%	15,393		1,078		139		16,610
70%-79.99%	8,136		727		73		8,936
80% or greater	7		141		2		150
Total commercial mortgage and agricultural property loans	$	51,448	$	2,689	$	316	$	54,453

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The following table sets forth the breakdown of our commercial mortgage and agricultural property loans attributable to PFI excluding the Closed Block division by year of origination, as of the date indicated:

	September 30, 2020
	Gross Carrying Value		% of Total
Year of Origination	($ in millions)
2020	$	3,518	6.5	%
2019	9,971		18.3
2018	8,516		15.6
2017	7,159		13.1
2016	6,294		11.6
2015	5,613		10.3
2014	4,500		8.3
2013 & Prior	8,882		16.3
Total commercial mortgage and agricultural property loans	$	54,453	100.0	%

Commercial Mortgage and Other Loans Quality

The commercial mortgage and other loans portfolio is monitored on an ongoing basis. If certain criteria are met, loans are assigned to either of the following “watch list” categories:

(1) “Closely Monitored,” which includes a variety of considerations, such as when loan metrics fall below acceptable levels, the borrower is not cooperative or has requested a material modification, or the portfolio manager has directed a change in category; or

(2) “Not in Good Standing,” which includes loans in default or with a high probability of loss of principal, such as when the loan is in the process of foreclosure or the borrower is in bankruptcy.

Our workout and special servicing professionals manage the loans on the watch list.

The current expected credit loss (“CECL”) allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, uncollateralized loans, other collateralized loans and residential property loans.

For commercial mortgage and agricultural mortgage loans, the allowance is calculated using an internally developed CECL model.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance for other collateralized and uncollateralized loans carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans.

The following table sets forth the change in allowance for credit losses for our commercial mortgage and other loans portfolio, as of the dates indicated:

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	September 30, 2020		December 31, 2019
	(in millions)
Allowance, beginning of year	$	102	$	106
Cumulative effect of adoption of ASU 2016-13	101		0
Addition to (release of) allowance for credit losses	2		(4)
Recoveries of amounts previously written-down	0		N/A
Other	3		0
Allowance, end of period	$	208	$	102

The allowance for credit losses as of September 30, 2020 increased compared to December 31, 2019, primarily due to the cumulative effect of adopting ASU 2016-13.

Equity Securities

The equity securities attributable to PFI excluding the Closed Block division consist principally of investments in Common and Preferred Stock of publicly-traded companies, as well as mutual fund shares. The following table sets forth the composition of our equity securities portfolio and the associated gross unrealized gains and losses, as of the dates indicated:

	September 30, 2020								December 31, 2019
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Mutual funds	$	937	$	294	$	7	$	1,224	$	817	$	258	$	1	$	1,074
Other Common Stocks	2,188		921		108		3,001		2,429		1,091		57		3,463
Non-redeemable Preferred Stocks	54		22		6		70		51		3		5		49
Total equity securities, at fair value(1)	$	3,179	$	1,237	$	121	$	4,295	$	3,297	$	1,352	$	63	$	4,586

__________  

(1)Amounts presented exclude investments in private equity and hedge funds and other investments which are reported in “Other invested assets.”

The net change in unrealized gains (losses) from equity securities attributable to PFI excluding Closed Block division still held at period end, recorded within “Other income (loss),” was $213 million and $80 million during the three months ended September 30, 2020 and 2019, respectively, and $(173) million and $410 million during the nine months ended September 30, 2020 and 2019, respectively.

Other Invested Assets

The following table sets forth the composition of “Other invested assets” attributable to PFI excluding the Closed Block division, as of the dates indicated:

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	September 30, 2020		December 31, 2019
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	3,191	$	2,740
Hedge funds	1,683		1,362
Real estate-related	854		792
Subtotal equity method	5,728		4,894
Fair value:
Private equity	994		990
Hedge funds	1,090		1,233
Real estate-related	44		50
Subtotal fair value	2,128		2,273
Total LPs/LLCs	7,856		7,167
Real estate held through direct ownership(1)	1,272		1,350
Derivative instruments	165		73
Other(2)	718		620
Total other invested assets	$	10,011	$	9,210

__________ 

(1)As of September 30, 2020 and December 31, 2019, real estate held through direct ownership had mortgage debt of $436 million and $537 million, respectively.

(2)Primarily includes leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding our holdings in the Federal Home Loan Banks of New York and Boston, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Invested Assets of Other Entities and Operations

“Invested Assets of Other Entities and Operations” presented below includes investments held outside the general account and primarily represents investments associated with our investment management operations and derivative operations. Our derivative operations act on behalf of affiliates primarily to manage interest rate, foreign currency, credit and equity exposures. Assets within our investment management operations that are managed for third-parties and those assets classified as “Separate account assets” on our balance sheet are not included.

	September 30, 2020		December 31, 2019
	(in millions)
Fixed maturities:
Public, available-for-sale, at fair value(1)	$	635	$	587
Private, available-for-sale, at fair value	1		1
Fixed maturities, trading, at fair value(1)	1,125		1,161
Equity securities, at fair value	656		691
Commercial mortgage and other loans, at book value(2)	936		259
Other invested assets(1)	3,492		3,062
Short-term investments	36		17
Total investments	$	6,881	$	5,778

__________ 

(1)As of September 30, 2020 and December 31, 2019, balances include investments in CLOs with fair value of $501 million and $438 million, respectively.

(2)Book value is generally based on unpaid principal balance, net of any allowance for credit losses, or at fair value, when the fair value option has been elected.

Fixed Maturities, Trading

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“Fixed maturities, trading, at fair value” are primarily related to assets associated with consolidated VIEs for which the Company is the investment manager. The assets of the consolidated VIEs are generally offset by liabilities for which the fair value option has been elected. For additional information on these consolidated VIEs, see Note 4 to the Unaudited Interim Consolidated Financial Statements.

Commercial Mortgage and Other Loans

Our investment management operations include our commercial mortgage operations, which provide mortgage origination, investment management and servicing for our general account, institutional clients, the Federal Housing Administration and government-sponsored entities such as Fannie Mae and Freddie Mac.

The mortgage loans of our commercial mortgage operations are included in “Commercial mortgage and other loans.” Derivatives and other hedging instruments related to our commercial mortgage operations are primarily included in “Other invested assets.”

Other Invested Assets

“Other invested assets” primarily include assets of our derivative operations used to manage interest rate, foreign currency, credit, and equity exposures.

Furthermore, other invested assets include strategic investments made as part of our investment management operations. We make these strategic investments in real estate, as well as fixed income, public equity and real estate securities, including controlling interests. Certain of these investments are made primarily for purposes of co-investment in our managed funds and structured products. Other strategic investments are made with the intention to sell or syndicate to investors, including our general account, or for placement in funds and structured products that we offer and manage (seed investments). As part of our investment management operations, we also make loans to our managed funds that are secured by equity commitments from investors or assets of the funds. Other invested assets also include certain assets in consolidated investment funds where the Company is deemed to exercise control over the funds.

Liquidity and Capital Resources

Overview

Liquidity refers to the ability to generate sufficient cash resources to meet the payment obligations of the Company. Capital refers to the long-term financial resources available to support the operations of our businesses, fund business growth, and provide a cushion to withstand adverse circumstances. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of our businesses, general economic conditions and our access to the capital markets and the alternate sources of liquidity and capital described herein. The principles of our liquidity and capital management framework are described in an enterprise wide policy that is reviewed and approved by our Board.

Our businesses are subject to comprehensive regulation and supervision by domestic and international regulators. These regulations currently include requirements (many of which are the subject of ongoing rule-making) relating to capital, leverage, liquidity, stress-testing, overall risk management, credit exposure reporting and credit concentration. For information on these regulatory initiatives and their potential impact on us, see “Business—Regulation” and “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019.

COVID-19 and Related Market Disruptions

Beginning in the first quarter of 2020, broad market concerns over the impact of COVID-19 have led to significant volatility and disruptions in the global economy and financial markets. In the first nine months of the year we took the following significant management actions that impacted our liquidity and capital position, including in response to this macro environment and the global pandemic:

•We executed transactions to reduce our ongoing financing costs in August by issuing $1.3 billion of junior subordinated notes at interest rates of 3.70% and 4.125% and with maturities ranging from 2050 to 2060 and using the proceeds to redeem in September our $710 million 5.70% junior subordinated notes due in 2053 and our $575 million 5.75% junior subordinated notes due in 2052;

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•In May, we augmented our alternative sources of liquidity by entering into a facility agreement with a Delaware trust, pursuant to which Prudential Financial may issue and sell to the trust at any time over a ten-year period up to $1.5 billion of 2.850% senior notes due May 15, 2030 and receive in exchange a corresponding amount of U.S. Treasury securities. The facility agreement is similar to our existing put option agreement that allows us to issue up to $1.5 billion of senior notes to a trust, which we established in 2013 and expires in 2023;

•We suspended Common Stock repurchases under our existing repurchase authorization beginning April 1, 2020, after repurchasing $500 million of shares of Prudential Financial’s Common Stock in the first quarter of 2020. We do not intend to resume share repurchases this year as the duration and severity of the pandemic and its effect on the economy remain uncertain. We will evaluate the resumption of share repurchases as informed by the market environment and any alternative opportunities for capital deployment;

•In March, we issued $1.5 billion of senior notes, with maturities ranging from 2026 to 2040, for general corporate purposes, including pre-funding part of our senior notes maturing through 2021. Of these senior notes, $500 million were issued in the form of “green bonds,” where proceeds are allocated to existing or future investments in assets, businesses or projects that provide environmental benefits;

•In March, Prudential Legacy Insurance Company of New Jersey issued $800 million of surplus notes under its $4 billion reserve financing facility to enhance the statutory surplus of the Closed Block. This facility, established in 2015, is intended to alleviate any temporary impact to the Closed Block’s surplus due to the timing difference between the mark to market on assets and the decision on the level of the policyholder dividend;

•We executed additional capital hedges that protect the capital position of our U.S. insurance subsidiaries against additional declines in the equity markets; and

•We accelerated our product diversification strategy and repriced certain products, which are expected to support the capital position of our insurance subsidiaries over time.

Liquidity. The Company continues to operate with significant liquid resources and maintains access to substantial alternative sources of liquidity, such as committed credit facilities, membership in the Federal Home Loan Banks, commercial paper programs, and agreements that allow us to issue senior debt to trust entities. As of September 30, 2020, Prudential Financial had highly liquid assets of $6.1 billion, excluding the net borrowings from an intercompany liquidity account. Nevertheless, adverse developments related to COVID-19 and associated market dislocations could strain our existing liquidity. For example, capital or liquidity needs at our subsidiaries resulting from market conditions or business operations could require us to use our highly liquid assets or tap alternative sources of liquidity, and our access to traditional funding sources, such as commercial paper borrowings, could become limited due to market conditions. Any need to increase the use of our alternative sources of liquidity may result in increased financial leverage on our balance sheet and negatively impact our credit and financial strength ratings or ratings outlooks.

Capital. As of September 30, 2020, all of our significant insurance subsidiaries maintained capital levels consistent with their ratings targets. However, market conditions could negatively impact the statutory capital of our insurance companies and constrain our overall capital flexibility. For example, adverse market conditions may lead to increased defaults and/or further deterioration in the credit quality or fair values of our investment portfolio, which would negatively impact the statutory capital of our insurance subsidiaries. Adverse market conditions could require us to take additional management actions for our insurance subsidiaries to maintain capital consistent with their ratings objectives, which may include redeploying financial resources from internal sources or using available external sources of capital or seeking additional sources.

Liquidity and Capital Risk Management. Effective and prudent liquidity and capital management is a priority across the organization. Management monitors the liquidity of Prudential Financial and its subsidiaries on a daily basis and projects borrowing and capital needs over a multi-year time horizon. We use a Risk Appetite Framework (“RAF”) to ensure that all risks taken across the Company align with our capacity and willingness to take those risks. The RAF provides a dynamic assessment of capital and liquidity stress impacts, including scenarios similar to, and more severe than, those occurring due to COVID-19, and is intended to ensure that sufficient resources are available to absorb those impacts. We believe that our capital and liquidity resources are sufficient to satisfy the capital and liquidity requirements of Prudential Financial and its subsidiaries.

Capital

The primary components of the Company’s capitalization consist of equity and outstanding capital debt, including junior subordinated debt. As shown in the table below, as of September 30, 2020, the Company had $50.2 billion in capital, all of which was available to support the aggregate capital requirements of its businesses and its Corporate and Other operations. Based on our assessment of these businesses and operations, we believe this level of capital is consistent with our ratings targets.

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	September 30, 2020		December 31, 2019
	(in millions)
Equity(1)	$	36,216	$	39,076
Junior subordinated debt (including hybrid securities)	7,611		7,575
Other capital debt	6,355		7,001
Total capital	$	50,182	$	53,652

__________

(1)Amounts attributable to Prudential Financial, excluding AOCI.

We manage PICA, The Prudential Life Insurance Company, Ltd. (“Prudential of Japan”), Gibraltar Life, and other significant insurance subsidiaries to regulatory capital levels consistent with our “AA” ratings targets. We utilize the risk-based capital (“RBC”) ratio as a primary measure of the capital adequacy of our domestic insurance subsidiaries and the solvency margin ratio as a primary measure of the capital adequacy of our Japanese insurance subsidiaries.

The table below presents the RBC ratios of our most significant domestic insurance subsidiaries as of December 31, 2019, the most recent statutory fiscal year-end and RBC reporting date for these subsidiaries.

	Ratio(1)
PICA(2)	411	%
Prudential Annuities Life Assurance Corporation (“PALAC”)	484	%
Composite Major U.S. Insurance Subsidiaries(3)	426	%

__________ 

(1)The RBC ratio calculations are intended to assist insurance regulators in measuring an insurer’s solvency and ability to pay future claims. The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities, but is available to the public.

(2)Includes Prudential Retirement Insurance and Annuity Company (“PRIAC”), Pruco Life Insurance Company (“Pruco Life”), Pruco Life Insurance Company of New Jersey (“PLNJ”), which is a subsidiary of Pruco Life, and Prudential Legacy Insurance Company of New Jersey (“PLIC”).

(3)Includes PICA and its subsidiaries, as noted above, and PALAC. Composite RBC is not reported to regulators and is based on the summation of total adjusted capital and risk charges for the included companies as determined under statutory accounting and RBC guidance to calculate a composite numerator and denominator, respectively, for purposes of calculating the composite ratio.

The table below presents the solvency margin ratios of our most significant international insurance subsidiaries as of June 30, 2020, the most recent date for which this information is available.

	Ratio
Prudential of Japan consolidated(1)	883	%
Gibraltar Life consolidated(2)	920	%

__________ 

(1)Includes Prudential Trust Co., Ltd., a subsidiary of Prudential of Japan.

(2)Includes Prudential Gibraltar Financial Life Insurance Co., Ltd. (“PGFL”), a subsidiary of Gibraltar Life.

All of our domestic and significant international insurance subsidiaries have capital levels that substantially exceed the minimum level required by applicable insurance regulations. However, market conditions could negatively impact the statutory capital of our insurance companies and constrain our overall capital flexibility. Adverse market conditions could require us to take additional management actions for our insurance subsidiaries to maintain capital consistent with their ratings objectives, which may include redeploying financial resources from internal sources or using available external sources of capital or seeking additional sources. Our regulatory capital levels also may be affected in the future by changes to the applicable regulations, proposals for which are currently under consideration by both domestic and international insurance regulators. For additional information on the calculation of RBC and solvency margin ratios, as well as regulatory minimums, see Note 19 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Captive Reinsurance Companies

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital—Captive Reinsurance Companies” included in our Annual Report on Form 10-K for the year ended December 31, 2019, for a discussion of our use of captive reinsurance companies. 

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Shareholder Distributions

Share Repurchase Program and Shareholder Dividends

In December 2019, the Board authorized the Company to repurchase at management’s discretion up to $2.0 billion of its outstanding Common Stock during the period from January 1, 2020 through December 31, 2020. We suspended Common Stock repurchases under this authorization beginning April 1, 2020, after purchasing $500 million of shares of Prudential Financial’s Common Stock in the first quarter of 2020. We do not intend to resume share repurchases this year as the duration and severity of the pandemic and its effect on the economy remain uncertain. We will evaluate the resumption of share repurchases as informed by the market environment and any alternative opportunities for capital deployment.

In general, the timing and amount of share repurchases are determined by management based on market conditions and other considerations, including any increased capital needs of our businesses due to, among other things, credit migration and losses in our investment portfolio, changes in regulatory capital requirements and opportunities for growth and acquisitions. Repurchases may be executed in the open market, through derivative, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) under the Securities Exchange Act of 1934.

The following table sets forth information about declarations of Common Stock dividends, as well as repurchases of shares of Prudential Financial’s Common Stock, for the nine months ended September 30, 2020.

	Dividend Amount				Shares Repurchased
Three months ended:	Per Share		Aggregate		Shares	Total Cost
	(in millions, except per share data)
March 31, 2020	$	1.10	$	445	6.7	$	500
June 30, 2020	$	1.10	$	441	0.0	$	0
September 30, 2020	$	1.10	$	441	0.0	$	0

Liquidity

Liquidity management and stress testing are performed on a legal entity basis as the ability to transfer funds between subsidiaries is limited due in part to regulatory restrictions. Liquidity needs are determined through daily and quarterly cash flow forecasting at the holding company and within our operating subsidiaries. We seek to maintain a minimum balance of highly liquid assets to ensure that adequate liquidity is available at Prudential Financial to cover fixed expenses in the event that we experience reduced cash flows from our operating subsidiaries at a time when access to capital markets is also not available.

We seek to mitigate the risk of having limited or no access to financing due to stressed market conditions by generally pre-funding debt in advance of maturity. During the first nine months of 2020, we issued $1.5 billion of senior notes, of which $1 billion were issued for general corporate purposes, including pre-funding in part our senior notes maturing through 2021. We mitigate the refinancing risk associated with our debt that is used to fund operating needs by matching the term of debt with the assets financed. To ensure adequate liquidity in stress scenarios, stress testing is performed for our major operating subsidiaries. We seek to further mitigate liquidity risk by maintaining our access to alternative sources of liquidity, as discussed below.

Liquidity of Prudential Financial

The principal sources of funds available to Prudential Financial, the parent holding company, are dividends, returns of capital and loans from subsidiaries, and proceeds from debt issuances and certain stock-based compensation activity. These sources of funds may be supplemented by Prudential Financial’s access to the capital markets as well as the “—Alternative Sources of Liquidity” described below.

The primary uses of funds at Prudential Financial include servicing debt, making capital contributions and loans to subsidiaries, making acquisitions, paying declared shareholder dividends and repurchasing outstanding shares of Common Stock executed under authority from the Board.

As of September 30, 2020, Prudential Financial had highly liquid assets with a carrying value totaling $6,712 million, an increase of $1,608 million from December 31, 2019. Highly liquid assets predominantly include cash, short-term investments, U.S. Treasury securities, obligations of other U.S. government authorities and agencies, and/or foreign government bonds. We maintain an intercompany liquidity account that is designed to optimize the use of cash by facilitating the lending and borrowing of funds between Prudential Financial and its subsidiaries on a daily basis. Excluding the net borrowings from this intercompany liquidity account, Prudential Financial had highly liquid assets of $6,089 million as of September 30, 2020, an increase of $2,028 million from December 31, 2019.

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The following table sets forth Prudential Financial’s principal sources and uses of highly liquid assets, excluding net borrowings from our intercompany liquidity account, for the periods indicated.

	Nine Months Ended September 30,
	2020		2019 (1)
	(in millions)
Highly Liquid Assets, beginning of period	$	4,061	$	5,548
Dividends and/or returns of capital from subsidiaries(2)	2,821		2,289
Affiliated (borrowings)/loans - (capital activities)(3)	(668)		818
Capital contributions to subsidiaries(4)	(85)		(268)
Total Business Capital Activity	2,068		2,839
Sale of Prudential of Korea(5)	1,627		0
Share repurchases(6)	(500)		(1,940)
Common stock dividends(7)	(1,325)		(1,237)
Total Share Repurchases, Dividends and Disposition Activity	(198)		(3,177)
Proceeds from the issuance of debt	2,768		2,465
Repayments of debt	(1,937)		(1,113)
Total Debt Activity(8)	831		1,352
Proceeds from stock-based compensation and exercise of stock options	212		298
Net income tax receipts & payments	136		(60)
Affiliated loans - (operating activities)(9)	44		153
Interest paid on external debt	(727)		(666)
Swap termination payments	(153)		(67)
Other, net(8)	(185)		(3)
Total Other Activity	(673)		(345)
Net increase/(decrease) in highly liquid assets	2,028		669
Highly Liquid Assets, end of period	$	6,089	$	6,217

__________ 

(1)Prior period amounts have been updated to conform to current period presentation.

(2)2020 includes $1,905 million from international insurance subsidiaries, (including $470 million in the form of in-kind dividends), $572 million from PALAC, $238 million from PGIM subsidiaries, $98 million from Prudential Annuities Holding Company, and $8 million from other subsidiaries. 2019 includes $1,018 million from international insurance subsidiaries, $737 million from PALAC, $406 million from PGIM subsidiaries, $119 million from Prudential Annuities Holding Company, and $9 million from other subsidiaries.

(3)Represents the investment and deployment of capital to and from our businesses in the form of loans. 2020 includes $470 million received by PFI in the form of the extinguishment of debt held by international subsidiaries (offset by the in-kind dividends referred to in footnote 2 above).

(4)2020 includes capital contributions of $85 million to international insurance subsidiaries. 2019 includes capital contributions of $200 million to PICA and $68 million to PGIM subsidiaries.

(5)Represents net proceeds from the sale of Prudential of Korea that were distributed to PFI.

(6)Excludes cash payments made on trades that settled in the subsequent period.

(7)Includes cash payments made on dividends declared in prior periods.

(8)“Total Debt Activity” excludes changes in PFI commercial paper. These changes are captured in “Other, net” in the “Total Other Activity” section.

(9)Represent loans to and from subsidiaries to support business operating needs.

Dividends and Returns of Capital from Subsidiaries

Domestic insurance subsidiaries. During the first nine months of 2020, Prudential Financial received returns of capital of $572 million from PALAC and dividends of $98 million from Prudential Annuities Holding Company.

International insurance subsidiaries. During the first nine months of 2020, Prudential Financial received dividends of $3,531 million from its international insurance subsidiaries, which includes $1,627 million net proceeds from the sale of POK and $470 million of in-kind dividends in the form of the extinguishment of debt held by international insurance subsidiaries. In addition to paying Common Stock dividends, our international insurance operations may return capital to Prudential Financial through or facilitated by other means, such as the repayment of preferred stock obligations held by Prudential Financial or other affiliates, affiliated lending, affiliated derivatives and reinsurance with U.S.- and Bermuda-based affiliates.

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Other subsidiaries. During the first nine months of 2020, Prudential Financial received dividends and returns of capital of $238 million from PGIM subsidiaries and dividends of $8 million from other subsidiaries.

Restriction on dividends and returns of capital from subsidiaries. Our insurance companies are subject to limitations on the payment of dividends and other transfers of funds to Prudential Financial and other affiliates under applicable insurance law and regulation. Further, as discussed above, recent market conditions could negatively impact capital positions of our insurance companies, which could further restrict their ability to pay dividends. More generally, the payment of dividends by any of our subsidiaries is subject to declaration by their Board of Directors and can be affected by market conditions and other factors.

With respect to our domestic insurance subsidiaries, PICA is permitted to pay ordinary dividends based on calculations specified under New Jersey insurance law, subject to prior notification to the New Jersey Department of Banking and Insurance (“NJDOBI”). Any distributions above this amount in any twelve-month period are considered to be “extraordinary” dividends, and the approval of the NJDOBI is required prior to payment. The laws regulating dividends of the states where our other domestic insurance companies are domiciled are similar, but not identical, to New Jersey’s.

Capital redeployment from our international insurance subsidiaries is subject to local regulatory requirements in the international jurisdictions in which they operate. Our most significant international insurance subsidiaries, Prudential of Japan and Gibraltar Life, are permitted to pay common stock dividends based on calculations specified by Japanese insurance law, subject to prior notification to the FSA. Dividends in excess of these amounts and other forms of capital distribution require the prior approval of the FSA.

The ability of our PGIM subsidiaries and the majority of our other operating subsidiaries to pay dividends is largely unrestricted from a regulatory standpoint.

See Note 19 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, for information on specific dividend restrictions.

Liquidity of Insurance Subsidiaries

We manage the liquidity of our insurance operations to ensure stable, reliable and cost-effective sources of cash flows to meet all of our obligations. Liquidity within each of our insurance subsidiaries is provided by a variety of sources, including portfolios of liquid assets. The investment portfolios of our subsidiaries are integral to the overall liquidity of our insurance operations. We segment our investment portfolios and employ an asset/liability management approach specific to the requirements of each of our product lines. This enhances the discipline applied in managing the liquidity, as well as the interest rate and credit risk profiles, of each portfolio in a manner consistent with the unique characteristics of the product liabilities.

Liquidity is measured against internally-developed benchmarks that take into account the characteristics of both the asset portfolio and the liabilities that they support. We consider attributes of the various categories of liquid assets (for example, type of asset and credit quality) in calculating internal liquidity measures to evaluate our insurance operations’ liquidity under various stress scenarios, including company-specific and market-wide events. We continue to believe that cash generated by ongoing operations and the liquidity profile of our assets provide sufficient liquidity under reasonably foreseeable stress scenarios for each of our insurance subsidiaries.

The principal sources of liquidity for our insurance subsidiaries are premiums, investment and fee income, investment maturities, sales of investments, and sales associated with our insurance and annuity operations, as well as internal and external borrowings. The principal uses of liquidity include benefits, claims and dividends paid to policyholders, and payments to policyholders and contractholders in connection with surrenders, withdrawals and net policy loan activity. Other uses of liquidity may include commissions, general and administrative expenses, purchases of investments, the payment of dividends to the parent holding company, hedging and reinsurance activity and payments in connection with financing activities.

The following table sets forth the fair value of certain of our domestic insurance operations’ portfolio of liquid assets, as of the dates indicated.

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	September 30, 2020
	Prudential Insurance		PLIC		PRIAC		PALAC		Pruco Life		Total		December 31, 2019
	(in billions)
Cash and short-term investments	$	9.4	$	0.4	$	1.2	$	7.3	$	0.8	$	19.1	$	11.9
Fixed maturity investments(1):
High or highest quality	135.1		37.7		20.8		17.5		6.0		217.1		201.3
Other than high or highest quality	8.4		3.2		1.3		0.8		0.4		14.1		12.2
Subtotal	143.5		40.9		22.1		18.3		6.4		231.2		213.5
Public equity securities, at fair value	0.2		2.1		0.1		0.0		0.0		2.4		2.5
Total	$	153.1	$	43.4	$	23.4	$	25.6	$	7.2	$	252.7	$	227.9

__________ 

(1)Excludes fixed maturities designated as held-to-maturity. Credit quality is based on NAIC or equivalent rating.

The following table sets forth the fair value of our international insurance operations’ portfolio of liquid assets, as of the dates indicated. 

	September 30, 2020
	Prudential of Japan		Gibraltar Life(1)		All Other(2)		Total		December 31, 2019
	(in billions)
Cash and short-term investments	$	1.1	$	3.4	$	1.3	$	5.8	$	5.0
Fixed maturity investments(3):
High or highest quality(4)	43.0		95.7		5.9		144.6		157.2
Other than high or highest quality	0.7		2.2		1.7		4.6		5.4
Subtotal	43.7		97.9		7.6		149.2		162.6
Public equity securities	1.5		0.2		0.0		1.7		4.7
Total	$	46.3	$	101.5	$	8.9	$	156.7	$	172.3

__________ 

(1)Includes PGFL.

(2)Represents our international insurance operations, excluding Japan.

(3)Excludes fixed maturities designated as held-to-maturity. Credit quality is based on NAIC or equivalent rating.

(4)As of September 30, 2020, $110.3 billion, or 76%, were invested in government or government agency bonds.

Liquidity associated with other activities

Hedging activities associated with Individual Annuities

For the portion of our Individual Annuities’ ALM strategy executed through hedging, as well as the capital hedge program, we enter into a range of exchange-traded, cleared and other OTC equity and interest rate derivatives in order to hedge certain capital market risks related to more severe market conditions. For a full discussion of our Individual Annuities’ risk management strategy, see “—Results of Operations by Segment—U.S. Businesses—U.S. Individual Solutions Division—Individual Annuities.” This portion of our Individual Annuities’ ALM strategy and capital hedge program requires access to liquidity to meet payment obligations relating to these derivatives, such as payments for periodic settlements, purchases, maturities and terminations. These liquidity needs can vary materially due to, among other items, changes in interest rates, equity markets, mortality and policyholder behavior.

The hedging portion of our Individual Annuities’ ALM strategy and capital hedge program may also result in derivative related collateral postings to (when we are in a net pay position) or from (when we are in a net receive position) counterparties. The net collateral position depends on changes in interest rates and equity markets related to the amount of the exposures hedged. Depending on market conditions, the collateral posting requirements can result in material liquidity needs when we are in a net pay position. As of September 30, 2020, the derivatives comprising the hedging portion of our ALM strategy and capital hedge program were in a net receive position of $11.1 billion compared to a net receive position of $4.7 billion as of December 31, 2019. The change in collateral position was primarily driven by a positive impact from declining interest rates.

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Foreign exchange hedging activities

We employ various hedging strategies to manage potential exposure to foreign currency exchange rate movements, particularly those associated with the yen. Our overall yen hedging strategy calibrates the hedge level to preserve the relative contribution of our yen-based business to the Company’s overall return on equity on a leverage neutral basis. The hedging strategy includes two primary components:

Income Hedges—We hedge a portion of our prospective yen-based earnings streams by entering into external forward currency derivative contracts that effectively fix the currency exchange rates for that portion of earnings, thereby reducing volatility from foreign currency exchange rate movements. As of September 30, 2020, we have hedged 100%, 97%, and 61%, of expected yen-based earnings for 2020, 2021, and 2022, respectively.

Equity Hedges—We hold both internal and external hedges primarily to hedge our USD-equivalent equity. These hedges also mitigate volatility in the solvency margins of yen-based subsidiaries resulting from changes in the market value of their USD-denominated investments hedging our USD-equivalent equity attributable to changes in the yen-USD exchange rate.

For additional information on our hedging strategy, see “—Results of Operations—Impact of Foreign Currency Exchange Rates.”

Cash settlements from these hedging activities result in cash flows between subsidiaries of Prudential Financial and either international-based subsidiaries or external parties. The cash flows are dependent on changes in foreign currency exchange rates and the notional amount of the exposures hedged. For example, a significant yen depreciation over an extended period of time could result in net cash inflows, while a significant yen appreciation could result in net cash outflows. The following tables set forth information about net cash settlements and the net asset or liability resulting from these hedging activities related to the yen and other currencies for the periods indicated.

	Nine Months Ended September 30,
Cash Settlements: Received (Paid)	2020		2019
	(in millions)
Income Hedges (External)(1)	$	65	$	51
Equity Hedges:
Internal(2)	163		314
External(3)	113		100
Total Equity Hedges	276		414
Total Cash Settlements	$	341	$	465
	September 30,		December 31,
Assets (Liabilities):	2020		2019
	(in millions)
Income Hedges (External)(4)	$	67	$	60
Equity Hedges:
Internal(2)	551		506
External(5)	36		43
Total Equity Hedges(6)	587		549
Total Assets (Liabilities)	$	654	$	609

__________

(1)Includes non-yen related cash settlements of $53 million, primarily denominated in Brazilian real, Australian dollar and Chilean peso and $30 million, primarily denominated in Australian dollar, Korean won and Brazilian real for the nine months ended September 30, 2020 and 2019, respectively.

(2)Represents internal transactions between international-based and U.S.-based entities. Amounts noted are from the U.S.-based entities’ perspectives.

(3)Includes non-yen related cash settlements of $23 million and $12 million, denominated in Korean won for the nine months ended September 30, 2020 and 2019, respectively.

(4)Includes non-yen related assets of $57 million, primarily denominated in Brazilian real and assets of $37 million, primarily denominated in Korean won, Australian dollar and Chilean peso, as of September 30, 2020 and December 31, 2019, respectively.

(5)Includes non-yen related assets of $1 million, denominated in Korean won, as of December 31, 2019.

(6)As of September 30, 2020, approximately $59 million, $376 million, $159 million and $(7) million of the net market values are scheduled to settle in 2020, 2021, 2022 and thereafter, respectively. The net market value of the assets (liabilities) will vary with changing market conditions to the extent there are no corresponding offsetting positions.

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PGIM operations

The principal sources of liquidity for our fee-based PGIM businesses include asset management fees and commercial mortgage origination and servicing fees. The principal uses of liquidity include general and administrative expenses, facilitating our commercial mortgage loan business, and distributions of dividends and returns of capital to Prudential Financial. The primary liquidity risks for our fee-based PGIM businesses relate to their profitability, which is impacted by market conditions, our investment management performance and client redemptions. We believe the cash flows from our fee-based PGIM businesses are adequate to satisfy the current liquidity requirements of these operations, as well as requirements that could arise under reasonably foreseeable stress scenarios, which are monitored through the use of internal measures.

The principal sources of liquidity for our co- and seed investments held in our PGIM businesses are cash flows from investments, the ability to liquidate investments, borrowing lines from internal sources, including Prudential Financial and Prudential Funding, LLC (“Prudential Funding”), a wholly-owned subsidiary of PICA, and external sources, including PGIM’s limited-recourse credit facility. The principal use of liquidity for our co- and seed investments includes making investments to support business growth and paying interest expense from the internal and external borrowings used to fund those investments. The primary liquidity risks include the inability to sell assets in a timely manner, declines in the value of assets and credit defaults. There have been no material changes to the liquidity position of our PGIM operations since December 31, 2019.

Alternative Sources of Liquidity

In addition to asset-based financing as discussed below, Prudential Financial and certain subsidiaries have access to other sources of liquidity, including syndicated, unsecured committed credit facilities, membership in the Federal Home Loan Banks, commercial paper programs, and a put option agreement. In May 2020, we entered into a facility agreement with a Delaware trust, pursuant to which Prudential Financial may issue and sell to the trust at any time over a ten-year period up to $1.5 billion of senior notes due May 15, 2030 and receive in exchange a corresponding amount of U.S. Treasury securities, thereby augmenting our alternative sources of liquidity. For more information on these sources of liquidity, see Note 9 to the Unaudited Interim Consolidated Financial Statements contained herein and Note 17 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

Asset-based Financing

We conduct asset-based or secured financing within our insurance and other subsidiaries, including transactions such as securities lending, repurchase agreements and mortgage dollar rolls, to earn spread income, to borrow funds, or to facilitate trading activity. These programs are primarily driven by portfolio holdings of securities that are lendable based on counterparty demand for these securities in the marketplace. The collateral received in connection with these programs is primarily used to purchase securities in the short-term spread portfolios of our insurance entities. Investments held in the short-term spread portfolios include cash and cash equivalents, short-term investments (primarily corporate bonds), mortgage loans and fixed maturities (primarily collateralized loan obligations and other structured securities), with a weighted average life at time of purchase by the short-term portfolios of four years or less. Floating rate assets comprise the majority of our short-term spread portfolio. These short-term portfolios are subject to specific investment policy statements, which among other things, do not allow for significant asset/liability interest rate duration mismatch.

The following table sets forth our liabilities under asset-based or secured financing programs as of the dates indicated.

	September 30, 2020						December 31, 2019
	PFI Excluding Closed Block Division		Closed Block Division		Consolidated		PFI Excluding Closed Block Division		Closed Block Division		Consolidated
	($ in millions)
Securities sold under agreements to repurchase	$	8,064	$	2,810	$	10,874	$	6,834	$	2,847	$	9,681
Cash collateral for loaned securities	2,925		146		3,071		3,228		986		4,214
Securities sold but not yet purchased	2		0		2		0		0		0
Total(1)	$	10,991	$	2,956	$	13,947	$	10,062	$	3,833	$	13,895
Portion of above securities that may be returned to the Company overnight requiring immediate return of the cash collateral(2)	$	10,436	$	2,956	$	13,392	$	10,062	$	3,833	$	13,895
Weighted average maturity, in days(2)	28		N/A				N/A		N/A

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__________ 

(1)The daily weighted average outstanding balance for the three and nine months ended September 30, 2020 was $11,506 million and $11,262 million, respectively, for PFI excluding the Closed Block division, and $3,062 million and $3,353 million, respectively, for the Closed Block division.

(2)Excludes securities that may be returned to the Company overnight. “N/A” reflects that all outstanding balances may be returned to the Company overnight.

As of September 30, 2020, our domestic insurance entities had assets eligible for the asset-based or secured financing programs of $130.8 billion, of which $14.0 billion were on loan. Taking into account market conditions and outstanding loan balances as of September 30, 2020, we believe approximately $19.7 billion of the remaining eligible assets are readily lendable, including approximately $14.1 billion relating to PFI excluding the Closed Block division, of which $3.8 billion relates to certain separate accounts and may only be used for financing activities related to those accounts, and the remaining $5.6 billion relating to the Closed Block division.

Financing Activities

As of September 30, 2020, total short-term and long-term debt of the Company on a consolidated basis was $21.3 billion, an increase of $0.7 billion from December 31, 2019. The following table sets forth total consolidated borrowings of the Company as of the dates indicated. We may, from time to time, seek to redeem or repurchase our outstanding debt securities through open market purchases, individually negotiated transactions or otherwise. Any such actions will depend on prevailing market conditions, our liquidity position and other factors.

	September 30, 2020						December 31, 2019
Borrowings:	Prudential Financial		Subsidiaries		Consolidated		Prudential Financial		Subsidiaries		Consolidated
	(in millions)
General obligation short-term debt:
Commercial paper	$	25	$	455	$	480	$	25	$	524	$	549
Current portion of long-term debt	529		0		529		1,179		0		1,179
Subtotal	554		455		1,009		1,204		524		1,728
General obligation long-term debt:
Senior debt	11,404		173		11,577		9,912		172		10,084
Junior subordinated debt	7,552		59		7,611		7,518		57		7,575
Surplus notes(1)	0		343		343		0		342		342
Subtotal	18,956		575		19,531		17,430		571		18,001
Total general obligations	19,510		1,030		20,540		18,634		1,095		19,729
Limited and non-recourse borrowings(2):
Short-term debt	0		7		7		0		13		13
Current portion of long-term debt	0		97		97		0		192		192
Long-term debt	0		638		638		0		645		645
Total limited and non-recourse borrowings	0		742		742		0		850		850
Total borrowings	$	19,510	$	1,772	$	21,282	$	18,634	$	1,945	$	20,579

__________ 

(1)Amounts are net of assets under set-off arrangements of $11,464 million and $9,749 million as of September 30, 2020 and December 31, 2019, respectively.

(2)Limited and non-recourse borrowing primarily represents mortgage debt of our subsidiaries that has recourse only to real estate investment property of $436 million and $537 million as of September 30, 2020 and December 31, 2019, respectively, and a $300 million draw on a credit facility that has recourse only to collateral pledged by the Company as of both September 30, 2020 and December 31, 2019.

As of September 30, 2020, and December 31, 2019, we were in compliance with all debt covenants related to the borrowings in the table above. For additional information on our short- and long-term debt obligations, see Note 9 to the Unaudited Interim Consolidated Financial Statements contained herein and Note 17 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

We executed transactions to reduce our ongoing financing costs in August 2020 by issuing $1.3 billion of junior subordinated notes at interest rates of 3.70% and 4.125% and with maturities ranging from 2050 to 2060 and using the proceeds to redeem in September 2020 our $710 million 5.70% junior subordinated notes due in 2053 and our $575 million 5.75% junior subordinated notes due in 2052.

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Prudential Financial’s borrowings increased $0.9 billion from December 31, 2019, driven by the issuance, net of related costs, of $1.5 billion of senior debt and $1.3 billion of junior subordinated notes, offset by $1.3 billion in prepayments and $0.6 billion in debt maturities. Borrowings of our subsidiaries decreased $173 million from December 31, 2019, primarily driven by $95 million in debt maturities, a $69 million decrease in commercial paper, a $6 million decrease in short-term borrowings, and a $7 million decrease in long-term limited recourse borrowings.

Term and Universal Life Reserve Financing

We use captive reinsurance subsidiaries to finance the portion of the statutory reserves required to be held by our domestic life insurance companies under Regulation XXX and Guideline AXXX that we consider to be non-economic. The financing arrangements involve the reinsurance of term and universal life business to our captive reinsurers and the issuance of surplus notes by those captives that are treated as capital for statutory purposes. These surplus notes are subordinated to policyholder obligations, and the payment of principal and interest on the surplus notes can only be made with prior insurance regulatory approval.

We have entered into agreements with external counterparties providing for the issuance of surplus notes by our captive reinsurers in return for the receipt of credit-linked notes (“Credit-Linked Note Structures”). As of September 30, 2020, we had Credit-Linked Note Structures with an aggregate issuance capacity of $14,825 million, of which $12,849 million was outstanding, as compared to an aggregate issuance capacity of $13,700 million, of which $12,009 million was outstanding, as of December 31, 2019. These amounts reflect a $1,200 million Credit Link Note Structure entered into in June 2020 for Guideline AXXX reserves, of which $700 million was outstanding as of September 30, 2020, as reflected in the table below. Under the agreements, the captive receives in exchange for the surplus notes one or more credit-linked notes issued by a special-purpose affiliate of the Company with an aggregate principal amount equal to the surplus notes outstanding. The captive holds the credit-linked notes as assets supporting Regulation XXX or Guideline AXXX non-economic reserves, as applicable. For more information on our Credit-Linked Note Structures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities” in our Annual Report on Form 10-K for the year ended December 31, 2019.

The following table summarizes our Credit-Linked Note Structures, which are reported on a net basis, as of September 30, 2020.

	Surplus Notes		Outstanding as of September 30, 2020
Credit-Linked Note Structures:	Original Issue Dates	Maturity Dates				Facility Size
	($ in millions)
XXX	2011-2014	2021-2024	$	1,750	(1)	$	1,750
AXXX	2013	2033	3,248			3,500
XXX	2014-2018	2021-2034	2,285		(2)	2,375
XXX	2014-2017	2024-2037	2,330			2,400
AXXX	2017	2037	1,466			2,000
XXX	2018	2038	1,070			1,600
AXXX	2020	2032	700			1,200
Total Credit-Linked Note Structures			$	12,849		$	14,825

__________

(1)Prudential Financial has agreed to reimburse amounts paid under the credit-linked notes issued in this structure up to $0.5 billion. During the fourth quarter of 2019, this financing facility was restructured to allow for an extension through 2036.

(2)The $2.3 billion of surplus notes represents an intercompany transaction that eliminates upon consolidation. Prudential Financial has agreed to reimburse amounts paid under credit-linked notes issued in this structure up to $1.0 billion.

As of September 30, 2020, we also had outstanding an aggregate of $2.3 billion of debt issued for the purpose of financing Regulation XXX and Guideline AXXX non-economic reserves, of which approximately $0.7 billion relates to Regulation XXX reserves and approximately $1.6 billion relates to Guideline AXXX reserves. In addition, as of September 30, 2020, for purposes of financing Guideline AXXX reserves, one of our captives had approximately $4.0 billion of surplus notes outstanding that were issued to affiliates.

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The Company has introduced updated versions of its individual life products in conjunction with the requirement to adopt principle-based reserving by January 1, 2020. These updated products are currently priced to support the principle-based statutory reserve level without the need for reserve financing. Certain elements of the implementation of principle-based reserving are yet to be finalized by the NAIC and may have a material impact on statutory reserves. The Company continues to assess the impact of the implementation of principle-based reserving on projected statutory reserve levels, product pricing and the use of financing.

Ratings

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Ratings” in our Annual Report on Form 10-K for the year ended December 31, 2019, for a discussion of our financial strength and credit ratings and their impact on our business.

There have been no significant changes or actions in ratings or ratings outlooks for our Company that have occurred since the filing of our Form 10-K for the year ended December 31, 2019 through the date of this filing. In 2020, Moody’s, Fitch, and AM Best revised their Outlook on the U.S. life insurance industry from Stable to Negative.

Off-Balance Sheet Arrangements

Guarantees, Other Contingencies and Other Contingent Commitments

In the course of our business, we provide certain guarantees and indemnities to third-parties pursuant to which we may be contingently required to make payments in the future. We also have other commitments, some of which are contingent upon events or circumstances not under our control, including those at the discretion of our counterparties. See “—Commitments and Guarantees” within Note 14 to the Unaudited Interim Consolidated Financial Statements for additional information. For further discussion of certain of these commitments that relate to our separate accounts, also see “—Liquidity—Liquidity associated with other activities—PGIM operations.”

Other Off-Balance Sheet Arrangements

In May 2020, Prudential Financial entered into a ten-year facility agreement with a Delaware trust that gives Prudential Financial the right, at any time over a ten-year period, to issue up to $1.5 billion of senior notes to the trust in return for principal and interest strips of U.S. Treasury securities that are held by the trust.

In November 2013, we entered into a put option agreement with a Delaware trust that gives Prudential Financial the right, at any time over a ten-year period, to issue up to $1.5 billion of senior notes to the trust in return for principal and interest strips of U.S. Treasury securities that are held by the trust.

In 2014, Prudential Financial entered into financing transactions, pursuant to which it issued $500 million of limited-recourse notes and, in return, obtained $500 million of asset-backed notes from a Delaware master trust and ultimately contributed the asset-backed notes to its subsidiary, PRIAC. As of September 30, 2020, no principal payments have been received or are currently due on the asset-backed notes and, as a result, there was no payment obligation under the limited-recourse notes. Accordingly, none of the notes are reflected in the Company’s Unaudited Interim Consolidated Financial Statements as of that date.

Other than as described above, we do not have retained or contingent interests in assets transferred to unconsolidated entities, or variable interests in unconsolidated entities or other similar transactions, arrangements or relationships that serve as credit, liquidity or market risk support, that we believe are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or our access to or requirements for capital resources. In addition, other than the agreements referred to above, we do not have relationships with any unconsolidated entities that are contractually limited to narrow activities that facilitate our transfer of or access to associated assets.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of fluctuations in the value of financial instruments as a result of absolute or relative changes in interest rates, foreign currency exchange rates, equity prices or commodity prices. To varying degrees, our products and services, and the investment activities supporting them, generate exposure to market risk. The market risk incurred, and our strategies for managing this risk, vary by product. As of September 30, 2020, there have been no material changes in our economic exposure to market risk from December 31, 2019, a description of which may be found in our Annual Report on

156

Form 10-K, for the year ended December 31, 2019, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” filed with the Securities and Exchange Commission. See “Risk Factors” in this Quarterly Report on Form 10-Q and Item 1A, “Risk Factors” included in the Annual Report on Form 10-K for the year ended December 31, 2019, for a discussion of how difficult conditions in the financial markets and the economy generally may materially adversely affect our business and results of our operations.

ITEM 4. CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized, and reported on a timely basis, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of September 30, 2020. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2020, our disclosure controls and procedures were effective. No change in our internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), occurred during the quarter ended September 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

157

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 14 to the Unaudited Interim Consolidated Financial Statements under “—Litigation and Regulatory Matters” for a description of certain pending litigation and regulatory matters affecting us, and certain risks to our businesses presented by such matters, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. These risks could materially affect our business, results of operations or financial condition, cause the trading price of our Common Stock to decline materially or cause our actual results to differ materially from those expected or those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” and the risks of our businesses described elsewhere in this Quarterly Report on Form 10-Q. The following should be read in conjunction with and supplements and amends the section titled “Risk Factors” in our Annual Report on Form 10-K.

The COVID-19 pandemic has resulted in extreme stress and disruption in the global economy and financial markets, and has adversely impacted, and may continue to adversely impact, our results of operations, financial condition and prospects.

During the first nine months of 2020, the COVID-19 crisis (i) caused unfavorable financial market conditions which had a substantial negative effect on reported results of our businesses, (ii) negatively impacted the statutory capital of our insurance companies and constrained our overall capital flexibility primarily due to asset value declines and the need to strengthen reserves, and (iii) caused us to lower our outlook for the future, as described further under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—COVID-19.”

We cannot predict what impact the COVID-19 pandemic will ultimately have on the global economy, markets or our businesses. The pandemic could exacerbate existing areas of concern, such as the pace of economic growth, equity market performance, and continued low interest rates, among others. Changes in consumer spending, business investment, and government debt and spending as a result of the crisis may negatively impact our businesses.

These risks may have manifested, and may continue to manifest, in our businesses in the following areas, among others:

Investment Risk. The COVID-19 pandemic and its impact on the global economy has increased the risk of loss on our investments due to default or deterioration in credit quality or value as described further under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Account Investments—COVID-19.”

Insurance Risk. We expect COVID-19 to drive elevated levels of mortality in the near-term. The COVID-19 pandemic may ultimately result in a mortality calamity, which is the risk that short-term mortality rates deviate adversely from what is expected as a result of pandemics or other disasters. Elevated losses will reduce our earnings and capital, and we may be forced to liquidate assets before maturity in order to pay the excess claims. The pandemic situation may worsen depending on the evolution of the virus’s transmissibility and virulence, effectiveness of public health measures and availability of potential vaccines and treatments. Ultimate losses would depend on several factors, including the rates of mortality and morbidity among various segments of the insured population, age distribution of associated deaths, collectability of reinsurance, performance of our investment portfolio, effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables.

The pandemic may also result in a change in policyholder behavior, such as policyholders choosing to defer or stop paying insurance premiums. It may also result in a lapse calamity, which is the risk that lapse rates over the short-term deviate adversely from what is expected. For example, surrenders of cash surrender value products by customers in need of liquidity can impact our liquidity, and it may be necessary in certain market conditions to sell assets to meet surrender demands. Lapse calamity can also impact our earnings through its impact on estimated future profits.

As a result of COVID-19 we also expect to experience elevated short-term disability claims in our Group Insurance business and may experience elevated claims in our Long-Term Care business.

Finally, we cannot predict whether COVID-19 will ultimately lead to longer-term deviations from the mortality, policyholder behavior or morbidity assumptions we used to price our products.

158

Market Risk. Continued market disruptions and volatility may further negatively impact the profitability of many of our insurance and annuity products, which depends in part on the value of the separate accounts supporting these products which can fluctuate substantially depending on market conditions. Market volatility and reduced liquidity may reduce our ability to implement asset-liability management and hedging strategies. In addition, market conditions may further reduce the value of assets that we manage in our investment management business, which depends on fees related primarily to the value of assets under management. The decline in interest rates, in particular, may result in lower investment income, higher reserve levels and other consequences as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of a Low Interest Rate Environment.” Finally, low interest rates and poor equity market returns will likely result in increased pension and other postretirement benefit plan expenses and reduce our profitability.

Liquidity Risk. During the first nine months of 2020, the Company took significant actions to support liquidity as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Nevertheless, the impact of the COVID-19 crisis and related market dislocations could strain our existing liquidity and cause us to increase the use of our alternative sources of liquidity, which could result in increased financial leverage on our balance sheet and negatively impact our credit and financial strength ratings. Furthermore, certain sources of liquidity might not be available during times of stress, or may only be available on unfavorable terms, which can result in a decrease in our profitability and a significant reduction in our financial flexibility.

In particular, abrupt changes to interest rate, equity, and/or currency markets could lead to increased collateral requirements to counterparties, and cash demands due to severe mortality calamity, customer withdrawals or lapse events.

Operational Risk. One of the main impacts of the COVID-19 crisis has been executing our business continuity protocols to ensure our employees are safe and able to serve our customers. This included transitioning the vast majority of our employees to remote work arrangements. We have also made a number of operational changes to accommodate our customers as further described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—COVID-19.”

In this environment, there is an elevated risk that weaknesses or failures in our business continuation plans could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Furthermore, weaknesses or failures within a vendor’s business continuation plan can materially disrupt our business operations. Our information systems and those of our vendors and service providers may be more vulnerable to cyber-attacks, computer viruses or other computer related attacks, programming errors and similar disruptive problems during a business continuation event.

Strategic Risk. The COVID-19 pandemic could ultimately generate an economic downturn; higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending. In such an environment, the demand for our products and our investment returns could be materially adversely affected. In addition, we expect near-term sales to be slowed by the impact of social distancing and financial hardship on our customers.

The macroeconomic environment may also result in the need to recognize an impairment of goodwill which could negatively impact our results of operations and financial condition.

Finally, we expect that account values in our Full Service business will be impacted by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides qualified individuals the ability to withdraw from defined contribution plans and individual retirement accounts up to $100,000 penalty-free, with the withdrawal taxed over a three-year period (unless otherwise elected by the individual). We cannot predict what other actions governments will take in response to the COVID-19 pandemic, and how any new laws, regulations, or state-sponsored programs may impact our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) The following table provides information about purchases by the Company during the three months ended September 30, 2020, of its Common Stock:

159

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program(2)	Approximate Dollar Value of Shares that May Yet Be Purchased under the Program(2)
July 1, 2020 through July 31, 2020	4,444	$	63.96	0
August 1, 2020 through August 31, 2020	6,631	$	69.30	0
September 1, 2020 through September 30, 2020	2,530	$	68.07	0
Total	13,605	$	67.33	0	$	1,500,000,000

__________

(1)Includes shares of Common Stock withheld from participants for income tax withholding purposes whose shares of restricted stock units vested during the period. Such restricted stock units were originally issued to participants pursuant to the Prudential Financial Inc. Omnibus Incentive Plan.

(2)In December 2019, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to $2.0 billion of its outstanding Common Stock during the period from January 1, 2020 through December 31, 2020. The Company suspended Common Stock repurchases under its existing repurchase authorization beginning April 1, 2020 and does not intend to resume share repurchases this year as the duration and severity of the pandemic and its effect on the economy remain uncertain. The Company will evaluate the resumption of share repurchases as informed by the market environment and any alternative opportunities for capital deployment.

160

ITEM 6. EXHIBITS

EXHIBIT INDEX

3.1	Amended and Restated By-Laws of Prudential Financial, Inc., effective September 8, 2020. Incorporated by reference to Exhibit 3.1 to the Registrant’s September 10, 2020 Current Report on Form 8-K.
4.1	Upon the request of the Securities and Exchange Commission, the Registrant will furnish copies of all instruments defining the rights of holders of long-term debt of the Registrant.
10.1	Sixth Amendment to the Prudential Supplemental Employee Savings Plan, effective as of November 1, 2020.*
31.1	Section 302 Certification of the Chief Executive Officer.
31.2	Section 302 Certification of the Chief Financial Officer.
32.1	Section 906 Certification of the Chief Executive Officer.
32.2	Section 906 Certification of the Chief Financial Officer.

101.INS - XBRL	Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH - XBRL	Taxonomy Extension Schema Document.
101.CAL - XBRL	Taxonomy Extension Calculation Linkbase Document.
101.LAB - XBRL	Taxonomy Extension Label Linkbase Document.
101.PRE - XBRL	Taxonomy Extension Presentation Linkbase Document.
101.DEF - XBRL	Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

__________

* This exhibit is a management contract or compensatory plan or arrangement.

Prudential Financial, Inc. will furnish upon request a copy of any exhibit listed above upon the payment of a reasonable fee covering the expense of furnishing the copy. Requests should be directed to:

Shareholder Services

Prudential Financial, Inc.

751 Broad Street, 21st Floor

Newark, New Jersey 07102

161

GLOSSARY

    Throughout this Quarterly Report on Form 10-Q, the Company may use certain abbreviations, acronyms and terms which are defined below.

Prudential Entities
Assurance IQ	Assurance IQ, LLC	POT	Prudential Life Insurance Company of Taiwan Inc.
Company	Prudential Financial, Inc. and its subsidiaries	PRIAC	Prudential Retirement Insurance and Annuity Company
PALAC	Prudential Annuities Life Assurance Corporation	Pruco Life	Pruco Life Insurance Company
PFI	Prudential Financial, Inc. and its subsidiaries	Prudential	Prudential Financial, Inc. and its subsidiaries
PGFL	Prudential Gibraltar Financial Life Insurance Co., Ltd.	Prudential Financial	Prudential Financial, Inc.
PIIH	Prudential International Insurance Holdings, Ltd.	Prudential Funding	Prudential Funding, LLC
PLIC	Prudential Legacy Insurance Company of New Jersey	Prudential Insurance/PICA	The Prudential Insurance Company of America
PLNJ	Pruco Life Insurance Company of New Jersey	Prudential of Japan	The Prudential Life Insurance Company, Ltd.
POA	Prudential of Argentina	Registrant	Prudential Financial, Inc.
POK	The Prudential Life Insurance Company of Korea, Ltd.

Defined Terms
Board	Prudential Financial's Board of Directors	Other Postretirement Benefits	Certain health care and life insurance benefits provided by the Company for its retired employees, their beneficiaries and covered dependents
Closed Block	Certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders' dividends on these products	Pension Benefits	Funded and non-funded non-contributory defined benefit pension plans which cover substantially all of the Company’s employees
Exchange Act	The Securities Exchange Act of 1934	PGIM	The global investment management businesses of Prudential Financial, Inc.
Fitch	Fitch Ratings Inc.	Regulation XXX	Valuation of Life Insurance Policies Model Regulation
Guideline AXXX	The Application of the Valuation of Life Insurance Policies Model Regulation	S&P	Standard & Poor's Rating Services
Moody's	Moody's Investors Service, Inc.	U.S. GAAP	Generally accepted accounting principles in the United States of America
Morningstar	Morningstar, Inc.

162

Acronyms
ALM	Asset Liability Management	LPs/LLCs	Limited Partnerships and Limited Liability Companies
AOCI	Accumulated Other Comprehensive Income (Loss)	MD&A	Management's Discussion and Analysis of Financial Condition and Results of Operations
ASU	Accounting Standards Update	NAIC	National Association of Insurance Commissioners
AUD	Australian Dollar	NAV	Net Asset Value
bps	Basis Points	NJDOBI	New Jersey Department of Banking and Insurance
CARES Act	Coronavirus Aid, Relief, and Economic Security Act	NOLs	Net Operating Losses
CECL	Current Expected Credit Loss	NPR	Non-Performance Risk
CLO	Collateralized Loan Obligations	OCI	Other Comprehensive Income (Loss)
COVID-19	2019 Novel Coronavirus	ODL	Overall Domestic Losses
DAC	Deferred Policy Acquisition Costs	OTC	Over-The-Counter
DSI	Deferred Sales Inducements	OTTI	Other-Than-Temporary Impairments
EBITDA	Earnings Before Interest, Taxes, Depreciation and Amortization	PDI	Prudential Defined Income
FASB	Financial Accounting Standards Board	RAF	Risk Appetite Framework
FHLBNY	Federal Home Loan Bank of New York	RBC	Risk-Based Capital
FSA	Financial Services Agency (an agency of the Japanese government)	SEC	Securities and Exchange Commission
GICs	Guaranteed Investment Contracts	SVO	Securities Valuation Office
GILTI	Global Intangible Low-Taxed Income	TBA	To Be Announced
GMDB	Guaranteed Minimum Death Benefits	TCJA	Tax Cuts and Jobs Act
GSE	Government Sponsored Entities	U.S.	The United States of America
HDI	Highest Daily Lifetime Income	USD	U.S. Dollar
LIBOR	London Inter-Bank Offered Rate	VIEs	Variable Interest Entities
IRA	Individual Retirement Account	VOBA	Value of Business Acquired

163

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Prudential Financial, Inc.
By:	/S/    KENNETH Y. TANJI
	Kenneth Y. Tanji Executive Vice President and Chief Financial Officer (Authorized signatory and principal financial officer)

Date: November 5, 2020

164

EX-10.1

SIXTH AMENDMENT

TO THE

PRUDENTIAL SUPPLEMENTAL EMPLOYEE SAVINGS PLAN

(Effective as of January 1, 2006)

(Amending to allow separate Beneficiary designations)

Purpose and Background:

A.Pursuant to Section 7.1(b) of the Prudential Supplemental Employee Savings Plan (the “Plan”), the Executive Vice President, Chief Human Resources Officer (“EVP HR”), or the successor to his or her duties relating to corporate human resources has the authority to amend the Plan on behalf of The Prudential Insurance Company of America (the “Company”) with respect to changes that do not increase or decrease the estimated benefit costs of the Plan by more than the greater of $500,000 per year and $5,000,000 in terms of present value subject to a limit of $25,000,000 (net) in terms of present value in any 12-month period.

B.The EVP HR deems it advisable to amend the Plan to allow a Plan participant to designate a beneficiary for the Plan that may be different from the beneficiary he or she has designated under The Prudential Employee Savings Plan, subject to the terms of the amendment.

C.The EVP HR has determined that the foregoing amendment is within the scope of authority granted to the EVP HR under the terms of the Plan.

Resolutions:

Effective November 1, 2020, the Plan is hereby amended as follows:

1.Article I of the Plan is amended by adding the following new section:

1.1(A) “Beneficiary” or “Beneficiaries” shall mean the person or persons

designated by a Participant in accordance with Section 6.3 of the Plan, who shall be entitled to receive a benefit under the Plan as a result of such Participant’s death.

2.Section 5.5 of the Plan is amended in its entirety to read as follows:

In the event of a Participant’s death, the balance, if any, in such Participant’s account shall be paid to his or her Beneficiary, as designated or determined (as applicable) under Section 6.3 of the Plan, in a lump sum payment within 90 days of the Participant’s death.

3.Section 6.3 of the Plan is amended in its entirety to read as follows:

(a) A Participant may designate his or her Beneficiary for purposes of this Plan in a writing delivered to the Committee prior to death in accordance with procedures established by the Committee. If a Participant has not properly designated a Beneficiary for purposes of this Plan, any designation by such Participant of a Beneficiary under

PESP, or determination of a Beneficiary under PESP, shall also apply for purposes of this Plan. Any provisions of PESP governing the manner of designating or recognizing a Beneficiary or limiting the amount of a benefit payable to such person shall also apply for purposes of this Plan. The foregoing sentence shall include the spousal consent requirement set forth in Section 6.3(b) below.

(b) If a Participant was married at the time of his or her death, the designation of a person other than the Participant's surviving spouse to receive any distribution to be made when the Participant is not living, regardless of when made, shall not be effective and shall be treated as a designation of such surviving spouse unless (i) such surviving spouse has consented to such designation in writing and such consent acknowledges the effect of the election and was witnessed by a notary public, or (ii) it is established to the satisfaction of the Committee that such consent may not be obtained because such spouse cannot be located or because of such other circumstances as the Secretary of the Treasury may prescribe. Such consent shall be effective only with respect to the spouse who signs the consent, or in the event of a waiver of such consent under (ii) of the preceding sentence, the designated spouse. For purposes of this Section 6.3 and the Plan, the term “spouse” shall have the same meaning ascribed to it under PESP.

4.All capitalized terms not defined herein shall have the meanings ascribed to them in the Plan.

5.Except where otherwise expressly amended herein, the Plan is ratified and confirmed and shall continue in full force and effect.

Adopted on behalf of The Prudential Insurance Company of America.

Date: October 26, 2020	/s/ Lucien Alziari
	Lucien Alziari
	Executive Vice President,
	Chief Human Resources Officer

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Charles F. Lowrey, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Prudential Financial, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2020	/s/ Charles F. Lowrey
	Charles F. Lowrey Chief Executive Officer

EX-31.2

                                                    Exhibit 31.2

CERTIFICATIONS

I, Kenneth Y. Tanji, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Prudential Financial, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2020	/s/ Kenneth Y. Tanji
	Kenneth Y. Tanji Chief Financial Officer

EX-32.1

                                                    Exhibit 32.1

Certification

    Pursuant to 18 U.S.C. § 1350, I, Charles F. Lowrey, Chief Executive Officer of Prudential Financial, Inc. (the “Company”), hereby certify that the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2020		/s/ Charles F. Lowrey
	Name:	Charles F. Lowrey
	Title:	Chief Executive Officer

    The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

                                                    Exhibit 32.2

Certification

    Pursuant to 18 U.S.C. § 1350, I, Kenneth Y. Tanji, Chief Financial Officer of Prudential Financial, Inc. (the “Company”), hereby certify that the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2020		/s/ Kenneth Y. Tanji
	Name:	Kenneth Y. Tanji
	Title:	Chief Financial Officer

    The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information - shares shares in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Oct. 31, 2020
Document Information [Line Items]
Document Type		10-Q
Document Period End Date		Sep. 30, 2020
Amendment Flag		false
Document Quarterly Report		true
Document Fiscal Year Focus		2020
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus		Q3
Document Transition Report		false
Entity File Number		001-16707
Entity Registrant Name		Prudential Financial, Inc.
Entity Central Index Key		0001137774
Entity Incorporation, State or Country Code		NJ
Entity Tax Identification Number		22-3703799
Entity Address, Address Line One		751 Broad Street
Entity Address, City or Town		Newark
Entity Address, State or Province		NJ
Entity Address, Postal Zip Code		07102
City Area Code		973
Local Phone Number		802-6000
Entity Current Reporting Status		Yes
Entity Interactive Data Current		Yes
Entity Filer Category		Large Accelerated Filer
Entity Small Business		false
Entity Emerging Growth Company		false
Entity Shell Company		false
Entity Common Stock, Shares Outstanding			396
Common Class A
Document Information [Line Items]
Title of 12(b) Security		Common Stock, Par Value $.01
Trading Symbol		PRU
Security Exchange Name		NYSE
5.625% Junior Subordinated Notes
Document Information [Line Items]
Title of 12(b) Security		5.625% Junior Subordinated Notes
Trading Symbol		PRS
Security Exchange Name		NYSE
4.125% Junior Subordinated Notes
Document Information [Line Items]
Title of 12(b) Security		4.125% Junior Subordinated Notes
Trading Symbol		PFH
Security Exchange Name		NYSE

XML

Unaudited Interim Consolidated Statements of Financial Position - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
ASSETS
Fixed maturities, available-for-sale, at fair value (amortized cost: 2020-$346,511; 2019-$346,574; 2020-net of $152 allowance for credit losses)	[1]	$ 400,816		$ 391,096
Fixed maturities, held-to-maturity, at amortized cost (2020-net of $9 allowance for credit losses; fair value: 2020-$2,264; 2019-$2,302)	[1]	1,901	[2]	1,933
Fixed maturities, trading, at fair value (amortized cost: 2020-$4,353: 2019-$3,917)	[1]	4,371		3,884
Assets supporting experience-rated contractholder liabilities, at fair value	[1]	23,961		21,597
Equity securities, at fair value (cost: 2020-$5,395; 2019-$5,560)	[1]	7,025		7,522
Commercial mortgage and other loans (net of $235 and $121 allowance for credit losses; includes $915 and $228 of loans measured at fair value under the fair value option at September 30, 2020 and December 31, 2019, respectively)	[1]	64,541	[2]	63,559
Policy loans		11,502		12,096
Other invested assets (2020-net of $2 allowance for credit losses; includes $5,949 and $5,646 of assets measured at fair value at September 30, 2020 and December 31, 2019, respectively)	[1]	16,921	[2]	15,606
Short-term investments (2020-net of $1 allowance for credit losses)		10,015		5,467
Total investments		541,053		522,760
Cash and cash equivalents	[1]	20,658		16,327
Accrued investment income	[1]	3,129		3,330
Deferred policy acquisition costs		18,599	[2]	19,912
Value of business acquired		1,131		1,110
Other assets (2020-net of $9 allowance for credit losses)	[1]	21,536	[2]	20,832
Separate account assets		305,483		312,281
TOTAL ASSETS		911,589		896,552
LIABILITIES
Future policy benefits		303,733		293,527
Policyholders’ account balances		159,346		152,110
Policyholders’ dividends		8,978	[2]	6,988
Securities sold under agreements to repurchase		10,874		9,681
Cash collateral for loaned securities		3,071		4,213
Income taxes		12,111	[2]	11,378
Short-term debt		1,113		1,933
Long-term debt		20,169		18,646
Other liabilities (2020-net of $19 allowance for credit losses)	[1]	18,579	[2]	20,802
Separate account liabilities		305,483		312,281
Total liabilities		844,699		832,833
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY
Preferred Stock ($.01 par value; 10,000,000 shares authorized; none issued)		0		0
Common Stock ($.01 par value; 1,500,000,000 shares authorized; 666,305,189 shares issued as of both September 30, 2020 and December 31, 2019)		6		6
Additional paid-in capital		25,563		25,532
Common Stock held in treasury, at cost (270,873,244 and 267,472,781 shares at September 30, 2020 and December 31, 2019, respectively)		(19,725)		(19,453)
Accumulated other comprehensive income (loss)		30,001		24,039
Retained earnings		30,372		32,991
Total Prudential Financial, Inc. equity		66,217		63,115
Noncontrolling interests		673		604
Total equity		66,890		63,719
TOTAL LIABILITIES AND EQUITY		911,589		896,552
Additional Paid-in Capital
EQUITY
Total equity		25,563		25,532
Consolidated VIEs for Which the Company is the Investment Manager
ASSETS
TOTAL ASSETS		5,365		5,048
LIABILITIES
Total liabilities		1,533		1,578
Notes Issued by Consolidated VIEs | Consolidated VIEs for Which the Company is the Investment Manager
LIABILITIES
Total liabilities	[1]	$ 1,242		$ 1,274

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

XML

Unaudited Interim Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
Fixed Maturities, AFS, amortized cost		$ 346,511		$ 346,574
Fixed Maturities, AFS, allowance for credit losses		152
Fixed Maturities, HTM, at fair value		2,264		2,302
Fixed Maturities, HTM, allowance for credit losses		9
Fixed Maturities, Trading, amortized cost		4,353		3,917
Equity Securities, AFS, amortized cost		5,395		5,560
Short-term investments (2020-net of $1 allowance for credit losses)		10,015		5,467
Commercial mortgage and other loans	[1]	64,541	[2]	63,559
Commercial mortgage and other loans, allowance for credit losses		235		121
Other invested assets, at fair value		5,949		5,646
Other invested assets, allowance for credit losses	[1]	16,921	[2]	15,606
Notes issued by consolidated VIEs		844,699		832,833
Other liabilities, allowance for credit losses	[1]	$ 18,579	[2]	$ 20,802
Preferred stock, par value (in dollars per share)		$ 0.01		$ 0.01
Preferred Stock, shares authorized		10,000,000		10,000,000
Preferred Stock, shares issued		0		0
Common Stock, par value (in dollars per share)		$ 0.01		$ 0.01
Common Stock, shares authorized		1,500,000,000		1,500,000,000
Common Stock, Shares, Issued		666,305,189		666,305,189
Treasury Stock, Shares		270,873,244		267,472,781
ASU 2016-13
Short-term investments (2020-net of $1 allowance for credit losses)		$ 1
Fair value option
Commercial mortgage and other loans		915		$ 228
Notes issued by consolidated VIEs		775		$ 800
Leveraged lease loans
Other invested assets, allowance for credit losses		2
ASU 2016-13
Other assets, allowance for credit losses		9
Other liabilities, allowance for credit losses		$ 19

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

XML

Unaudited Interim Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
REVENUES
Premiums	$ 7,482	$ 6,937	$ 22,839	$ 22,972
Policy charges and fee income	1,464	1,519	4,476	4,463
Net investment income	4,446	4,438	12,834	13,044
Asset management and service fees	1,120	1,038	3,144	3,137
Other income (loss)	992	320	(125)	2,217
Realized investment gains (losses), net	(79)	853	(2,164)	(249)
Total revenues	15,425	15,105	41,004	45,584
BENEFITS AND EXPENSES
Policyholders' benefits	8,312	7,722	25,768	25,037
Interest credited to policyholders' account balances	1,151	1,106	3,375	3,729
Dividends to policyholders	554	667	1,008	1,681
Amortization of deferred policy acquisition costs	638	591	1,882	1,808
General and administrative expenses	3,323	3,294	10,194	9,588
Total benefits and expenses	13,978	13,380	42,227	41,843
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURES	1,447	1,725	(1,223)	3,741
Total income tax expense (benefit)	(50)	332	7	726
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest	1,497	1,393	(1,230)	3,015
Equity in earnings of operating joint ventures, net of taxes	10	32	62	85
NET INCOME (LOSS)	1,507	1,425	(1,168)	3,100
Less: Income (loss) attributable to noncontrolling interests	20	7	25	42
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.	$ 1,487	$ 1,418	$ (1,193)	$ 3,058
Basic earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc. (in dollars per share)	$ 3.72	$ 3.47	$ (3.06)	$ 7.45
Diluted earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc. (in dollars per share)	$ 3.70	$ 3.44	$ (3.06)	$ 7.35

XML

Unaudited Interim Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
NET INCOME (LOSS)	$ 1,507	$ 1,425	$ (1,168)	$ 3,100
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments for the period	329	(174)	122	(66)
Net unrealized investment gains (losses)	(1,853)	4,776	6,894	21,571
Defined benefit pension and postretirement unrecognized periodic benefit (cost)	74	23	218	104
Total	(1,450)	4,625	7,234	21,609
Less: Income tax expense (benefit) related to other comprehensive income (loss)	(620)	1,051	1,265	4,961
Other comprehensive income (loss), net of taxes	(830)	3,574	5,969	16,648
Comprehensive income (loss)	677	4,999	4,801	19,748
Less: Comprehensive income (loss) attributable to noncontrolling interests	26	5	32	45
Comprehensive income (loss) attributable to Prudential Financial, Inc.	$ 651	$ 4,994	$ 4,769	$ 19,703

XML

Unaudited Interim Consolidated Statements of Equity - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Common Stock Held in Treasury	Common Stock Held in Treasury Common Stock	Accumulated Other Comprehensive Income (Loss)	Total Prudential Financial, Inc. Equity	Noncontrolling Interests	Cumulative effect of adoption of accounting changes		Cumulative effect of adoption of accounting changes Retained Earnings		Cumulative effect of adoption of accounting changes Accumulated Other Comprehensive Income (Loss)	[1]	Cumulative effect of adoption of accounting changes Total Prudential Financial, Inc. Equity
Balance at Dec. 31, 2018	$ 49,031	$ 6	$ 24,828	$ 30,470		$ (17,593)	$ 10,906	$ 48,617	$ 414	$ (14)	[1]	$ (21)	[1]	$ 7		$ (14)	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common Stock acquired	(500)					(500)		(500)
Contributions from noncontrolling interests	26								26
Distributions to noncontrolling interests	(4)								(4)
Stock-based compensation programs	85		(46)			131		85
Dividends declared on Common Stock	(415)			(415)				(415)
Comprehensive income:
Net income (loss)	937			932				932	5
Other comprehensive income (loss), net of tax	6,304						6,305	6,305	(1)
Total comprehensive income (loss)	7,241							7,237	4
Balance at Mar. 31, 2019	55,450	6	24,782	30,966		(17,962)	17,218	55,010	440
Balance at Dec. 31, 2018	49,031	6	24,828	30,470		(17,593)	10,906	48,617	414	(14)	[1]	(21)	[1]	$ 7		(14)	[1]
Comprehensive income:
Net income (loss)	3,100
Other comprehensive income (loss), net of tax	16,648
Total comprehensive income (loss)	19,748
Balance at Sep. 30, 2019	66,314	6	25,351	32,269	$ (19,386)		27,558	65,798	516
Balance at Mar. 31, 2019	55,450	6	24,782	30,966		(17,962)	17,218	55,010	440
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common Stock acquired	(500)				(500)			(500)
Contributions from noncontrolling interests	25								25
Distributions to noncontrolling interests	(16)								(16)
Consolidations (deconsolidations) of noncontrolling interests	8								8
Stock-based compensation programs	89		43		46			89
Dividends declared on Common Stock	(411)			(411)				(411)
Comprehensive income:
Net income (loss)	738			708				708	30
Other comprehensive income (loss), net of tax	6,770						6,764	6,764	6
Total comprehensive income (loss)	7,508							7,472	36
Balance at Jun. 30, 2019	62,153	6	24,825	31,263	(18,416)		23,982	61,660	493
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common Stock acquired	(1,000)				(1,000)			(1,000)
Exchangeable Surplus Notes conversion	502		502					502
Contributions from noncontrolling interests	54								54
Distributions to noncontrolling interests	(36)								(36)
Stock-based compensation programs	54		24		30			54
Dividends declared on Common Stock	(412)			(412)				(412)
Comprehensive income:
Net income (loss)	1,425			1,418				1,418	7
Other comprehensive income (loss), net of tax	3,574						3,576	3,576	(2)
Total comprehensive income (loss)	4,999							4,994	5
Balance at Sep. 30, 2019	66,314	6	25,351	32,269	(19,386)		27,558	65,798	516
Balance at Dec. 31, 2019	63,719	6	25,532	32,991		(19,453)	24,039	63,115	604	(99)	[2]	(99)	[2]			(99)	[2]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common Stock acquired	(500)					(500)		(500)
Contributions from noncontrolling interests	31								31
Distributions to noncontrolling interests	(11)								(11)
Stock-based compensation programs	86		(26)			112		86
Dividends declared on Common Stock	(445)			(445)				(445)
Comprehensive income:
Net income (loss)	(270)			(271)				(271)	1
Other comprehensive income (loss), net of tax	(1,439)						(1,439)	(1,439)	0
Total comprehensive income (loss)	(1,709)							(1,710)	1
Balance at Mar. 31, 2020	61,072	6	25,506	32,176		(19,841)	22,600	60,447	625
Balance at Dec. 31, 2019	63,719	6	25,532	32,991		(19,453)	24,039	63,115	604	$ (99)	[2]	$ (99)	[2]			$ (99)	[2]
Comprehensive income:
Net income (loss)	(1,168)
Other comprehensive income (loss), net of tax	5,969
Total comprehensive income (loss)	4,801
Balance at Sep. 30, 2020	66,890	6	25,563	30,372	(19,725)		30,001	66,217	673
Balance at Mar. 31, 2020	61,072	6	25,506	32,176		(19,841)	22,600	60,447	625
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Contributions from noncontrolling interests	4								4
Distributions to noncontrolling interests	(23)								(23)
Stock-based compensation programs	63		7			56		63
Dividends declared on Common Stock	(441)			(441)				(441)
Comprehensive income:
Net income (loss)	(2,405)			(2,409)				(2,409)	4
Other comprehensive income (loss), net of tax	8,238						8,237	8,237	1
Total comprehensive income (loss)	5,833							5,828	5
Balance at Jun. 30, 2020	66,508	6	25,513	29,326		$ (19,785)	30,837	65,897	611
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Contributions from noncontrolling interests	50								50
Distributions to noncontrolling interests	(14)								(14)
Consolidations (deconsolidations) of noncontrolling interests	0								0
Stock-based compensation programs	110		50		60			110
Dividends declared on Common Stock	(441)			(441)				(441)
Comprehensive income:
Net income (loss)	1,507			1,487				1,487	20
Other comprehensive income (loss), net of tax	(830)						(836)	(836)	6
Total comprehensive income (loss)	677							651	26
Balance at Sep. 30, 2020	$ 66,890	$ 6	$ 25,563	$ 30,372	$ (19,725)		$ 30,001	$ 66,217	$ 673

[1] Includes the impact from the adoption of ASU 2017-08 and 2017-12. See Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.

[2] Includes the impact from the adoption of ASU 2016-13. See Note 2.

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Unaudited Interim Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020		Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (1,168)		$ 3,100
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Realized investment (gains) losses, net	2,164		249
Policy charges and fee income	(1,995)		(2,117)
Interest credited to policyholders’ account balances	3,375		3,729
Depreciation and amortization	448		352
(Gains) losses on assets supporting experience-rated contractholder liabilities, net	(393)		(832)
Change in:
Deferred policy acquisition costs	(206)		(414)
Future policy benefits and other insurance liabilities	7,656		7,718
Income taxes	(331)		(245)
Derivatives, net	6,477		5,225
Other, net	(3,146)		(1,125)
Cash flows from (used in) operating activities	12,881		15,640
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	31,989		38,356
Fixed maturities, held-to-maturity	76		84
Fixed maturities, trading	444		284
Assets supporting experience-rated contractholder liabilities	22,534		11,631
Equity securities	1,974		2,087
Commercial mortgage and other loans	3,629		4,483
Policy loans	1,862		1,717
Other invested assets	1,376		1,074
Short-term investments	35,401		27,675
Payments for the purchase/origination of:
Fixed maturities, available-for-sale	(39,692)		(48,162)
Fixed maturities, trading	(869)		(733)
Assets supporting experience-rated contractholder liabilities	(24,390)		(11,731)
Equity securities	(2,025)		(2,094)
Commercial mortgage and other loans	(3,913)		(6,807)
Policy loans	(1,700)		(1,440)
Other invested assets	(2,089)		(1,667)
Short-term investments	(40,009)		(28,704)
Dispositions, net of cash disposed	1,454		0
Derivatives, net	434		1,170
Other, net	(225)		(339)
Cash flows from (used in) investing activities	(13,739)		(13,116)
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholders’ account deposits	33,268		21,140
Policyholders’ account withdrawals	(26,944)		(19,734)
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities	50		89
Cash dividends paid on Common Stock	(1,325)		(1,237)
Net change in financing arrangements (maturities 90 days or less)	(56)		(33)
Common Stock acquired	(500)		(1,940)
Common Stock reissued for exercise of stock options	106		107
Proceeds from the issuance of debt (maturities longer than 90 days)	2,948		2,923
Repayments of debt (maturities longer than 90 days)	(2,113)		(1,338)
Proceeds from notes issued by consolidated VIEs	0		925
Repayments of notes issued by consolidated VIEs	(19)		(638)
Other, net	(349)		94
Cash flows from (used in) financing activities	5,066		358
Effect of foreign exchange rate changes on cash balances	122		56
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	4,330		2,938
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR	16,474		15,495
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	20,804		18,433
NON-CASH TRANSACTIONS DURING THE PERIOD
Treasury Stock shares issued for stock-based compensation programs	147		174
Conversion of surplus notes into Common Stock	0		502
RECONCILIATION TO THE UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Cash and cash equivalents	20,658	[1]	18,289
Restricted cash and restricted cash equivalents (included in “Other assets”)	146		144
Total cash, cash equivalents, restricted cash and restricted cash equivalents	20,804		18,433
Pension Risk Transfer
NON-CASH TRANSACTIONS DURING THE PERIOD
Assets Received, excluding cash and cash equivalents	317		445
Liabilities Assumed	584		447
Net cash received	$ 267		$ 2

[1] See Note 4 for details of balances associated with variable interest entities.

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Business and Basis of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Basis of Presentation

BUSINESS AND BASIS OF PRESENTATION

Prudential Financial, Inc. (“Prudential Financial”) and its subsidiaries (collectively, “Prudential” or the “Company”) provide a wide range of insurance, investment management, and other financial products and services to both individual and institutional customers throughout the United States and in many other countries. Principal products and services provided include life insurance, annuities, retirement-related services, mutual funds and investment management.

The Company’s principal operations are comprised of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the U.S. Workplace Solutions, U.S. Individual Solutions, and Assurance IQ divisions), the International Businesses, the Closed Block division, and the Company’s Corporate and Other operations. The U.S. Workplace Solutions division consists of the Retirement and Group Insurance businesses, the U.S. Individual Solutions division consists of the Individual Annuities and Individual Life businesses, and the Assurance IQ division consists of the Assurance IQ business. In October 2019, the Company completed the acquisition of Assurance IQ, LLC (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. The Company’s Corporate and Other operations include corporate items and initiatives that are not allocated to business segments and businesses that have been or will be divested or placed in run-off, excluding the Closed Block division.

Basis of Presentation

The Unaudited Interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). The Unaudited Interim Consolidated Financial Statements include the accounts of Prudential Financial, entities over which the Company exercises control, including majority-owned subsidiaries and minority-owned entities such as limited partnerships in which the Company is the general partner and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. See Note 4 for additional information on the Company’s consolidated variable interest entities. Intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments necessary for a fair statement of the financial position and results of operations have been made. All such adjustments are of a normal, recurring nature. Interim results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining deferred policy acquisition costs (“DAC”) and related amortization; policyholders’ account balances related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and fixed annuity products; value of business acquired (“VOBA”) and its amortization; amortization of deferred sales inducements (“DSI”); measurement of goodwill and any related impairment; valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”); future policy benefits including guarantees; pension and other postretirement benefits; provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

COVID-19

Beginning in the first quarter of 2020, the outbreak of the novel coronavirus (“COVID-19”) has resulted in extreme stress and disruption in the global economy and financial markets, and has adversely impacted, and may continue to adversely impact, our results of operations, financial condition and cash flows. Due to the highly uncertain nature of these conditions, it is not possible to estimate the ultimate impacts at this time. The risks may have manifested, and may continue to manifest, in our financial statements in the areas of, among others, i) investments: increased risk of loss on our investments due to default or deterioration in credit quality or value; ii) insurance liabilities and related balances: potential changes to assumptions regarding investment returns, mortality, morbidity and policyholder behavior which are reflected in our insurance liabilities and certain related balances (e.g., DAC, VOBA, etc.); and iii) goodwill: the macroeconomic environment may also result in the need to recognize an impairment of goodwill which could negatively impact our results of operations and financial condition. We cannot predict what impact the COVID-19 pandemic will ultimately have on the global economy, markets or our businesses.

Business Dispositions

The Prudential Life Insurance Company of Korea, Ltd.

On August 31, 2020, Prudential International Insurance Holdings, Ltd. (“PIIH”), a subsidiary of Prudential Financial, successfully completed the sale of The Prudential Life Insurance Company of Korea, Ltd. (“POK”) to KB Financial Group Inc., for cash consideration of approximately 2.3 trillion Korean Won, equal to approximately U.S. $1.9 billion.

The after-tax loss on the sale of POK was approximately $800 million, including approximately $700 million of which was recorded during the second quarter of 2020 at the time the Company reported its investment in POK as “held for sale”, and approximately $100 million of which was recognized in the third quarter of 2020 reflective of final balances at the completion of the sale.

Prudential Life Insurance Company of Taiwan Inc.

On August 11, 2020, PIIH entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Taishin Financial Holding Co, Ltd. (the “Buyer”), pursuant to which PIIH has agreed to sell to the Buyer all of the issued and outstanding capital stock of Prudential Life Insurance Company of Taiwan Inc. (“POT”), the Company’s insurance business in Taiwan, for cash consideration of approximately 5.5 billion New Taiwan Dollars, equal to approximately U.S. $190 million at then current exchange rates, to be paid at closing, and contingent consideration with a fair value of approximately $26 million as of September 30, 2020. The fair value of the contingent consideration is tied to the level of yields for the 10-year Taiwanese Government bond two years after the signing of the transaction and can result in a maximum payout of $100 million if yields increase by 40 basis points.

The Share Purchase Agreement contains customary warranties and covenants of PIIH and the Buyer. The Company expects the transaction to close in 2021, subject to regulatory approval and the satisfaction of customary closing conditions.

In the third quarter of 2020, the Company is reporting its investment in POT as “held for sale” and recognized an estimated $300 million after-tax charge to earnings to adjust the carrying value of POT to the fair market value reflected in the purchase price. The ultimate after-tax loss will be based on balances at the closing date and could vary materially from the charge recorded in the third quarter.

The Company intends to use the proceeds of the transaction for general corporate purposes.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

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Significant Accounting Policies and Pronouncements

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Significant Accounting Policies and Pronouncements

SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the current fiscal year

and/or those that have been issued but not yet adopted as of September 30, 2020, and as of the date of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.

Adoption of ASU 2016-13

The Company adopted ASU 2016-13, and related ASUs, effective January 1, 2020 using the modified retrospective method for certain financial assets carried at amortized cost and certain off-balance sheet exposures. The modified retrospective method results in a cumulative effect adjustment to opening retained earnings. The Company adopted the guidance related to fixed maturities, available-for-sale on a prospective basis.

This ASU requires the use of a new current expected credit loss (“CECL”) model to account for expected credit losses on certain financial assets reported at amortized cost (e.g., loans held for investment, fixed maturities held-to-maturity, reinsurance receivables, etc.) and certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans and certain loan commitments). The guidance requires an entity to estimate lifetime credit losses related to such financial assets and credit exposures based on relevant information about past events, current conditions, and reasonable and supportable forecasts that may affect the collectability of the reported amounts. The standard also modifies the OTTI guidance for fixed maturities, available-for-sale requiring the use of an allowance rather than a direct write-down of the investment.

The impacts of this ASU on the Company’s Consolidated Financial Statements primarily include (1) A Cumulative Effect Adjustment Upon Adoption; (2) Changes to the Presentation of the Consolidated Statements of Financial Position and Consolidated Statements of Operations; and (3) Changes to Accounting Policies. Each of these impacts is described below. This section is meant to serve as an update to, and should be read in conjunction with, Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(1) Cumulative Effect Adjustment Upon Adoption

Summary of Transition Impact on the Consolidated Statements of Financial Position
Upon Adoption on January 1, 2020
	Increase/(Decrease)
	(in millions)
Fixed maturities, held-to-maturity	$	(9)
Commercial mortgage and other loans	(115)
Other invested assets	(1)
Deferred policy acquisition costs	9
Other assets	(6)
Total assets	$	(122)
Policyholders' dividends	$	(14)
Other liabilities	21
Income taxes	(30)
Total liabilities	(23)
Retained earnings	(99)
Total equity	(99)
Total liabilities and equity	$	(122)

The prospective adoption of the portions of the standard related to fixed maturities, available-for-sale resulted in no impact to opening retained earnings.

(2) Changes to the Presentation of the Consolidated Statements of Financial Position and Consolidated Statements of Operations

The allowance for credit losses is presented parenthetically on relevant line items in the Consolidated Statements of Financial Position. In the Consolidated Statements of Operations, realized investment gains (losses), net are presented on one

line item and will no longer reflect the breakout of OTTI on fixed maturity securities; OTTI on fixed maturity securities transferred to other comprehensive income (“OCI”); and other realized investment gains (losses), net. The presentation of this detail in prior periods is immaterial.

(3) Changes to Accounting Policies

This section has been updated to include the following changes in our accounting policies resulting from the adoption of ASU 2016-13.

Fixed maturities, available-for-sale

Fixed maturities, available-for-sale (“AFS debt securities”) are reported at fair value in the Statements of Financial Position. Interest income, and amortization of premium and accretion of discount are included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions relating to the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of impairments recognized in earnings and OCI. For mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is impaired or purchased with credit deterioration. For impaired mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively only if subsequent favorable or adverse changes in expected cash flows are not reflected in the allowance for credit losses. Prior to the adoption of this standard, the effective yield was adjusted prospectively regardless of whether the investment was impaired or not.

AFS debt securities with unrealized losses are reviewed quarterly to determine whether the amortized cost basis of the security is recoverable. In evaluating whether the amortized cost basis is recoverable, the Company considers several factors including, but not limited to the extent of the decline and the reasons for the decline in value (credit events, currency or interest-rate related, including general credit spread widening), and the financial condition of the issuer.

When an AFS debt security is in an unrealized loss position and (1) the Company has the intent to sell the AFS debt security, or (2) it is more likely than not the Company will be required to sell the AFS debt security before its anticipated recovery, or (3) the Company has deemed the AFS debt security to be uncollectable, the amortized cost basis of the AFS debt security is written down to fair value and any previously recognized allowance is reversed. The impairment is reported in “Realized investment gains (losses), net.” The new cost basis is not adjusted for subsequent increases in estimated fair value.

For an AFS debt security in an unrealized loss position that does not meet these conditions, the Company analyzes its ability to recover the amortized cost by comparing the net present value of projected future cash flows (the “net present value”) with the amortized cost of the security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the AFS debt security at the date of acquisition. The Company may use the estimated fair value of collateral, if any, as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment, an allowance for losses is recognized in earnings for the difference between amortized cost and the net present value and is limited to the difference between amortized cost and fair value of the AFS debt security. Any difference between the fair value and the net present value of the debt security at the impairment measurement date remains in “Other comprehensive income (loss).” Changes in the allowance for losses are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, any impairments on AFS debt securities were reported as an adjustment to the amortized cost basis of the security. Subsequent to the impairment, the AFS debt security was treated as if it were newly acquired at the date of impairment, and any increases in cash flows expected to be collected were accreted into net investment income over the life of the investment.

Fixed maturities, held-to-maturity

Fixed maturities, held-to-maturity are reported in the Statements of Financial Position at amortized cost net of the CECL allowance. The CECL allowance is generally determined based on probability of default and loss given default assumptions according to sector, credit quality and remaining time to maturity. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, fixed maturities, held-to-maturity deemed to be OTTI were written down to the net present value of expected cash flows. Any difference between the fair value and the net present value of the debt security at the impairment measurement date was recorded in “Other comprehensive income (loss).”

Interest income, and amortization of premium and accretion of discount are included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated timing and amount of cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of impairment recognized in earnings and OCI. For mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is impaired or purchased with credit deterioration. For impaired mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively only if subsequent favorable or adverse changes in expected cash flows are not reflected in the allowance for credit losses.

Prior to the adoption of this standard, the effective yield was adjusted prospectively regardless of whether the investment was impaired or not.

Commercial mortgage and other loans

Commercial mortgage and other loans are reported in the Statements of Financial Position at amortized cost net of the CECL allowance. Additionally, certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans, and certain unfunded mortgage loan commitments where the Company cannot unconditionally cancel the commitment) are also subject to a CECL allowance.

The CECL allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets or off-balance sheet credit exposures. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, and other collateralized and uncollateralized loans.

For commercial mortgage and agricultural mortgage loans (and related unfunded commitments where the Company cannot unconditionally cancel the commitment), the allowance is calculated using an internally developed CECL model.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions, and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate. Information about certain key inputs is detailed below.

Key factors in determining the internal credit ratings for commercial mortgage and agricultural mortgage loans include loan-to-value and debt-service-coverage ratios. Other factors include amortization, loan term, and estimated market value growth rate and volatility for the property type and region. The loan-to-value ratio compares the carrying amount of the loan to the fair value of the underlying property or properties collateralizing the loan and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the carrying amount of the loan exceeds the collateral value. A loan-to-value ratio less than 100% indicates an excess of collateral value over the carrying amount of the loan. The debt-service-coverage ratio is a property’s net operating income as a percentage of its debt service payments. Debt-service-coverage ratios less than 1.0 times indicate that a property’s operations do not generate enough income to cover the loan’s current debt payments. A debt-service-coverage ratio greater than 1.0 times indicates an excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company’s periodic review of the commercial mortgage and agricultural mortgage loan portfolios, which includes an internal appraisal of the underlying collateral value. The Company’s periodic review also includes a credit re-rating process, whereby the internal credit rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary credit quality rating system. See Note 3 for additional information related to the loan-to-value ratios and debt-service-coverage ratios related to the Company’s commercial mortgage and agricultural mortgage loan portfolios. Generally, every loan is re-rated at least annually.

Annual expected loss rates are based on historical default and loss experience factors. Using average lives, the annual expected loss rates are converted into life-of-loan loss expectations.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. The change in allowance is reported in “Realized investment gains (losses), net.” As it relates to unfunded commitments that are in scope of this guidance, the CECL allowance is reported in “Other liabilities,” and the change in the allowance is reported in “Realized investment gains (losses), net.”

When a commercial mortgage or other loan is deemed to be uncollectible, any allowance is reversed and a direct write-down of the carrying amount of the loan is recorded through “Realized investment gains (losses), net.” The carrying amount of the loan is not adjusted for subsequent recoveries in value.

The CECL allowance for other collateralized and uncollateralized loans carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, the impairments on commercial mortgage and other loans were collectively reviewed at a portfolio level for impairment based on probable incurred but not specifically identified losses with any such losses reflected in an allowance for credit losses. When a loan was individually identified to be impaired, the loan was individually evaluated for an allowance. Changes in these allowances were reported in “Realized investment gains (losses), net.” Additionally, an allowance for credit losses was not required on unfunded loan commitments.

As further described in Note 14, the Company’s PGIM business provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities (“GSEs”). The Company has agreed to indemnify the GSEs for a portion of the credit risk associated with certain of the mortgages it services. Management has established a CECL allowance that factors in historical loss information, current conditions and reasonable and supportable forecasts. The allowance also considers the remaining lives of the loans subject to the indemnification. The CECL allowance is included in “Other liabilities” and changes in the CECL allowance are reported in “Realized investment gains (losses), net.” Prior to the adoption of this standard, a credit loss allowance was not required.

Reinsurance Recoverables

Reinsurance recoverables are reported on the Statements of Financial Position in “Other Assets” net of the CECL allowance. The CECL allowance considers the credit quality of the reinsurance counterparty and is generally determined based on the probability of default and loss given default assumptions, after considering any applicable collateral arrangements. Additions to or releases of the allowance are reported in “Policyholders’ benefits.”

Prior to the adoption of this standard, an allowance for credit losses for reinsurance recoverables was established only when it was deemed probable that a reinsurer may fail to make payments to us in a timely manner.

Trade Receivables

Trade receivables related to Assurance IQ are reported in the Statements of Financial Position in “Other assets” net of the CECL allowance. The CECL allowance considers the credit quality of the counterparties and is generally determined based on probability of default and loss given default assumptions. Additions to or releases of the allowance are reported in “General and administrative expenses.” Prior to the adoption of this standard, the reserve was limited to an allowance for doubtful accounts.

Other ASUs adopted during the nine months ended September 30, 2020

Standard	Description	Effective date and method of adoption	Effect on the financial statements or other significant matters
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment	This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test, which measures a goodwill impairment by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill. Under the ASU, a goodwill impairment should be recorded for the amount by which the carrying amount of a reporting unit exceeds its fair value (capped by the total amount of goodwill allocated to the reporting unit).	January 1, 2020 using the prospective method.	The adoption of the ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	This ASU provides optional relief for certain contracts impacted by reference rate reform. The standard permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The ASU also temporarily (until December 31, 2022) allows hedge relationships to continue without de-designation upon changes due to reference rate reform.	March 12, 2020 to December 31, 2022 using the prospective method.	This ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements. The Company made the election under ASU 2020-04 for all applicable contracts as they converted from the current reference rate to the new reference rate.

ASU issued but not yet adopted as of September 30, 2020 — ASU 2018-12

ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the FASB on August 15, 2018 and is expected to have a significant impact on the Consolidated Financial Statements and Notes to the Consolidated Financial Statements. In October 2019, the FASB issued ASU 2019-09, Financial Services - Insurance (Topic 944): Effective Date to affirm its decision to defer the effective date of ASU 2018-12 to January 1, 2022 (with early adoption permitted), representing a one year extension from the original effective date of January 1, 2021. As a result of the COVID-19 pandemic, in November 2020 the FASB issued ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application to defer for an additional one year the effective date of ASU 2018-12 from January 1, 2022 to January 1, 2023, and to provide transition relief to facilitate the early adoption of the ASU. The transition relief would allow large calendar-year public companies that early adopt ASU 2018-12 to apply the guidance either as of January 1, 2020 or January 1, 2021 (and record transition adjustments as of January 1, 2020 or January 1, 2021, respectively) in the 2022 financial statements. Companies that do not early adopt ASU 2018-12 would apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the 2023 financial statements. ASU 2018-12 will impact, at least to some extent, the accounting and disclosure requirements for all long-duration insurance and investment contracts issued by the Company. Outlined below are four key areas of change, although there are other less significant changes not noted below. In addition to the impacts to the balance sheet upon adoption, the Company also expects an impact to how earnings emerge thereafter.

ASU 2018-12 Amended Topic	Description	Method of adoption	Effect on the financial statements or other significant matters
Cash flow assumptions used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products	Requires an entity to review, and if necessary, update the cash flow assumptions used to measure the liability for future policy benefits, for both changes in future assumptions and actual experience, at least annually using a retrospective update method with a cumulative catch-up adjustment recorded in a separate line item in the Consolidated Statements of Operations.	An entity may choose one of two adoption methods for the liability for future policy benefits: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in Accumulated other comprehensive income (loss) (“AOCI”) or (2) a full retrospective transition method.	The options for method of adoption and the impacts of such methods are under assessment.
Discount rate assumption used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products	Requires discount rate assumptions to be based on an upper-medium grade fixed income instrument yield, which will be updated each quarter with the impact recorded through OCI. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the discount rate assumptions.	As noted above, an entity may choose either a modified retrospective transition method or full retrospective transition method for the liability for future policy benefits. Under either method, for balance sheet remeasurement purposes, the liability for future policy benefits will be remeasured using current discount rates as of either the beginning of the prior year (if early adoption is elected) or the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.	Upon adoption, under either transition method, there will be an adjustment to AOCI as a result of remeasuring in-force contract liabilities using current upper-medium grade fixed income instrument yields. The adjustment upon adoption will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The magnitude of such adjustment is currently being assessed.
Amortization of deferred acquisition costs (DAC) and other balances	Requires DAC and other balances, such as unearned revenue reserves and DSI, to be amortized on a constant level basis over the expected term of the related contract, independent of expected profitability.	An entity may apply one of two adoption methods: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) if an entity chooses a full retrospective transition method for its liability for future policy benefits, as described above, it is required to also use a full retrospective transition method for DAC and other balances.	The options for method of adoption and the impacts of such methods are under assessment. Under the modified retrospective transition method, the Company would not expect a significant impact to the balance sheet, other than the impact of the removal of any related amounts in AOCI.
Market Risk Benefits (MRB)	Requires an entity to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value, and record MRB assets and liabilities separately on the Consolidated Statements of Financial Position. Changes in fair value of market risk benefits are recorded in net income, except for the portion of the change in MRB liabilities attributable to changes in an entity’s non-performance risk (“NPR”) which is recognized in OCI.	An entity shall adopt the guidance for market risk benefits using the retrospective transition method, which includes a cumulative effect adjustment on the balance sheet as of either the beginning of prior year (if early adoption is elected) or the beginning of the earliest period presented. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the balance of the market risk benefits upon adoption.	Upon adoption, the Company expects an impact to retained earnings for the difference between the fair value and carrying value of benefits not currently measured at fair value (e.g., guaranteed minimum death benefits on variable annuities) and an impact from reclassifying the cumulative effect of changes in NPR from retained earnings to AOCI. The magnitude of such adjustments is currently being assessed.

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Investments

9 Months Ended

Sep. 30, 2020

Investments [Abstract]

Investments

3. INVESTMENTS

Fixed Maturity Securities

The following tables set forth the composition of fixed maturity securities (excluding investments classified as trading), as of the dates indicated:

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	31,095	$	11,040	$	23	$	0	$	42,112
Obligations of U.S. states and their political subdivisions	10,555		2,052		4		0		12,603
Foreign government bonds	90,915		16,317		195		1		107,036
U.S. public corporate securities	92,988		16,259		454		64		108,729
U.S. private corporate securities(1)	35,846		3,586		192		29		39,211
Foreign public corporate securities	25,131		3,408		185		24		28,330
Foreign private corporate securities	27,934		1,785		485		30		29,204
Asset-backed securities(2)	14,070		168		104		0		14,134
Commercial mortgage-backed securities	15,096		1,263		6		4		16,349
Residential mortgage-backed securities(3)	2,881		228		1		0		3,108
Total fixed maturities, available-for-sale(1)	$	346,511	$	56,106	$	1,649	$	152	$	400,816

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Amortized Cost, Net of Allowance
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	915	$	265	$	0	$	1,180	$	0	$	915
Foreign public corporate securities	637		66		0		703		9		628
Foreign private corporate securities	85		2		0		87		0		85
Residential mortgage-backed securities(3)	273		21		0		294		0		273
Total fixed maturities, held-to-maturity(4)	$	1,910	$	354	$	0	$	2,264	$	9	$	1,901

__________

(1)Excludes notes with amortized cost of $6,466 million (fair value, $6,594 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, credit cards and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Excludes notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCI(4)
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	30,625	$	5,195	$	161	$	35,659	$	0
Obligations of U.S. states and their political subdivisions	10,068		1,437		8		11,497		0
Foreign government bonds	98,356		20,761		63		119,054		(34)
U.S. public corporate securities	87,566		11,030		257		98,339		(6)
U.S. private corporate securities(1)	34,410		2,243		120		36,533		0
Foreign public corporate securities	26,841		3,054		70		29,825		(1)
Foreign private corporate securities	27,619		1,201		580		28,240		0
Asset-backed securities(2)	13,067		147		40		13,174		(77)
Commercial mortgage-backed securities	14,978		610		14		15,574		0
Residential mortgage-backed securities(3)	3,044		159		2		3,201		(1)
Total fixed maturities, available-for-sale(1)	$	346,574	$	45,837	$	1,315	$	391,096	$	(119)

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	891	$	282	$	0	$	1,173
Foreign public corporate securities	649		64		0		713
Foreign private corporate securities	83		2		0		85
Residential mortgage-backed securities(3)	310		21		0		331
Total fixed maturities, held-to-maturity(5)	$	1,933	$	369	$	0	$	2,302

__________

(1)Excludes notes with amortized cost of $4,751 million (fair value, $4,757 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, home equity and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Represents the amount of unrealized losses remaining in AOCI, from the impairment measurement date. Amount excludes $362 million of net unrealized gains on impaired available-for-sale securities and $1 million of net unrealized gains on impaired held-to-maturity securities relating to changes in the value of such securities subsequent to the impairment measurement date.

(5)Excludes notes with amortized cost of $4,998 million (fair value, $5,401 million), which have been offset with the associated debt under a netting agreement.

The following table sets forth the fair value and gross unrealized losses on available-for-sale fixed maturity securities without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the date indicated:

	September 30, 2020
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	1,068	$	23	$	0	$	0	$	1,068	$	23
Obligations of U.S. states and their political subdivisions	200		4		0		0		200		4
Foreign government bonds	5,548		190		44		5		5,592		195
U.S. public corporate securities	6,939		261		1,332		174		8,271		435
U.S. private corporate securities	2,452		105		847		86		3,299		191
Foreign public corporate securities	2,022		126		367		52		2,389		178
Foreign private corporate securities	3,442		105		3,311		376		6,753		481
Asset-backed securities	5,145		48		4,742		56		9,887		104
Commercial mortgage-backed securities	160		4		94		2		254		6
Residential mortgage-backed securities	148		1		0		0		148		1
Total fixed maturities, available-for-sale	$	27,124	$	867	$	10,737	$	751	$	37,861	$	1,618

The following table sets forth the fair value and gross unrealized losses on fixed maturity securities aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the date indicated:

	December 31, 2019
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities(1):
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	4,950	$	161	$	267	$	0	$	5,217	$	161
Obligations of U.S. states and their political subdivisions	273		8		0		0		273		8
Foreign government bonds	2,332		60		126		3		2,458		63
U.S. public corporate securities	3,944		85		2,203		172		6,147		257
U.S. private corporate securities	2,283		44		1,563		76		3,846		120
Foreign public corporate securities	1,271		23		496		47		1,767		70
Foreign private corporate securities	1,466		33		5,666		547		7,132		580
Asset-backed securities	3,979		12		4,433		28		8,412		40
Commercial mortgage-backed securities	1,193		10		164		4		1,357		14
Residential mortgage-backed securities	207		1		88		1		295		2
Total	$	21,898	$	437	$	15,006	$	878	$	36,904	$	1,315

__________ 

(1)As of December 31, 2019, there were no securities classified as held-to-maturity in a gross unrealized loss position.

As of September 30, 2020, the gross unrealized losses on fixed maturity available-for-sale securities without an allowance were composed of $970 million related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $648 million related to other than high or highest quality securities based on NAIC or equivalent rating. As of September 30, 2020, the $751 million of gross unrealized losses of twelve months or more were concentrated in the Company’s corporate securities within the energy, finance and utility sectors.

As of December 31, 2019, the gross unrealized losses on fixed maturity securities were composed of $973 million related to “1” highest quality or “2” high quality securities based on the NAIC or equivalent rating and $342 million related to other than high or highest quality securities based on NAIC or equivalent rating. As of December 31, 2019, the $878 million of gross unrealized losses of twelve months or more were concentrated in the Company’s corporate securities within the energy, consumer non-cyclical and finance sectors.

In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at September 30, 2020. These conclusions were based on a detailed analysis of the underlying credit and cash flows on each security. Gross unrealized losses are primarily attributable to general credit spread widening, increases in interest rates, foreign currency exchange rate movements and the financial condition or near-term prospects of the issuer. As of September 30, 2020, 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 basis.

The following table sets forth the amortized cost or amortized cost, net of allowance and fair value of fixed maturities by contractual maturities, as of the date indicated:

	September 30, 2020
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost, Net of Allowance		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	13,497	$	14,096	$	117	$	118
Due after one year through five years	50,428		53,969		0		0
Due after five years through ten years	66,321		74,393		600		676
Due after ten years(1)	184,218		224,767		911		1,176
Asset-backed securities	14,070		14,134		0		0
Commercial mortgage-backed securities	15,096		16,349		0		0
Residential mortgage-backed securities	2,881		3,108		273		294
Total	$	346,511	$	400,816	$	1,901	$	2,264

__________

(1)Excludes available-for-sale notes with amortized cost of $6,466 million (fair value, $6,594 million) and held-to-maturity notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed and residential mortgage-backed securities are shown separately in the table above, as they do not have a single maturity date.

The following table sets forth the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on write-downs, impairments and the allowance for credit losses of fixed maturities, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	4,284	$	7,190	$	14,654	$	24,011
Proceeds from maturities/prepayments	7,181		5,315		17,603		14,507
Gross investment gains from sales and maturities	578		565		1,451		1,276
Gross investment losses from sales and maturities	(129)		(62)		(339)		(345)
OTTI recognized in earnings(2)	N/A		(143)		N/A		(242)
Write-downs recognized in earnings(3)	(134)		N/A		(289)		N/A
(Addition to) release of allowance for credit losses(4)	86		N/A		(152)		N/A
Fixed maturities, held-to-maturity:
Proceeds from maturities/prepayments(5)	$	14	$	47	$	77	$	84
(Addition to) release of allowance for credit losses(4)	0		N/A		0		N/A

__________ 

(1)Includes $268 million and $162 million of non-cash related proceeds due to the timing of trade settlements for the nine months ended September 30, 2020 and 2019, respectively.

(2)For the three and nine months ended September 30, 2019, amounts exclude the portion of OTTI amounts remaining in OCI, representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.

(3)For the three and nine months ended September 30, 2020, amounts represent write-downs of credit adverse securities, write-downs on securities approaching maturity related to foreign exchange movements and securities actively marketed for sale.

(4)Effective January 1, 2020, credit losses on available-for-sale and held-to-maturity fixed maturity securities are recorded within the “allowance for credit losses.”

(5)Includes $1 million and less than $1 million of non-cash related proceeds due to the timing of trade settlements for the nine months ended September 30, 2020 and 2019, respectively.

The following tables set forth the activity in the allowance for credit losses for fixed maturity securities, as of the date indicated: 

	Three Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	38	$	199	$	0	$	1	$	0	$	238
Additions to allowance for credit losses not previously recorded	0		1		33		0		0		0		34
Reductions for securities sold during the period	0		0		(8)		0		0		0		(8)
Additions (reductions) on securities with previous allowance	0		0		(12)		0		3		0		(9)
Write-downs charged against the allowance	0		(38)		(65)		0		0		0		(103)
Balance, end of period	$	0	$	1	$	147	$	0	$	4	$	0	$	152

	Nine Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of year	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Additions to allowance for credit losses not previously recorded	0		39		238		0		1		0		278
Reductions for securities sold during the period	0		0		(36)		0		0		0		(36)
Additions (reductions) on securities with previous allowance	0		0		10		0		3		0		13
Write-downs charged against the allowance	0		(38)		(65)		0		0		0		(103)
Balance, end of period	$	0	$	1	$	147	$	0	$	4	$	0	$	152

	Three Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9
Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

	Nine Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of year	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Cumulative effect of adoption of ASU 2016-13	0		0		9		0		0		0		9
Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

See Note 2 for additional information about the Company’s methodology for developing our allowance and expected losses.

For the nine months ended September 30, 2020, the increase in the allowance for credit losses on available-for-sale securities was primarily related to adverse projected cash flows on public and private corporate securities.

The Company did not have any fixed maturity securities purchased with credit deterioration, as of September 30, 2020.

Assets Supporting Experience-Rated Contractholder Liabilities

The following table sets forth the composition of “Assets supporting experience-rated contractholder liabilities,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value
	(in millions)
Short-term investments and cash equivalents	$	1,103	$	1,103	$	277	$	277
Fixed maturities:
Corporate securities	14,060		14,909		13,143		13,603
Commercial mortgage-backed securities	1,845		1,946		1,845		1,896
Residential mortgage-backed securities(1)	1,064		1,126		1,134		1,158
Asset-backed securities(2)	1,691		1,716		1,639		1,662
Foreign government bonds	889		898		802		814
U.S. government authorities and agencies and obligations of U.S. states	358		438		341		397
Total fixed maturities(3)	19,907		21,033		18,904		19,530
Equity securities	1,603		1,825		1,465		1,790
Total assets supporting experience-rated contractholder liabilities(4)	$	22,613	$	23,961	$	20,646	$	21,597

__________ 

(1)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(2)Includes collateralized loan obligations, auto loans, education loans, home equity and other asset types. Collateralized loan obligations at fair value were $1,133 million and $1,060 million as of September 30, 2020 and December 31, 2019, respectively, all of which were rated AAA.

(3)As a percentage of amortized cost, 94% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of both September 30, 2020 and December 31, 2019.

(4)As a percentage of amortized cost, 79% and 77% of the portfolio consisted of public securities as of September 30, 2020 and December 31, 2019, respectively.

The net change in unrealized gains (losses) from assets supporting experience-rated contractholder liabilities still held at period end, recorded within “Other income (loss),” was $255 million and $99 million during the three months ended September 30, 2020 and 2019, respectively, and $397 million and $868 million during the nine months ended September 30, 2020 and 2019, respectively.

Equity Securities

The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss),” was $324 million and $52 million during the three months ended September 30, 2020 and 2019, respectively, and $(332) million and $632 million during the nine months ended September 30, 2020 and 2019, respectively.

Concentrations of Financial Instruments

The Company monitors its concentrations of financial instruments and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any single issuer.

As of the dates indicated, the Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s equity included securities of the U.S. government and certain U.S. government agencies and securities guaranteed by the U.S. government, as well as the securities disclosed below:

	September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Japanese government and government agency securities:
Fixed maturities, available-for-sale	$	77,749	$	90,480	$	74,118	$	89,546
Fixed maturities, held-to-maturity	892		1,148		869		1,143
Fixed maturities, trading	24		24		23		23
Assets supporting experience-rated contractholder liabilities	826		831		653		664
Total	$	79,491	$	92,483	$	75,663	$	91,376

	September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in South Korean government and government agency securities:
Fixed maturities, available-for-sale	$	26	$	34	$	10,823	$	13,322
Assets supporting experience-rated contractholder liabilities	15		16		15		16
Total	$	41	$	50	$	10,838	$	13,338

The decrease in South Korean government and government agency securities from December 31, 2019 to September 30, 2020 was due to the sale of POK which was completed in August 2020.

Commercial Mortgage and Other Loans

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amount (in millions)		% of Total		Amount (in millions)		% of Total
Commercial mortgage and agricultural property loans by property type:
Office	$	12,677	19.9	%	$	13,462	21.4	%
Retail	7,677		12.0		8,379		13.3
Apartments/Multi-Family	18,385		28.8		17,348		27.6
Industrial	13,639		21.4		13,226		21.1
Hospitality	2,390		3.7		2,415		3.9
Other	5,051		7.9		4,533		7.2
Total commercial mortgage loans	59,819		93.7		59,363		94.5
Agricultural property loans	4,015		6.3		3,472		5.5
Total commercial mortgage and agricultural property loans	63,834		100.0	%	62,835		100.0	%
Allowance for credit losses	(227)				(117)
Total net commercial mortgage and agricultural property loans	63,607				62,718
Other loans:
Uncollateralized loans	723				656
Residential property loans	104				124
Other collateralized loans	115				65
Total other loans	942				845
Allowance for credit losses	(8)				(4)
Total net other loans	934				841
Total net commercial mortgage and other loans(1)	$	64,541			$	63,559

__________ 

(1)Includes loans held for sale which are carried at fair value and are collateralized primarily by apartment complexes. As of September 30, 2020 and December 31, 2019, the net carrying value of these loans was $915 million and $228 million, respectively.

As of September 30, 2020, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States (with the largest concentrations in California (27%), Texas (9%) and New York (8%)) and included loans secured by properties in Europe (7%), Asia (2%) and Australia (1%).

The following tables set forth the activity in the allowance for credit losses for commercial mortgage and other loans, as of the dates indicated:

	Three Months Ended September 30, 2020
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance, beginning of period	$	230	$	8	$	0	$	3	$	4	$	245
Addition to (release of) allowance for expected losses	(5)		1		0		0		1		(3)
Write-downs charged against the allowance	(7)		0		0		0		0		(7)
Other	0		0		0		0		0		0
Balance, end of period	$	218	$	9	$	0	$	3	$	5	$	235

	Nine Months Ended September 30, 2020
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance at December 31, 2019	$	114	$	3	$	0	$	0	$	4	$	121
Cumulative effect of adoption of ASU 2016-13	110		5		0		0		0		115
Addition to (release of) allowance for expected losses	1		1		0		0		1		3
Write-downs charged against the allowance	(7)		0		0		0		0		(7)
Other	0		0		0		3		0		3
Balance at September 30, 2020	$	218	$	9	$	0	$	3	$	5	$	235

See Note 2 for additional information about the Company’s methodology for developing our allowance and expected losses.

For the nine months ended September 30, 2020, the increase in the allowance for credit losses on commercial mortgage and other loans was primarily related to the cumulative effect of adoption of ASU 2016-13.The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses, as of the date indicated:

	September 30, 2020
	Amortized Cost by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
	(in millions)
Commercial Mortgage Loans
Loan-to-Value Ratio:
0%-59.99%	$	650	$	2,824	$	3,105	$	3,309	$	3,381	$	17,616	$	0	$	30,885
60%-69.99%	1,480		4,152		3,437		2,913		2,801		4,282		0		19,065
70%-79.99%	1,744		3,138		2,530		1,010		613		654		0		9,689
80% or greater	0		10		0		18		24		128		0		180
Total	$	3,874	$	10,124	$	9,072	$	7,250	$	6,819	$	22,680	$	0	$	59,819
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	3,759	$	9,490	$	8,590	$	7,009	$	6,525	$	21,045	$	0	$	56,418
1.0 - 1.2x	114		518		453		241		286		1,499		0		3,111
Less than 1.0x	1		116		29		0		8		136		0		290
Total	$	3,874	$	10,124	$	9,072	$	7,250	$	6,819	$	22,680	$	0	$	59,819
Agricultural Property Loans
Loan-to-Value Ratio:
0%-59.99%	$	724	$	482	$	360	$	531	$	397	$	1,320	$	0	$	3,814
60%-69.99%	87		72		39		3		0		0		0		201
70%-79.99%	0		0		0		0		0		0		0		0
80% or greater	0		0		0		0		0		0		0		0
Total	$	811	$	554	$	399	$	534	$	397	$	1,320	$	0	$	4,015
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	801	$	553	$	398	$	471	$	377	$	1,303	$	0	$	3,903
1.0 - 1.2x	10		0		1		59		5		5		0		80
Less than 1.0x	0		1		0		4		15		12		0		32
Total	$	811	$	554	$	399	$	534	$	397	$	1,320	$	0	$	4,015

Commercial mortgage loans
	December 31, 2019
	Debt Service Coverage Ratio
	>1.2X		1.0X to <1.2X		< 1.0X		Total
	(in millions)
Loan-to-Value Ratio:
0%-59.99%	$	31,027	$	701	$	217	$	31,945
60%-69.99%	17,090		1,145		42		18,277
70%-79.99%	8,020		719		28		8,767
80% or greater	209		143		22		374
Total commercial mortgage loans	$	56,346	$	2,708	$	309	$	59,363

Agricultural property loans
	December 31, 2019
	Debt Service Coverage Ratio
	>1.2X		1.0X to <1.2X		< 1.0X		Total
	(in millions)
Loan-to-Value Ratio:
0%-59.99%	$	3,289	$	57	$	14	$	3,360
60%-69.99%	112		0		0		112
70%-79.99%	0		0		0		0
80% or greater	0		0		0		0
Total agricultural property loans	$	3,401	$	57	$	14	$	3,472

See Note 2 for additional information about the Company’s commercial mortgage and other loans credit quality monitoring process.

The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status, as of the dates indicated:

	September 30, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	59,794	$	0	$	24	$	1	$	25	$	59,819	$	27
Agricultural property loans	4,014		0		0		1		1		4,015		15
Residential property loans	102		1		0		1		2		104		1
Other collateralized loans	115		0		0		0		0		115		0
Uncollateralized loans	723		0		0		0		0		723		0
Total	$	64,748	$	1	$	24	$	3	$	28	$	64,776	$	43

 __________

(1)As of September 30, 2020, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

	December 31, 2019
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	59,363	$	0	$	0	$	0	$	0	$	59,363	$	44
Agricultural property loans	3,458		1		0		13		14		3,472		13
Residential property loans	121		1		0		2		3		124		2
Other collateralized loans	65		0		0		0		0		65		0
Uncollateralized loans	656		0		0		0		0		656		0
Total	$	63,663	$	2	$	0	$	15	$	17	$	63,680	$	59

__________

(1)As of December 31, 2019, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Loans on non-accrual status recognized interest income of $2 million for both the three months and nine months ended September 30, 2020, respectively, and $17 million of these loans did not have a related allowance for credit losses as of September 30, 2020.

The Company did not have any significant losses on commercial mortgage and other loans purchased with credit deterioration as of September 30, 2020.

Other Invested Assets

The following table sets forth the composition of “Other invested assets,” as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	4,139	$	3,625
Hedge funds	2,333		1,947
Real estate-related	1,409		1,372
Subtotal equity method	7,881		6,944
Fair value:
Private equity	1,679		1,705
Hedge funds	1,965		2,172
Real estate-related	333		336
Subtotal fair value	3,977		4,213
Total LPs/LLCs	11,858		11,157
Real estate held through direct ownership(1)	2,517		2,388
Derivative instruments	1,201		877
Other(2)	1,345		1,184
Total other invested assets	$	16,921	$	15,606

_________ 

(1)As of September 30, 2020 and December 31, 2019, real estate held through direct ownership had mortgage debt of $436 million and $537 million, respectively.

(2)Primarily includes strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding the Company’s holdings in the Federal Home Loan Banks of New York and Boston, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the date indicated:

	September 30, 2020
	(in millions)
Fixed maturities	$	2,586
Equity securities	17
Commercial mortgage and other loans	203
Policy loans	289
Other invested assets	28
Short-term investments and cash equivalents	6
Total accrued investment income	$	3,129

There were $3 million and $15 million of write-downs on accrued investment income for the three and nine months ended September 30, 2020, respectively.

Net Investment Income

The following table sets forth “Net investment income” by investment type, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities, available-for-sale(1)	$	3,113	$	3,191	$	9,292	$	9,429
Fixed maturities, held-to-maturity(1)	59		58		176		173
Fixed maturities, trading	32		37		100		109
Assets supporting experience-rated contractholder liabilities	179		191		527		558
Equity securities	36		38		119		119
Commercial mortgage and other loans	608		636		1,866		1,863
Policy loans	147		160		450		463
Other invested assets	415		251		693		727
Short-term investments and cash equivalents	30		123		182		356
Gross investment income	4,619		4,685		13,405		13,797
Less: investment expenses	(173)		(247)		(571)		(753)
Net investment income	$	4,446	$	4,438	$	12,834	$	13,044

__________ 

(1)Includes income on credit-linked notes which are reported on the same financial statement line item as related surplus notes, as conditions are met for right to offset.

Realized Investment Gains (Losses), Net

The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities(1)	$	401	$	360	$	671	$	689
Commercial mortgage and other loans	41		20		65		34
Investment real estate	5		38		15		38
LPs/LLCs	8		2		2		(1)
Derivatives	(537)		433		(2,926)		(1,010)
Other	3		0		9		1
Realized investment gains (losses), net	$	(79)	$	853	$	(2,164)	$	(249)

__________ 

(1)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.

Net Unrealized Gains (Losses) on Investments within AOCI

The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Fixed maturity securities, available-for-sale—with OTTI(1)	$ N/A		$	243
Fixed maturity securities, available-for-sale—all other(1)	N/A		44,279
Fixed maturity securities, available-for-sale with an allowance	(23)		N/A
Fixed maturity securities, available-for-sale without an allowance	54,480		N/A
Derivatives designated as cash flow hedges(2)	1,407		832
Other investments(3)	(20)		(15)
Net unrealized gains (losses) on investments	$	55,844	$	45,339

__________ 

(1)Effective January 1, 2020, per ASU 2016-13, fixed maturity securities, available-for-sale are no longer required to be disclosed “with OTTI” and “all other.”

(2)For additional information on cash flow hedges, see Note 5.

(3)As of September 30, 2020, there were no net unrealized losses on held-to-maturity securities that were previously transferred from available-for-sale. Includes net unrealized gains on certain joint ventures that are strategic in nature and are included in “Other assets.”

Repurchase Agreements and Securities Lending

In the normal course of business, the Company sells securities under agreements to repurchase and enters into securities lending transactions. The following table sets forth the composition of “Securities sold under agreements to repurchase,” as of the dates indicated:

	September 30, 2020						December 31, 2019
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	9,944	$	553	$	10,497	$	9,431	$	0	$	9,431
Residential mortgage-backed securities	377		0		377		250		0		250
Total securities sold under agreements to repurchase(1)	$	10,321	$	553	$	10,874	$	9,681	$	0	$	9,681

__________ 

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

The following table sets forth the composition of “Cash collateral for loaned securities,” which represents the liability to return cash collateral received for the following types of securities loaned, as of the dates indicated:

	September 30, 2020						December 31, 2019
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	0	$	0	$	9	$	0	$	9
Obligations of U.S. states and their political subdivisions	108		0		108		33		0		33
Foreign government bonds	353		0		353		244		0		244
U.S. public corporate securities	2,161		0		2,161		2,996		0		2,996
Foreign public corporate securities	425		0		425		762		0		762
Commercial mortgage-backed securities	0		0		0		2		0		2
Equity securities	24		0		24		167		0		167
Total cash collateral for loaned securities(1)	$	3,071	$	0	$	3,071	$	4,213	$	0	$	4,213

__________ 

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

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Variable Interest Entities

9 Months Ended

Sep. 30, 2020

Variable Interest Entity, Measure of Activity [Abstract]

Variable Interest Entities

VARIABLE INTEREST ENTITIES

In the normal course of its activities, the Company enters into relationships with various special-purpose entities and other entities that are deemed to be variable interest entities (“VIEs”). For additional information, see Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Consolidated Variable Interest Entities

The table below reflects the carrying amount and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported. The liabilities primarily comprise obligations under debt instruments issued by the VIEs. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs.

	Consolidated VIEs for which the Company is the Investment Manager(1)				Other Consolidated VIEs(1)
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
	(in millions)
Fixed maturities, available-for-sale	$	107	$	104	$	290	$	285
Fixed maturities, held-to-maturity	85		83		863		839
Fixed maturities, trading	1,081		1,112		0		0
Assets supporting experience-rated contractholder liabilities	0		0		1		4
Equity securities	44		47		0		0
Commercial mortgage and other loans	976		883		0		0
Other invested assets	2,502		2,199		152		89
Cash and cash equivalents	140		166		0		0
Accrued investment income	6		4		4		4
Other assets	424		450		689		689
Total assets of consolidated VIEs	$	5,365	$	5,048	$	1,999	$	1,910
Other liabilities	$	291	$	304	$	11	$	13
Notes issued by consolidated VIEs(2)	1,242		1,274		0		0
Total liabilities of consolidated VIEs	$	1,533	$	1,578	$	11	$	13

 __________

(1)Total assets of consolidated VIEs reflect $2,892 million and $2,668 million as of September 30, 2020 and December 31, 2019, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.

(2)Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company. As of September 30, 2020, the maturities of these obligations were between 3 and 9 years.

Unconsolidated Variable Interest Entities

The Company has determined that it is not the primary beneficiary of certain VIEs for which it is the investment manager. The Company’s maximum exposure to loss resulting from its relationship with unconsolidated VIEs for which it is the investment manager is limited to its investment in the VIEs, which was $1,098 million and $1,021 million at September 30, 2020 and December 31, 2019, respectively. These investments are reflected in “Fixed maturities, available-for-sale,” “Fixed maturities, trading,” “Equity securities” and “Other invested assets.” There are no liabilities associated with these unconsolidated VIEs on the Company’s Unaudited Interim Consolidated Statements of Financial Position.

In the normal course of its activities, the Company will invest in limited partnerships and limited liability companies (“LPs/LLCs”), which include hedge funds, private equity funds and real estate-related funds and may or may not be VIEs. The Company’s maximum exposure to loss on these investments, both VIEs and non-VIEs, is limited to the amount of its investment. The Company classifies these investments as “Other invested assets” and its maximum exposure to loss associated with these entities was $11,858 million and $11,157 million as of September 30, 2020 and December 31, 2019, respectively.

In addition, in the normal course of its activities, the Company will invest in structured investments including VIEs for which it is not the investment manager. These structured investments typically invest in fixed income investments and are managed by third-parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited to the amount of its investment. See Note 3 for details regarding the carrying amounts and classification of these assets. The Company has not provided material financial or other support that was not contractually required to these structures. The Company has determined that it is not the primary beneficiary of these structures due to the fact that it does not control these entities.

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Derivative Instruments

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

5. DERIVATIVES AND HEDGING

Types of Derivative and Hedging Instruments

The Company utilizes various derivatives and hedging instruments to manage its risk. Commonly used derivative and non-derivative hedging instruments include, but are not necessarily limited to:

•Interest rate contracts: futures, swaps, forwards, options, caps and floors

•Equity contracts: futures, options and total return swaps

•Foreign exchange contracts: futures, options, forwards, swaps, and foreign currency debt instruments

•Credit contracts: single and index reference credit default swaps

Other types of financial contracts that the Company accounts for as derivatives are:

•To-be-announced (“TBA”) forward contracts, loan commitments, embedded derivatives and synthetic guaranteed investment contracts (“GICs”).

For detailed information on these contracts and the related strategies, see Note 5 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Primary Risks Managed by Derivatives

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 $1,190 million and $867 million as of September 30, 2020 and December 31, 2019, respectively, and total derivative liabilities of $573 million and $831 million as of September 30, 2020 and December 31, 2019, respectively, reflected in the Unaudited Interim Consolidated Statements of Financial Position.

Primary Underlying Risk /Instrument Type	September 30, 2020						December 31, 2019
			Fair Value						Fair Value
	Gross Notional		Assets		Liabilities		Gross Notional		Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	3,101	$	1,128	$	(100)	$	3,257	$	628	$	(73)
Interest Rate Forwards	249		11		(2)		205		4		(1)
Foreign Currency
Foreign Currency Forwards	2,194		51		(48)		1,461		22		(57)
Currency/Interest Rate
Foreign Currency Swaps	21,885		2,023		(246)		22,746		1,467		(302)
Total Derivatives Designated as Hedge Accounting Instruments	$	27,429	$	3,213	$	(396)	$	27,669	$	2,121	$	(433)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	151,469	$	20,256	$	(10,295)	$	141,162	$	10,249	$	(4,861)
Interest Rate Futures	16,651		12		(77)		17,095		4		(38)
Interest Rate Options	13,418		1,353		(257)		16,496		339		(238)
Interest Rate Forwards	3,077		22		0		2,218		18		(3)
Foreign Currency
Foreign Currency Forwards	36,539		746		(517)		26,604		208		(214)
Foreign Currency Options	0		0		0		0		0		0
Currency/Interest Rate
Foreign Currency Swaps	14,164		814		(355)		13,874		740		(345)
Credit
Credit Default Swaps	1,667		10		(23)		798		21		0
Equity
Equity Futures	7,742		7		(31)		1,802		0		(3)
Equity Options	46,829		854		(403)		32,657		679		(765)
Total Return Swaps	24,407		134		(409)		18,218		6		(636)
Other
Other(1)	1,262		0		0		1,258		0		0
Synthetic GICs	84,088		1		0		80,009		1		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	401,313	$	24,209	$	(12,367)	$	352,191	$	12,265	$	(7,103)
Total Derivatives(2)(3)	$	428,742	$	27,422	$	(12,763)	$	379,860	$	14,386	$	(7,536)

__________

(1)“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.

(2)Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $24,153 million and $14,035 million as of September 30, 2020 and December 31, 2019, respectively, primarily included in “Future policy benefits.”

(3)Recorded in “Other invested assets” and “Other liabilities” on the Unaudited Interim Consolidated Statements of Financial Position.

As of September 30, 2020, the following amounts were recorded on the Unaudited Interim Consolidated Statements of Financial Position related to the carrying amount of the hedged assets (liabilities) and cumulative basis adjustments included in the carrying amount for fair value hedges.

	September 30, 2020				December 31, 2019
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)		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	$	402	$	86	$	389	$	64
Commercial mortgage and other loans	$	21	$	2	$	23	$	2
Policyholders’ account balances	$	(1,686)	$	(376)	$	(1,376)	$	(107)
Future policy benefits	$	(1,248)	$	(410)	$	(676)	$	(172)

__________

(1)There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.

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 GICs, which are product standalone derivatives, do not qualify as hedging instruments under hedge accounting rules.

Offsetting Assets and Liabilities

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 Unaudited Interim 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 Unaudited Interim Consolidated Statements of Financial Position.

	September 30, 2020
	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)	$	27,270	$	(26,232)	$	1,038	$	(569)	$	469
Securities purchased under agreement to resell	641		0		641		(641)		0
Total assets	$	27,911	$	(26,232)	$	1,679	$	(1,210)	$	469
Offsetting of Financial Liabilities:
Derivatives(1)	$	12,757	$	(12,190)	$	567	$	(140)	$	427
Securities sold under agreement to repurchase	10,874		0		10,874		(10,874)		0
Total liabilities	$	23,631	$	(12,190)	$	11,441	$	(11,014)	$	427

	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

__________

(1)    Amounts exclude the excess of collateral received/pledged from/to the counterparty.

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 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

Cash Flow, Fair Value and Net Investment Hedges

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

The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, including the offset of the hedged item in fair value hedge relationships.

	Three Months Ended September 30, 2020
	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	$	5	$	(2)	$	0	$	0	$	(35)	$	(37)	$	0
Currency	(1)		0		0		0		0		15		0
Total gains (losses) on derivatives designated as hedge instruments	4		(2)		0		0		(35)		(22)		0
Gains (losses) on the hedged item:
Interest Rate	(6)		4		0		0		49		48		0
Currency	0		0		0		0		0		(15)		0
Total gains (losses) on hedged item	(6)		4		0		0		49		33		0
Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		(1)		2
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(1)		2
Total gains (losses) on fair value hedges net of hedged item	(2)		2		0		0		14		10		2
Cash flow hedges
Interest Rate	19		0		0		0		0		0		(15)
Currency	0		0		0		0		0		0		(65)
Currency/Interest Rate	55		78		(210)		0		0		0		(1,011)
Total gains (losses) on cash flow hedges	74		78		(210)		0		0		0		(1,091)
Net investment hedges
Currency	(6)		0		142		0		0		0		(143)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(6)		0		142		0		0		0		(143)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,163)		0		0		0		0		0		0
Currency	(44)		0		2		0		0		0		0
Currency/Interest Rate	(394)		0		(3)		0		0		0		0
Credit	(15)		0		0		0		0		0		0
Equity	(2,243)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	3,254		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(604)		0		(1)		0		0		0		0
Total	$	(538)	$	80	$	(69)	$	0	$	14	$	10	$	(1,232)

	Nine Months Ended September 30, 2020
	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	$	(24)	$	(6)	$	0	$	0	$	295	$	242	$	0
Currency	1		0		0		0		0		17		0
Total gains (losses) on derivatives designated as hedge instruments	(23)		(6)		0		0		295		259		0
Gains (losses) on the hedged item:
Interest Rate	23		13		0		0		(269)		(222)		0
Currency	(1)		1		0		0		0		(17)		0
Total gains (losses) on hedged item	22		14		0		0		(269)		(239)		0
Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		(1)		(1)
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(1)		(1)
Total gains (losses) on fair value hedges net of hedged item	(1)		8		0		0		26		19		(1)
Cash flow hedges
Interest Rate	27		0		0		0		0		0		29
Currency	4		0		0		0		0		0		27
Currency/Interest Rate	121		239		(17)		0		0		0		519
Total gains (losses) on cash flow hedges	152		239		(17)		0		0		0		575
Net investment hedges
Currency	(6)		0		142		0		0		0		(133)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(6)		0		142		0		0		0		(133)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,829		0		0		0		0		0		0
Currency	186		0		(5)		0		0		0		0
Currency/Interest Rate	337		0		(1)		0		0		0		0
Credit	(56)		0		0		0		0		0		0
Equity	(2,028)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	(9,339)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(3,070)		0		(6)		0		0		0		0
Total	$	(2,925)	$	247	$	119	$	0	$	26	$	19	$	441

	Three Months Ended September 30, 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	$	(10)	$	(2)	$	0	$	0	$	115	$	102	$	0
Currency	1		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(9)		(2)		0		0		115		102		0
Gains (losses) on the hedged item:
Interest Rate	10		5		0		0		(116)		(103)		0
Currency	(1)		1		0		0		0		0		0
Total gains (losses) on hedged item	9		6		0		0		(116)		(103)		0
Total gains (losses) on fair value hedges net of hedged item	0		4		0		0		(1)		(1)		0
Cash flow hedges
Interest Rate	56		1		0		0		0		0		(38)
Currency	3		0		0		0		0		0		4
Currency/Interest Rate	57		70		140		0		0		0		601
Total gains (losses) on cash flow hedges	116		71		140		0		0		0		567
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	3,356		0		0		0		0		0		0
Currency	158		0		5		0		0		0		0
Currency/Interest Rate	364		0		2		0		0		0		0
Credit	4		0		0		0		0		0		0
Equity	(133)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(3,427)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	322		0		7		0		0		0		0
Total	$	438	$	75	$	147	$	0	$	(1)	$	(1)	$	576

	Nine Months Ended September 30, 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	$	(24)	$	(5)	$	0	$	0	$	283	$	233	$	0
Currency	2		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(22)		(5)		0		0		283		233		0
Gains (losses) on the hedged item:
Interest Rate	21		16		0		0		(280)		(222)		0
Currency	(1)		2		0		0		0		0		0
Total gains (losses) on hedged item	20		18		0		0		(280)		(222)		0
Total gains (losses) on fair value hedges net of hedged item	(2)		13		0		0		3		11		0
Cash flow hedges
Interest Rate	55		1		0		0		0		0		(16)
Currency	5		0		0		0		0		0		9
Currency/Interest Rate	96		207		135		0		0		0		771
Total gains (losses) on cash flow hedges	156		208		135		0		0		0		764
Net investment hedges
Currency	0		0		0		0		0		0		12
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		12
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,090		0		0		0		0		0		0
Currency	242		0		4		0		0		0		0
Currency/Interest Rate	568		0		2		0		0		0		0
Credit	107		0		0		0		0		0		0
Equity	(2,560)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(6,607)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,160)		0		6		0		0		0		0
Total	$	(1,006)	$	221	$	141	$	0	$	3	$	11	$	776

_________

(1)Net change in AOCI, excluding changes related to net investment hedges using non-derivative instruments of ($17) million for both the three and nine months ended September 30, 2020, and $0 million for both the three and nine months ended September 30, 2019.

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:

	(in millions)
Balance, December 31, 2019	$	832
Amount recorded in AOCI
Interest Rate	56
Currency	31
Currency/Interest Rate	862
Total amount recorded in AOCI	949
Amount reclassified from AOCI to income
Interest Rate	(27)
Currency	(4)
Currency/Interest Rate	(343)
Total amount reclassified from AOCI to income	(374)
Balance, September 30, 2020	$	1,407

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Unaudited Interim Consolidated Statements of Comprehensive Income; these amounts are then reclassified to earnings when the hedged item affects earnings. Using September 30, 2020 values, it is estimated that a pre-tax gain of approximately $271 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending September 30, 2021.

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.

For net investment hedges, in addition to derivatives, the Company uses foreign currency denominated debt to hedge the risk of change in the net investment in a foreign subsidiary due to changes in exchange rates. For effective net investment hedges, the amounts, before applicable taxes, recorded in the cumulative translation adjustment within AOCI were ($160) million and ($150) million for the three and nine months ended September 30, 2020, respectively, and $9 million and $12 million for the three and nine months ended September 30, 2019, respectively.

Credit Derivatives

The following table provides a summary of the notional and fair value of written credit protection. The Company’s maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is equal to the notional amounts. These credit derivatives have maturities of less than 27 years for index references.

	September 30, 2020
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(2)	50		0		0		0		577		6		600		2		0		0		0		0		1,227		8
Total	$	50	$	0	$	0	$	0	$	577	$	6	$	600	$	2	$	0	$	0	$	0	$	0	$	1,227	$	8

	December 31, 2019
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	36	$	0	$	60	$	1	$	4	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	100	$	1
Index reference(2)	50		0		0		0		570		13		0		0		0		0		72		7		692		20
Total	$	86	$	0	$	60	$	1	$	574	$	13	$	0	$	0	$	0	$	0	$	72	$	7	$	792	$	21

_________

(1)The NAIC rating designations are based on availability and the lowest ratings among Moody's Investors Service, Inc. ("Moody's"), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, a NAIC 6 rating is used.

(2)Single name credit default swaps may reference to the credit of corporate debt, sovereign debt, and structured finance. Index references 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 September 30, 2020 and December 31, 2019, the Company had $440 million and $6 million of outstanding notional amounts and reported at fair value as a liability of $21 million and $0 million, respectively. 

Counterparty Credit Risk

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 over-the-counter (“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.

As of September 30, 2020, there were no net liability derivative positions with counterparties with credit risk-related contingent features. All derivatives have been appropriately collateralized by the Company or the counterparty in accordance with the terms of the derivative agreements.

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Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Measurement—Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1—Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities.

Level 2—Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs.

Level 3—Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value.

For a discussion of Company’s valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 6 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Assets and Liabilities by Hierarchy Level—The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.

	As of September 30, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	41,980	$	132	$		$	42,112
Obligations of U.S. states and their political subdivisions	0		12,599		4				12,603
Foreign government bonds	0		107,026		10				107,036
U.S. corporate public securities	0		108,346		383				108,729
U.S. corporate private securities(2)	0		37,245		1,966				39,211
Foreign corporate public securities	0		28,170		160				28,330
Foreign corporate private securities	0		26,610		2,594				29,204
Asset-backed securities(3)	0		13,593		541				14,134
Commercial mortgage-backed securities	0		16,335		14				16,349
Residential mortgage-backed securities	0		3,097		11				3,108
Subtotal	0		395,001		5,815				400,816
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		209		0				209
Obligations of U.S. states and their political subdivisions	0		229		0				229
Foreign government bonds	0		876		22				898
Corporate securities	0		14,331		578				14,909
Asset-backed securities(3)	0		1,607		109				1,716
Commercial mortgage-backed securities	0		1,945		1				1,946
Residential mortgage-backed securities	0		1,126		0				1,126
Equity securities	1,582		243		0				1,825
All other(4)	80		882		110				1,072
Subtotal	1,662		21,448		820				23,930
Fixed maturities, trading	0		4,131		240				4,371
Equity securities	5,118		1,097		673				6,888
Commercial mortgage and other loans	0		915		0				915
Other invested assets(5)	115		27,307		782		(26,232)		1,972
Short-term investments	1,124		6,833		183				8,140
Cash equivalents	3,686		8,398		1				12,085
Other assets	0		0		332				332
Separate account assets(6)(7)	46,517		234,126		1,801				282,444
Total assets	$	58,222	$	699,256	$	10,647	$	(26,232)	$	741,893
Future policy benefits(8)	$	0	$	0	$	23,340	$		$	23,340
Policyholders’ account balances	0		0		1,549				1,549
Other liabilities	110		12,251		0		(12,190)		171
Notes issued by consolidated VIEs	0		0		775				775
Total liabilities	$	110	$	12,251	$	25,664	$	(12,190)	$	25,835

	As of December 31, 2019
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	35,554	$	105	$		$	35,659
Obligations of U.S. states and their political subdivisions	0		11,493		4				11,497
Foreign government bonds	0		119,032		22				119,054
U.S. corporate public securities	0		97,959		380				98,339
U.S. corporate private securities(2)	0		34,749		1,784				36,533
Foreign corporate public securities	0		29,756		69				29,825
Foreign corporate private securities	0		27,237		1,003				28,240
Asset-backed securities(3)	0		12,238		936				13,174
Commercial mortgage-backed securities	0		15,574		0				15,574
Residential mortgage-backed securities	0		3,189		12				3,201
Subtotal	0		386,781		4,315				391,096
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		185		0				185
Obligations of U.S. states and their political subdivisions	0		212		0				212
Foreign government bonds	0		790		24				814
Corporate securities	0		12,966		637				13,603
Asset-backed securities(3)	0		1,593		69				1,662
Commercial mortgage-backed securities	0		1,896		0				1,896
Residential mortgage-backed securities	0		1,158		0				1,158
Equity securities	1,505		285		0				1,790
All other(4)	0		261		0				261
Subtotal	1,505		19,346		730				21,581
Fixed maturities, trading	0		3,597		287				3,884
Equity securities	5,813		939		633				7,385
Commercial mortgage and other loans	0		228		0				228
Other invested assets(5)	6		14,379		567		(13,519)		1,433
Short-term investments	1,806		1,975		155				3,936
Cash equivalents	2,079		6,796		131				9,006
Other assets	0		0		113				113
Separate account assets(6)(7)	46,574		240,433		1,717				288,724
Total assets	$	57,783	$	674,474	$	8,648	$	(13,519)	$	727,386
Future policy benefits(8)	$	0	$	0	$	12,831	$		$	12,831
Policyholders’ account balances	0		0		1,316				1,316
Other liabilities	41		7,495		105		(6,705)		936
Notes issued by consolidated VIEs	0		0		800				800
Total liabilities	$	41	$	7,495	$	15,052	$	(6,705)	$	15,883

__________

(1)“Netting” amounts represent cash collateral of $14,042 million and $6,814 million as of September 30, 2020 and December 31, 2019, respectively.

(2)Excludes notes with fair value of $6,594 million (carrying amount of $6,466 million) and $4,757 million (carrying amount of $4,751 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.

(3)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(4)All other represents cash equivalents and short-term investments.

(5)Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of September 30, 2020 and December 31, 2019, the fair values of such investments were $3,977 million and $4,213 million respectively.

(6)Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets. As of September 30, 2020 and December 31, 2019, the fair value of such investments was $23,039 million and $23,557 million, respectively.

(7)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(8)As of September 30, 2020, the net embedded derivative liability position of $23.3 billion includes $0.3 billion of embedded derivatives in an asset position and $23.7 billion of embedded derivatives in a liability position. As of December 31, 2019, the net embedded derivative liability position of $12.8 billion includes $0.7 billion of embedded derivatives in an asset position and $13.5 billion of embedded derivatives in a liability position.

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities—The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities.

	As of September 30, 2020
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	3,491	Discounted  cash flow(5)	Discount rate	0.50%	30%	5.03%	Decrease
			Market comparables	EBITDA multiples(4)	6.5X	15.0X	9.1X	Increase
			Liquidation	Liquidation value	15.06%	77.34%	53.84%	Increase
Equity securities	$	231	Discounted cash flow(5)	Discount rate	0.5%	20%		Decrease
			Market comparables	EBITDA multiples(4)	1X	8.8X	3.3X	Increase
			Net Asset Value	Share price	$1	$1,414	$509	Increase
Separate account assets-commercial mortgage loans(6)	$	797	Discounted cash flow	Spread	1.68%	3.29%	1.90%	Decrease
Liabilities:
Future policy benefits(7)	$	23,340	Discounted cash flow	Lapse rate(9)	1%	20%		Decrease
				Spread over LIBOR(10)	0.09%	1.59%		Decrease
				Utilization rate(11)	39%	96%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	15%		Decrease
				Equity volatility curve	18%	26%		Increase
Policyholders’ account balances(8)	$	1,549	Discounted cash flow	Lapse rate(9)	1%	42%		Decrease
				Spread over LIBOR(10)	0.09%	1.59%		Decrease
				Mortality rate(13)	0%	24%		Decrease
				Equity volatility curve	6%	38%		Increase

	As of December 31, 2019
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	1,424	Discounted  cash flow(5)	Discount rate	0.49%	20%	7.41%	Decrease
			Market comparables	EBITDA multiples(4)	5.7X	9.2X	7.3X	Increase
			Liquidation	Liquidation value	14.25%	83.61%	59.47%	Increase
Equity securities	$	210	Discounted cash flow(5)	Discount rate	10%	30%		Decrease
			Market comparables	EBITDA multiples(4)	1X	10.1X	5.4X	Increase
			Net Asset Value	Share price	$5	$1,353	$451	Increase
Separate account assets-commercial mortgage loans(6)	$	796	Discounted cash flow	Spread	1.11%	1.85%	1.26%	Decrease
Liabilities:
Future policy benefits(7)	$	12,831	Discounted cash flow	Lapse rate(9)	1%	18%		Decrease
				Spread over LIBOR(10)	0.10%	1.23%		Decrease
				Utilization rate(11)	43%	97%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	15%		Decrease
				Equity volatility curve	13%	23%		Increase
Policyholders’ account balances(8)	$	1,316	Discounted cash flow	Lapse rate(9)	1%	42%		Decrease
				Spread over LIBOR(10)	0.10%	1.23%		Decrease
				Mortality rate(13)	0%	24%		Decrease
				Equity volatility curve	6%	25%		Increase

__________ 

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

(2)Includes assets classified as fixed maturities available-for-sale, assets supporting experience-rated contractholder liabilities and fixed maturities trading.

(3)Excludes notes which have been offset with the associated payables under a netting agreement.

(4)Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.

(5)These investments typically use a range of discount rates (10% to 20%), therefore presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(6)Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Unaudited Interim Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Unaudited Interim Consolidated Statements of Operations.

(7)Future policy benefits primarily represent general account liabilities for the living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(8)Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(9)Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these embedded derivatives.

(10)The spread over the London Inter-Bank Offered Rate (“LIBOR”) swap curve represents the premium added to the proxy for the risk-free rate (LIBOR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements, living benefit guarantees, and index-linked interest crediting guarantees are insurance liabilities and are therefore senior to debt.

(11)The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(12)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of September 30, 2020 and December 31, 2019, the minimum withdrawal rate assumption is 76% and 78% respectively. As of September 30, 2020 and December 31, 2019, the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(13)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 45 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age, and duration. A mortality improvement assumption is also incorporated into the overall mortality table.

Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another or multiple inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities—The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term, and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. During weaker economic cycles, as the expectations of default increases, credit spreads widen, which results in a decrease in fair value.

Asset-Backed Securities—Interrelationships may exist between the prepayment rate, the default rate and/or loss severity, depending on specific market conditions. In stronger economic cycles, prepayment rates are generally driven by overall market interest rates and accompanied by lower default rates and loss severity. During weaker economic cycles, prepayments may decline, as default rates and loss severity increase. Additionally, the impact of these factors on average life varies with the structure and subordination. Generally, a change in the assumption used for the probability of default would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

Future Policy Benefits—The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent that more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Changes in Level 3 Assets and Liabilities—The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	122	$	0	$	10	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	21		1		0		0		0		0		0		0		(12)		10		1
Corporate securities(3)	4,904		215		165		(8)		0		(160)		(23)		113		(103)		5,103		193
Structured securities(4)	801		5		96		0		0		(147)		1		68		(258)		566		4
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	624		5		1		0		0		(6)		(22)		0		(24)		578		3
Structured securities(4)	99		1		19		0		0		(9)		0		1		(1)		110		1
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	7		0		107		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	236		0		(1)		(1)		0		0		1		4		1		240		1
Equity securities	594		67		15		(3)		0		(4)		5		0		(1)		673		66
Other invested assets	658		3		101		0		1		2		9		8		0		782		4
Short-term investments	44		(1)		145		0		0		(5)		0		0		0		183		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	377		(64)		19		0		0		0		0		0		0		332		(62)
Separate account assets(5)	1,684		84		65		(5)		0		(14)		0		10		(23)		1,801		87
Liabilities:
Future policy benefits	(26,439)		3,339		0		0		(331)		0		91		0		0		(23,340)		3,069
Policyholders’ account balances(6)	(1,441)		(34)		0		0		(74)		0		0		0		0		(1,549)		(6)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(741)		(34)		0		0		0		0		0		0		0		(775)		(34)

	Three Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	3	$	0	$	0	$	217	$	1	$	(12)	$	0	$	0	$	210
Assets supporting experience-rated contractholder liabilities	0		4		0		0		2		0		4		0		0
Other assets:
Fixed maturities, trading	0		0		0		0		0		0		1		0		0
Equity securities	0		67		0		0		0		0		66		0		0
Other invested assets	0		3		0		0		0		0		4		0		0
Short-term investments	(1)		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	(64)		0		0		0		0		(62)		0		0		0
Separate account assets(5)	0		0		84		0		0		0		0		87		0
Liabilities:
Future policy benefits	3,339		0		0		0		0		3,069		0		0		0
Policyholders’ account balances	(34)		0		0		0		0		(6)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		(34)		0		0		0		0		(34)		0		0

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	105	$	0	$	27	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	22		0		0		0		0		0		0		1		(13)		10		0
Corporate securities(3)	3,236		33		584		(126)		0		(490)		(22)		2,136		(248)		5,103		19
Structured securities(4)	948		2		484		(17)		0		(444)		156		160		(723)		566		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	637		(22)		5		(9)		0		(71)		(22)		92		(32)		578		(25)
Structured securities(4)	69		(1)		174		0		0		(19)		0		1		(114)		110		3
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	0		0		114		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	287		(16)		21		(33)		0		0		9		19		(47)		240		(16)
Equity securities	633		9		43		(13)		0		(4)		6		0		(1)		673		6
Other invested assets	567		7		182		0		5		(2)		15		8		0		782		9
Short-term investments	155		1		189		0		0		(115)		(47)		0		0		183		0
Cash equivalents	131		0		0		0		0		0		(130)		0		0		1		0
Other assets	113		164		55		0		0		0		0		0		0		332		165
Separate account assets(5)	1,717		58		169		(26)		0		(47)		0		43		(113)		1,801		70
Liabilities:
Future policy benefits	(12,831)		(9,630)		0		0		(972)		0		93		0		0		(23,340)		(9,940)
Policyholders’ account balances(6)	(1,316)		38		0		0		(271)		0		0		0		0		(1,549)		80
Other liabilities	(105)		105		0		0		0		0		0		0		0		0		105
Notes issued by consolidated VIEs	(800)		25		0		0		0		0		0		0		0		(775)		25

	Nine Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	(112)	$	0	$	0	$	141	$	6	$	(118)	$	0	$	0	$	137
Assets supporting experience-rated contractholder liabilities	0		(25)		0		0		2		0		(22)		0		0
Other assets:
Fixed maturities, trading	0		(17)		0		0		1		0		(16)		0		0
Equity securities	0		9		0		0		0		0		6		0		0
Other invested assets	0		7		0		0		0		1		8		0		0
Short-term investments	1		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	164		0		0		0		0		165		0		0		0
Separate account assets(5)	0		0		58		0		0		0		0		70		0
Liabilities:
Future policy benefits	(9,630)		0		0		0		0		(9,940)		0		0		0
Policyholders’ account balances	38		0		0		0		0		80		0		0		0
Other liabilities	0		105		0		0		0		0		105		0		0
Notes issued by consolidated VIEs	0		25		0		0		0		0		25		0		0

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	94	$	0	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	24		(2)		0		0		0		0		0		0		0		22		(2)
Corporate securities(3)	2,792		(26)		509		(7)		0		(203)		(1)		136		(21)		3,179		(25)
Structured securities(4)	861		4		439		(1)		0		(74)		(14)		5		(45)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	26		0		0		0		0		0		0		0		0		26		0
Corporate securities(3)	553		(5)		103		0		0		(27)		0		36		0		660		(8)
Structured securities(4)	57		0		22		0		0		(4)		0		0		0		75		0
Equity securities	1		0		0		0		0		0		0		0		0		1		0
All other activity	1		0		3		0		0		(1)		0		0		0		3		0
Other assets:
Fixed maturities, trading	296		(3)		16		(6)		0		0		(1)		2		0		304		(3)
Equity securities	624		15		27		(20)		0		(1)		(2)		0		0		643		7
Other invested assets	436		0		28		0		0		0		0		0		0		464		0
Short-term investments	288		0		127		0		0		(121)		0		0		0		294		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	98		71		10		0		0		0		0		0		0		179		73
Separate account assets(5)	1,708		9		54		(88)		0		(62)		0		43		(4)		1,660		8
Liabilities:
Future policy benefits	(12,723)		(3,417)		0		0		(314)		0		2		0		0		(16,452)		(3,570)
Policyholders’ account balances(6)	(1,047)		(79)		0		0		(62)		0		0		0		0		(1,188)		(66)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(816)		9		0		0		0		0		0		0		0		(807)		9

	Three Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(25)	$	0	$	0	$	(3)	$	4	$	(27)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		(8)		0		0		3		0		(8)		0
Other assets:
Fixed maturities, trading	0		(3)		0		0		0		0		(3)		0
Equity securities	3		12		0		0		0		0		7		0
Other invested assets	0		0		0		0		0		0		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	71		0		0		0		0		73		0		0
Separate account assets(5)	0		0		8		0		1		0		0		8
Liabilities:
Future policy benefits	(3,417)		0		0		0		0		(3,570)		0		0
Policyholders’ account balances	(79)		0		0		0		0		(66)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	9		0		0		0		0		9		0		0

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	81	$	0	$	18	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	5		0		0		0		0		(1)		0		0		0		4		0
Foreign government	125		0		0		0		0		0		(1)		9		(111)		22		(2)
Corporate securities(3)	2,685		(16)		1,116		(36)		0		(807)		(2)		319		(80)		3,179		(51)
Structured securities(4)	1,339		29		870		(48)		0		(406)		(7)		755		(1,357)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	225		0		0		0		0		(3)		(196)		0		0		26		0
Corporate securities(3)	444		5		144		0		0		(170)		196		46		(5)		660		(2)
Structured securities(4)	149		1		28		0		0		(29)		0		0		(74)		75		1
Equity securities	1		1		0		(1)		0		0		0		0		0		1		1
All other activity	0		0		6		0		0		(3)		0		0		0		3		0
Other assets:
Fixed maturities, trading	206		(14)		90		(20)		0		0		2		41		(1)		304		(15)
Equity securities	671		39		73		(44)		0		(75)		2		1		(24)		643		30
Other invested assets	263		(1)		246		0		0		(42)		(2)		0		0		464		(1)
Short-term investments	89		0		553		0		0		(348)		0		0		0		294		0
Cash equivalents	77		0		1		0		0		(77)		0		0		0		1		0
Other assets	25		127		27		0		0		0		0		0		0		179		127
Separate account assets(5)	1,534		134		282		(105)		0		(112)		0		43		(116)		1,660		122
Liabilities:
Future policy benefits	(8,926)		(6,627)		0		0		(902)		0		3		0		0		(16,452)		(6,870)
Policyholders’ account balances(6)	(56)		(958)		0		0		(171)		0		(3)		0		0		(1,188)		(938)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(595)		8		0		0		(858)		638		0		0		0		(807)		8

	Nine Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(38)	$	0	$	0	$	37	$	14	$	(53)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		1		0		0		6		0		0		0
Other assets:
Fixed maturities, trading	0		(15)		0		0		1		0		(15)		0
Equity securities	3		36		0		0		0		0		30		0
Other invested assets	(1)		0		0		0		0		(1)		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	127		0		0		0		0		127		0		0
Separate account assets(5)	0		0		131		0		3		0		0		122
Liabilities:
Future policy benefits	(6,627)		0		0		0		0		(6,870)		0		0
Policyholders’ account balances	(958)		0		0		0		0		(938)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	8		0		0		0		0		8		0		0

__________

(1)“Other,” for the period ended September 30, 2020 primarily represent the sale of POK, reclassifications of certain assets between reporting categories and foreign currency translation. For September 30, 2019, “Other” primarily represent reclassifications of certain assets between reporting categories and foreign currency translation.

(2)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(4)Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.

(5)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(6)Issuances and settlements for Policyholders’ account balances are presented net in the rollforward.

(7)Effective January 1, 2020, the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period were added prospectively due to adoption of ASU 2018-13. Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

Derivative Fair Value Information

The following tables present the balances of derivative assets and liabilities measured at fair value on a recurring basis, as of the date indicated, by primary underlying risk. These tables include NPR and exclude embedded derivatives and associated reinsurance recoverables. The derivative assets and liabilities shown below are included in “Other invested assets” or “Other liabilities” in the tables contained within the sections “—Assets and Liabilities by Hierarchy Level” and “—Changes in Level 3 Assets and Liabilities,” above.

	As of September 30, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	12	$	22,770	$	1	$		$	22,783
Currency	0		797		0				797
Credit	0		10		0				10
Currency/Interest Rate	0		2,837		0				2,837
Equity	102		893		0				995
Other	0		0		0				0
Netting(1)							(26,232)		(26,232)
Total derivative assets	$	114	$	27,307	$	1	$	(26,232)	$	1,190
Derivative Liabilities:
Interest Rate	$	77	$	10,654	$	0	$		$	10,731
Currency	0		565		0				565
Credit	0		23		0				23
Currency/Interest Rate	0		601		0				601
Equity	31		812		0				843
Other	0		0		0				0
Netting(1)							(12,190)		(12,190)
Total derivative liabilities	$	108	$	12,655	$	0	$	(12,190)	$	573

	As of December 31, 2019
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	4	$	11,238	$	1	$		$	11,243
Currency	0		230		0				230
Credit	0		21		0				21
Currency/Interest Rate	0		2,207		0				2,207
Equity	2		683		0				685
Other	0		0		0				0
Netting(1)							(13,519)		(13,519)
Total derivative assets	$	6	$	14,379	$	1	$	(13,519)	$	867
Derivative Liabilities:
Interest Rate	$	38	$	5,176	$	0	$		$	5,214
Currency	0		271		0				271
Credit	0		0		0				0
Currency/Interest Rate	0		647		0				647
Equity	3		1,401		0				1,404
Other	0		0		0				0
Netting(1)							(6,705)		(6,705)
Total derivative liabilities	$	41	$	7,495	$	0	$	(6,705)	$	831

__________ 

(1)“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreement.

Changes in Level 3 derivative assets and liabilities—The following tables provide a summary of the changes in fair value of Level 3 derivative assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income, attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	2		(1)		0		0		0		0		0		0		0		1		(1)

______ 

(1)Total realized and unrealized gains (losses) as well as unrealized gains (losses) for assets still held at the end of the period are recorded in “Realized investment gains (losses), net.”

(2)Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.

Nonrecurring Fair Value Measurements—The following tables represent information for assets measured at fair value on a nonrecurring basis. The fair value measurement is nonrecurring as these assets are measured at fair value only when there is a triggering event (e.g., an evidence of impairment). Assets included in the table are those that were impaired during the respective reporting periods and that are still held as of the reporting date. The estimated fair values for these amounts were determined using significant unobservable inputs (Level 3).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Realized investment gains (losses) net:
Commercial mortgage loans(1)	$	3	$	1	$	0	$	1
Mortgage servicing rights(2)	$	5	$	(3)	$	(24)	$	(5)

	September 30, 2020		December 31, 2019
	(in millions)
Carrying value after measurement as of period end:
Commercial mortgage loans(1)	$	0	$	15
Mortgage servicing rights(2)	$	280	$	87

__________ 

(1)Commercial mortgage loans are valued based on discounted cash flows utilizing market rates or the fair value of the underlying real estate collateral.

(2)Mortgage servicing rights are valued using a discounted cash flow model. The model incorporates assumptions for servicing revenues, which are adjusted for expected prepayments, delinquency rates, escrow deposit income and estimated loan servicing expenses. The discount rates incorporated into the model are determined based on the estimated returns a market participant would require for this business including a liquidity and risk premium. This estimate includes available relevant data from any active market sales of mortgage servicing rights.

Fair Value Option

The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made by the Company to help mitigate volatility in earnings that result from different measurement attributes. Electing the fair value option also allows the Company to achieve consistent accounting for certain assets and liabilities. Changes in fair value are reflected in “Realized investment gains (losses), net” for commercial mortgage and other loans and “Other income (loss)” for other assets and notes issued by consolidated VIEs. Changes in fair value due to instrument-specific credit risk are estimated using changes in credit spreads and quality ratings for the period reported. Interest income on commercial mortgage and other loans is included in “Net investment income.” Interest income on these loans is recorded based on the effective interest rate as determined at the closing of the loan.

The following tables present information regarding assets and liabilities where the fair value option has been elected.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Liabilities:
Notes issued by consolidated VIEs:
Changes in fair value	$	34	$	(9)	$	(25)	$	(8)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Commercial mortgage and other loans:
Interest income	$	4	$	5	$	10	$	16
Notes issued by consolidated VIEs:
Interest expense	$	10	$	11	$	32	$	33

	September 30, 2020		December 31, 2019
	(in millions)
Commercial mortgage and other loans(1):
Fair value as of period end	$	915	$	228
Aggregate contractual principal as of period end	$	896	$	224
Other assets:
Fair value as of period end	$	10	$	10
Notes issued by consolidated VIEs:
Fair value as of period end	$	775	$	800
Aggregate contractual principal as of period end	$	857	$	857

__________ 

(1)As of September 30, 2020, for loans for which the fair value option has been elected, there were no loans in non-accrual status and none of the loans were more than 90 days past due and still accruing.

Fair Value of Financial Instruments

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Unaudited Interim Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.

	September 30, 2020
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(2)	$	0	$	2,177	$	87	$	2,264	$	1,901
Assets supporting experience-rated contractholder liabilities	31		0		0		31		31
Commercial mortgage and other loans	0		105		66,812		66,917		63,626
Policy loans	0		0		11,502		11,502		11,502
Other invested assets	0		177		0		177		177
Short-term investments	1,855		20		0		1,875		1,875
Cash and cash equivalents	7,919		654		0		8,573		8,573
Accrued investment income	0		3,129		0		3,129		3,129
Other assets	146		2,513		392		3,051		3,050
Total assets	$	9,951	$	8,775	$	78,793	$	97,519	$	93,864
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	37,425	$	72,888	$	110,313	$	107,498
Securities sold under agreements to repurchase	0		10,874		0		10,874		10,874
Cash collateral for loaned securities	0		3,071		0		3,071		3,071
Short-term debt	0		1,011		104		1,115		1,113
Long-term debt(3)	622		21,514		1,184		23,320		20,169
Notes issued by consolidated VIEs	0		0		467		467		467
Other liabilities	0		7,438		48		7,486		7,486
Separate account liabilities—investment contracts	0		79,329		23,653		102,982		102,982
Total liabilities	$	622	$	160,662	$	98,344	$	259,628	$	253,660

	December 31, 2019
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(2)	$	0	$	2,217	$	85	$	2,302	$	1,933
Assets supporting experience-rated contractholder liabilities	16		0		0		16		16
Commercial mortgage and other loans	0		107		65,558		65,665		63,331
Policy loans	0		0		12,096		12,096		12,096
Other invested assets	0		36		0		36		36
Short-term investments	1,492		39		0		1,531		1,531
Cash and cash equivalents	6,278		1,043		0		7,321		7,321
Accrued investment income	0		3,330		0		3,330		3,330
Other assets	147		2,526		643		3,316		3,315
Total assets	$	7,933	$	9,298	$	78,382	$	95,613	$	92,909
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	32,940	$	69,216	$	102,156	$	101,241
Securities sold under agreements to repurchase	0		9,681		0		9,681		9,681
Cash collateral for loaned securities	0		4,213		0		4,213		4,213
Short-term debt	0		1,748		205		1,953		1,933
Long-term debt(3)	1,950		18,188		1,186		21,324		18,646
Notes issued by consolidated VIEs	0		0		474		474		474
Other liabilities	0		6,403		579		6,982		6,982
Separate account liabilities—investment contracts	0		77,134		24,407		101,541		101,541
Total liabilities	$	1,950	$	150,307	$	96,067	$	248,324	$	244,711

__________ 

(1)Carrying values presented herein differ from those in the Company’s Unaudited Interim Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or are out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.

(2)Excludes notes with fair value of $5,814 million (carrying amount of $4,998 million) and $5,401 million (carrying amount of $4,998 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.

(3)Includes notes with fair value of $12,408 million (carrying amount of $11,464 million) and $10,158 million (carrying amount of $9,749 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated receivables under a netting agreement.

XML

Closed Block

9 Months Ended

Sep. 30, 2020

Closed Block Disclosure [Abstract]

Closed Block

CLOSED BLOCK

On December 18, 2001, the date of demutualization, The Prudential Insurance Company of America (“PICA”) established a closed block for certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders’ dividends on these products, (collectively the “Closed Block”), and ceased offering these participating products. The recorded assets and liabilities were allocated to the Closed Block at their historical carrying amounts. The Closed Block forms the principal component of the Closed Block division. For additional information on the Closed Block, see Note 15 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

As of September 30, 2020 and December 31, 2019, the Company recognized a policyholder dividend obligation of $2,611 million and $2,816 million, respectively, to Closed Block policyholders for the excess of actual cumulative earnings over expected cumulative earnings. Additionally, accumulated net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block have been reflected as a policyholder dividend obligation of $5,530 million and $3,332 million at September 30, 2020 and December 31, 2019, respectively, to be paid to Closed Block policyholders unless offset by future experience, with a corresponding amount reported in AOCI.

Closed Block liabilities and assets designated to the Closed Block, as well as maximum future earnings to be recognized from these liabilities and assets, are as follows:

	September 30, 2020		December 31, 2019
	(in millions)
Closed Block liabilities
Future policy benefits	$	46,918	$	47,613
Policyholders’ dividends payable	754		717
Policyholders’ dividend obligation	8,141		6,149
Policyholders’ account balances	4,894		4,973
Other Closed Block liabilities	3,224		4,049
Total Closed Block liabilities	63,931		63,501
Closed Block assets
Fixed maturities, available-for-sale, at fair value	41,973		41,146
Fixed maturities, trading, at fair value	257		256
Equity securities, at fair value	2,074		2,245
Commercial mortgage and other loans	8,419		8,629
Policy loans	4,106		4,264
Other invested assets	3,418		3,333
Short-term investments	79		227
Total investments	60,326		60,100
Cash and cash equivalents	385		191
Accrued investment income	459		456
Other Closed Block assets	141		93
Total Closed Block assets	61,311		60,840
Excess of reported Closed Block liabilities over Closed Block assets	2,620		2,661
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	5,473		3,280
Allocated to policyholder dividend obligation	(5,530)		(3,332)
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$	2,563	$	2,609

Information regarding the policyholder dividend obligation is as follows:

	Nine Months Ended September 30, 2020
	(in millions)
Balance, December 31, 2019	$	6,149
Cumulative effect adjustment from the adoption of ASU 2016-13(1)	(13)
Impact from earnings allocable to policyholder dividend obligation	(192)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	2,197
Balance, September 30, 2020	$	8,141

__________

(1)See Note 2 for more information.

Closed Block revenues and benefits and expenses are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Revenues
Premiums	$	459	$	510	$	1,457	$	1,618
Net investment income	586		591		1,649		1,732
Realized investment gains (losses), net	18		351		266		456
Other income (loss)	242		31		(43)		356
Total Closed Block revenues	1,305		1,483		3,329		4,162
Benefits and Expenses
Policyholders’ benefits	641		659		2,013		2,148
Interest credited to policyholders’ account balances	32		33		96		97
Dividends to policyholders	532		649		955		1,617
General and administrative expenses	81		88		248		266
Total Closed Block benefits and expenses	1,286		1,429		3,312		4,128
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes	19		54		17		34
Income tax expense (benefit)	4		39		(30)		(14)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes	$	15	$	15	$	47	$	48

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Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company uses a full year projected effective tax rate approach to calculate year-to-date taxes. In addition, certain items impacting total income tax expense are recorded in the periods in which they occur. The projected effective tax rate is the ratio of projected “Total income tax expense” divided by projected “Income before income taxes and equity in earnings of operating joint ventures.” Taxes attributable to operating joint ventures are recorded within “Equity in earnings of operating joint ventures, net of taxes.” The interim period tax expense (or benefit) is the difference between the year-to-date income tax provision and the amounts reported for the previous interim periods of the fiscal year.

The Company’s income tax provision, on a consolidated basis, amounted to an income tax expense of $7 million, or (0.6)% of income (loss) before income taxes and equity in earnings of operating joint ventures, in the first nine months of 2020, compared to an income tax expense of $726 million, or 19.4%, in the first nine months of 2019. The Company’s current and prior effective tax rates differ from the U.S. statutory rate of 21% primarily due to non-taxable investment income, tax credits, foreign earnings taxed at higher rates than the U.S. statutory rate, and the items discussed below.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted into law. One provision of the CARES Act amends the Tax Cuts and Jobs Act (“TCJA”) and allows companies with net operating losses (“NOLs”) originating in 2018, 2019 or 2020 to carry back those losses for five years. The Company has incorporated into the full year projected effective tax rate an income tax benefit of $325 million that would result from carrying the estimated 2020 NOL back to tax years that have a 35% tax rate. The projected tax benefit related to the NOL carryback was partially offset by an incremental Global Intangible Low-Taxed Income (“GILTI”) tax expense of $13 million driven primarily by projected overall domestic losses (“ODLs”) which resulted in a reduced GILTI foreign tax credit. These amounts are estimates and will change if the amount of, and sources of, 2020 net taxable income are different from forecast. The inclusion of these two amounts in the full year projected effective tax rate results in a projected negative effective tax rate for the year, which when applied to the year-to-date pre-tax loss resulted in a $38 million increase to our income tax expense for the first nine months of 2020. The first nine months of 2020 also include a $47 million reduction in income tax expense recorded as a discrete item from the carryback of 2018 NOL and related ODL.

On July 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations which will allow an annual election to exclude from the U.S. tax return certain GILTI amounts when the taxes paid by a foreign affiliate exceed 18.9% (90% of U.S. statutory rate of 21%) of the GILTI amount for that foreign affiliate (the “high-tax exception”). These regulations are effective for the 2021 taxable year with an election to apply to any taxable year beginning after 2017. In many of the countries in which we operate, including Japan, there are differences between local tax rules used to determine the tax base

and the U.S. tax principles used to determine GILTI. Also, our Japan affiliates have a different tax year than the U.S. calendar tax year used to determine GILTI. Therefore, while many of the countries, including Japan, have a statutory tax rate above the 18.9% threshold, separate affiliates may not meet the 18.9% threshold each year and, as such, may not qualify for this exclusion. The Company plans to make the high-tax exception election for the 2020 tax year and reflected the impact of the election in its full year projected effective tax rate used to calculate year-to-date taxes for the first nine months of 2020. The Company is in the process of reviewing and estimating the impacts of the regulations for the 2018 and 2019 tax years.

The Treasury Department and the IRS also issued Proposed Regulations on July 20th which would require that, if a high-tax exception election is made with respect to GILTI in any year, an election having the same effect must also be made with regard to income taxed under Subpart F of the Tax Code. Such an election under Subpart F of the Tax Code would apply to the Full Inclusion election made by the Company for its insurance operations in Brazil, thereby increasing the tax rate applied to our Brazil insurance operations. The Proposed Regulations will be effective for taxable years beginning after they are issued in final form.

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Pension and Other Postretirement Plans

The Company has funded and non-funded non-contributory defined benefit pension plans (“Pension Benefits”), which cover substantially all of its employees. For some employees, benefits are based on final average earnings and length of service, while benefits for other employees are based on an account balance that takes into consideration age, service and earnings during their career.

The Company provides certain health care and life insurance benefits for its retired employees, their beneficiaries and covered dependents (“Other Postretirement Benefits”). The health care plan is contributory; the life insurance plan is non-contributory. Substantially all of the Company’s U.S. employees may become eligible to receive Other Postretirement Benefits if they retire after age 55 with at least 10 years of service or under certain circumstances after age 50 with at least 20 years of continuous service.

Net periodic (benefit) cost included in “General and administrative expenses” includes the following components:

	Three Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	80	$	73	$	6	$	5
Interest cost	108		122		15		20
Expected return on plan assets	(201)		(204)		(25)		(24)
Amortization of prior service cost	(1)		(1)		2		1
Amortization of actuarial (gain) loss, net	65		54		4		6
Settlements	(1)		4		0		0
Special termination benefits(1)(2)	5		2		0		0
Net periodic (benefit) cost	$	55	$	50	$	2	$	8
	Nine Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	241	$	218	$	18	$	16
Interest cost	323		368		47		59
Expected return on plan assets	(604)		(612)		(75)		(71)
Amortization of prior service cost	(3)		(3)		5		3
Amortization of actuarial (gain) loss, net	196		162		12		18
Settlements	3		52		0		0
Special termination benefits(1)(2)	7		3		0		0
Net periodic (benefit) cost	$	163	$	188	$	7	$	25

__________ 

(1)For 2020 certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination or participation in the Voluntary Separation Program that was offered to eligible U.S.-based employees in 2019.

(2)For 2019 certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination.

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Equity

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Equity

EQUITY

The changes in the number of shares of Common Stock issued, held in treasury and outstanding, are as follows for the periods indicated:

	Common Stock
	Issued	Held In Treasury	Outstanding
	(in millions)
Balance, December 31, 2019	666.3	267.5	398.8
Common Stock issued	0.0	0.0	0.0
Common Stock acquired	0.0	6.7	(6.7)
Stock-based compensation programs(1)	0.0	(3.3)	3.3
Balance, September 30, 2020	666.3	270.9	395.4

__________ 

(1)Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.

In December 2019, Prudential Financial’s Board of Directors (the “Board”) authorized the Company to repurchase at management’s discretion up to $2.0 billion of its outstanding Common Stock during the period from January 1, 2020 through December 31, 2020. As of September 30, 2020, 6.7 million shares of the Company’s Common Stock were repurchased under this authorization at a total cost of $500 million. The Company suspended Common Stock repurchases under the existing repurchase authorization beginning April 1, 2020 and does not intend to resume share repurchases this year as the duration and severity of the pandemic and its effect on the economy remain uncertain. The Company will evaluate the resumption of share repurchases as informed by the market environment and any alternative opportunities for capital deployment.

The timing and amount of share repurchases are determined by management based upon market conditions and other considerations, and repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Securities Exchange Act of 1934 (the “Exchange Act”). Numerous factors could affect the timing and amount of any future repurchases under the share repurchase authorization, including increased capital needs of the Company due to changes in regulatory capital requirements, opportunities for growth and acquisitions, and the effect of adverse market conditions on the segments.

Dividends declared per share of Common Stock are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Dividends declared per share of Common Stock	$	1.10	$	1.00	$	3.30	$	3.00

Accumulated Other Comprehensive Income (Loss)

AOCI represents the cumulative OCI items that are reported separate from net income and detailed on the Unaudited Interim Consolidated Statements of Comprehensive Income. The balance of and changes in each component of AOCI as of and for the nine months ended September 30, 2020 and 2019, are as follows:

	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2019	$	(536)	$	28,112	$	(3,537)	$	24,039
Change in OCI before reclassifications	69		7,939		8		8,016
Amounts reclassified from AOCI	46		(1,045)		210		(789)
Income tax benefit (expense)	73		(1,289)		(49)		(1,265)
Balance, September 30, 2020	$	(348)	$	33,717	$	(3,368)	$	30,001

	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2018	$	(564)	$	14,745	$	(3,275)	$	10,906
Change in OCI before reclassifications	(74)		22,759		(76)		22,609
Amounts reclassified from AOCI	5		(1,188)		180		(1,003)
Income tax benefit (expense)	20		(4,956)		(25)		(4,961)
Cumulative effect of adoption of ASU 2017-12	0		7		0		7
Balance, September 30, 2019	$	(613)	$	31,367	$	(3,196)	$	27,558

__________

(1)Includes cash flow hedges of $1,407 million and $832 million as of September 30, 2020 and December 31, 2019, respectively, and $1,584 million and $811 million as of September 30, 2019 and December 31, 2018, respectively, and fair value hedges of $(1) million and $0 million as of September 30, 2020 and December 31, 2019, respectively.

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

	Three Months Ended September 30,				Nine Months Ended September 30,				Affected line item in Consolidated Statements of Operations
	2020		2019		2020		2019
	(in millions)
Amounts reclassified from AOCI(1)(2):
Foreign currency translation adjustment:
Foreign currency translation adjustments	$	(2)	$	0	$	(7)	$	(5)	Realized investment gains (losses), net
Foreign currency translation adjustments	(39)		0		(39)		0		Other income (loss)
Total foreign currency translation adjustment	(41)		0		(46)		(5)
Net unrealized investment gains (losses):
Cash flow hedges—Interest rate	19		57		27		56		(3)
Cash flow hedges—Currency	0		3		4		5		(3)
Cash flow hedges—Currency/Interest rate	(77)		267		343		438		(3)
Net unrealized investment gains (losses) on available-for-sale securities	401		360		671		689
Total net unrealized investment gains (losses)	343		687		1,045		1,188		(4)
Amortization of defined benefit pension items:
Prior service cost	(1)		0		(2)		0		(5)
Actuarial gain (loss)	(69)		(60)		(208)		(180)		(5)
Total amortization of defined benefit pension items	(70)		(60)		(210)		(180)
Total reclassifications for the period	$	232	$	627	$	789	$	1,003

__________

(1)All amounts are shown before tax.

(2)Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.

(3)See Note 5 for additional information on cash flow hedges.

(4)See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.

(5)See Note 10 for information on employee benefit plans.

Net Unrealized Investment Gains (Losses)

Net unrealized investment gains (losses) on available-for-sale fixed maturity securities and certain other invested assets and other assets are included in the Company’s Unaudited Interim Consolidated Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from “Other comprehensive income (loss)” those items that are included as part of “Net income (loss)” for a period that had been part of “Other comprehensive income (loss)” in earlier periods. The amounts for the periods indicated below, split between amounts related to available-for-sale fixed maturity securities on which an allowance for credit losses has been recognized, and all other net unrealized investment gains (losses), are as follows:

Net Unrealized Investment Gains (Losses) on Available-for-sale Fixed Maturity Securities on which an allowance for credit losses has been recognized

	Net Unrealized Gains (Losses) on Investments		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Deferred Income Tax (Liability) Benefit		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
December 31, 2019(1)	$	0	$	0	$	0	$	0	$	0	$	0
Net investment gains (losses) on investments arising during the period	41								(8)		33
Reclassification adjustment for (gains) losses included in net income	23								(4)		19
Increase (Decrease) due to non-credit related losses recognized in AOCI during the period	(87)								17		(70)
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables			2						0		2
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables					0				0		0
Impact of net unrealized investment (gains) losses on policyholders’ dividends							(3)		1		(2)
Balance, September 30, 2020	$	(23)	$	2	$	0	$	(3)	$	6	$	(18)

__________

(1)Allowance for credit losses on available-for-sale fixed maturity securities effective January 1, 2020.

 All Other Net Unrealized Investment Gains (Losses) in AOCI

	Net Unrealized Gains (Losses) on Investments(1)		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Deferred Income Tax (Liability) Benefit		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
December 31, 2019(2)	$	45,339	$	(1,585)	$	(2,909)	$	(3,366)	$	(9,367)	$	28,112
Net investment gains (losses) on investments arising during the period	11,509								(2,232)		9,277
Reclassification adjustment for (gains) losses included in net income	(1,068)								207		(861)
Reclassification due to allowance for credit losses recorded during the period	87								(17)		70
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables			336						(68)		268
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables					(1,764)				357		(1,407)
Impact of net unrealized investment (gains) losses on policyholders’ dividends							(2,182)		458		(1,724)
Balance, September 30, 2020	$	55,867	$	(1,249)	$	(4,673)	$	(5,548)	$	(10,662)	$	33,735

__________

(1)Includes cash flow and fair value hedges. See Note 5 for information on cash flow and fair value hedges.

(2)Includes net unrealized gains (losses) for which an OTTI loss had been previously recognized.

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Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

A reconciliation of the numerators and denominators of the basic and diluted per share computations of Common Stock based on the consolidated earnings of Prudential Financial for the periods indicated is as follows:

	Three Months Ended September 30,
	2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	1,507				$	1,425
Less: Income (loss) attributable to noncontrolling interests	20					7
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	18					15
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,469	395.3	$	3.72	$	1,403	404.1	$	3.47
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	18				$	15
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	18					15
Stock options			0.3					1.0
Deferred and long-term compensation programs			1.5					1.2
Exchangeable Surplus Notes	0		0.0			1		2.2
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,469	397.1	$	3.70	$	1,404	408.5	$	3.44

	Nine Months Ended September 30,
	2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	(1,168)				$	3,100
Less: Income (loss) attributable to noncontrolling interests	25					42
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	16					33
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	(1,209)	395.6	$	(3.06)	$	3,025	406.2	$	7.45
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	16				$	33
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	16					33
Stock options			0.0					1.1
Deferred and long-term compensation programs			0.0					1.1
Exchangeable Surplus Notes	0		0.0			12		4.8
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	(1,209)	395.6	$	(3.06)	$	3,037	413.2	$	7.35

__________ 

(1)For the nine months ended September 30, 2020, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because dilutive shares and dilutive earnings per share are not applicable when a net loss is reported. As a result of the net loss attributable to Prudential Financial available to holders of Common Stock for the nine months ended September 30, 2020, all potential stock options and compensation programs were considered antidilutive.

Unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and included in the computation of earnings per share pursuant to the two-class method. Under this method, earnings attributable to Prudential Financial are allocated between Common Stock and the participating awards, as if the awards were a second class of stock. During periods of net income available to holders of Common Stock, the calculation of earnings per share excludes the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. In the event of a net loss available to holders of Common Stock, undistributed earnings are not allocated to participating securities and the denominator excludes the dilutive impact of these securities as they do not share in the losses of the Company. Undistributed earnings allocated to participating unvested share-based payment awards for the three months ended September 30, 2020 and 2019, as applicable, were based on 4.9 million and 4.5 million of such awards, respectively, and for the nine months ended September 30, 2020 and 2019, as applicable, were based on 5.0 million and 4.6 million of such awards, respectively, weighted for the period they were outstanding.

Stock options and shares related to deferred and long-term compensation programs that are considered antidilutive are excluded from the computation of diluted earnings per share. Stock options are considered antidilutive based on application of the treasury stock method or in the event of a net loss available to holders of Common Stock. Shares related to deferred and long-term compensation programs are considered antidilutive in the event of a net loss available to holders of Common Stock. For the periods indicated, the number of stock options and shares related to deferred and long-term compensation programs that were considered antidilutive and were excluded from the computation of diluted earnings per share, weighted for the portion of the period they were outstanding, are as follows:

	Three Months Ended September 30,
	2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	3.2	$	84.17	1.4	$	101.57
Antidilutive stock options due to net loss available to holders of Common Stock	0.0			0.0
Antidilutive shares based on application of the treasury stock method	0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	0.0			0.0
Total antidilutive stock options and shares	3.4			1.4

	Nine Months Ended September 30,
	2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	3.4	$	80.64	1.2	$	103.35
Antidilutive stock options due to net loss available to holders of Common Stock	0.4			0.0
Antidilutive shares based on application of the treasury stock method	0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	1.6			0.0
Total antidilutive stock options and shares	5.6			1.2

In September 2009, the Company issued $500 million of surplus notes with an interest rate of 5.36% per annum which were exchangeable at the option of the note holders for shares of Common Stock. In August 2019, as a result of the note holders’ exercise of the exchange option, the Company issued approximately 6.2 million shares of Common Stock at an exchange rate equal to 12.3877 shares of Common Stock per each $1,000 principal amount of surplus notes. The Company’s obligations under the surplus notes are now satisfied. In calculating diluted earnings per share under the if-converted method, for the three and nine months ended September 30, 2019, the potential shares that would be issued assuming a hypothetical exchange, weighted for the period the notes were outstanding, are added to the denominator, and the related interest expense, net of tax, is excluded from the numerator, if the overall effect is dilutive.

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Segments

The Company’s principal operations are comprised of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the U.S. Workplace Solutions, U.S. Individual Solutions, and Assurance IQ divisions), the International Businesses, the Closed Block division, and the Company’s Corporate and Other operations. The U.S. Workplace Solutions division consists of the Retirement and Group Insurance businesses, the U.S. Individual Solutions division consists of the Individual Annuities and Individual Life businesses, and the Assurance IQ division consists of the Assurance IQ business. In October 2019, the Company completed the acquisition of Assurance IQ, LLC (“Assurance IQ”), a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other. Divested and Run-off Businesses are comprised of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. The Company’s Corporate and Other operations include corporate items and initiatives that are not allocated to business segments and businesses that have been or will be divested or placed in run-off, excluding the Closed Block division.

Adjusted Operating Income

The Company analyzes the operating performance of each segment using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of operating joint ventures” or “Net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss used by the Company’s chief operating decision maker to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below. Adjusted operating income is calculated by adjusting each segment’s “Income (loss) before income taxes and equity in earnings of operating joint ventures” for the following items:

•Realized investment gains (losses), net, and related adjustments;

•Charges related to realized investment gains (losses), net;

•Market experience updates;

•Divested and Run-off Businesses;

•Other adjustments; and

•Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests.

These items are important to an understanding of overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of adjusted operating income may differ from that used by other companies. The Company, however, believes that the presentation of adjusted operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses. For additional information on these reconciling items, see Note 22 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The Company has historically reflected the results of its variable annuities hedging programs in adjusted operating income over time. Beginning with the second quarter of 2020, these impacts are excluded from adjusted operating income which the Company believes enhances the understanding of underlying performance trends.

Reconciliation of adjusted operating income to net income (loss)

The table below reconciles “Adjusted operating income before income taxes” to “Income (loss) before income taxes and equity in earnings of operating joint ventures”:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Adjusted operating income before income taxes by segment:	(in millions)
PGIM	$	370	$	232	$	858	$	710
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	372		302		898		1,020
Group Insurance	22		90		71		224
Total U.S. Workplace Solutions division	394		392		969		1,244
U.S. Individual Solutions division:
Individual Annuities(1)	408		459		1,030		1,393
Individual Life	101		59		17		29
Total U.S. Individual Solutions division	509		518		1,047		1,422
Assurance IQ division(2):
Assurance IQ	(30)		0		(69)		0
Total Assurance IQ division	(30)		0		(69)		0
Total U.S. Businesses	873		910		1,947		2,666
International Businesses(3)	775		721		2,162		2,364
Corporate and Other	(455)		(281)		(1,338)		(1,028)
Total segment adjusted operating income before income taxes	1,563		1,582		3,629		4,712
Reconciling items:
Realized investment gains (losses), net, and related adjustments(4)	223		331		(2,746)		(882)
Charges related to realized investment gains (losses), net	(70)		(92)		(353)		(149)
Market experience updates(5)	(134)		(314)		(1,016)		(515)
Divested and Run-off Businesses:
Closed Block division	8		45		(15)		5
Other Divested and Run-off Businesses(3)	(132)		207		(725)		641
Other adjustments(6)	(12)		0		65		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	1		(34)		(62)		(71)
Income (loss) before income taxes and equity in earnings of operating joint ventures per Unaudited Interim Consolidated Financial Statements	$	1,447	$	1,725	$	(1,223)	$	3,741

________

(1)Individual Annuities segment results reflect DAC as if the Individual Annuities business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.

(2)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(3)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(4)Prior period amounts have been updated to conform to current period presentation.

(5)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(6)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.

Reconciliation of select financial information

The tables below present certain financial information for the Company’s segments and its Corporate and Other operations, including assets by segment and revenues by segment on an adjusted operating income basis, and the reconciliation of the segment totals to amounts reported in the Consolidated Financial Statements.

	September 30, 2020		December 31, 2019
Assets by segment:	(in millions)
PGIM	$	48,507	$	47,655
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	205,878		198,153
Group Insurance	43,851		43,712
Total U.S. Workplace Solutions division	249,729		241,865
U.S. Individual Solutions division:
Individual Annuities	193,509		189,040
Individual Life	104,036		96,072
Total U.S. Individual Solutions division	297,545		285,112
Assurance IQ division(1):
Assurance IQ	2,621		2,639
Total Assurance IQ division	2,621		2,639
Total U.S. Businesses	549,895		529,616
International Businesses(2)	224,932		213,335
Corporate and Other(2)	26,433		44,619
Closed Block division	61,822		61,327
Total assets per Unaudited Interim Consolidated Financial Statements	$	911,589	$	896,552

 __________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the carrying amount of assets of POK are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the carrying amount of assets of POT are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues on an adjusted operating income basis:	(in millions)
PGIM	$	1,066	$	855	$	2,801	$	2,651
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	2,690		2,261		8,119		8,486
Group Insurance	1,457		1,438		4,352		4,340
Total U.S. Workplace Solutions division	4,147		3,699		12,471		12,826
U.S. Individual Solutions division:
Individual Annuities	1,148		1,251		3,249		3,774
Individual Life	1,609		1,529		4,702		4,519
Total U.S. Individual Solutions division	2,757		2,780		7,951		8,293
Assurance IQ division(1):
Assurance IQ	75		0		194		0
Total Assurance IQ division	75		0		194		0
Total U.S. Businesses	6,979		6,479		20,616		21,119
International Businesses(2)	5,481		5,216		16,201		15,734
Corporate and Other	(190)		(177)		(545)		(512)
Total revenues on an adjusted operating income basis	13,336		12,373		39,073		38,992
Reconciling items:
Realized investment gains (losses), net, and related adjustments(3)	392		491		(2,290)		(6)
Charges related to realized investment gains (losses), net	(40)		(62)		(121)		(187)
Market experience updates(4)	(58)		(67)		(406)		(74)
Divested and Run-off Businesses:
Closed Block division	1,301		1,482		3,318		4,157
Other Divested and Run-off Businesses(2)	511		928		1,411		2,813
Other adjustments(5)	0		0		105		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(17)		(40)		(86)		(111)
Total revenues per Unaudited Interim Consolidated Financial Statements	$	15,425	$	15,105	$	41,004	$	45,584

__________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(3)Prior period amounts have been updated to conform to current period presentation.

(4)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(5)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.

Intersegment revenues

Management has determined the intersegment revenues with reference to market rates. Intersegment revenues are eliminated in consolidation in Corporate and Other operations. The PGIM segment revenues include intersegment revenues, primarily consisting of asset-based management and administration fees, as follows: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
PGIM segment intersegment revenues	$	215	$	197	$	640	$	571

Segments may also enter into internal derivative contracts with other segments. For adjusted operating income, each segment accounts for the internal derivative results consistent with the manner in which that segment accounts for other similar external derivatives.

Asset management and service fees

The table below presents asset management and service fees, predominantly related to investment management activities, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Asset-based management fees	$	930	$	881	$	2,644	$	2,596
Performance-based incentive fees	43		10		73		108
Other fees	147		147		427		433
Total asset management and service fees	$	1,120	$	1,038	$	3,144	$	3,137

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Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

COMMITMENTS AND CONTINGENT LIABILITIES

Commitments and Guarantees

Commercial Mortgage Loan Commitments

	September 30, 2020		December 31, 2019
	(in millions)
Total outstanding mortgage loan commitments	$	1,701	$	2,129
Portion of commitment where prearrangement to sell to investor exists	$	959	$	751

In connection with the Company’s commercial mortgage operations, it originates commercial mortgage loans. Commitments for loans that will be held for sale are recognized as derivatives and recorded at fair value. In certain of these transactions, the Company pre-arranges that it will sell the loan to an investor, including to government sponsored entities as discussed below, after the Company funds the loan. The above amount includes unfunded commitments that are not unconditionally cancellable. For related credit exposure, there was an allowance for credit losses of $1 million as of September 30, 2020, which is a change of $(1) million for the three and nine months ended September 30, 2020.

Commitments to Purchase Investments (excluding Commercial Mortgage Loans)

	September 30, 2020		December 31, 2019
	(in millions)
Expected to be funded from the general account and other operations outside the separate accounts	$	8,968	$	7,372
Expected to be funded from separate accounts	$	120	$	49

The Company has other commitments to purchase or fund investments, some of which are contingent upon events or circumstances not under the Company’s control, including those at the discretion of the Company’s counterparties. The Company anticipates a portion of these commitments will ultimately be funded from its separate accounts. The above amount includes unfunded commitments that are not unconditionally cancellable. There were no related charges for credit losses for the three and nine months ended September 30, 2020.

 Indemnification of Securities Lending and Securities Repurchase Transactions

	September 30, 2020		December 31, 2019
	(in millions)
Indemnification provided to certain clients for securities lending and securities repurchase transactions(1)	$	7,328	$	5,071
Fair value of related collateral associated with above indemnifications(2)	$	7,480	$	5,204
Accrued liability associated with guarantee	$	0	$	0

__________ 

(1)Includes $34 million and $38 million related to securities repurchase transactions as of September 30, 2020 and December 31, 2019, respectively.

(2)Includes $34 million and $37 million related to securities repurchase transactions as of September 30, 2020 and December 31, 2019, respectively.

In the normal course of business, the Company may facilitate securities lending or securities repurchase transactions on behalf of certain client accounts (collectively, “the accounts”). In certain of these arrangements, the Company has provided an indemnification to the accounts to hold them harmless against losses caused by counterparty (i.e., borrower) defaults associated with such transactions facilitated by the Company. In securities lending transactions, collateral is provided by the counterparty to the accounts at the inception of the transaction in an amount at least equal to 102% of the fair value of the loaned securities and the collateral is maintained daily to equal at least 102% of the fair value of the loaned securities. In securities repurchase transactions, collateral is provided by the counterparty to the accounts at the inception of the transaction in an amount at least equal to 95% of the fair value of the securities subject to repurchase and the collateral is maintained daily to equal at least 95% of the fair value of the securities subject to repurchase. The Company is only at risk if the counterparty to the transaction defaults and the value of the collateral held is less than the value of the securities loaned to, or subject to repurchase from, such counterparty. The Company believes the possibility of any payments under these indemnities is remote.

Credit Derivatives Written

As discussed further in Note 5, the Company writes credit derivatives under which the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the defaulted security or similar security.

Guarantees of Asset Values

	September 30, 2020		December 31, 2019
	(in millions)
Guaranteed value of third-parties’ assets	$	84,088	$	80,009
Fair value of collateral supporting these assets	$	88,425	$	81,604
Asset (liability) associated with guarantee, carried at fair value	$	1	$	1

Certain contracts underwritten by the Retirement segment include guarantees related to financial assets owned by the guaranteed party. These contracts are accounted for as derivatives and carried at fair value. The collateral supporting these guarantees is not reflected on the Unaudited Interim Consolidated Statements of Financial Position.

Indemnification of Serviced Mortgage Loans

	September 30, 2020		December 31, 2019
	(in millions)
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company	$	2,451	$	2,113
First-loss exposure portion of above	$	718	$	622
Accrued liability associated with guarantees(1)	$	39	$	19

__________

(1)As of September 30, 2020, the accrued liability associated with guarantees includes an allowance for credit losses of $18 million, which is a change of $1 million and $0 million for the three and nine months ended September 30, 2020, respectively.

As part of the commercial mortgage activities of the Company’s PGIM segment, the Company provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities, such as Fannie Mae and Freddie Mac. The Company has agreed to indemnify the government sponsored entities for a portion of the credit risk associated with

certain of the mortgages it services through a delegated authority arrangement. Under these arrangements, the Company originates multi-family mortgages for sale to the government sponsored entities based on underwriting standards they specify, and makes payments to them for a specified percentage share of losses they incur on certain loans serviced by the Company. The Company’s percentage share of losses incurred generally varies from 4% to 20% of the loan balance, and is typically based on a first-loss exposure for a stated percentage of the loan balance, plus a shared exposure with the government sponsored entity for any losses in excess of the stated first-loss percentage, subject to a contractually specified maximum percentage. The Company determines the liability related to this exposure using historical loss experience, and the size and remaining life of the asset. The Company serviced $19,411 million and $16,878 million of mortgages subject to these loss-sharing arrangements as of September 30, 2020 and December 31, 2019, respectively, all of which are collateralized by first priority liens on the underlying multi-family residential properties. As of September 30, 2020, these mortgages had a weighted-average debt service coverage ratio of 1.89 times and a weighted-average loan-to-value ratio of 62%. As of December 31, 2019, these mortgages had a weighted average debt service coverage ratio of 1.88 times and a weighted-average loan-to-value ratio of 61%. The Company had no losses related to indemnifications that were settled for both the nine months ended September 30, 2020 and 2019.

Other Guarantees

	September 30, 2020		December 31, 2019
	(in millions)
Other guarantees where amount can be determined	$	52	$	55
Accrued liability for other guarantees and indemnifications	$	0	$	0

The Company is also subject to other financial guarantees and indemnity arrangements. The Company has provided indemnities and guarantees related to acquisitions, dispositions, investments and other transactions that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. Included above reflects $9 million and $12 million as of September 30, 2020 and December 31, 2019, respectively, of yield maintenance guarantees related to certain investments the Company sold. The Company does not expect to make any payments on these guarantees and is not carrying any liabilities associated with these guarantees.

Since certain of these obligations are not subject to limitations, it is not possible to determine the maximum potential amount due under these guarantees. The accrued liabilities identified above do not include retained liabilities associated with sold businesses. 

Assurance IQ Contingent Consideration Liability

On October 10, 2019, the Company completed its acquisition of Assurance IQ, a leading consumer solutions platform that offers a range of solutions that help meet consumers’ financial needs. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Pursuant to the merger agreement, contingent consideration as well as additional compensation awards are payable in 2023 in a mix of approximately 25% cash and 75% Prudential Financial Common Stock, contingent upon Assurance IQ’s achievement of certain targets for gross revenues net of associated selling expenses (“Variable Profits”) over the period from January 1, 2020 through December 31, 2022 as follows:

•If Variable Profits are less than $900 million, no additional amount is payable.

•If Variable Profits are greater than $1,300 million, an additional amount of $1,150 million is payable.

•If Variable Profits are greater than $900 million but less than or equal to $1,300 million, an additional amount is payable equal to the product of (i) the quotient of (A) an amount equal to (1) Variable Profits achieved minus (2) $900 million divided by (B) $400 million and (ii) $1,150 million.

Payment of the additional amount may be accelerated if the Company violates certain provisions of the merger agreement requiring it to take or refrain from taking certain actions, including with respect to the management and operation of Assurance IQ.

The contingent consideration liability referred to above is reported at fair value. Fair value is determined based on the present value of expected payments under the arrangement described above, using an internally developed option pricing model based on a number of assumptions, including certain unobservable assumptions for future Variable Profits and the future price of Prudential Financial Common Stock. The fair value of the liability is updated each reporting period, with changes in fair value reported within “Other income.” The fair value of the contingent consideration liability was zero as of September 30, 2020 and $105 million as of December 31, 2019 (see Note 6 for additional information). The stock-based component of contingent consideration impacts the share count for purposes of calculating the Company’s diluted earnings per share when Assurance IQ’s actual Variable Profits achieved as of the end of the reporting period is in excess of $900 million, as if the contingent consideration performance period ended on the applicable reporting date. The number of shares issued as part of the contingent consideration payable in 2023 will be based on a $83.71 price per share.

Contingent Liabilities

On an ongoing basis, the Company and its regulators review its operations including, but not limited to, sales and other customer interface procedures and practices, and procedures for meeting obligations to its customers and other parties. These reviews may result in the modification or enhancement of processes or the imposition of other action plans, including concerning management oversight, sales and other customer interface procedures and practices, and the timing or computation of payments to customers and other parties. In certain cases, if appropriate, the Company may offer customers or other parties remediation and may incur charges, including the cost of such remediation, administrative costs and regulatory fines.

The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see “—Litigation and Regulatory Matters” below.

It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company’s financial position.

Litigation and Regulatory Matters

The Company is subject to legal and regulatory actions in the ordinary course of its businesses. Pending legal and regulatory actions include proceedings relating to aspects of the Company’s businesses and operations that are specific to it and proceedings that are typical of the businesses in which it operates, including in both cases businesses that have been either divested or placed in wind down status. Some of these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain.

The Company establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed, including matters discussed below. The Company estimates that as of September 30, 2020, the aggregate range of reasonably possible losses in excess of accruals established for those litigation and regulatory matters for which such an estimate currently can be made is less than $250 million. Any estimate is not an indication of expected loss, if any, or the Company’s maximum possible loss exposure on such matters. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews.

The following discussion of litigation and regulatory matters provides an update of those matters discussed in Note 23 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and should be read in conjunction with the complete descriptions provided in the Form 10-K.

Individual Annuities, Individual Life, and Group Insurance

Broderick v. PICA, et al.

In September 2020, the parties filed a Joint Stipulation of Dismissal with Prejudice. This matter is closed.

Behfarin v. Pruco Life

In June 2020, the court issued an order: (i) granting plaintiffs’ motion for certification of the settlement class; (ii) approving the proposed nationwide class settlement agreement; (iii) approving the class notice; (iv) awarding attorneys’ fees and costs to plaintiffs and a reduced incentive award to Behfarin; and (v) dismissing the action with prejudice, but maintaining jurisdiction over the settlement.

Securities Litigation

City of Warren v. PFI, et al

In March 2020, the court issued an order consolidating this action with Donald P. Crawford v. PFI, et al. under the caption In re Prudential Financial, Inc. Securities Litigation. In June 2020, plaintiffs filed an amended complaint and added Robert M. Falzon, PFI’s vice chairman, as an individual defendant. In August 2020, the Company filed a motion to dismiss the amended complaint.

Donald P. Crawford v. PFI, et al.

In March 2020, the court issued an order consolidating this action with City of Warren v. PFI, et al. under the caption In re Prudential Financial, Inc. Securities Litigation. Case updates are consolidated with the City of Warren action.

Pekin Police Pension Fund v. Charles F. Lowrey, et al.

In September 2020, a shareholder derivative complaint entitled Pekin Police Pension Fund, Derivatively on Behalf of Prudential Financial, Inc. v. Charles F. Lowrey, et al., was filed in the United States District Court for the District of New Jersey (the “Derivative Complaint”) against PFI as a “nominal” defendant, PFI’s chairman and chief executive officer, vice chairman, chief financial officer, certain former officers of PFI, and all of the current outside directors of PFI’s Board. The Derivative Complaint asserts claims for federal securities law violations, breach of fiduciary duty, waste of corporate assets, and unjust enrichment, and alleges that: (i) the Company's reserve assumptions failed to account for adversely developing mortality experience in the Individual Life business segment; (ii) the Company's reserves were insufficient to satisfy its future policy benefit liabilities; (iii) the Company materially understated its liabilities and overstated net income due to flawed assumptions in calculating mortality experience; and (iv) the individual defendants breached their duty of care and loyalty to the Company by allowing the alleged improper activity.

Daniel Plaut v. Prudential Financial, Inc.

In October 2020, a shareholder derivative complaint entitled Daniel Plaut, Derivatively on Behalf of Prudential Financial, Inc. v. Charles F. Lowrey, et al., was filed in the Superior Court of New Jersey, Law Division, Essex County (the “Derivative Complaint”) against PFI as a “nominal” defendant, PFI’s chairman and chief executive officer, vice chairman, and all of the current outside directors of PFI’s Board. The Derivative Complaint asserts claims for breach of fiduciary duty, unjust enrichment, and abuse of control and alleges that: (i) the Company's reserve assumptions failed to account for adversely developing mortality experience in the Individual Life business segment; (ii) the Company's reserves were insufficient to satisfy its future policy benefit liabilities; (iii) the Company materially understated its liabilities and overstated net income due to flawed assumptions in calculating mortality experience; and (iv) the individual defendants engaged in corporate misconduct, mismanagement and waste through their participation in the alleged wrongdoing.

Shareholder Demands

In January 2020, the Board of Directors received a shareholder demand letter containing allegations: (i) of wrongdoing similar to those alleged in the City of Warren and Crawford complaints; and (ii) that certain of the Company’s current and former directors and executive officers breached their fiduciary duties of loyalty, due care and candor. The demand letter requests that the Board of Directors investigate and commence legal proceedings against the named individuals to recover for

the Company’s benefit the damages purportedly sustained by the Company as a result of the alleged breaches. In February 2020, the Board of Directors authorized the creation of a special committee to investigate the allegations set forth in the shareholder demand letter. In April 2020, the Company received additional shareholder demands raising allegations similar to those contained in the January 2020 demand, and may be subject prospectively to additional activity relating to these matters.

Other Matters

Cho v. PICA, et al.

In September 2020, plaintiff filed an amended complaint and added as individual defendants certain PFI officers and current and former members of the Company’s Administrative Committee and Investment Oversight Committee.

LIBOR Litigation

Prudential Investment Portfolios 2, f/k/a Dryden Core Investment Fund, o/b/o Prudential Core Short-Term Bond Fund and Prudential Core Taxable Money Market Fund v. Bank of America Corporation, et al.

In May 2020, the court issued two orders approving stipulations dismissing with prejudice Prudential’s claims against Barclays Bank PLC, Barclays Capital Inc., and Barclays PLC. In August 2020, the court issued two orders approving stipulations dismissing with prejudice Prudential’s claims against Deutsche Bank AG. In October 2020, the court issued orders approving stipulations dismissing with prejudice Prudential’s claims against JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC, f/k/a/ J.P. Morgan Securities Inc., Bank of America Corporation, Bank of America, N.A., and Merrill Lynch, Pierce, Fenner & Smith Inc., f/k/a Banc of America Securities LLC.

Summary

The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company’s results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of the Company’s litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company’s financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company’s financial position.

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Significant Accounting Policies and Pronouncements (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Unaudited Interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). The Unaudited Interim Consolidated Financial Statements include the accounts of Prudential Financial, entities over which the Company exercises control, including majority-owned subsidiaries and minority-owned entities such as limited partnerships in which the Company is the general partner and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. See Note 4 for additional information on the Company’s consolidated variable interest entities. Intercompany balances and transactions have been eliminated.

In the opinion of management, all adjustments necessary for a fair statement of the financial position and results of operations have been made. All such adjustments are of a normal, recurring nature. Interim results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining deferred policy acquisition costs (“DAC”) and related amortization; policyholders’ account balances related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and fixed annuity products; value of business acquired (“VOBA”) and its amortization; amortization of deferred sales inducements (“DSI”); measurement of goodwill and any related impairment; valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”); future policy benefits including guarantees; pension and other postretirement benefits; provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

Reclassifications

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

Adoption of New Accounting Pronouncements

Adoption of ASU 2016-13

The Company adopted ASU 2016-13, and related ASUs, effective January 1, 2020 using the modified retrospective method for certain financial assets carried at amortized cost and certain off-balance sheet exposures. The modified retrospective method results in a cumulative effect adjustment to opening retained earnings. The Company adopted the guidance related to fixed maturities, available-for-sale on a prospective basis.

This ASU requires the use of a new current expected credit loss (“CECL”) model to account for expected credit losses on certain financial assets reported at amortized cost (e.g., loans held for investment, fixed maturities held-to-maturity, reinsurance receivables, etc.) and certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans and certain loan commitments). The guidance requires an entity to estimate lifetime credit losses related to such financial assets and credit exposures based on relevant information about past events, current conditions, and reasonable and supportable forecasts that may affect the collectability of the reported amounts. The standard also modifies the OTTI guidance for fixed maturities, available-for-sale requiring the use of an allowance rather than a direct write-down of the investment.

The impacts of this ASU on the Company’s Consolidated Financial Statements primarily include (1) A Cumulative Effect Adjustment Upon Adoption; (2) Changes to the Presentation of the Consolidated Statements of Financial Position and Consolidated Statements of Operations; and (3) Changes to Accounting Policies. Each of these impacts is described below. This section is meant to serve as an update to, and should be read in conjunction with, Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(1) Cumulative Effect Adjustment Upon Adoption

Summary of Transition Impact on the Consolidated Statements of Financial Position
Upon Adoption on January 1, 2020
	Increase/(Decrease)
	(in millions)
Fixed maturities, held-to-maturity	$	(9)
Commercial mortgage and other loans	(115)
Other invested assets	(1)
Deferred policy acquisition costs	9
Other assets	(6)
Total assets	$	(122)
Policyholders' dividends	$	(14)
Other liabilities	21
Income taxes	(30)
Total liabilities	(23)
Retained earnings	(99)
Total equity	(99)
Total liabilities and equity	$	(122)

The prospective adoption of the portions of the standard related to fixed maturities, available-for-sale resulted in no impact to opening retained earnings.

(2) Changes to the Presentation of the Consolidated Statements of Financial Position and Consolidated Statements of Operations

The allowance for credit losses is presented parenthetically on relevant line items in the Consolidated Statements of Financial Position. In the Consolidated Statements of Operations, realized investment gains (losses), net are presented on one

line item and will no longer reflect the breakout of OTTI on fixed maturity securities; OTTI on fixed maturity securities transferred to other comprehensive income (“OCI”); and other realized investment gains (losses), net. The presentation of this detail in prior periods is immaterial.

(3) Changes to Accounting Policies

This section has been updated to include the following changes in our accounting policies resulting from the adoption of ASU 2016-13.

Fixed maturities, available-for-sale

Fixed maturities, available-for-sale (“AFS debt securities”) are reported at fair value in the Statements of Financial Position. Interest income, and amortization of premium and accretion of discount are included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions relating to the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of impairments recognized in earnings and OCI. For mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is impaired or purchased with credit deterioration. For impaired mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively only if subsequent favorable or adverse changes in expected cash flows are not reflected in the allowance for credit losses. Prior to the adoption of this standard, the effective yield was adjusted prospectively regardless of whether the investment was impaired or not.

AFS debt securities with unrealized losses are reviewed quarterly to determine whether the amortized cost basis of the security is recoverable. In evaluating whether the amortized cost basis is recoverable, the Company considers several factors including, but not limited to the extent of the decline and the reasons for the decline in value (credit events, currency or interest-rate related, including general credit spread widening), and the financial condition of the issuer.

When an AFS debt security is in an unrealized loss position and (1) the Company has the intent to sell the AFS debt security, or (2) it is more likely than not the Company will be required to sell the AFS debt security before its anticipated recovery, or (3) the Company has deemed the AFS debt security to be uncollectable, the amortized cost basis of the AFS debt security is written down to fair value and any previously recognized allowance is reversed. The impairment is reported in “Realized investment gains (losses), net.” The new cost basis is not adjusted for subsequent increases in estimated fair value.

For an AFS debt security in an unrealized loss position that does not meet these conditions, the Company analyzes its ability to recover the amortized cost by comparing the net present value of projected future cash flows (the “net present value”) with the amortized cost of the security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the AFS debt security at the date of acquisition. The Company may use the estimated fair value of collateral, if any, as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment, an allowance for losses is recognized in earnings for the difference between amortized cost and the net present value and is limited to the difference between amortized cost and fair value of the AFS debt security. Any difference between the fair value and the net present value of the debt security at the impairment measurement date remains in “Other comprehensive income (loss).” Changes in the allowance for losses are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, any impairments on AFS debt securities were reported as an adjustment to the amortized cost basis of the security. Subsequent to the impairment, the AFS debt security was treated as if it were newly acquired at the date of impairment, and any increases in cash flows expected to be collected were accreted into net investment income over the life of the investment.

Fixed maturities, held-to-maturity

Fixed maturities, held-to-maturity are reported in the Statements of Financial Position at amortized cost net of the CECL allowance. The CECL allowance is generally determined based on probability of default and loss given default assumptions according to sector, credit quality and remaining time to maturity. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, fixed maturities, held-to-maturity deemed to be OTTI were written down to the net present value of expected cash flows. Any difference between the fair value and the net present value of the debt security at the impairment measurement date was recorded in “Other comprehensive income (loss).”

Interest income, and amortization of premium and accretion of discount are included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated timing and amount of cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of impairment recognized in earnings and OCI. For mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is impaired or purchased with credit deterioration. For impaired mortgage-backed and asset-backed securities rated below AA, the effective yield is adjusted prospectively only if subsequent favorable or adverse changes in expected cash flows are not reflected in the allowance for credit losses.

Prior to the adoption of this standard, the effective yield was adjusted prospectively regardless of whether the investment was impaired or not.

Commercial mortgage and other loans

Commercial mortgage and other loans are reported in the Statements of Financial Position at amortized cost net of the CECL allowance. Additionally, certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans, and certain unfunded mortgage loan commitments where the Company cannot unconditionally cancel the commitment) are also subject to a CECL allowance.

The CECL allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets or off-balance sheet credit exposures. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, and other collateralized and uncollateralized loans.

For commercial mortgage and agricultural mortgage loans (and related unfunded commitments where the Company cannot unconditionally cancel the commitment), the allowance is calculated using an internally developed CECL model.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions, and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate. Information about certain key inputs is detailed below.

Key factors in determining the internal credit ratings for commercial mortgage and agricultural mortgage loans include loan-to-value and debt-service-coverage ratios. Other factors include amortization, loan term, and estimated market value growth rate and volatility for the property type and region. The loan-to-value ratio compares the carrying amount of the loan to the fair value of the underlying property or properties collateralizing the loan and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the carrying amount of the loan exceeds the collateral value. A loan-to-value ratio less than 100% indicates an excess of collateral value over the carrying amount of the loan. The debt-service-coverage ratio is a property’s net operating income as a percentage of its debt service payments. Debt-service-coverage ratios less than 1.0 times indicate that a property’s operations do not generate enough income to cover the loan’s current debt payments. A debt-service-coverage ratio greater than 1.0 times indicates an excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company’s periodic review of the commercial mortgage and agricultural mortgage loan portfolios, which includes an internal appraisal of the underlying collateral value. The Company’s periodic review also includes a credit re-rating process, whereby the internal credit rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary credit quality rating system. See Note 3 for additional information related to the loan-to-value ratios and debt-service-coverage ratios related to the Company’s commercial mortgage and agricultural mortgage loan portfolios. Generally, every loan is re-rated at least annually.

Annual expected loss rates are based on historical default and loss experience factors. Using average lives, the annual expected loss rates are converted into life-of-loan loss expectations.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. The change in allowance is reported in “Realized investment gains (losses), net.” As it relates to unfunded commitments that are in scope of this guidance, the CECL allowance is reported in “Other liabilities,” and the change in the allowance is reported in “Realized investment gains (losses), net.”

When a commercial mortgage or other loan is deemed to be uncollectible, any allowance is reversed and a direct write-down of the carrying amount of the loan is recorded through “Realized investment gains (losses), net.” The carrying amount of the loan is not adjusted for subsequent recoveries in value.

The CECL allowance for other collateralized and uncollateralized loans carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

Prior to the adoption of this standard, the impairments on commercial mortgage and other loans were collectively reviewed at a portfolio level for impairment based on probable incurred but not specifically identified losses with any such losses reflected in an allowance for credit losses. When a loan was individually identified to be impaired, the loan was individually evaluated for an allowance. Changes in these allowances were reported in “Realized investment gains (losses), net.” Additionally, an allowance for credit losses was not required on unfunded loan commitments.

As further described in Note 14, the Company’s PGIM business provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities (“GSEs”). The Company has agreed to indemnify the GSEs for a portion of the credit risk associated with certain of the mortgages it services. Management has established a CECL allowance that factors in historical loss information, current conditions and reasonable and supportable forecasts. The allowance also considers the remaining lives of the loans subject to the indemnification. The CECL allowance is included in “Other liabilities” and changes in the CECL allowance are reported in “Realized investment gains (losses), net.” Prior to the adoption of this standard, a credit loss allowance was not required.

Reinsurance Recoverables

Reinsurance recoverables are reported on the Statements of Financial Position in “Other Assets” net of the CECL allowance. The CECL allowance considers the credit quality of the reinsurance counterparty and is generally determined based on the probability of default and loss given default assumptions, after considering any applicable collateral arrangements. Additions to or releases of the allowance are reported in “Policyholders’ benefits.”

Prior to the adoption of this standard, an allowance for credit losses for reinsurance recoverables was established only when it was deemed probable that a reinsurer may fail to make payments to us in a timely manner.

Trade Receivables

Trade receivables related to Assurance IQ are reported in the Statements of Financial Position in “Other assets” net of the CECL allowance. The CECL allowance considers the credit quality of the counterparties and is generally determined based on probability of default and loss given default assumptions. Additions to or releases of the allowance are reported in “General and administrative expenses.” Prior to the adoption of this standard, the reserve was limited to an allowance for doubtful accounts.

Other ASUs adopted during the nine months ended September 30, 2020

Standard	Description	Effective date and method of adoption	Effect on the financial statements or other significant matters
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment	This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test, which measures a goodwill impairment by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill. Under the ASU, a goodwill impairment should be recorded for the amount by which the carrying amount of a reporting unit exceeds its fair value (capped by the total amount of goodwill allocated to the reporting unit).	January 1, 2020 using the prospective method.	The adoption of the ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	This ASU provides optional relief for certain contracts impacted by reference rate reform. The standard permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The ASU also temporarily (until December 31, 2022) allows hedge relationships to continue without de-designation upon changes due to reference rate reform.	March 12, 2020 to December 31, 2022 using the prospective method.	This ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements. The Company made the election under ASU 2020-04 for all applicable contracts as they converted from the current reference rate to the new reference rate.

Future Adoption Of New Accounting Pronouncements

ASU issued but not yet adopted as of September 30, 2020 — ASU 2018-12

ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the FASB on August 15, 2018 and is expected to have a significant impact on the Consolidated Financial Statements and Notes to the Consolidated Financial Statements. In October 2019, the FASB issued ASU 2019-09, Financial Services - Insurance (Topic 944): Effective Date to affirm its decision to defer the effective date of ASU 2018-12 to January 1, 2022 (with early adoption permitted), representing a one year extension from the original effective date of January 1, 2021. As a result of the COVID-19 pandemic, in November 2020 the FASB issued ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application to defer for an additional one year the effective date of ASU 2018-12 from January 1, 2022 to January 1, 2023, and to provide transition relief to facilitate the early adoption of the ASU. The transition relief would allow large calendar-year public companies that early adopt ASU 2018-12 to apply the guidance either as of January 1, 2020 or January 1, 2021 (and record transition adjustments as of January 1, 2020 or January 1, 2021, respectively) in the 2022 financial statements. Companies that do not early adopt ASU 2018-12 would apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the 2023 financial statements. ASU 2018-12 will impact, at least to some extent, the accounting and disclosure requirements for all long-duration insurance and investment contracts issued by the Company. Outlined below are four key areas of change, although there are other less significant changes not noted below. In addition to the impacts to the balance sheet upon adoption, the Company also expects an impact to how earnings emerge thereafter.

ASU 2018-12 Amended Topic	Description	Method of adoption	Effect on the financial statements or other significant matters
Cash flow assumptions used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products	Requires an entity to review, and if necessary, update the cash flow assumptions used to measure the liability for future policy benefits, for both changes in future assumptions and actual experience, at least annually using a retrospective update method with a cumulative catch-up adjustment recorded in a separate line item in the Consolidated Statements of Operations.	An entity may choose one of two adoption methods for the liability for future policy benefits: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in Accumulated other comprehensive income (loss) (“AOCI”) or (2) a full retrospective transition method.	The options for method of adoption and the impacts of such methods are under assessment.
Discount rate assumption used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products	Requires discount rate assumptions to be based on an upper-medium grade fixed income instrument yield, which will be updated each quarter with the impact recorded through OCI. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the discount rate assumptions.	As noted above, an entity may choose either a modified retrospective transition method or full retrospective transition method for the liability for future policy benefits. Under either method, for balance sheet remeasurement purposes, the liability for future policy benefits will be remeasured using current discount rates as of either the beginning of the prior year (if early adoption is elected) or the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.	Upon adoption, under either transition method, there will be an adjustment to AOCI as a result of remeasuring in-force contract liabilities using current upper-medium grade fixed income instrument yields. The adjustment upon adoption will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The magnitude of such adjustment is currently being assessed.
Amortization of deferred acquisition costs (DAC) and other balances	Requires DAC and other balances, such as unearned revenue reserves and DSI, to be amortized on a constant level basis over the expected term of the related contract, independent of expected profitability.	An entity may apply one of two adoption methods: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) if an entity chooses a full retrospective transition method for its liability for future policy benefits, as described above, it is required to also use a full retrospective transition method for DAC and other balances.	The options for method of adoption and the impacts of such methods are under assessment. Under the modified retrospective transition method, the Company would not expect a significant impact to the balance sheet, other than the impact of the removal of any related amounts in AOCI.
Market Risk Benefits (MRB)	Requires an entity to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value, and record MRB assets and liabilities separately on the Consolidated Statements of Financial Position. Changes in fair value of market risk benefits are recorded in net income, except for the portion of the change in MRB liabilities attributable to changes in an entity’s non-performance risk (“NPR”) which is recognized in OCI.	An entity shall adopt the guidance for market risk benefits using the retrospective transition method, which includes a cumulative effect adjustment on the balance sheet as of either the beginning of prior year (if early adoption is elected) or the beginning of the earliest period presented. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the balance of the market risk benefits upon adoption.	Upon adoption, the Company expects an impact to retained earnings for the difference between the fair value and carrying value of benefits not currently measured at fair value (e.g., guaranteed minimum death benefits on variable annuities) and an impact from reclassifying the cumulative effect of changes in NPR from retained earnings to AOCI. The magnitude of such adjustments is currently being assessed.

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Significant Accounting Policies and Pronouncements Significant Accounting Policies and Pronouncements (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Transition Impact

(1) Cumulative Effect Adjustment Upon Adoption

Summary of Transition Impact on the Consolidated Statements of Financial Position
Upon Adoption on January 1, 2020
	Increase/(Decrease)
	(in millions)
Fixed maturities, held-to-maturity	$	(9)
Commercial mortgage and other loans	(115)
Other invested assets	(1)
Deferred policy acquisition costs	9
Other assets	(6)
Total assets	$	(122)
Policyholders' dividends	$	(14)
Other liabilities	21
Income taxes	(30)
Total liabilities	(23)
Retained earnings	(99)
Total equity	(99)
Total liabilities and equity	$	(122)

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Investments (Tables)

9 Months Ended

Sep. 30, 2020

Investments [Abstract]

Fixed Maturities, Available-for-sale Securities

The following tables set forth the composition of fixed maturity securities (excluding investments classified as trading), as of the dates indicated:

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	31,095	$	11,040	$	23	$	0	$	42,112
Obligations of U.S. states and their political subdivisions	10,555		2,052		4		0		12,603
Foreign government bonds	90,915		16,317		195		1		107,036
U.S. public corporate securities	92,988		16,259		454		64		108,729
U.S. private corporate securities(1)	35,846		3,586		192		29		39,211
Foreign public corporate securities	25,131		3,408		185		24		28,330
Foreign private corporate securities	27,934		1,785		485		30		29,204
Asset-backed securities(2)	14,070		168		104		0		14,134
Commercial mortgage-backed securities	15,096		1,263		6		4		16,349
Residential mortgage-backed securities(3)	2,881		228		1		0		3,108
Total fixed maturities, available-for-sale(1)	$	346,511	$	56,106	$	1,649	$	152	$	400,816

__________

(1)Excludes notes with amortized cost of $6,466 million (fair value, $6,594 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, credit cards and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Excludes notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCI(4)
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	30,625	$	5,195	$	161	$	35,659	$	0
Obligations of U.S. states and their political subdivisions	10,068		1,437		8		11,497		0
Foreign government bonds	98,356		20,761		63		119,054		(34)
U.S. public corporate securities	87,566		11,030		257		98,339		(6)
U.S. private corporate securities(1)	34,410		2,243		120		36,533		0
Foreign public corporate securities	26,841		3,054		70		29,825		(1)
Foreign private corporate securities	27,619		1,201		580		28,240		0
Asset-backed securities(2)	13,067		147		40		13,174		(77)
Commercial mortgage-backed securities	14,978		610		14		15,574		0
Residential mortgage-backed securities(3)	3,044		159		2		3,201		(1)
Total fixed maturities, available-for-sale(1)	$	346,574	$	45,837	$	1,315	$	391,096	$	(119)

__________

(1)Excludes notes with amortized cost of $4,751 million (fair value, $4,757 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, home equity and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Represents the amount of unrealized losses remaining in AOCI, from the impairment measurement date. Amount excludes $362 million of net unrealized gains on impaired available-for-sale securities and $1 million of net unrealized gains on impaired held-to-maturity securities relating to changes in the value of such securities subsequent to the impairment measurement date.

(5)Excludes notes with amortized cost of $4,998 million (fair value, $5,401 million), which have been offset with the associated debt under a netting agreement.

Fixed Maturities, Held-to-maturity Securities

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Amortized Cost, Net of Allowance
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	915	$	265	$	0	$	1,180	$	0	$	915
Foreign public corporate securities	637		66		0		703		9		628
Foreign private corporate securities	85		2		0		87		0		85
Residential mortgage-backed securities(3)	273		21		0		294		0		273
Total fixed maturities, held-to-maturity(4)	$	1,910	$	354	$	0	$	2,264	$	9	$	1,901

__________

(1)Excludes notes with amortized cost of $6,466 million (fair value, $6,594 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, credit cards and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Excludes notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	891	$	282	$	0	$	1,173
Foreign public corporate securities	649		64		0		713
Foreign private corporate securities	83		2		0		85
Residential mortgage-backed securities(3)	310		21		0		331
Total fixed maturities, held-to-maturity(5)	$	1,933	$	369	$	0	$	2,302

__________

(1)Excludes notes with amortized cost of $4,751 million (fair value, $4,757 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, home equity and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Represents the amount of unrealized losses remaining in AOCI, from the impairment measurement date. Amount excludes $362 million of net unrealized gains on impaired available-for-sale securities and $1 million of net unrealized gains on impaired held-to-maturity securities relating to changes in the value of such securities subsequent to the impairment measurement date.

(5)Excludes notes with amortized cost of $4,998 million (fair value, $5,401 million), which have been offset with the associated debt under a netting agreement.

Duration Of Gross Unrealized Losses On Fixed Maturity Securities

The following table sets forth the fair value and gross unrealized losses on available-for-sale fixed maturity securities without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the date indicated:

	September 30, 2020
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	1,068	$	23	$	0	$	0	$	1,068	$	23
Obligations of U.S. states and their political subdivisions	200		4		0		0		200		4
Foreign government bonds	5,548		190		44		5		5,592		195
U.S. public corporate securities	6,939		261		1,332		174		8,271		435
U.S. private corporate securities	2,452		105		847		86		3,299		191
Foreign public corporate securities	2,022		126		367		52		2,389		178
Foreign private corporate securities	3,442		105		3,311		376		6,753		481
Asset-backed securities	5,145		48		4,742		56		9,887		104
Commercial mortgage-backed securities	160		4		94		2		254		6
Residential mortgage-backed securities	148		1		0		0		148		1
Total fixed maturities, available-for-sale	$	27,124	$	867	$	10,737	$	751	$	37,861	$	1,618

The following table sets forth the fair value and gross unrealized losses on fixed maturity securities aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the date indicated:

	December 31, 2019
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities(1):
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	4,950	$	161	$	267	$	0	$	5,217	$	161
Obligations of U.S. states and their political subdivisions	273		8		0		0		273		8
Foreign government bonds	2,332		60		126		3		2,458		63
U.S. public corporate securities	3,944		85		2,203		172		6,147		257
U.S. private corporate securities	2,283		44		1,563		76		3,846		120
Foreign public corporate securities	1,271		23		496		47		1,767		70
Foreign private corporate securities	1,466		33		5,666		547		7,132		580
Asset-backed securities	3,979		12		4,433		28		8,412		40
Commercial mortgage-backed securities	1,193		10		164		4		1,357		14
Residential mortgage-backed securities	207		1		88		1		295		2
Total	$	21,898	$	437	$	15,006	$	878	$	36,904	$	1,315

__________ 

(1)As of December 31, 2019, there were no securities classified as held-to-maturity in a gross unrealized loss position.

Fixed Maturities Classified by Contractual Maturity Date

The following table sets forth the amortized cost or amortized cost, net of allowance and fair value of fixed maturities by contractual maturities, as of the date indicated:

	September 30, 2020
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost, Net of Allowance		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	13,497	$	14,096	$	117	$	118
Due after one year through five years	50,428		53,969		0		0
Due after five years through ten years	66,321		74,393		600		676
Due after ten years(1)	184,218		224,767		911		1,176
Asset-backed securities	14,070		14,134		0		0
Commercial mortgage-backed securities	15,096		16,349		0		0
Residential mortgage-backed securities	2,881		3,108		273		294
Total	$	346,511	$	400,816	$	1,901	$	2,264

__________

(1)Excludes available-for-sale notes with amortized cost of $6,466 million (fair value, $6,594 million) and held-to-maturity notes with amortized cost of $4,998 million (fair value, $5,814 million), which have been offset with the associated debt under a netting agreement.

Sources of Fixed Maturity Proceeds and Related Investment Gains (Losses) as well as Losses on Impairments

The following table sets forth the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on write-downs, impairments and the allowance for credit losses of fixed maturities, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	4,284	$	7,190	$	14,654	$	24,011
Proceeds from maturities/prepayments	7,181		5,315		17,603		14,507
Gross investment gains from sales and maturities	578		565		1,451		1,276
Gross investment losses from sales and maturities	(129)		(62)		(339)		(345)
OTTI recognized in earnings(2)	N/A		(143)		N/A		(242)
Write-downs recognized in earnings(3)	(134)		N/A		(289)		N/A
(Addition to) release of allowance for credit losses(4)	86		N/A		(152)		N/A
Fixed maturities, held-to-maturity:
Proceeds from maturities/prepayments(5)	$	14	$	47	$	77	$	84
(Addition to) release of allowance for credit losses(4)	0		N/A		0		N/A

__________ 

(1)Includes $268 million and $162 million of non-cash related proceeds due to the timing of trade settlements for the nine months ended September 30, 2020 and 2019, respectively.

(2)For the three and nine months ended September 30, 2019, amounts exclude the portion of OTTI amounts remaining in OCI, representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.

(3)For the three and nine months ended September 30, 2020, amounts represent write-downs of credit adverse securities, write-downs on securities approaching maturity related to foreign exchange movements and securities actively marketed for sale.

(4)Effective January 1, 2020, credit losses on available-for-sale and held-to-maturity fixed maturity securities are recorded within the “allowance for credit losses.”

(5)Includes $1 million and less than $1 million of non-cash related proceeds due to the timing of trade settlements for the nine months ended September 30, 2020 and 2019, respectively.

Credit Losses Recognized in Earnings on Fixed Maturity Securities Held by the Company for which a Portion of the OTTI Loss was Recognized in OCI

The following tables set forth the activity in the allowance for credit losses for fixed maturity securities, as of the date indicated: 

	Three Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	38	$	199	$	0	$	1	$	0	$	238
Additions to allowance for credit losses not previously recorded	0		1		33		0		0		0		34
Reductions for securities sold during the period	0		0		(8)		0		0		0		(8)
Additions (reductions) on securities with previous allowance	0		0		(12)		0		3		0		(9)
Write-downs charged against the allowance	0		(38)		(65)		0		0		0		(103)
Balance, end of period	$	0	$	1	$	147	$	0	$	4	$	0	$	152

	Nine Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of year	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Additions to allowance for credit losses not previously recorded	0		39		238		0		1		0		278
Reductions for securities sold during the period	0		0		(36)		0		0		0		(36)
Additions (reductions) on securities with previous allowance	0		0		10		0		3		0		13
Write-downs charged against the allowance	0		(38)		(65)		0		0		0		(103)
Balance, end of period	$	0	$	1	$	147	$	0	$	4	$	0	$	152

	Three Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9
Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

	Nine Months Ended September 30, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of year	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Cumulative effect of adoption of ASU 2016-13	0		0		9		0		0		0		9
Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

Assets Supporting Experience-Rated Contractholder Liabilities

The following table sets forth the composition of “Assets supporting experience-rated contractholder liabilities,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value
	(in millions)
Short-term investments and cash equivalents	$	1,103	$	1,103	$	277	$	277
Fixed maturities:
Corporate securities	14,060		14,909		13,143		13,603
Commercial mortgage-backed securities	1,845		1,946		1,845		1,896
Residential mortgage-backed securities(1)	1,064		1,126		1,134		1,158
Asset-backed securities(2)	1,691		1,716		1,639		1,662
Foreign government bonds	889		898		802		814
U.S. government authorities and agencies and obligations of U.S. states	358		438		341		397
Total fixed maturities(3)	19,907		21,033		18,904		19,530
Equity securities	1,603		1,825		1,465		1,790
Total assets supporting experience-rated contractholder liabilities(4)	$	22,613	$	23,961	$	20,646	$	21,597

__________ 

(1)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(2)Includes collateralized loan obligations, auto loans, education loans, home equity and other asset types. Collateralized loan obligations at fair value were $1,133 million and $1,060 million as of September 30, 2020 and December 31, 2019, respectively, all of which were rated AAA.

(3)As a percentage of amortized cost, 94% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of both September 30, 2020 and December 31, 2019.

(4)As a percentage of amortized cost, 79% and 77% of the portfolio consisted of public securities as of September 30, 2020 and December 31, 2019, respectively.

Securities Concentrations of Credit Risk

As of the dates indicated, the Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s equity included securities of the U.S. government and certain U.S. government agencies and securities guaranteed by the U.S. government, as well as the securities disclosed below:

	September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Japanese government and government agency securities:
Fixed maturities, available-for-sale	$	77,749	$	90,480	$	74,118	$	89,546
Fixed maturities, held-to-maturity	892		1,148		869		1,143
Fixed maturities, trading	24		24		23		23
Assets supporting experience-rated contractholder liabilities	826		831		653		664
Total	$	79,491	$	92,483	$	75,663	$	91,376

	September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in South Korean government and government agency securities:
Fixed maturities, available-for-sale	$	26	$	34	$	10,823	$	13,322
Assets supporting experience-rated contractholder liabilities	15		16		15		16
Total	$	41	$	50	$	10,838	$	13,338

Commercial Mortgage and Other Loans

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amount (in millions)		% of Total		Amount (in millions)		% of Total
Commercial mortgage and agricultural property loans by property type:
Office	$	12,677	19.9	%	$	13,462	21.4	%
Retail	7,677		12.0		8,379		13.3
Apartments/Multi-Family	18,385		28.8		17,348		27.6
Industrial	13,639		21.4		13,226		21.1
Hospitality	2,390		3.7		2,415		3.9
Other	5,051		7.9		4,533		7.2
Total commercial mortgage loans	59,819		93.7		59,363		94.5
Agricultural property loans	4,015		6.3		3,472		5.5
Total commercial mortgage and agricultural property loans	63,834		100.0	%	62,835		100.0	%
Allowance for credit losses	(227)				(117)
Total net commercial mortgage and agricultural property loans	63,607				62,718
Other loans:
Uncollateralized loans	723				656
Residential property loans	104				124
Other collateralized loans	115				65
Total other loans	942				845
Allowance for credit losses	(8)				(4)
Total net other loans	934				841
Total net commercial mortgage and other loans(1)	$	64,541			$	63,559

__________ 

(1)Includes loans held for sale which are carried at fair value and are collateralized primarily by apartment complexes. As of September 30, 2020 and December 31, 2019, the net carrying value of these loans was $915 million and $228 million, respectively.

Allowance for Credit Losses

The following tables set forth the activity in the allowance for credit losses for commercial mortgage and other loans, as of the dates indicated:

	Three Months Ended September 30, 2020
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance, beginning of period	$	230	$	8	$	0	$	3	$	4	$	245
Addition to (release of) allowance for expected losses	(5)		1		0		0		1		(3)
Write-downs charged against the allowance	(7)		0		0		0		0		(7)
Other	0		0		0		0		0		0
Balance, end of period	$	218	$	9	$	0	$	3	$	5	$	235

	Nine Months Ended September 30, 2020
	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance at December 31, 2019	$	114	$	3	$	0	$	0	$	4	$	121
Cumulative effect of adoption of ASU 2016-13	110		5		0		0		0		115
Addition to (release of) allowance for expected losses	1		1		0		0		1		3
Write-downs charged against the allowance	(7)		0		0		0		0		(7)
Other	0		0		0		3		0		3
Balance at September 30, 2020	$	218	$	9	$	0	$	3	$	5	$	235

Financing Receivable Credit Quality Indicators

The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses, as of the date indicated:

	September 30, 2020
	Amortized Cost by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
	(in millions)
Commercial Mortgage Loans
Loan-to-Value Ratio:
0%-59.99%	$	650	$	2,824	$	3,105	$	3,309	$	3,381	$	17,616	$	0	$	30,885
60%-69.99%	1,480		4,152		3,437		2,913		2,801		4,282		0		19,065
70%-79.99%	1,744		3,138		2,530		1,010		613		654		0		9,689
80% or greater	0		10		0		18		24		128		0		180
Total	$	3,874	$	10,124	$	9,072	$	7,250	$	6,819	$	22,680	$	0	$	59,819
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	3,759	$	9,490	$	8,590	$	7,009	$	6,525	$	21,045	$	0	$	56,418
1.0 - 1.2x	114		518		453		241		286		1,499		0		3,111
Less than 1.0x	1		116		29		0		8		136		0		290
Total	$	3,874	$	10,124	$	9,072	$	7,250	$	6,819	$	22,680	$	0	$	59,819
Agricultural Property Loans
Loan-to-Value Ratio:
0%-59.99%	$	724	$	482	$	360	$	531	$	397	$	1,320	$	0	$	3,814
60%-69.99%	87		72		39		3		0		0		0		201
70%-79.99%	0		0		0		0		0		0		0		0
80% or greater	0		0		0		0		0		0		0		0
Total	$	811	$	554	$	399	$	534	$	397	$	1,320	$	0	$	4,015
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	801	$	553	$	398	$	471	$	377	$	1,303	$	0	$	3,903
1.0 - 1.2x	10		0		1		59		5		5		0		80
Less than 1.0x	0		1		0		4		15		12		0		32
Total	$	811	$	554	$	399	$	534	$	397	$	1,320	$	0	$	4,015

Commercial mortgage loans
	December 31, 2019
	Debt Service Coverage Ratio
	>1.2X		1.0X to <1.2X		< 1.0X		Total
	(in millions)
Loan-to-Value Ratio:
0%-59.99%	$	31,027	$	701	$	217	$	31,945
60%-69.99%	17,090		1,145		42		18,277
70%-79.99%	8,020		719		28		8,767
80% or greater	209		143		22		374
Total commercial mortgage loans	$	56,346	$	2,708	$	309	$	59,363

Agricultural property loans
	December 31, 2019
	Debt Service Coverage Ratio
	>1.2X		1.0X to <1.2X		< 1.0X		Total
	(in millions)
Loan-to-Value Ratio:
0%-59.99%	$	3,289	$	57	$	14	$	3,360
60%-69.99%	112		0		0		112
70%-79.99%	0		0		0		0
80% or greater	0		0		0		0
Total agricultural property loans	$	3,401	$	57	$	14	$	3,472

Aging of Past Due Commercial Mortgage and Other Loans and Nonaccrual Status

The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status, as of the dates indicated:

	September 30, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	59,794	$	0	$	24	$	1	$	25	$	59,819	$	27
Agricultural property loans	4,014		0		0		1		1		4,015		15
Residential property loans	102		1		0		1		2		104		1
Other collateralized loans	115		0		0		0		0		115		0
Uncollateralized loans	723		0		0		0		0		723		0
Total	$	64,748	$	1	$	24	$	3	$	28	$	64,776	$	43

 __________

(1)As of September 30, 2020, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

	December 31, 2019
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	59,363	$	0	$	0	$	0	$	0	$	59,363	$	44
Agricultural property loans	3,458		1		0		13		14		3,472		13
Residential property loans	121		1		0		2		3		124		2
Other collateralized loans	65		0		0		0		0		65		0
Uncollateralized loans	656		0		0		0		0		656		0
Total	$	63,663	$	2	$	0	$	15	$	17	$	63,680	$	59

__________

(1)As of December 31, 2019, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Other Invested Assets

The following table sets forth the composition of “Other invested assets,” as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	4,139	$	3,625
Hedge funds	2,333		1,947
Real estate-related	1,409		1,372
Subtotal equity method	7,881		6,944
Fair value:
Private equity	1,679		1,705
Hedge funds	1,965		2,172
Real estate-related	333		336
Subtotal fair value	3,977		4,213
Total LPs/LLCs	11,858		11,157
Real estate held through direct ownership(1)	2,517		2,388
Derivative instruments	1,201		877
Other(2)	1,345		1,184
Total other invested assets	$	16,921	$	15,606

_________ 

(1)As of September 30, 2020 and December 31, 2019, real estate held through direct ownership had mortgage debt of $436 million and $537 million, respectively.

(2)Primarily includes strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding the Company’s holdings in the Federal Home Loan Banks of New York and Boston, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the date indicated:

	September 30, 2020
	(in millions)
Fixed maturities	$	2,586
Equity securities	17
Commercial mortgage and other loans	203
Policy loans	289
Other invested assets	28
Short-term investments and cash equivalents	6
Total accrued investment income	$	3,129

Net Investment Income

The following table sets forth “Net investment income” by investment type, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities, available-for-sale(1)	$	3,113	$	3,191	$	9,292	$	9,429
Fixed maturities, held-to-maturity(1)	59		58		176		173
Fixed maturities, trading	32		37		100		109
Assets supporting experience-rated contractholder liabilities	179		191		527		558
Equity securities	36		38		119		119
Commercial mortgage and other loans	608		636		1,866		1,863
Policy loans	147		160		450		463
Other invested assets	415		251		693		727
Short-term investments and cash equivalents	30		123		182		356
Gross investment income	4,619		4,685		13,405		13,797
Less: investment expenses	(173)		(247)		(571)		(753)
Net investment income	$	4,446	$	4,438	$	12,834	$	13,044

__________ 

(1)Includes income on credit-linked notes which are reported on the same financial statement line item as related surplus notes, as conditions are met for right to offset.

Realized Investment Gains (Losses), Net

The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Fixed maturities(1)	$	401	$	360	$	671	$	689
Commercial mortgage and other loans	41		20		65		34
Investment real estate	5		38		15		38
LPs/LLCs	8		2		2		(1)
Derivatives	(537)		433		(2,926)		(1,010)
Other	3		0		9		1
Realized investment gains (losses), net	$	(79)	$	853	$	(2,164)	$	(249)

__________ 

(1)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.

Net Unrealized Gains (Losses) on Investment

The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Fixed maturity securities, available-for-sale—with OTTI(1)	$ N/A		$	243
Fixed maturity securities, available-for-sale—all other(1)	N/A		44,279
Fixed maturity securities, available-for-sale with an allowance	(23)		N/A
Fixed maturity securities, available-for-sale without an allowance	54,480		N/A
Derivatives designated as cash flow hedges(2)	1,407		832
Other investments(3)	(20)		(15)
Net unrealized gains (losses) on investments	$	55,844	$	45,339

__________ 

(1)Effective January 1, 2020, per ASU 2016-13, fixed maturity securities, available-for-sale are no longer required to be disclosed “with OTTI” and “all other.”

(2)For additional information on cash flow hedges, see Note 5.

(3)As of September 30, 2020, there were no net unrealized losses on held-to-maturity securities that were previously transferred from available-for-sale. Includes net unrealized gains on certain joint ventures that are strategic in nature and are included in “Other assets.”

Repurchase Agreements and Securities Lending

The following table sets forth the composition of “Securities sold under agreements to repurchase,” as of the dates indicated:

	September 30, 2020						December 31, 2019
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	9,944	$	553	$	10,497	$	9,431	$	0	$	9,431
Residential mortgage-backed securities	377		0		377		250		0		250
Total securities sold under agreements to repurchase(1)	$	10,321	$	553	$	10,874	$	9,681	$	0	$	9,681

__________ 

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

The following table sets forth the composition of “Cash collateral for loaned securities,” which represents the liability to return cash collateral received for the following types of securities loaned, as of the dates indicated:

	September 30, 2020						December 31, 2019
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	0	$	0	$	9	$	0	$	9
Obligations of U.S. states and their political subdivisions	108		0		108		33		0		33
Foreign government bonds	353		0		353		244		0		244
U.S. public corporate securities	2,161		0		2,161		2,996		0		2,996
Foreign public corporate securities	425		0		425		762		0		762
Commercial mortgage-backed securities	0		0		0		2		0		2
Equity securities	24		0		24		167		0		167
Total cash collateral for loaned securities(1)	$	3,071	$	0	$	3,071	$	4,213	$	0	$	4,213

__________ 

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

XML

Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2020

Variable Interest Entity, Measure of Activity [Abstract]

Schedule of Consolidated Variable Interest Entities

The table below reflects the carrying amount and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported. The liabilities primarily comprise obligations under debt instruments issued by the VIEs. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs.

	Consolidated VIEs for which the Company is the Investment Manager(1)				Other Consolidated VIEs(1)
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
	(in millions)
Fixed maturities, available-for-sale	$	107	$	104	$	290	$	285
Fixed maturities, held-to-maturity	85		83		863		839
Fixed maturities, trading	1,081		1,112		0		0
Assets supporting experience-rated contractholder liabilities	0		0		1		4
Equity securities	44		47		0		0
Commercial mortgage and other loans	976		883		0		0
Other invested assets	2,502		2,199		152		89
Cash and cash equivalents	140		166		0		0
Accrued investment income	6		4		4		4
Other assets	424		450		689		689
Total assets of consolidated VIEs	$	5,365	$	5,048	$	1,999	$	1,910
Other liabilities	$	291	$	304	$	11	$	13
Notes issued by consolidated VIEs(2)	1,242		1,274		0		0
Total liabilities of consolidated VIEs	$	1,533	$	1,578	$	11	$	13

 __________

(1)Total assets of consolidated VIEs reflect $2,892 million and $2,668 million as of September 30, 2020 and December 31, 2019, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.

(2)Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company. As of September 30, 2020, the maturities of these obligations were between 3 and 9 years.

XML

Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

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 $1,190 million and $867 million as of September 30, 2020 and December 31, 2019, respectively, and total derivative liabilities of $573 million and $831 million as of September 30, 2020 and December 31, 2019, respectively, reflected in the Unaudited Interim Consolidated Statements of Financial Position.

Primary Underlying Risk /Instrument Type	September 30, 2020						December 31, 2019
			Fair Value						Fair Value
	Gross Notional		Assets		Liabilities		Gross Notional		Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	3,101	$	1,128	$	(100)	$	3,257	$	628	$	(73)
Interest Rate Forwards	249		11		(2)		205		4		(1)
Foreign Currency
Foreign Currency Forwards	2,194		51		(48)		1,461		22		(57)
Currency/Interest Rate
Foreign Currency Swaps	21,885		2,023		(246)		22,746		1,467		(302)
Total Derivatives Designated as Hedge Accounting Instruments	$	27,429	$	3,213	$	(396)	$	27,669	$	2,121	$	(433)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	151,469	$	20,256	$	(10,295)	$	141,162	$	10,249	$	(4,861)
Interest Rate Futures	16,651		12		(77)		17,095		4		(38)
Interest Rate Options	13,418		1,353		(257)		16,496		339		(238)
Interest Rate Forwards	3,077		22		0		2,218		18		(3)
Foreign Currency
Foreign Currency Forwards	36,539		746		(517)		26,604		208		(214)
Foreign Currency Options	0		0		0		0		0		0
Currency/Interest Rate
Foreign Currency Swaps	14,164		814		(355)		13,874		740		(345)
Credit
Credit Default Swaps	1,667		10		(23)		798		21		0
Equity
Equity Futures	7,742		7		(31)		1,802		0		(3)
Equity Options	46,829		854		(403)		32,657		679		(765)
Total Return Swaps	24,407		134		(409)		18,218		6		(636)
Other
Other(1)	1,262		0		0		1,258		0		0
Synthetic GICs	84,088		1		0		80,009		1		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	401,313	$	24,209	$	(12,367)	$	352,191	$	12,265	$	(7,103)
Total Derivatives(2)(3)	$	428,742	$	27,422	$	(12,763)	$	379,860	$	14,386	$	(7,536)

__________

(1)“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.

(2)Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $24,153 million and $14,035 million as of September 30, 2020 and December 31, 2019, respectively, primarily included in “Future policy benefits.”

(3)Recorded in “Other invested assets” and “Other liabilities” on the Unaudited Interim Consolidated Statements of Financial Position.

Schedule of Derivative instruments (hedged item in fair value hedge accounting relationship)

As of September 30, 2020, the following amounts were recorded on the Unaudited Interim Consolidated Statements of Financial Position related to the carrying amount of the hedged assets (liabilities) and cumulative basis adjustments included in the carrying amount for fair value hedges.

	September 30, 2020				December 31, 2019
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)		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	$	402	$	86	$	389	$	64
Commercial mortgage and other loans	$	21	$	2	$	23	$	2
Policyholders’ account balances	$	(1,686)	$	(376)	$	(1,376)	$	(107)
Future policy benefits	$	(1,248)	$	(410)	$	(676)	$	(172)

__________

(1)There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.

Offsetting of Financial Assets

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 Unaudited Interim 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 Unaudited Interim Consolidated Statements of Financial Position.

	September 30, 2020
	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)	$	27,270	$	(26,232)	$	1,038	$	(569)	$	469
Securities purchased under agreement to resell	641		0		641		(641)		0
Total assets	$	27,911	$	(26,232)	$	1,679	$	(1,210)	$	469
Offsetting of Financial Liabilities:
Derivatives(1)	$	12,757	$	(12,190)	$	567	$	(140)	$	427
Securities sold under agreement to repurchase	10,874		0		10,874		(10,874)		0
Total liabilities	$	23,631	$	(12,190)	$	11,441	$	(11,014)	$	427

	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

__________

(1)    Amounts exclude the excess of collateral received/pledged from/to the counterparty.

Offsetting of Financial Liabilities

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 Unaudited Interim 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 Unaudited Interim Consolidated Statements of Financial Position.

	September 30, 2020
	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)	$	27,270	$	(26,232)	$	1,038	$	(569)	$	469
Securities purchased under agreement to resell	641		0		641		(641)		0
Total assets	$	27,911	$	(26,232)	$	1,679	$	(1,210)	$	469
Offsetting of Financial Liabilities:
Derivatives(1)	$	12,757	$	(12,190)	$	567	$	(140)	$	427
Securities sold under agreement to repurchase	10,874		0		10,874		(10,874)		0
Total liabilities	$	23,631	$	(12,190)	$	11,441	$	(11,014)	$	427

	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

__________

(1)    Amounts exclude the excess of collateral received/pledged from/to the counterparty.

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, including the offset of the hedged item in fair value hedge relationships.

	Three Months Ended September 30, 2020
	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	$	5	$	(2)	$	0	$	0	$	(35)	$	(37)	$	0
Currency	(1)		0		0		0		0		15		0
Total gains (losses) on derivatives designated as hedge instruments	4		(2)		0		0		(35)		(22)		0
Gains (losses) on the hedged item:
Interest Rate	(6)		4		0		0		49		48		0
Currency	0		0		0		0		0		(15)		0
Total gains (losses) on hedged item	(6)		4		0		0		49		33		0
Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		(1)		2
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(1)		2
Total gains (losses) on fair value hedges net of hedged item	(2)		2		0		0		14		10		2
Cash flow hedges
Interest Rate	19		0		0		0		0		0		(15)
Currency	0		0		0		0		0		0		(65)
Currency/Interest Rate	55		78		(210)		0		0		0		(1,011)
Total gains (losses) on cash flow hedges	74		78		(210)		0		0		0		(1,091)
Net investment hedges
Currency	(6)		0		142		0		0		0		(143)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(6)		0		142		0		0		0		(143)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,163)		0		0		0		0		0		0
Currency	(44)		0		2		0		0		0		0
Currency/Interest Rate	(394)		0		(3)		0		0		0		0
Credit	(15)		0		0		0		0		0		0
Equity	(2,243)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	3,254		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(604)		0		(1)		0		0		0		0
Total	$	(538)	$	80	$	(69)	$	0	$	14	$	10	$	(1,232)

	Nine Months Ended September 30, 2020
	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	$	(24)	$	(6)	$	0	$	0	$	295	$	242	$	0
Currency	1		0		0		0		0		17		0
Total gains (losses) on derivatives designated as hedge instruments	(23)		(6)		0		0		295		259		0
Gains (losses) on the hedged item:
Interest Rate	23		13		0		0		(269)		(222)		0
Currency	(1)		1		0		0		0		(17)		0
Total gains (losses) on hedged item	22		14		0		0		(269)		(239)		0
Amortization for gains (losses) excluded from assessment of the effectiveness
Currency	0		0		0		0		0		(1)		(1)
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(1)		(1)
Total gains (losses) on fair value hedges net of hedged item	(1)		8		0		0		26		19		(1)
Cash flow hedges
Interest Rate	27		0		0		0		0		0		29
Currency	4		0		0		0		0		0		27
Currency/Interest Rate	121		239		(17)		0		0		0		519
Total gains (losses) on cash flow hedges	152		239		(17)		0		0		0		575
Net investment hedges
Currency	(6)		0		142		0		0		0		(133)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(6)		0		142		0		0		0		(133)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,829		0		0		0		0		0		0
Currency	186		0		(5)		0		0		0		0
Currency/Interest Rate	337		0		(1)		0		0		0		0
Credit	(56)		0		0		0		0		0		0
Equity	(2,028)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	(9,339)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(3,070)		0		(6)		0		0		0		0
Total	$	(2,925)	$	247	$	119	$	0	$	26	$	19	$	441

	Three Months Ended September 30, 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	$	(10)	$	(2)	$	0	$	0	$	115	$	102	$	0
Currency	1		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(9)		(2)		0		0		115		102		0
Gains (losses) on the hedged item:
Interest Rate	10		5		0		0		(116)		(103)		0
Currency	(1)		1		0		0		0		0		0
Total gains (losses) on hedged item	9		6		0		0		(116)		(103)		0
Total gains (losses) on fair value hedges net of hedged item	0		4		0		0		(1)		(1)		0
Cash flow hedges
Interest Rate	56		1		0		0		0		0		(38)
Currency	3		0		0		0		0		0		4
Currency/Interest Rate	57		70		140		0		0		0		601
Total gains (losses) on cash flow hedges	116		71		140		0		0		0		567
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	3,356		0		0		0		0		0		0
Currency	158		0		5		0		0		0		0
Currency/Interest Rate	364		0		2		0		0		0		0
Credit	4		0		0		0		0		0		0
Equity	(133)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(3,427)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	322		0		7		0		0		0		0
Total	$	438	$	75	$	147	$	0	$	(1)	$	(1)	$	576

	Nine Months Ended September 30, 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	$	(24)	$	(5)	$	0	$	0	$	283	$	233	$	0
Currency	2		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(22)		(5)		0		0		283		233		0
Gains (losses) on the hedged item:
Interest Rate	21		16		0		0		(280)		(222)		0
Currency	(1)		2		0		0		0		0		0
Total gains (losses) on hedged item	20		18		0		0		(280)		(222)		0
Total gains (losses) on fair value hedges net of hedged item	(2)		13		0		0		3		11		0
Cash flow hedges
Interest Rate	55		1		0		0		0		0		(16)
Currency	5		0		0		0		0		0		9
Currency/Interest Rate	96		207		135		0		0		0		771
Total gains (losses) on cash flow hedges	156		208		135		0		0		0		764
Net investment hedges
Currency	0		0		0		0		0		0		12
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		12
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	7,090		0		0		0		0		0		0
Currency	242		0		4		0		0		0		0
Currency/Interest Rate	568		0		2		0		0		0		0
Credit	107		0		0		0		0		0		0
Equity	(2,560)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(6,607)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,160)		0		6		0		0		0		0
Total	$	(1,006)	$	221	$	141	$	0	$	3	$	11	$	776

_________

(1)Net change in AOCI, excluding changes related to net investment hedges using non-derivative instruments of ($17) million for both the three and nine months ended September 30, 2020, and $0 million for both the three and nine months ended September 30, 2019.

Schedule of Derivative Instruments Recognized in Accumulated Other Comprehensive Income (Loss) Before Taxes

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:

	(in millions)
Balance, December 31, 2019	$	832
Amount recorded in AOCI
Interest Rate	56
Currency	31
Currency/Interest Rate	862
Total amount recorded in AOCI	949
Amount reclassified from AOCI to income
Interest Rate	(27)
Currency	(4)
Currency/Interest Rate	(343)
Total amount reclassified from AOCI to income	(374)
Balance, September 30, 2020	$	1,407

Credit Derivatives

The following table provides a summary of the notional and fair value of written credit protection. The Company’s maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is equal to the notional amounts. These credit derivatives have maturities of less than 27 years for index references.

	September 30, 2020
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(2)	50		0		0		0		577		6		600		2		0		0		0		0		1,227		8
Total	$	50	$	0	$	0	$	0	$	577	$	6	$	600	$	2	$	0	$	0	$	0	$	0	$	1,227	$	8

	December 31, 2019
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	36	$	0	$	60	$	1	$	4	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	100	$	1
Index reference(2)	50		0		0		0		570		13		0		0		0		0		72		7		692		20
Total	$	86	$	0	$	60	$	1	$	574	$	13	$	0	$	0	$	0	$	0	$	72	$	7	$	792	$	21

_________

(1)The NAIC rating designations are based on availability and the lowest ratings among Moody's Investors Service, Inc. ("Moody's"), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, a NAIC 6 rating is used.

(2)Single name credit default swaps may reference to the credit of corporate debt, sovereign debt, and structured finance. Index references 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 September 30, 2020 and December 31, 2019, the Company had $440 million and $6 million of outstanding notional amounts and reported at fair value as a liability of $21 million and $0 million, respectively

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Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value, Assets and Liabilities Measured on Recurring Basis

The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.

	As of September 30, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	41,980	$	132	$		$	42,112
Obligations of U.S. states and their political subdivisions	0		12,599		4				12,603
Foreign government bonds	0		107,026		10				107,036
U.S. corporate public securities	0		108,346		383				108,729
U.S. corporate private securities(2)	0		37,245		1,966				39,211
Foreign corporate public securities	0		28,170		160				28,330
Foreign corporate private securities	0		26,610		2,594				29,204
Asset-backed securities(3)	0		13,593		541				14,134
Commercial mortgage-backed securities	0		16,335		14				16,349
Residential mortgage-backed securities	0		3,097		11				3,108
Subtotal	0		395,001		5,815				400,816
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		209		0				209
Obligations of U.S. states and their political subdivisions	0		229		0				229
Foreign government bonds	0		876		22				898
Corporate securities	0		14,331		578				14,909
Asset-backed securities(3)	0		1,607		109				1,716
Commercial mortgage-backed securities	0		1,945		1				1,946
Residential mortgage-backed securities	0		1,126		0				1,126
Equity securities	1,582		243		0				1,825
All other(4)	80		882		110				1,072
Subtotal	1,662		21,448		820				23,930
Fixed maturities, trading	0		4,131		240				4,371
Equity securities	5,118		1,097		673				6,888
Commercial mortgage and other loans	0		915		0				915
Other invested assets(5)	115		27,307		782		(26,232)		1,972
Short-term investments	1,124		6,833		183				8,140
Cash equivalents	3,686		8,398		1				12,085
Other assets	0		0		332				332
Separate account assets(6)(7)	46,517		234,126		1,801				282,444
Total assets	$	58,222	$	699,256	$	10,647	$	(26,232)	$	741,893
Future policy benefits(8)	$	0	$	0	$	23,340	$		$	23,340
Policyholders’ account balances	0		0		1,549				1,549
Other liabilities	110		12,251		0		(12,190)		171
Notes issued by consolidated VIEs	0		0		775				775
Total liabilities	$	110	$	12,251	$	25,664	$	(12,190)	$	25,835

	As of December 31, 2019
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	35,554	$	105	$		$	35,659
Obligations of U.S. states and their political subdivisions	0		11,493		4				11,497
Foreign government bonds	0		119,032		22				119,054
U.S. corporate public securities	0		97,959		380				98,339
U.S. corporate private securities(2)	0		34,749		1,784				36,533
Foreign corporate public securities	0		29,756		69				29,825
Foreign corporate private securities	0		27,237		1,003				28,240
Asset-backed securities(3)	0		12,238		936				13,174
Commercial mortgage-backed securities	0		15,574		0				15,574
Residential mortgage-backed securities	0		3,189		12				3,201
Subtotal	0		386,781		4,315				391,096
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		185		0				185
Obligations of U.S. states and their political subdivisions	0		212		0				212
Foreign government bonds	0		790		24				814
Corporate securities	0		12,966		637				13,603
Asset-backed securities(3)	0		1,593		69				1,662
Commercial mortgage-backed securities	0		1,896		0				1,896
Residential mortgage-backed securities	0		1,158		0				1,158
Equity securities	1,505		285		0				1,790
All other(4)	0		261		0				261
Subtotal	1,505		19,346		730				21,581
Fixed maturities, trading	0		3,597		287				3,884
Equity securities	5,813		939		633				7,385
Commercial mortgage and other loans	0		228		0				228
Other invested assets(5)	6		14,379		567		(13,519)		1,433
Short-term investments	1,806		1,975		155				3,936
Cash equivalents	2,079		6,796		131				9,006
Other assets	0		0		113				113
Separate account assets(6)(7)	46,574		240,433		1,717				288,724
Total assets	$	57,783	$	674,474	$	8,648	$	(13,519)	$	727,386
Future policy benefits(8)	$	0	$	0	$	12,831	$		$	12,831
Policyholders’ account balances	0		0		1,316				1,316
Other liabilities	41		7,495		105		(6,705)		936
Notes issued by consolidated VIEs	0		0		800				800
Total liabilities	$	41	$	7,495	$	15,052	$	(6,705)	$	15,883

__________

(1)“Netting” amounts represent cash collateral of $14,042 million and $6,814 million as of September 30, 2020 and December 31, 2019, respectively.

(2)Excludes notes with fair value of $6,594 million (carrying amount of $6,466 million) and $4,757 million (carrying amount of $4,751 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.

(3)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(4)All other represents cash equivalents and short-term investments.

(5)Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of September 30, 2020 and December 31, 2019, the fair values of such investments were $3,977 million and $4,213 million respectively.

(6)Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets. As of September 30, 2020 and December 31, 2019, the fair value of such investments was $23,039 million and $23,557 million, respectively.

(7)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(8)As of September 30, 2020, the net embedded derivative liability position of $23.3 billion includes $0.3 billion of embedded derivatives in an asset position and $23.7 billion of embedded derivatives in a liability position. As of December 31, 2019, the net embedded derivative liability position of $12.8 billion includes $0.7 billion of embedded derivatives in an asset position and $13.5 billion of embedded derivatives in a liability position.

Fair Value Inputs, Assets and Liabilities, Quantitative Information

The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities.

	As of September 30, 2020
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	3,491	Discounted  cash flow(5)	Discount rate	0.50%	30%	5.03%	Decrease
			Market comparables	EBITDA multiples(4)	6.5X	15.0X	9.1X	Increase
			Liquidation	Liquidation value	15.06%	77.34%	53.84%	Increase
Equity securities	$	231	Discounted cash flow(5)	Discount rate	0.5%	20%		Decrease
			Market comparables	EBITDA multiples(4)	1X	8.8X	3.3X	Increase
			Net Asset Value	Share price	$1	$1,414	$509	Increase
Separate account assets-commercial mortgage loans(6)	$	797	Discounted cash flow	Spread	1.68%	3.29%	1.90%	Decrease
Liabilities:
Future policy benefits(7)	$	23,340	Discounted cash flow	Lapse rate(9)	1%	20%		Decrease
				Spread over LIBOR(10)	0.09%	1.59%		Decrease
				Utilization rate(11)	39%	96%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	15%		Decrease
				Equity volatility curve	18%	26%		Increase
Policyholders’ account balances(8)	$	1,549	Discounted cash flow	Lapse rate(9)	1%	42%		Decrease
				Spread over LIBOR(10)	0.09%	1.59%		Decrease
				Mortality rate(13)	0%	24%		Decrease
				Equity volatility curve	6%	38%		Increase

	As of December 31, 2019
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)(3)	$	1,424	Discounted  cash flow(5)	Discount rate	0.49%	20%	7.41%	Decrease
			Market comparables	EBITDA multiples(4)	5.7X	9.2X	7.3X	Increase
			Liquidation	Liquidation value	14.25%	83.61%	59.47%	Increase
Equity securities	$	210	Discounted cash flow(5)	Discount rate	10%	30%		Decrease
			Market comparables	EBITDA multiples(4)	1X	10.1X	5.4X	Increase
			Net Asset Value	Share price	$5	$1,353	$451	Increase
Separate account assets-commercial mortgage loans(6)	$	796	Discounted cash flow	Spread	1.11%	1.85%	1.26%	Decrease
Liabilities:
Future policy benefits(7)	$	12,831	Discounted cash flow	Lapse rate(9)	1%	18%		Decrease
				Spread over LIBOR(10)	0.10%	1.23%		Decrease
				Utilization rate(11)	43%	97%		Increase
				Withdrawal rate	See table footnote (12) below.
				Mortality rate(13)	0%	15%		Decrease
				Equity volatility curve	13%	23%		Increase
Policyholders’ account balances(8)	$	1,316	Discounted cash flow	Lapse rate(9)	1%	42%		Decrease
				Spread over LIBOR(10)	0.10%	1.23%		Decrease
				Mortality rate(13)	0%	24%		Decrease
				Equity volatility curve	6%	25%		Increase

__________ 

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

(2)Includes assets classified as fixed maturities available-for-sale, assets supporting experience-rated contractholder liabilities and fixed maturities trading.

(3)Excludes notes which have been offset with the associated payables under a netting agreement.

(4)Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.

(5)These investments typically use a range of discount rates (10% to 20%), therefore presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(6)Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Unaudited Interim Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Unaudited Interim Consolidated Statements of Operations.

(7)Future policy benefits primarily represent general account liabilities for the living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(8)Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(9)Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these embedded derivatives.

(10)The spread over the London Inter-Bank Offered Rate (“LIBOR”) swap curve represents the premium added to the proxy for the risk-free rate (LIBOR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements, living benefit guarantees, and index-linked interest crediting guarantees are insurance liabilities and are therefore senior to debt.

(11)The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(12)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of September 30, 2020 and December 31, 2019, the minimum withdrawal rate assumption is 76% and 78% respectively. As of September 30, 2020 and December 31, 2019, the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(13)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 45 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age, and duration. A mortality improvement assumption is also incorporated into the overall mortality table.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

—The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	122	$	0	$	10	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	21		1		0		0		0		0		0		0		(12)		10		1
Corporate securities(3)	4,904		215		165		(8)		0		(160)		(23)		113		(103)		5,103		193
Structured securities(4)	801		5		96		0		0		(147)		1		68		(258)		566		4
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	624		5		1		0		0		(6)		(22)		0		(24)		578		3
Structured securities(4)	99		1		19		0		0		(9)		0		1		(1)		110		1
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	7		0		107		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	236		0		(1)		(1)		0		0		1		4		1		240		1
Equity securities	594		67		15		(3)		0		(4)		5		0		(1)		673		66
Other invested assets	658		3		101		0		1		2		9		8		0		782		4
Short-term investments	44		(1)		145		0		0		(5)		0		0		0		183		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	377		(64)		19		0		0		0		0		0		0		332		(62)
Separate account assets(5)	1,684		84		65		(5)		0		(14)		0		10		(23)		1,801		87
Liabilities:
Future policy benefits	(26,439)		3,339		0		0		(331)		0		91		0		0		(23,340)		3,069
Policyholders’ account balances(6)	(1,441)		(34)		0		0		(74)		0		0		0		0		(1,549)		(6)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(741)		(34)		0		0		0		0		0		0		0		(775)		(34)

	Three Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	3	$	0	$	0	$	217	$	1	$	(12)	$	0	$	0	$	210
Assets supporting experience-rated contractholder liabilities	0		4		0		0		2		0		4		0		0
Other assets:
Fixed maturities, trading	0		0		0		0		0		0		1		0		0
Equity securities	0		67		0		0		0		0		66		0		0
Other invested assets	0		3		0		0		0		0		4		0		0
Short-term investments	(1)		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	(64)		0		0		0		0		(62)		0		0		0
Separate account assets(5)	0		0		84		0		0		0		0		87		0
Liabilities:
Future policy benefits	3,339		0		0		0		0		3,069		0		0		0
Policyholders’ account balances	(34)		0		0		0		0		(6)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		(34)		0		0		0		0		(34)		0		0

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	105	$	0	$	27	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	22		0		0		0		0		0		0		1		(13)		10		0
Corporate securities(3)	3,236		33		584		(126)		0		(490)		(22)		2,136		(248)		5,103		19
Structured securities(4)	948		2		484		(17)		0		(444)		156		160		(723)		566		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	637		(22)		5		(9)		0		(71)		(22)		92		(32)		578		(25)
Structured securities(4)	69		(1)		174		0		0		(19)		0		1		(114)		110		3
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	0		0		114		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	287		(16)		21		(33)		0		0		9		19		(47)		240		(16)
Equity securities	633		9		43		(13)		0		(4)		6		0		(1)		673		6
Other invested assets	567		7		182		0		5		(2)		15		8		0		782		9
Short-term investments	155		1		189		0		0		(115)		(47)		0		0		183		0
Cash equivalents	131		0		0		0		0		0		(130)		0		0		1		0
Other assets	113		164		55		0		0		0		0		0		0		332		165
Separate account assets(5)	1,717		58		169		(26)		0		(47)		0		43		(113)		1,801		70
Liabilities:
Future policy benefits	(12,831)		(9,630)		0		0		(972)		0		93		0		0		(23,340)		(9,940)
Policyholders’ account balances(6)	(1,316)		38		0		0		(271)		0		0		0		0		(1,549)		80
Other liabilities	(105)		105		0		0		0		0		0		0		0		0		105
Notes issued by consolidated VIEs	(800)		25		0		0		0		0		0		0		0		(775)		25

	Nine Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	(112)	$	0	$	0	$	141	$	6	$	(118)	$	0	$	0	$	137
Assets supporting experience-rated contractholder liabilities	0		(25)		0		0		2		0		(22)		0		0
Other assets:
Fixed maturities, trading	0		(17)		0		0		1		0		(16)		0		0
Equity securities	0		9		0		0		0		0		6		0		0
Other invested assets	0		7		0		0		0		1		8		0		0
Short-term investments	1		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	164		0		0		0		0		165		0		0		0
Separate account assets(5)	0		0		58		0		0		0		0		70		0
Liabilities:
Future policy benefits	(9,630)		0		0		0		0		(9,940)		0		0		0
Policyholders’ account balances	38		0		0		0		0		80		0		0		0
Other liabilities	0		105		0		0		0		0		105		0		0
Notes issued by consolidated VIEs	0		25		0		0		0		0		25		0		0

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	94	$	0	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	24		(2)		0		0		0		0		0		0		0		22		(2)
Corporate securities(3)	2,792		(26)		509		(7)		0		(203)		(1)		136		(21)		3,179		(25)
Structured securities(4)	861		4		439		(1)		0		(74)		(14)		5		(45)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	26		0		0		0		0		0		0		0		0		26		0
Corporate securities(3)	553		(5)		103		0		0		(27)		0		36		0		660		(8)
Structured securities(4)	57		0		22		0		0		(4)		0		0		0		75		0
Equity securities	1		0		0		0		0		0		0		0		0		1		0
All other activity	1		0		3		0		0		(1)		0		0		0		3		0
Other assets:
Fixed maturities, trading	296		(3)		16		(6)		0		0		(1)		2		0		304		(3)
Equity securities	624		15		27		(20)		0		(1)		(2)		0		0		643		7
Other invested assets	436		0		28		0		0		0		0		0		0		464		0
Short-term investments	288		0		127		0		0		(121)		0		0		0		294		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	98		71		10		0		0		0		0		0		0		179		73
Separate account assets(5)	1,708		9		54		(88)		0		(62)		0		43		(4)		1,660		8
Liabilities:
Future policy benefits	(12,723)		(3,417)		0		0		(314)		0		2		0		0		(16,452)		(3,570)
Policyholders’ account balances(6)	(1,047)		(79)		0		0		(62)		0		0		0		0		(1,188)		(66)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(816)		9		0		0		0		0		0		0		0		(807)		9

	Three Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(25)	$	0	$	0	$	(3)	$	4	$	(27)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		(8)		0		0		3		0		(8)		0
Other assets:
Fixed maturities, trading	0		(3)		0		0		0		0		(3)		0
Equity securities	3		12		0		0		0		0		7		0
Other invested assets	0		0		0		0		0		0		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	71		0		0		0		0		73		0		0
Separate account assets(5)	0		0		8		0		1		0		0		8
Liabilities:
Future policy benefits	(3,417)		0		0		0		0		(3,570)		0		0
Policyholders’ account balances	(79)		0		0		0		0		(66)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	9		0		0		0		0		9		0		0

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	81	$	0	$	18	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	5		0		0		0		0		(1)		0		0		0		4		0
Foreign government	125		0		0		0		0		0		(1)		9		(111)		22		(2)
Corporate securities(3)	2,685		(16)		1,116		(36)		0		(807)		(2)		319		(80)		3,179		(51)
Structured securities(4)	1,339		29		870		(48)		0		(406)		(7)		755		(1,357)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	225		0		0		0		0		(3)		(196)		0		0		26		0
Corporate securities(3)	444		5		144		0		0		(170)		196		46		(5)		660		(2)
Structured securities(4)	149		1		28		0		0		(29)		0		0		(74)		75		1
Equity securities	1		1		0		(1)		0		0		0		0		0		1		1
All other activity	0		0		6		0		0		(3)		0		0		0		3		0
Other assets:
Fixed maturities, trading	206		(14)		90		(20)		0		0		2		41		(1)		304		(15)
Equity securities	671		39		73		(44)		0		(75)		2		1		(24)		643		30
Other invested assets	263		(1)		246		0		0		(42)		(2)		0		0		464		(1)
Short-term investments	89		0		553		0		0		(348)		0		0		0		294		0
Cash equivalents	77		0		1		0		0		(77)		0		0		0		1		0
Other assets	25		127		27		0		0		0		0		0		0		179		127
Separate account assets(5)	1,534		134		282		(105)		0		(112)		0		43		(116)		1,660		122
Liabilities:
Future policy benefits	(8,926)		(6,627)		0		0		(902)		0		3		0		0		(16,452)		(6,870)
Policyholders’ account balances(6)	(56)		(958)		0		0		(171)		0		(3)		0		0		(1,188)		(938)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(595)		8		0		0		(858)		638		0		0		0		(807)		8

	Nine Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(38)	$	0	$	0	$	37	$	14	$	(53)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		1		0		0		6		0		0		0
Other assets:
Fixed maturities, trading	0		(15)		0		0		1		0		(15)		0
Equity securities	3		36		0		0		0		0		30		0
Other invested assets	(1)		0		0		0		0		(1)		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	127		0		0		0		0		127		0		0
Separate account assets(5)	0		0		131		0		3		0		0		122
Liabilities:
Future policy benefits	(6,627)		0		0		0		0		(6,870)		0		0
Policyholders’ account balances	(958)		0		0		0		0		(938)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	8		0		0		0		0		8		0		0

__________

(1)“Other,” for the period ended September 30, 2020 primarily represent the sale of POK, reclassifications of certain assets between reporting categories and foreign currency translation. For September 30, 2019, “Other” primarily represent reclassifications of certain assets between reporting categories and foreign currency translation.

(2)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(4)Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.

(5)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(6)Issuances and settlements for Policyholders’ account balances are presented net in the rollforward.

(7)Effective January 1, 2020, the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period were added prospectively due to adoption of ASU 2018-13. Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

—The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	122	$	0	$	10	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	21		1		0		0		0		0		0		0		(12)		10		1
Corporate securities(3)	4,904		215		165		(8)		0		(160)		(23)		113		(103)		5,103		193
Structured securities(4)	801		5		96		0		0		(147)		1		68		(258)		566		4
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	624		5		1		0		0		(6)		(22)		0		(24)		578		3
Structured securities(4)	99		1		19		0		0		(9)		0		1		(1)		110		1
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	7		0		107		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	236		0		(1)		(1)		0		0		1		4		1		240		1
Equity securities	594		67		15		(3)		0		(4)		5		0		(1)		673		66
Other invested assets	658		3		101		0		1		2		9		8		0		782		4
Short-term investments	44		(1)		145		0		0		(5)		0		0		0		183		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	377		(64)		19		0		0		0		0		0		0		332		(62)
Separate account assets(5)	1,684		84		65		(5)		0		(14)		0		10		(23)		1,801		87
Liabilities:
Future policy benefits	(26,439)		3,339		0		0		(331)		0		91		0		0		(23,340)		3,069
Policyholders’ account balances(6)	(1,441)		(34)		0		0		(74)		0		0		0		0		(1,549)		(6)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(741)		(34)		0		0		0		0		0		0		0		(775)		(34)

	Three Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	3	$	0	$	0	$	217	$	1	$	(12)	$	0	$	0	$	210
Assets supporting experience-rated contractholder liabilities	0		4		0		0		2		0		4		0		0
Other assets:
Fixed maturities, trading	0		0		0		0		0		0		1		0		0
Equity securities	0		67		0		0		0		0		66		0		0
Other invested assets	0		3		0		0		0		0		4		0		0
Short-term investments	(1)		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	(64)		0		0		0		0		(62)		0		0		0
Separate account assets(5)	0		0		84		0		0		0		0		87		0
Liabilities:
Future policy benefits	3,339		0		0		0		0		3,069		0		0		0
Policyholders’ account balances	(34)		0		0		0		0		(6)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		(34)		0		0		0		0		(34)		0		0

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	105	$	0	$	27	$	0	$	0	$	0	$	0	$	0	$	0	$	132	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	22		0		0		0		0		0		0		1		(13)		10		0
Corporate securities(3)	3,236		33		584		(126)		0		(490)		(22)		2,136		(248)		5,103		19
Structured securities(4)	948		2		484		(17)		0		(444)		156		160		(723)		566		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(2)		0		0		0		22		0
Corporate securities(3)	637		(22)		5		(9)		0		(71)		(22)		92		(32)		578		(25)
Structured securities(4)	69		(1)		174		0		0		(19)		0		1		(114)		110		3
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	0		0		114		0		0		(4)		0		0		0		110		0
Other assets:
Fixed maturities, trading	287		(16)		21		(33)		0		0		9		19		(47)		240		(16)
Equity securities	633		9		43		(13)		0		(4)		6		0		(1)		673		6
Other invested assets	567		7		182		0		5		(2)		15		8		0		782		9
Short-term investments	155		1		189		0		0		(115)		(47)		0		0		183		0
Cash equivalents	131		0		0		0		0		0		(130)		0		0		1		0
Other assets	113		164		55		0		0		0		0		0		0		332		165
Separate account assets(5)	1,717		58		169		(26)		0		(47)		0		43		(113)		1,801		70
Liabilities:
Future policy benefits	(12,831)		(9,630)		0		0		(972)		0		93		0		0		(23,340)		(9,940)
Policyholders’ account balances(6)	(1,316)		38		0		0		(271)		0		0		0		0		(1,549)		80
Other liabilities	(105)		105		0		0		0		0		0		0		0		0		105
Notes issued by consolidated VIEs	(800)		25		0		0		0		0		0		0		0		(775)		25

	Nine Months Ended September 30, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)(7)
	(in millions)
Fixed maturities, available-for-sale	$	(112)	$	0	$	0	$	141	$	6	$	(118)	$	0	$	0	$	137
Assets supporting experience-rated contractholder liabilities	0		(25)		0		0		2		0		(22)		0		0
Other assets:
Fixed maturities, trading	0		(17)		0		0		1		0		(16)		0		0
Equity securities	0		9		0		0		0		0		6		0		0
Other invested assets	0		7		0		0		0		1		8		0		0
Short-term investments	1		0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	164		0		0		0		0		165		0		0		0
Separate account assets(5)	0		0		58		0		0		0		0		70		0
Liabilities:
Future policy benefits	(9,630)		0		0		0		0		(9,940)		0		0		0
Policyholders’ account balances	38		0		0		0		0		80		0		0		0
Other liabilities	0		105		0		0		0		0		105		0		0
Notes issued by consolidated VIEs	0		25		0		0		0		0		25		0		0

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	94	$	0	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	24		(2)		0		0		0		0		0		0		0		22		(2)
Corporate securities(3)	2,792		(26)		509		(7)		0		(203)		(1)		136		(21)		3,179		(25)
Structured securities(4)	861		4		439		(1)		0		(74)		(14)		5		(45)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	26		0		0		0		0		0		0		0		0		26		0
Corporate securities(3)	553		(5)		103		0		0		(27)		0		36		0		660		(8)
Structured securities(4)	57		0		22		0		0		(4)		0		0		0		75		0
Equity securities	1		0		0		0		0		0		0		0		0		1		0
All other activity	1		0		3		0		0		(1)		0		0		0		3		0
Other assets:
Fixed maturities, trading	296		(3)		16		(6)		0		0		(1)		2		0		304		(3)
Equity securities	624		15		27		(20)		0		(1)		(2)		0		0		643		7
Other invested assets	436		0		28		0		0		0		0		0		0		464		0
Short-term investments	288		0		127		0		0		(121)		0		0		0		294		0
Cash equivalents	1		0		0		0		0		0		0		0		0		1		0
Other assets	98		71		10		0		0		0		0		0		0		179		73
Separate account assets(5)	1,708		9		54		(88)		0		(62)		0		43		(4)		1,660		8
Liabilities:
Future policy benefits	(12,723)		(3,417)		0		0		(314)		0		2		0		0		(16,452)		(3,570)
Policyholders’ account balances(6)	(1,047)		(79)		0		0		(62)		0		0		0		0		(1,188)		(66)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(816)		9		0		0		0		0		0		0		0		(807)		9

	Three Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(25)	$	0	$	0	$	(3)	$	4	$	(27)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		(8)		0		0		3		0		(8)		0
Other assets:
Fixed maturities, trading	0		(3)		0		0		0		0		(3)		0
Equity securities	3		12		0		0		0		0		7		0
Other invested assets	0		0		0		0		0		0		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	71		0		0		0		0		73		0		0
Separate account assets(5)	0		0		8		0		1		0		0		8
Liabilities:
Future policy benefits	(3,417)		0		0		0		0		(3,570)		0		0
Policyholders’ account balances	(79)		0		0		0		0		(66)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	9		0		0		0		0		9		0		0

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	81	$	0	$	18	$	0	$	0	$	0	$	0	$	0	$	0	$	99	$	0
U.S. states	5		0		0		0		0		(1)		0		0		0		4		0
Foreign government	125		0		0		0		0		0		(1)		9		(111)		22		(2)
Corporate securities(3)	2,685		(16)		1,116		(36)		0		(807)		(2)		319		(80)		3,179		(51)
Structured securities(4)	1,339		29		870		(48)		0		(406)		(7)		755		(1,357)		1,175		0
Assets supporting experience-rated contractholder liabilities:
Foreign government	225		0		0		0		0		(3)		(196)		0		0		26		0
Corporate securities(3)	444		5		144		0		0		(170)		196		46		(5)		660		(2)
Structured securities(4)	149		1		28		0		0		(29)		0		0		(74)		75		1
Equity securities	1		1		0		(1)		0		0		0		0		0		1		1
All other activity	0		0		6		0		0		(3)		0		0		0		3		0
Other assets:
Fixed maturities, trading	206		(14)		90		(20)		0		0		2		41		(1)		304		(15)
Equity securities	671		39		73		(44)		0		(75)		2		1		(24)		643		30
Other invested assets	263		(1)		246		0		0		(42)		(2)		0		0		464		(1)
Short-term investments	89		0		553		0		0		(348)		0		0		0		294		0
Cash equivalents	77		0		1		0		0		(77)		0		0		0		1		0
Other assets	25		127		27		0		0		0		0		0		0		179		127
Separate account assets(5)	1,534		134		282		(105)		0		(112)		0		43		(116)		1,660		122
Liabilities:
Future policy benefits	(8,926)		(6,627)		0		0		(902)		0		3		0		0		(16,452)		(6,870)
Policyholders’ account balances(6)	(56)		(958)		0		0		(171)		0		(3)		0		0		(1,188)		(938)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	(595)		8		0		0		(858)		638		0		0		0		(807)		8

	Nine Months Ended September 30, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(38)	$	0	$	0	$	37	$	14	$	(53)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		1		0		0		6		0		0		0
Other assets:
Fixed maturities, trading	0		(15)		0		0		1		0		(15)		0
Equity securities	3		36		0		0		0		0		30		0
Other invested assets	(1)		0		0		0		0		(1)		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	127		0		0		0		0		127		0		0
Separate account assets(5)	0		0		131		0		3		0		0		122
Liabilities:
Future policy benefits	(6,627)		0		0		0		0		(6,870)		0		0
Policyholders’ account balances	(958)		0		0		0		0		(938)		0		0
Other liabilities	0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	8		0		0		0		0		8		0		0

__________

(1)“Other,” for the period ended September 30, 2020 primarily represent the sale of POK, reclassifications of certain assets between reporting categories and foreign currency translation. For September 30, 2019, “Other” primarily represent reclassifications of certain assets between reporting categories and foreign currency translation.

(2)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(4)Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.

(5)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Unaudited Interim Consolidated Statements of Financial Position.

(6)Issuances and settlements for Policyholders’ account balances are presented net in the rollforward.

(7)Effective January 1, 2020, the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period were added prospectively due to adoption of ASU 2018-13. Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

Fair Value Assets and Liabilities Measured on Recurring Basis, Derivatives

The following tables present the balances of derivative assets and liabilities measured at fair value on a recurring basis, as of the date indicated, by primary underlying risk. These tables include NPR and exclude embedded derivatives and associated reinsurance recoverables. The derivative assets and liabilities shown below are included in “Other invested assets” or “Other liabilities” in the tables contained within the sections “—Assets and Liabilities by Hierarchy Level” and “—Changes in Level 3 Assets and Liabilities,” above.

	As of September 30, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	12	$	22,770	$	1	$		$	22,783
Currency	0		797		0				797
Credit	0		10		0				10
Currency/Interest Rate	0		2,837		0				2,837
Equity	102		893		0				995
Other	0		0		0				0
Netting(1)							(26,232)		(26,232)
Total derivative assets	$	114	$	27,307	$	1	$	(26,232)	$	1,190
Derivative Liabilities:
Interest Rate	$	77	$	10,654	$	0	$		$	10,731
Currency	0		565		0				565
Credit	0		23		0				23
Currency/Interest Rate	0		601		0				601
Equity	31		812		0				843
Other	0		0		0				0
Netting(1)							(12,190)		(12,190)
Total derivative liabilities	$	108	$	12,655	$	0	$	(12,190)	$	573

	As of December 31, 2019
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Derivative Assets:
Interest Rate	$	4	$	11,238	$	1	$		$	11,243
Currency	0		230		0				230
Credit	0		21		0				21
Currency/Interest Rate	0		2,207		0				2,207
Equity	2		683		0				685
Other	0		0		0				0
Netting(1)							(13,519)		(13,519)
Total derivative assets	$	6	$	14,379	$	1	$	(13,519)	$	867
Derivative Liabilities:
Interest Rate	$	38	$	5,176	$	0	$		$	5,214
Currency	0		271		0				271
Credit	0		0		0				0
Currency/Interest Rate	0		647		0				647
Equity	3		1,401		0				1,404
Other	0		0		0				0
Netting(1)							(6,705)		(6,705)
Total derivative liabilities	$	41	$	7,495	$	0	$	(6,705)	$	831

__________ 

(1)“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreement.

Fair Value Assets and Liabilities Measured on Recurring Basis Unobservable Input Reconciliation, Derivatives

The following tables provide a summary of the changes in fair value of Level 3 derivative assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income, attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.

	Three Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Nine Months Ended September 30, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Three Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		0		0		0		0		0		0		0		0		1		0

	Nine Months Ended September 30, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3(2)		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(1)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	2		(1)		0		0		0		0		0		0		0		1		(1)

______ 

(1)Total realized and unrealized gains (losses) as well as unrealized gains (losses) for assets still held at the end of the period are recorded in “Realized investment gains (losses), net.”

(2)Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.

Fair Value Measurements, Nonrecurring

The following tables represent information for assets measured at fair value on a nonrecurring basis. The fair value measurement is nonrecurring as these assets are measured at fair value only when there is a triggering event (e.g., an evidence of impairment). Assets included in the table are those that were impaired during the respective reporting periods and that are still held as of the reporting date. The estimated fair values for these amounts were determined using significant unobservable inputs (Level 3).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Realized investment gains (losses) net:
Commercial mortgage loans(1)	$	3	$	1	$	0	$	1
Mortgage servicing rights(2)	$	5	$	(3)	$	(24)	$	(5)

	September 30, 2020		December 31, 2019
	(in millions)
Carrying value after measurement as of period end:
Commercial mortgage loans(1)	$	0	$	15
Mortgage servicing rights(2)	$	280	$	87

__________ 

(1)Commercial mortgage loans are valued based on discounted cash flows utilizing market rates or the fair value of the underlying real estate collateral.

(2)Mortgage servicing rights are valued using a discounted cash flow model. The model incorporates assumptions for servicing revenues, which are adjusted for expected prepayments, delinquency rates, escrow deposit income and estimated loan servicing expenses. The discount rates incorporated into the model are determined based on the estimated returns a market participant would require for this business including a liquidity and risk premium. This estimate includes available relevant data from any active market sales of mortgage servicing rights.

Fair Value, Option

The following tables present information regarding assets and liabilities where the fair value option has been elected.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Liabilities:
Notes issued by consolidated VIEs:
Changes in fair value	$	34	$	(9)	$	(25)	$	(8)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Commercial mortgage and other loans:
Interest income	$	4	$	5	$	10	$	16
Notes issued by consolidated VIEs:
Interest expense	$	10	$	11	$	32	$	33

	September 30, 2020		December 31, 2019
	(in millions)
Commercial mortgage and other loans(1):
Fair value as of period end	$	915	$	228
Aggregate contractual principal as of period end	$	896	$	224
Other assets:
Fair value as of period end	$	10	$	10
Notes issued by consolidated VIEs:
Fair value as of period end	$	775	$	800
Aggregate contractual principal as of period end	$	857	$	857

__________ 

(1)As of September 30, 2020, for loans for which the fair value option has been elected, there were no loans in non-accrual status and none of the loans were more than 90 days past due and still accruing.

Fair Value Disclosure Financial Instruments Not Carried at Fair Value

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Unaudited Interim Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.

	September 30, 2020
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(2)	$	0	$	2,177	$	87	$	2,264	$	1,901
Assets supporting experience-rated contractholder liabilities	31		0		0		31		31
Commercial mortgage and other loans	0		105		66,812		66,917		63,626
Policy loans	0		0		11,502		11,502		11,502
Other invested assets	0		177		0		177		177
Short-term investments	1,855		20		0		1,875		1,875
Cash and cash equivalents	7,919		654		0		8,573		8,573
Accrued investment income	0		3,129		0		3,129		3,129
Other assets	146		2,513		392		3,051		3,050
Total assets	$	9,951	$	8,775	$	78,793	$	97,519	$	93,864
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	37,425	$	72,888	$	110,313	$	107,498
Securities sold under agreements to repurchase	0		10,874		0		10,874		10,874
Cash collateral for loaned securities	0		3,071		0		3,071		3,071
Short-term debt	0		1,011		104		1,115		1,113
Long-term debt(3)	622		21,514		1,184		23,320		20,169
Notes issued by consolidated VIEs	0		0		467		467		467
Other liabilities	0		7,438		48		7,486		7,486
Separate account liabilities—investment contracts	0		79,329		23,653		102,982		102,982
Total liabilities	$	622	$	160,662	$	98,344	$	259,628	$	253,660

	December 31, 2019
	Fair Value								Carrying Amount(1)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(2)	$	0	$	2,217	$	85	$	2,302	$	1,933
Assets supporting experience-rated contractholder liabilities	16		0		0		16		16
Commercial mortgage and other loans	0		107		65,558		65,665		63,331
Policy loans	0		0		12,096		12,096		12,096
Other invested assets	0		36		0		36		36
Short-term investments	1,492		39		0		1,531		1,531
Cash and cash equivalents	6,278		1,043		0		7,321		7,321
Accrued investment income	0		3,330		0		3,330		3,330
Other assets	147		2,526		643		3,316		3,315
Total assets	$	7,933	$	9,298	$	78,382	$	95,613	$	92,909
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	32,940	$	69,216	$	102,156	$	101,241
Securities sold under agreements to repurchase	0		9,681		0		9,681		9,681
Cash collateral for loaned securities	0		4,213		0		4,213		4,213
Short-term debt	0		1,748		205		1,953		1,933
Long-term debt(3)	1,950		18,188		1,186		21,324		18,646
Notes issued by consolidated VIEs	0		0		474		474		474
Other liabilities	0		6,403		579		6,982		6,982
Separate account liabilities—investment contracts	0		77,134		24,407		101,541		101,541
Total liabilities	$	1,950	$	150,307	$	96,067	$	248,324	$	244,711

__________ 

(1)Carrying values presented herein differ from those in the Company’s Unaudited Interim Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or are out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.

(2)Excludes notes with fair value of $5,814 million (carrying amount of $4,998 million) and $5,401 million (carrying amount of $4,998 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.

(3)Includes notes with fair value of $12,408 million (carrying amount of $11,464 million) and $10,158 million (carrying amount of $9,749 million) as of September 30, 2020 and December 31, 2019, respectively, which have been offset with the associated receivables under a netting agreement.

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Closed Block (Tables)

9 Months Ended

Sep. 30, 2020

Closed Block Disclosure [Abstract]

Schedule of Closed Block Liabilities and Assets

Closed Block liabilities and assets designated to the Closed Block, as well as maximum future earnings to be recognized from these liabilities and assets, are as follows:

	September 30, 2020		December 31, 2019
	(in millions)
Closed Block liabilities
Future policy benefits	$	46,918	$	47,613
Policyholders’ dividends payable	754		717
Policyholders’ dividend obligation	8,141		6,149
Policyholders’ account balances	4,894		4,973
Other Closed Block liabilities	3,224		4,049
Total Closed Block liabilities	63,931		63,501
Closed Block assets
Fixed maturities, available-for-sale, at fair value	41,973		41,146
Fixed maturities, trading, at fair value	257		256
Equity securities, at fair value	2,074		2,245
Commercial mortgage and other loans	8,419		8,629
Policy loans	4,106		4,264
Other invested assets	3,418		3,333
Short-term investments	79		227
Total investments	60,326		60,100
Cash and cash equivalents	385		191
Accrued investment income	459		456
Other Closed Block assets	141		93
Total Closed Block assets	61,311		60,840
Excess of reported Closed Block liabilities over Closed Block assets	2,620		2,661
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	5,473		3,280
Allocated to policyholder dividend obligation	(5,530)		(3,332)
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$	2,563	$	2,609

Schedule of Closed Block Dividend Obligation

Information regarding the policyholder dividend obligation is as follows:

	Nine Months Ended September 30, 2020
	(in millions)
Balance, December 31, 2019	$	6,149
Cumulative effect adjustment from the adoption of ASU 2016-13(1)	(13)
Impact from earnings allocable to policyholder dividend obligation	(192)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	2,197
Balance, September 30, 2020	$	8,141

Schedule of Closed Block Revenues Benefits Expenses

Closed Block revenues and benefits and expenses are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Revenues
Premiums	$	459	$	510	$	1,457	$	1,618
Net investment income	586		591		1,649		1,732
Realized investment gains (losses), net	18		351		266		456
Other income (loss)	242		31		(43)		356
Total Closed Block revenues	1,305		1,483		3,329		4,162
Benefits and Expenses
Policyholders’ benefits	641		659		2,013		2,148
Interest credited to policyholders’ account balances	32		33		96		97
Dividends to policyholders	532		649		955		1,617
General and administrative expenses	81		88		248		266
Total Closed Block benefits and expenses	1,286		1,429		3,312		4,128
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes	19		54		17		34
Income tax expense (benefit)	4		39		(30)		(14)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes	$	15	$	15	$	47	$	48

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Short-Term and Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of Short-term Debt

The table below presents the Company’s short-term debt as of the dates indicated:

	September 30, 2020			December 31, 2019
	($ in millions)
Commercial paper:
Prudential Financial	$	25		$	25
Prudential Funding, LLC	455			524
Subtotal commercial paper	480			549
Current portion of long-term debt:
Senior Notes	529			1,179
Mortgage Debt	97			192
Surplus notes subject to set-off arrangements (1)	250			0
Subtotal current portion of long-term debt	876			1,371
Other(2)	7			13
Subtotal	1,363			1,933
Less: assets under set-off arrangements(1)	250			0
Total short-term debt(3)	$	1,113		$	1,933
Supplemental short-term debt information:
Portion of commercial paper borrowings due overnight	$	224		$	224
Daily average commercial paper outstanding for the quarter ended	$	1,733		$	1,702
Weighted average maturity of outstanding commercial paper, in days	14			6
Weighted average interest rate on outstanding commercial paper	0.11		%	1.61		%

_________

(1)     The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes.

(2)    Includes $7 million drawn on a revolving line of credit held by a subsidiary at September 30, 2020.

(3) Includes Prudential Financial debt of $553 million and $1,204 million at September 30, 2020 and December 31, 2019, respectively.

Schedule of Long-term Debt

The table below presents the Company’s long-term debt as of the dates indicated:

	September 30, 2020		December 31, 2019
	(in millions)
Fixed-rate obligations:
Surplus notes	$	343	$	342
Surplus notes subject to set-off arrangements(1)	8,884		7,484
Senior notes	11,577		10,084
Mortgage debt(2)	67		104
Floating-rate obligations:
Line of credit	300		300
Surplus notes subject to set-off arrangements(1)	2,330		2,265
Mortgage debt(3)	271		241
Junior subordinated notes(4)	7,611		7,575
Subtotal	31,383		28,395
Less: assets under set-off arrangements(1)	11,214		9,749
Total long-term debt(5)	$	20,169	$	18,646

 __________    

(1)The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes included in long-term debt.

(2)Includes $43 million and $43 million of debt denominated in foreign currency at September 30, 2020 and December 31, 2019, respectively.

(3)Includes $29 million and $53 million of debt denominated in foreign currency at September 30, 2020 and December 31, 2019, respectively.

(4)Includes Prudential Financial debt of $7,552 million and $7,518 million at September 30, 2020 and December 31, 2019, respectively. Also includes subsidiary debt of $59 million and $57 million denominated in foreign currency at September 30, 2020 and December 31, 2019, respectively.

(5)Includes Prudential Financial debt of $18,956 million and $17,430 million at September 30, 2020 and December 31, 2019, respectively.

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Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs

Net periodic (benefit) cost included in “General and administrative expenses” includes the following components:

	Three Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	80	$	73	$	6	$	5
Interest cost	108		122		15		20
Expected return on plan assets	(201)		(204)		(25)		(24)
Amortization of prior service cost	(1)		(1)		2		1
Amortization of actuarial (gain) loss, net	65		54		4		6
Settlements	(1)		4		0		0
Special termination benefits(1)(2)	5		2		0		0
Net periodic (benefit) cost	$	55	$	50	$	2	$	8
	Nine Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(in millions)
Components of net periodic (benefit) cost:
Service cost	$	241	$	218	$	18	$	16
Interest cost	323		368		47		59
Expected return on plan assets	(604)		(612)		(75)		(71)
Amortization of prior service cost	(3)		(3)		5		3
Amortization of actuarial (gain) loss, net	196		162		12		18
Settlements	3		52		0		0
Special termination benefits(1)(2)	7		3		0		0
Net periodic (benefit) cost	$	163	$	188	$	7	$	25

__________ 

(1)For 2020 certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination or participation in the Voluntary Separation Program that was offered to eligible U.S.-based employees in 2019.

(2)For 2019 certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination.

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Equity (Tables)

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Common Stock Disclosure

The changes in the number of shares of Common Stock issued, held in treasury and outstanding, are as follows for the periods indicated:

	Common Stock
	Issued	Held In Treasury	Outstanding
	(in millions)
Balance, December 31, 2019	666.3	267.5	398.8
Common Stock issued	0.0	0.0	0.0
Common Stock acquired	0.0	6.7	(6.7)
Stock-based compensation programs(1)	0.0	(3.3)	3.3
Balance, September 30, 2020	666.3	270.9	395.4

__________ 

(1)Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.

Dividends Declared

Dividends declared per share of Common Stock are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Dividends declared per share of Common Stock	$	1.10	$	1.00	$	3.30	$	3.00

Components of Accumulated Other Comprehensive Income (Loss)

The balance of and changes in each component of AOCI as of and for the nine months ended September 30, 2020 and 2019, are as follows:

	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2019	$	(536)	$	28,112	$	(3,537)	$	24,039
Change in OCI before reclassifications	69		7,939		8		8,016
Amounts reclassified from AOCI	46		(1,045)		210		(789)
Income tax benefit (expense)	73		(1,289)		(49)		(1,265)
Balance, September 30, 2020	$	(348)	$	33,717	$	(3,368)	$	30,001

	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2018	$	(564)	$	14,745	$	(3,275)	$	10,906
Change in OCI before reclassifications	(74)		22,759		(76)		22,609
Amounts reclassified from AOCI	5		(1,188)		180		(1,003)
Income tax benefit (expense)	20		(4,956)		(25)		(4,961)
Cumulative effect of adoption of ASU 2017-12	0		7		0		7
Balance, September 30, 2019	$	(613)	$	31,367	$	(3,196)	$	27,558

__________

(1)Includes cash flow hedges of $1,407 million and $832 million as of September 30, 2020 and December 31, 2019, respectively, and $1,584 million and $811 million as of September 30, 2019 and December 31, 2018, respectively, and fair value hedges of $(1) million and $0 million as of September 30, 2020 and December 31, 2019, respectively.

Reclassification Out Of Accumulated Other Comprehensive Income (Loss)

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

	Three Months Ended September 30,				Nine Months Ended September 30,				Affected line item in Consolidated Statements of Operations
	2020		2019		2020		2019
	(in millions)
Amounts reclassified from AOCI(1)(2):
Foreign currency translation adjustment:
Foreign currency translation adjustments	$	(2)	$	0	$	(7)	$	(5)	Realized investment gains (losses), net
Foreign currency translation adjustments	(39)		0		(39)		0		Other income (loss)
Total foreign currency translation adjustment	(41)		0		(46)		(5)
Net unrealized investment gains (losses):
Cash flow hedges—Interest rate	19		57		27		56		(3)
Cash flow hedges—Currency	0		3		4		5		(3)
Cash flow hedges—Currency/Interest rate	(77)		267		343		438		(3)
Net unrealized investment gains (losses) on available-for-sale securities	401		360		671		689
Total net unrealized investment gains (losses)	343		687		1,045		1,188		(4)
Amortization of defined benefit pension items:
Prior service cost	(1)		0		(2)		0		(5)
Actuarial gain (loss)	(69)		(60)		(208)		(180)		(5)
Total amortization of defined benefit pension items	(70)		(60)		(210)		(180)
Total reclassifications for the period	$	232	$	627	$	789	$	1,003

__________

(1)All amounts are shown before tax.

(2)Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.

(3)See Note 5 for additional information on cash flow hedges.

(4)See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.

(5)See Note 10 for information on employee benefit plans.

Allowance for Credit Losses Net Unrealized Investment Gain (Loss) AOCI Rollforward

The amounts for the periods indicated below, split between amounts related to available-for-sale fixed maturity securities on which an allowance for credit losses has been recognized, and all other net unrealized investment gains (losses), are as follows:

Net Unrealized Investment Gains (Losses) on Available-for-sale Fixed Maturity Securities on which an allowance for credit losses has been recognized

	Net Unrealized Gains (Losses) on Investments		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Deferred Income Tax (Liability) Benefit		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
December 31, 2019(1)	$	0	$	0	$	0	$	0	$	0	$	0
Net investment gains (losses) on investments arising during the period	41								(8)		33
Reclassification adjustment for (gains) losses included in net income	23								(4)		19
Increase (Decrease) due to non-credit related losses recognized in AOCI during the period	(87)								17		(70)
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables			2						0		2
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables					0				0		0
Impact of net unrealized investment (gains) losses on policyholders’ dividends							(3)		1		(2)
Balance, September 30, 2020	$	(23)	$	2	$	0	$	(3)	$	6	$	(18)

__________

(1)Allowance for credit losses on available-for-sale fixed maturity securities effective January 1, 2020

All Other Net Unrealized Investment Gain (Loss) AOCI Rollforward

All Other Net Unrealized Investment Gains (Losses) in AOCI

	Net Unrealized Gains (Losses) on Investments(1)		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Deferred Income Tax (Liability) Benefit		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
December 31, 2019(2)	$	45,339	$	(1,585)	$	(2,909)	$	(3,366)	$	(9,367)	$	28,112
Net investment gains (losses) on investments arising during the period	11,509								(2,232)		9,277
Reclassification adjustment for (gains) losses included in net income	(1,068)								207		(861)
Reclassification due to allowance for credit losses recorded during the period	87								(17)		70
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables			336						(68)		268
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables					(1,764)				357		(1,407)
Impact of net unrealized investment (gains) losses on policyholders’ dividends							(2,182)		458		(1,724)
Balance, September 30, 2020	$	55,867	$	(1,249)	$	(4,673)	$	(5,548)	$	(10,662)	$	33,735

__________

(1)Includes cash flow and fair value hedges. See Note 5 for information on cash flow and fair value hedges.

(2)Includes net unrealized gains (losses) for which an OTTI loss had been previously recognized.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Reconciliation of Earnings Per Share

A reconciliation of the numerators and denominators of the basic and diluted per share computations of Common Stock based on the consolidated earnings of Prudential Financial for the periods indicated is as follows:

	Three Months Ended September 30,
	2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	1,507				$	1,425
Less: Income (loss) attributable to noncontrolling interests	20					7
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	18					15
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,469	395.3	$	3.72	$	1,403	404.1	$	3.47
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	18				$	15
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	18					15
Stock options			0.3					1.0
Deferred and long-term compensation programs			1.5					1.2
Exchangeable Surplus Notes	0		0.0			1		2.2
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	1,469	397.1	$	3.70	$	1,404	408.5	$	3.44

	Nine Months Ended September 30,
	2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	(1,168)				$	3,100
Less: Income (loss) attributable to noncontrolling interests	25					42
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	16					33
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	(1,209)	395.6	$	(3.06)	$	3,025	406.2	$	7.45
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	16				$	33
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	16					33
Stock options			0.0					1.1
Deferred and long-term compensation programs			0.0					1.1
Exchangeable Surplus Notes	0		0.0			12		4.8
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	(1,209)	395.6	$	(3.06)	$	3,037	413.2	$	7.35

__________ 

(1)For the nine months ended September 30, 2020, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because dilutive shares and dilutive earnings per share are not applicable when a net loss is reported. As a result of the net loss attributable to Prudential Financial available to holders of Common Stock for the nine months ended September 30, 2020, all potential stock options and compensation programs were considered antidilutive.

Earnings Per Share Computation

For the periods indicated, the number of stock options and shares related to deferred and long-term compensation programs that were considered antidilutive and were excluded from the computation of diluted earnings per share, weighted for the portion of the period they were outstanding, are as follows:

	Three Months Ended September 30,
	2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	3.2	$	84.17	1.4	$	101.57
Antidilutive stock options due to net loss available to holders of Common Stock	0.0			0.0
Antidilutive shares based on application of the treasury stock method	0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	0.0			0.0
Total antidilutive stock options and shares	3.4			1.4

	Nine Months Ended September 30,
	2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	3.4	$	80.64	1.2	$	103.35
Antidilutive stock options due to net loss available to holders of Common Stock	0.4			0.0
Antidilutive shares based on application of the treasury stock method	0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	1.6			0.0
Total antidilutive stock options and shares	5.6			1.2

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

The table below reconciles “Adjusted operating income before income taxes” to “Income (loss) before income taxes and equity in earnings of operating joint ventures”:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Adjusted operating income before income taxes by segment:	(in millions)
PGIM	$	370	$	232	$	858	$	710
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	372		302		898		1,020
Group Insurance	22		90		71		224
Total U.S. Workplace Solutions division	394		392		969		1,244
U.S. Individual Solutions division:
Individual Annuities(1)	408		459		1,030		1,393
Individual Life	101		59		17		29
Total U.S. Individual Solutions division	509		518		1,047		1,422
Assurance IQ division(2):
Assurance IQ	(30)		0		(69)		0
Total Assurance IQ division	(30)		0		(69)		0
Total U.S. Businesses	873		910		1,947		2,666
International Businesses(3)	775		721		2,162		2,364
Corporate and Other	(455)		(281)		(1,338)		(1,028)
Total segment adjusted operating income before income taxes	1,563		1,582		3,629		4,712
Reconciling items:
Realized investment gains (losses), net, and related adjustments(4)	223		331		(2,746)		(882)
Charges related to realized investment gains (losses), net	(70)		(92)		(353)		(149)
Market experience updates(5)	(134)		(314)		(1,016)		(515)
Divested and Run-off Businesses:
Closed Block division	8		45		(15)		5
Other Divested and Run-off Businesses(3)	(132)		207		(725)		641
Other adjustments(6)	(12)		0		65		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	1		(34)		(62)		(71)
Income (loss) before income taxes and equity in earnings of operating joint ventures per Unaudited Interim Consolidated Financial Statements	$	1,447	$	1,725	$	(1,223)	$	3,741

________

(1)Individual Annuities segment results reflect DAC as if the Individual Annuities business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.

(2)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(3)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(4)Prior period amounts have been updated to conform to current period presentation.

(5)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(6)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.

Reconciliation of Certain Financial Information from Segments to Consolidated

The tables below present certain financial information for the Company’s segments and its Corporate and Other operations, including assets by segment and revenues by segment on an adjusted operating income basis, and the reconciliation of the segment totals to amounts reported in the Consolidated Financial Statements.

	September 30, 2020		December 31, 2019
Assets by segment:	(in millions)
PGIM	$	48,507	$	47,655
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	205,878		198,153
Group Insurance	43,851		43,712
Total U.S. Workplace Solutions division	249,729		241,865
U.S. Individual Solutions division:
Individual Annuities	193,509		189,040
Individual Life	104,036		96,072
Total U.S. Individual Solutions division	297,545		285,112
Assurance IQ division(1):
Assurance IQ	2,621		2,639
Total Assurance IQ division	2,621		2,639
Total U.S. Businesses	549,895		529,616
International Businesses(2)	224,932		213,335
Corporate and Other(2)	26,433		44,619
Closed Block division	61,822		61,327
Total assets per Unaudited Interim Consolidated Financial Statements	$	911,589	$	896,552

 __________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the carrying amount of assets of POK are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the carrying amount of assets of POT are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues on an adjusted operating income basis:	(in millions)
PGIM	$	1,066	$	855	$	2,801	$	2,651
U.S. Businesses:
U.S. Workplace Solutions division:
Retirement	2,690		2,261		8,119		8,486
Group Insurance	1,457		1,438		4,352		4,340
Total U.S. Workplace Solutions division	4,147		3,699		12,471		12,826
U.S. Individual Solutions division:
Individual Annuities	1,148		1,251		3,249		3,774
Individual Life	1,609		1,529		4,702		4,519
Total U.S. Individual Solutions division	2,757		2,780		7,951		8,293
Assurance IQ division(1):
Assurance IQ	75		0		194		0
Total Assurance IQ division	75		0		194		0
Total U.S. Businesses	6,979		6,479		20,616		21,119
International Businesses(2)	5,481		5,216		16,201		15,734
Corporate and Other	(190)		(177)		(545)		(512)
Total revenues on an adjusted operating income basis	13,336		12,373		39,073		38,992
Reconciling items:
Realized investment gains (losses), net, and related adjustments(3)	392		491		(2,290)		(6)
Charges related to realized investment gains (losses), net	(40)		(62)		(121)		(187)
Market experience updates(4)	(58)		(67)		(406)		(74)
Divested and Run-off Businesses:
Closed Block division	1,301		1,482		3,318		4,157
Other Divested and Run-off Businesses(2)	511		928		1,411		2,813
Other adjustments(5)	0		0		105		0
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(17)		(40)		(86)		(111)
Total revenues per Unaudited Interim Consolidated Financial Statements	$	15,425	$	15,105	$	41,004	$	45,584

__________

(1)Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

(2)Effective second quarter of 2020, the results of POK and the impact of its sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Effective third quarter of 2020, the results of POT and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.

(3)Prior period amounts have been updated to conform to current period presentation.

(4)Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.

(5)Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.

Schedule of Intersegment Revenues

The PGIM segment revenues include intersegment revenues, primarily consisting of asset-based management and administration fees, as follows: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
PGIM segment intersegment revenues	$	215	$	197	$	640	$	571

Schedule of Asset Management and Service Fees

The table below presents asset management and service fees, predominantly related to investment management activities, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Asset-based management fees	$	930	$	881	$	2,644	$	2,596
Performance-based incentive fees	43		10		73		108
Other fees	147		147		427		433
Total asset management and service fees	$	1,120	$	1,038	$	3,144	$	3,137

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Commitments and Contingent Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingent Liabilities [Line Items]

Mortgage Loans

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:

	September 30, 2020				December 31, 2019
	Amount (in millions)		% of Total		Amount (in millions)		% of Total
Commercial mortgage and agricultural property loans by property type:
Office	$	12,677	19.9	%	$	13,462	21.4	%
Retail	7,677		12.0		8,379		13.3
Apartments/Multi-Family	18,385		28.8		17,348		27.6
Industrial	13,639		21.4		13,226		21.1
Hospitality	2,390		3.7		2,415		3.9
Other	5,051		7.9		4,533		7.2
Total commercial mortgage loans	59,819		93.7		59,363		94.5
Agricultural property loans	4,015		6.3		3,472		5.5
Total commercial mortgage and agricultural property loans	63,834		100.0	%	62,835		100.0	%
Allowance for credit losses	(227)				(117)
Total net commercial mortgage and agricultural property loans	63,607				62,718
Other loans:
Uncollateralized loans	723				656
Residential property loans	104				124
Other collateralized loans	115				65
Total other loans	942				845
Allowance for credit losses	(8)				(4)
Total net other loans	934				841
Total net commercial mortgage and other loans(1)	$	64,541			$	63,559

__________ 

(1)Includes loans held for sale which are carried at fair value and are collateralized primarily by apartment complexes. As of September 30, 2020 and December 31, 2019, the net carrying value of these loans was $915 million and $228 million, respectively.

Commitments | Commercial Mortgage Loans

Commitments and Contingent Liabilities [Line Items]

Mortgage Loans

Commercial Mortgage Loan Commitments

	September 30, 2020		December 31, 2019
	(in millions)
Total outstanding mortgage loan commitments	$	1,701	$	2,129
Portion of commitment where prearrangement to sell to investor exists	$	959	$	751

Commitments | Investments

Commitments and Contingent Liabilities [Line Items]

Commitments to Purchase Investments (excluding Commercial Mortgage Loans)

Commitments to Purchase Investments (excluding Commercial Mortgage Loans)

	September 30, 2020		December 31, 2019
	(in millions)
Expected to be funded from the general account and other operations outside the separate accounts	$	8,968	$	7,372
Expected to be funded from separate accounts	$	120	$	49

Indemnification

Commitments and Contingent Liabilities [Line Items]

Indemnification of Securities Lending and Securities Repurchase Transactions

Indemnification of Securities Lending and Securities Repurchase Transactions

	September 30, 2020		December 31, 2019
	(in millions)
Indemnification provided to certain clients for securities lending and securities repurchase transactions(1)	$	7,328	$	5,071
Fair value of related collateral associated with above indemnifications(2)	$	7,480	$	5,204
Accrued liability associated with guarantee	$	0	$	0

__________ 

(1)Includes $34 million and $38 million related to securities repurchase transactions as of September 30, 2020 and December 31, 2019, respectively.

(2)Includes $34 million and $37 million related to securities repurchase transactions as of September 30, 2020 and December 31, 2019, respectively.

Indemnification | Serviced Mortgage Loans

Commitments and Contingent Liabilities [Line Items]

Mortgage Loans

Indemnification of Serviced Mortgage Loans

	September 30, 2020		December 31, 2019
	(in millions)
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company	$	2,451	$	2,113
First-loss exposure portion of above	$	718	$	622
Accrued liability associated with guarantees(1)	$	39	$	19

__________

(1)As of September 30, 2020, the accrued liability associated with guarantees includes an allowance for credit losses of $18 million, which is a change of $1 million and $0 million for the three and nine months ended September 30, 2020, respectively.

Guarantees of Asset Values

Commitments and Contingent Liabilities [Line Items]

Guarantees

Guarantees of Asset Values

	September 30, 2020		December 31, 2019
	(in millions)
Guaranteed value of third-parties’ assets	$	84,088	$	80,009
Fair value of collateral supporting these assets	$	88,425	$	81,604
Asset (liability) associated with guarantee, carried at fair value	$	1	$	1

Other Guarantees

Commitments and Contingent Liabilities [Line Items]

Guarantees

Other Guarantees

	September 30, 2020		December 31, 2019
	(in millions)
Other guarantees where amount can be determined	$	52	$	55
Accrued liability for other guarantees and indemnifications	$	0	$	0

XML

Business and Basic Presentation (Narrative) (Details) $ in Millions, ₩ in Trillions	3 Months Ended			9 Months Ended
	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Aug. 31, 2020 USD ($)	Aug. 31, 2020 KRW (₩)	Aug. 11, 2020 USD ($)	Aug. 11, 2020 TWD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Other income	$ 992,000,000		$ 320,000,000	$ (125,000,000)	$ 2,217,000,000
The Prudential Life Insurance Company of Korea, Ltd. | Discontinued Operations, Held for Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash considerations for sale of a business						$ 1,900,000,000	₩ 2.3
Other income	(100,000,000)	$ (700,000,000)		$ (800,000,000)
The Prudential Life Insurance Company of Taiwan Inc. | Discontinued Operations, Held for Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash considerations for sale of a business								$ 190,000,000	$ 5,500
Other income	$ (300,000,000)
Business Combination, Contingent Consideration, Asset								26,000,000
The Prudential Life Insurance Company of Taiwan Inc. | Discontinued Operations, Held for Sale | Maximum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Business Combination, Contingent Consideration, Asset								$ 100,000,000

XML

Significant Accounting Policies and Pronouncements (Summary of Transition Impact) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Jun. 30, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Fixed maturities, held-to-maturity	[1]	$ 1,901	[2]				$ 1,933
Commercial mortgage and other loans	[1]	64,541	[2]				63,559
Other invested assets	[1]	16,921	[2]				15,606
Deferred policy acquisition costs		18,599	[2]				19,912
Other assets	[1]	21,536	[2]				20,832
Total Assets		911,589					896,552
Policyholders’ dividends		8,978	[2]				6,988
Other liabilities	[1]	18,579	[2]				20,802
Income taxes		12,111	[2]				11,378
Total liabilities		844,699					832,833
Retained earnings		30,372					32,991
Total equity		66,890		$ 66,508	$ 61,072		63,719	$ 66,314	$ 62,153	$ 55,450	$ 49,031
Total liabilities and equity		911,589					$ 896,552
ASU 2016-13
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other liabilities		$ 19
Restatement Adjustment | ASU 2016-13
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Fixed maturities, held-to-maturity						$ (9)
Commercial mortgage and other loans						(115)
Other invested assets						(1)
Deferred policy acquisition costs						9
Other assets						(6)
Total Assets						(122)
Policyholders’ dividends						(14)
Other liabilities						21
Income taxes						(30)
Total liabilities						(23)
Retained earnings						(99)
Total equity						(99)
Total liabilities and equity						$ (122)

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

XML

Investments (Fixed Maturities Securities Excluding Investments Classified as Trading) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		$ 346,511		$ 346,574
Allowance for Credit Losses		152
Fair Value	[1]	400,816		391,096
Amortized Cost	[1]	1,901	[2]	1,933
Fair Value		2,264		2,302
Allowance for Credit Losses		9
Fixed maturities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		346,511		346,574
Gross Unrealized Gains		56,106		45,837
Gross Unrealized Losses		1,649		1,315
Allowance for Credit Losses		152
Fair Value		400,816		391,096
Amortized Cost		1,910		1,933
Gross Unrealized Gains		354		369
Gross Unrealized Losses		0		0
Fair Value		2,264		2,302
Allowance for Credit Losses		9
Amortized Cost, Net of Allowance		1,901
Fixed maturities | U.S. Treasury securities and obligations of U.S. government authorities and agencies
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		31,095		30,625
Gross Unrealized Gains		11,040		5,195
Gross Unrealized Losses		23		161
Allowance for Credit Losses		0
Fair Value		42,112		35,659
Fixed maturities | Obligations of U.S. states and their political subdivisions
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		10,555		10,068
Gross Unrealized Gains		2,052		1,437
Gross Unrealized Losses		4		8
Allowance for Credit Losses		0
Fair Value		12,603		11,497
Fixed maturities | Foreign government bonds
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		90,915		98,356
Gross Unrealized Gains		16,317		20,761
Gross Unrealized Losses		195		63
Allowance for Credit Losses		1
Fair Value		107,036		119,054
Amortized Cost		915		891
Gross Unrealized Gains		265		282
Gross Unrealized Losses		0		0
Fair Value		1,180		1,173
Allowance for Credit Losses		0
Amortized Cost, Net of Allowance		915
Fixed maturities | U.S. public corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		92,988		87,566
Gross Unrealized Gains		16,259		11,030
Gross Unrealized Losses		454		257
Allowance for Credit Losses		64
Fair Value		108,729		98,339
Fixed maturities | U.S. private corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		35,846		34,410
Gross Unrealized Gains		3,586		2,243
Gross Unrealized Losses		192		120
Allowance for Credit Losses		29
Fair Value		39,211		36,533
Fixed maturities | Foreign public corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		25,131		26,841
Gross Unrealized Gains		3,408		3,054
Gross Unrealized Losses		185		70
Allowance for Credit Losses		24
Fair Value		28,330		29,825
Amortized Cost		637		649
Gross Unrealized Gains		66		64
Gross Unrealized Losses		0		0
Fair Value		703		713
Allowance for Credit Losses		9
Amortized Cost, Net of Allowance		628
Fixed maturities | Foreign private corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		27,934		27,619
Gross Unrealized Gains		1,785		1,201
Gross Unrealized Losses		485		580
Allowance for Credit Losses		30
Fair Value		29,204		28,240
Amortized Cost		85		83
Gross Unrealized Gains		2		2
Gross Unrealized Losses		0		0
Fair Value		87		85
Allowance for Credit Losses		0
Amortized Cost, Net of Allowance		85
Fixed maturities | Asset-backed securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		14,070		13,067
Gross Unrealized Gains		168		147
Gross Unrealized Losses		104		40
Allowance for Credit Losses		0
Fair Value		14,134		13,174
Fixed maturities | Commercial mortgage-backed securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		15,096		14,978
Gross Unrealized Gains		1,263		610
Gross Unrealized Losses		6		14
Allowance for Credit Losses		4
Fair Value		16,349		15,574
Fixed maturities | Residential mortgage-backed securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		2,881		3,044
Gross Unrealized Gains		228		159
Gross Unrealized Losses		1		2
Allowance for Credit Losses		0
Fair Value		3,108		3,201
Amortized Cost		273		310
Gross Unrealized Gains		21		21
Gross Unrealized Losses		0		0
Fair Value		294		331
Allowance for Credit Losses		0
Amortized Cost, Net of Allowance		273
Available-for-sale | OTTI | Fixed maturities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				(119)
Available-for-sale | OTTI | Fixed maturities | U.S. Treasury securities and obligations of U.S. government authorities and agencies
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				0
Available-for-sale | OTTI | Fixed maturities | Obligations of U.S. states and their political subdivisions
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				0
Available-for-sale | OTTI | Fixed maturities | Foreign government bonds
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				(34)
Available-for-sale | OTTI | Fixed maturities | U.S. public corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				(6)
Available-for-sale | OTTI | Fixed maturities | U.S. private corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				0
Available-for-sale | OTTI | Fixed maturities | Foreign public corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				(1)
Available-for-sale | OTTI | Fixed maturities | Foreign private corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				0
Available-for-sale | OTTI | Fixed maturities | Asset-backed securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				(77)
Available-for-sale | OTTI | Fixed maturities | Commercial mortgage-backed securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				0
Available-for-sale | OTTI | Fixed maturities | Residential mortgage-backed securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				(1)
Available-for-sale | Net Unrealized Investment Gains (Losses) | Fixed maturities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				362
Held-to-maturity | Net Unrealized Investment Gains (Losses) | Fixed maturities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
OTTI in AOCI				1
Prudential Netting Agreement | U.S. private corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Fair Value		6,466		4,751
Prudential Netting Agreement | Fixed maturities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		4,998		4,998
Fair Value		5,814		5,401
Prudential Netting Agreement | Fixed maturities | U.S. private corporate securities
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items]
Amortized Cost		6,466		4,751
Fair Value		$ 6,594		$ 4,757

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

XML

Investments (Fair Value and Losses by Investment Category and Length of Time in a Loss Position) (Details) - Fixed maturities - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	$ 27,124	$ 21,898
Less Than Twelve Months, Gross Unrealized Losses	867	437
Twelve Months or More, Fair Value	10,737	15,006
Twelve Months or More, Gross Unrealized Losses	751	878
Total, Fair Value	37,861	36,904
Total, Gross Unrealized Losses	1,618	1,315
U.S. Treasury securities and obligations of U.S. government authorities and agencies
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	1,068	4,950
Less Than Twelve Months, Gross Unrealized Losses	23	161
Twelve Months or More, Fair Value	0	267
Twelve Months or More, Gross Unrealized Losses	0	0
Total, Fair Value	1,068	5,217
Total, Gross Unrealized Losses	23	161
Obligations of U.S. states and their political subdivisions
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	200	273
Less Than Twelve Months, Gross Unrealized Losses	4	8
Twelve Months or More, Fair Value	0	0
Twelve Months or More, Gross Unrealized Losses	0	0
Total, Fair Value	200	273
Total, Gross Unrealized Losses	4	8
Foreign government bonds
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	5,548	2,332
Less Than Twelve Months, Gross Unrealized Losses	190	60
Twelve Months or More, Fair Value	44	126
Twelve Months or More, Gross Unrealized Losses	5	3
Total, Fair Value	5,592	2,458
Total, Gross Unrealized Losses	195	63
U.S. public corporate securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	6,939	3,944
Less Than Twelve Months, Gross Unrealized Losses	261	85
Twelve Months or More, Fair Value	1,332	2,203
Twelve Months or More, Gross Unrealized Losses	174	172
Total, Fair Value	8,271	6,147
Total, Gross Unrealized Losses	435	257
U.S. private corporate securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	2,452	2,283
Less Than Twelve Months, Gross Unrealized Losses	105	44
Twelve Months or More, Fair Value	847	1,563
Twelve Months or More, Gross Unrealized Losses	86	76
Total, Fair Value	3,299	3,846
Total, Gross Unrealized Losses	191	120
Foreign public corporate securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	2,022	1,271
Less Than Twelve Months, Gross Unrealized Losses	126	23
Twelve Months or More, Fair Value	367	496
Twelve Months or More, Gross Unrealized Losses	52	47
Total, Fair Value	2,389	1,767
Total, Gross Unrealized Losses	178	70
Foreign private corporate securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	3,442	1,466
Less Than Twelve Months, Gross Unrealized Losses	105	33
Twelve Months or More, Fair Value	3,311	5,666
Twelve Months or More, Gross Unrealized Losses	376	547
Total, Fair Value	6,753	7,132
Total, Gross Unrealized Losses	481	580
Asset-backed securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	5,145	3,979
Less Than Twelve Months, Gross Unrealized Losses	48	12
Twelve Months or More, Fair Value	4,742	4,433
Twelve Months or More, Gross Unrealized Losses	56	28
Total, Fair Value	9,887	8,412
Total, Gross Unrealized Losses	104	40
Commercial mortgage-backed securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	160	1,193
Less Than Twelve Months, Gross Unrealized Losses	4	10
Twelve Months or More, Fair Value	94	164
Twelve Months or More, Gross Unrealized Losses	2	4
Total, Fair Value	254	1,357
Total, Gross Unrealized Losses	6	14
Residential mortgage-backed securities
Debt Securities [Line Items]
Less Than Twelve Months, Fair Value	148	207
Less Than Twelve Months, Gross Unrealized Losses	1	1
Twelve Months or More, Fair Value	0	88
Twelve Months or More, Gross Unrealized Losses	0	1
Total, Fair Value	148	295
Total, Gross Unrealized Losses	$ 1	$ 2

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Investments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Schedule of Investments [Line Items]
Write-down on accrued investment income receivable	$ 3		$ 15
Fixed maturity securities purchased with credit deterioration			0
Commercial mortgage and other loans purchased with credit deterioration			0
Loans on non-accrual status recognized in interest income	2		2
Loans on non-accrual status, do not have allowance for credit losses			17
Fixed maturities
Schedule of Investments [Line Items]
Gross Unrealized Losses	1,618		1,618		$ 1,315
Gross unrealized losses of twelve months or more concentrated in various sectors	751		751		878
Corporate securities
Schedule of Investments [Line Items]
Gross unrealized losses of twelve months or more concentrated in various sectors	751		751		878
Other income | Equity securities
Schedule of Investments [Line Items]
Unrealized gains (losses) for assets still held:	324	$ 52	(332)	$ 632
Other income | Assets supporting experience-rated contractholder liabilities
Schedule of Investments [Line Items]
Unrealized gains (losses) for assets still held:	$ 255	$ 99	$ 397	$ 868
California
Schedule of Investments [Line Items]
Commercial mortgage loan, concentration percentage	27.00%		27.00%
Texas
Schedule of Investments [Line Items]
Commercial mortgage loan, concentration percentage	9.00%		9.00%
New York
Schedule of Investments [Line Items]
Commercial mortgage loan, concentration percentage	8.00%		8.00%
Europe
Schedule of Investments [Line Items]
Commercial mortgage loan, concentration percentage	7.00%		7.00%
Asia
Schedule of Investments [Line Items]
Commercial mortgage loan, concentration percentage	2.00%		2.00%
Australia
Schedule of Investments [Line Items]
Commercial mortgage loan, concentration percentage	1.00%		1.00%
NAIC Other Than High or Highest Quality Rating | Fixed maturities
Schedule of Investments [Line Items]
Gross Unrealized Losses	$ 648		$ 648		342
NAIC High or Highest Quality Rating | Fixed maturities
Schedule of Investments [Line Items]
Gross Unrealized Losses	$ 970		$ 970		$ 973

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Investments Investments (Amortized Cost and Fair Value of Fixed Maturities by Contractual Maturities) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
Available-for-sale, Amortized Cost
Due in one year or less		$ 13,497
Due after one year through five years		50,428
Due after five years through ten years		66,321
Due after ten years		184,218
Amortized Cost		346,511		$ 346,574
Available-for-sale, Fair Value
Due in one year or less		14,096
Due after one year through five years		53,969
Due after five years through ten years		74,393
Due after ten years		224,767
Fair Value	[1]	400,816		391,096
Held-to-maturity, Amortized Cost
Due in one year or less		117
Due after one year through five years		0
Due after five years through ten years		600
Due after ten years		911
Amortized Cost	[1]	1,901	[2]	1,933
Held-to-maturity, Fair Value
Due in one year or less		118
Due after one year through five years		0
Due after five years through ten years		676
Due after ten years		1,176
Fair Value		2,264		2,302
Asset-backed securities
Available-for-sale, Amortized Cost
Debt Maturities, without single maturity date		14,070
Available-for-sale, Fair Value
Debt Maturities, without single maturity date		14,134
Held-to-maturity, Amortized Cost
Debt Maturities, without single maturity date		0
Held-to-maturity, Fair Value
Debt Maturities, without single maturity date		0
Commercial mortgage-backed securities
Available-for-sale, Amortized Cost
Debt Maturities, without single maturity date		15,096
Available-for-sale, Fair Value
Debt Maturities, without single maturity date		16,349
Held-to-maturity, Amortized Cost
Debt Maturities, without single maturity date		0
Held-to-maturity, Fair Value
Debt Maturities, without single maturity date		0
Residential mortgage-backed securities
Available-for-sale, Amortized Cost
Debt Maturities, without single maturity date		2,881
Available-for-sale, Fair Value
Debt Maturities, without single maturity date		3,108
Held-to-maturity, Amortized Cost
Debt Maturities, without single maturity date		273
Held-to-maturity, Fair Value
Debt Maturities, without single maturity date		294
Prudential Netting Agreement | U.S. private corporate securities
Available-for-sale, Fair Value
Fair Value		6,466		4,751
Fixed maturities
Available-for-sale, Amortized Cost
Amortized Cost		346,511		346,574
Available-for-sale, Fair Value
Fair Value		400,816		391,096
Held-to-maturity, Amortized Cost
Amortized Cost		1,910		1,933
Held-to-maturity, Fair Value
Fair Value		2,264		2,302
Fixed maturities | U.S. private corporate securities
Available-for-sale, Amortized Cost
Amortized Cost		35,846		34,410
Available-for-sale, Fair Value
Fair Value		39,211		36,533
Fixed maturities | Asset-backed securities
Available-for-sale, Amortized Cost
Amortized Cost		14,070		13,067
Available-for-sale, Fair Value
Fair Value		14,134		13,174
Fixed maturities | Commercial mortgage-backed securities
Available-for-sale, Amortized Cost
Amortized Cost		15,096		14,978
Available-for-sale, Fair Value
Fair Value		16,349		15,574
Fixed maturities | Residential mortgage-backed securities
Available-for-sale, Amortized Cost
Amortized Cost		2,881		3,044
Available-for-sale, Fair Value
Fair Value		3,108		3,201
Held-to-maturity, Amortized Cost
Amortized Cost		273		310
Held-to-maturity, Fair Value
Fair Value		294		331
Fixed maturities | Prudential Netting Agreement
Held-to-maturity, Amortized Cost
Amortized Cost		4,998		4,998
Held-to-maturity, Fair Value
Fair Value		5,814		5,401
Fixed maturities | Prudential Netting Agreement | U.S. private corporate securities
Available-for-sale, Amortized Cost
Amortized Cost		6,466		4,751
Available-for-sale, Fair Value
Fair Value		$ 6,594		$ 4,757

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

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Investments (Fixed Maturity Proceeds) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Debt Securities [Line Items]
Proceeds from maturities/prepayments - AFS			$ 31,989	$ 38,356
Proceeds from maturities/prepayments - HTM			76	84
Fixed maturities | Available-for-sale
Debt Securities [Line Items]
Proceeds from sales	$ 4,284	$ 7,190	14,654	24,011
Proceeds from maturities/prepayments - AFS	7,181	5,315	17,603	14,507
Gross investment gains from sales and maturities	578	565	1,451	1,276
Gross investment losses from sales and maturities	(129)	(62)	(339)	(345)
OTTI recognized in earnings		(143)		(242)
Write-down recognized in earnings	(134)		(289)
(Addition to) release of allowance for credit losses - AFS	86		(152)
Fixed maturities | Held-to-maturity
Debt Securities [Line Items]
Proceeds from maturities/prepayments - HTM	14	$ 47	77	84
(Addition to) release of allowance for credit Losses - HTM	$ 0		0
Fixed maturities | Available-for-sale
Debt Securities [Line Items]
Noncash or Part Noncash Divestiture, Amount of Consideration Received			268	162
Fixed maturities | Held-to-maturity
Debt Securities [Line Items]
Noncash or Part Noncash Divestiture, Amount of Consideration Received			$ 1	$ 1

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Investments (Credit Losses Recognized In Earnings on Fixed Maturity Securities Held by the Company) (Details) - Fixed maturities - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Available-for-sale
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	$ 238	$ 0
Additions to allowance for credit losses not previously recorded	34	278
Reductions for securities sold during the period	(8)	(36)
Additions (reductions) on securities with previous allowance	(9)	13
Write-downs charged against the allowance	(103)	(103)
Balance, ending of period	152	152
Available-for-sale | U.S. Treasury securities and obligations of U.S. government authorities and agencies
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Additions to allowance for credit losses not previously recorded	0	0
Reductions for securities sold during the period	0	0
Additions (reductions) on securities with previous allowance	0	0
Write-downs charged against the allowance	0	0
Balance, ending of period	0	0
Available-for-sale | Foreign government bonds
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	38	0
Additions to allowance for credit losses not previously recorded	1	39
Reductions for securities sold during the period	0	0
Additions (reductions) on securities with previous allowance	0	0
Write-downs charged against the allowance	(38)	(38)
Balance, ending of period	1	1
Available-for-sale | U.S. and Foreign Corporate Securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	199	0
Additions to allowance for credit losses not previously recorded	33	238
Reductions for securities sold during the period	(8)	(36)
Additions (reductions) on securities with previous allowance	(12)	10
Write-downs charged against the allowance	(65)	(65)
Balance, ending of period	147	147
Available-for-sale | Asset-backed securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Additions to allowance for credit losses not previously recorded	0	0
Reductions for securities sold during the period	0	0
Additions (reductions) on securities with previous allowance	0	0
Write-downs charged against the allowance	0	0
Balance, ending of period	0	0
Available-for-sale | Commercial mortgage-backed securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	1	0
Additions to allowance for credit losses not previously recorded	0	1
Reductions for securities sold during the period	0	0
Additions (reductions) on securities with previous allowance	3	3
Write-downs charged against the allowance	0	0
Balance, ending of period	4	4
Available-for-sale | Residential mortgage-backed securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Additions to allowance for credit losses not previously recorded	0	0
Reductions for securities sold during the period	0	0
Additions (reductions) on securities with previous allowance	0	0
Write-downs charged against the allowance	0	0
Balance, ending of period	0	0
Held-to-maturity
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	9	0
Cumulative effect of adoption of ASU 2016-13		9
Balance, ending of period	9	9
Held-to-maturity | U.S. Treasury securities and obligations of U.S. government authorities and agencies
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Cumulative effect of adoption of ASU 2016-13		0
Balance, ending of period	0	0
Held-to-maturity | Foreign government bonds
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Cumulative effect of adoption of ASU 2016-13		0
Balance, ending of period	0	0
Held-to-maturity | U.S. and Foreign Corporate Securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	9	0
Cumulative effect of adoption of ASU 2016-13		9
Balance, ending of period	9	9
Held-to-maturity | Asset-backed securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Cumulative effect of adoption of ASU 2016-13		0
Balance, ending of period	0	0
Held-to-maturity | Commercial mortgage-backed securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Cumulative effect of adoption of ASU 2016-13		0
Balance, ending of period	0	0
Held-to-maturity | Residential mortgage-backed securities
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items]
Balance, beginning of period	0	0
Cumulative effect of adoption of ASU 2016-13		0
Balance, ending of period	$ 0	$ 0

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Investments (Assets Supporting Experience-Rated Contractholder Liabilities) (Details) - USD ($) $ in Millions		Sep. 30, 2020	Dec. 31, 2019
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		$ 22,613	$ 20,646
Assets supporting experience-rated contractholder liabilities, at fair value	[1]	23,961	21,597
Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		19,907	18,904
Assets supporting experience-rated contractholder liabilities, at fair value		21,033	19,530
Equity securities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		1,603	1,465
Assets supporting experience-rated contractholder liabilities, at fair value		1,825	1,790
Short-term investments and cash equivalents
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		1,103	277
Assets supporting experience-rated contractholder liabilities, at fair value		1,103	277
Corporate securities | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		14,060	13,143
Assets supporting experience-rated contractholder liabilities, at fair value		14,909	13,603
Commercial mortgage-backed securities | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		1,845	1,845
Assets supporting experience-rated contractholder liabilities, at fair value		1,946	1,896
Residential mortgage-backed securities | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		1,064	1,134
Assets supporting experience-rated contractholder liabilities, at fair value		1,126	1,158
Asset-backed securities | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		1,691	1,639
Assets supporting experience-rated contractholder liabilities, at fair value		1,716	1,662
Foreign government bonds | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		889	802
Assets supporting experience-rated contractholder liabilities, at fair value		898	814
U.S. government authorities and agencies and obligations of U.S. states | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost or cost		358	341
Assets supporting experience-rated contractholder liabilities, at fair value		$ 438	$ 397
Public Securities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost percentage		79.00%	77.00%
Collateralized loan obligations
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at fair value		$ 1,133	$ 1,060
NAIC High or Highest Quality Rating | Fixed maturities
Assets Supporting Experience-Rated Contractholder Liabilities [Line Items]
Assets supporting experience-rated contractholder liabilities, at amortized cost percentage		94.00%	94.00%

[1] See Note 4 for details of balances associated with variable interest entities.

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Investments (Concentrations of Credit Risk) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Investments in Japanese government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	$ 79,491	$ 75,663
Concentrations of credit risk at fair value	92,483	91,376
Investments in South Korean government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	41	10,838
Concentrations of credit risk at fair value	50	13,338
Assets supporting experience-rated contractholder liabilities | Investments in Japanese government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	826	653
Concentrations of credit risk at fair value	831	664
Assets supporting experience-rated contractholder liabilities | Investments in South Korean government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	15	15
Concentrations of credit risk at fair value	16	16
Available-for-sale | Fixed maturities | Investments in Japanese government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	77,749	74,118
Concentrations of credit risk at fair value	90,480	89,546
Available-for-sale | Fixed maturities | Investments in South Korean government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	26	10,823
Concentrations of credit risk at fair value	34	13,322
Held-to-maturity | Fixed maturities | Investments in Japanese government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	892	869
Concentrations of credit risk at fair value	1,148	1,143
Trading | Fixed maturities | Investments in Japanese government and government agency securities:
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Concentrations of credit risk at amortized cost	24	23
Concentrations of credit risk at fair value	$ 24	$ 23

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Investments (Commercial Mortgage and Other Loans) (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 63,834	$ 62,835
Other loans	942	845
Total commercial mortgage and other loans	$ 64,541	$ 63,559
% of Total	100.00%	100.00%
Net carrying value of commercial loans held for sale	$ 915	$ 228
Commercial Mortgage Loans
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 59,819	$ 59,363
% of Total	93.70%	94.50%
Commercial mortgage and agricultural property loans
Commercial Mortgage and Other Loans [Line Items]
Allowance for credit losses	$ (227)	$ (117)
Total net loans	63,607	62,718
Uncollateralized loans
Commercial Mortgage and Other Loans [Line Items]
Other loans	723	656
Residential property loans
Commercial Mortgage and Other Loans [Line Items]
Other loans	104	124
Other Collateralized Loans
Commercial Mortgage and Other Loans [Line Items]
Other loans	115	65
Other loans
Commercial Mortgage and Other Loans [Line Items]
Total net loans	934	841
Allowance for credit losses, Other loans	(8)	(4)
Office
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 12,677	$ 13,462
% of Total	19.90%	21.40%
Retail
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 7,677	$ 8,379
% of Total	12.00%	13.30%
Apartments/Multi-Family
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 18,385	$ 17,348
% of Total	28.80%	27.60%
Industrial
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 13,639	$ 13,226
% of Total	21.40%	21.10%
Hospitality
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 2,390	$ 2,415
% of Total	3.70%	3.90%
Other
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 5,051	$ 4,533
% of Total	7.90%	7.20%
Agricultural property loans
Commercial Mortgage and Other Loans [Line Items]
Commercial mortgage and agricultural property loans by property type	$ 4,015	$ 3,472
% of Total	6.30%	5.50%

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Investments (Allowance for Credit Losses) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of year	$ 245	$ 121
Cumulative effect of adoption of ASU 2016-13		115
Addition to (release of) allowance for expected losses	(3)	3
Write-downs charged against the allowance	(7)	(7)
Other	0	3
Total ending balance	235	235
Commercial Mortgage Loans
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of year	230	114
Cumulative effect of adoption of ASU 2016-13		110
Addition to (release of) allowance for expected losses	(5)	1
Write-downs charged against the allowance	(7)	(7)
Other	0	0
Total ending balance	218	218
Agricultural Property Loans
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of year	8	3
Cumulative effect of adoption of ASU 2016-13		5
Addition to (release of) allowance for expected losses	1	1
Write-downs charged against the allowance	0	0
Other	0	0
Total ending balance	9	9
Residential Property Loans
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of year	0	0
Cumulative effect of adoption of ASU 2016-13		0
Addition to (release of) allowance for expected losses	0	0
Write-downs charged against the allowance	0	0
Other	0	0
Total ending balance	0	0
Other Collateralized Loans
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of year	3	0
Cumulative effect of adoption of ASU 2016-13		0
Addition to (release of) allowance for expected losses	0	0
Write-downs charged against the allowance	0	0
Other	0	3
Total ending balance	3	3
Uncollateralized Loans
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of year	4	4
Cumulative effect of adoption of ASU 2016-13		0
Addition to (release of) allowance for expected losses	1	1
Write-downs charged against the allowance	0	0
Other	0	0
Total ending balance	$ 5	$ 5

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Investments (Credit Quality Indicators) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Commercial Mortgage Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	$ 3,874
2019	10,124
2018	9,072
2017	7,250
2016	6,819
Prior	22,680
Revolving Loans	0
Recording investment gross of allowance for credit losses	59,819	$ 59,363
Commercial Mortgage Loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
2020	3,759
2019	9,490
2018	8,590
2017	7,009
2016	6,525
Prior	21,045
Revolving Loans	0
Recording investment gross of allowance for credit losses	56,418	56,346
Commercial Mortgage Loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
2020	114
2019	518
2018	453
2017	241
2016	286
Prior	1,499
Revolving Loans	0
Recording investment gross of allowance for credit losses	3,111	2,708
Commercial Mortgage Loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1
2019	116
2018	29
2017	0
2016	8
Prior	136
Revolving Loans	0
Recording investment gross of allowance for credit losses	290	309
Agricultural property loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	811
2019	554
2018	399
2017	534
2016	397
Prior	1,320
Revolving Loans	0
Recording investment gross of allowance for credit losses	4,015	3,472
Agricultural property loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
2020	801
2019	553
2018	398
2017	471
2016	377
Prior	1,303
Revolving Loans	0
Recording investment gross of allowance for credit losses	3,903	3,401
Agricultural property loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
2020	10
2019	0
2018	1
2017	59
2016	5
Prior	5
Revolving Loans	0
Recording investment gross of allowance for credit losses	80	57
Agricultural property loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1
2018	0
2017	4
2016	15
Prior	12
Revolving Loans	0
Recording investment gross of allowance for credit losses	32	14
0%-59.99% | Commercial Mortgage Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	650
2019	2,824
2018	3,105
2017	3,309
2016	3,381
Prior	17,616
Revolving Loans	0
Recording investment gross of allowance for credit losses	30,885	31,945
0%-59.99% | Commercial Mortgage Loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		31,027
0%-59.99% | Commercial Mortgage Loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		701
0%-59.99% | Commercial Mortgage Loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		217
0%-59.99% | Agricultural property loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	724
2019	482
2018	360
2017	531
2016	397
Prior	1,320
Revolving Loans	0
Recording investment gross of allowance for credit losses	3,814	3,360
0%-59.99% | Agricultural property loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		3,289
0%-59.99% | Agricultural property loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		57
0%-59.99% | Agricultural property loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		14
60%-69.99% | Commercial Mortgage Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1,480
2019	4,152
2018	3,437
2017	2,913
2016	2,801
Prior	4,282
Revolving Loans	0
Recording investment gross of allowance for credit losses	19,065	18,277
60%-69.99% | Commercial Mortgage Loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		17,090
60%-69.99% | Commercial Mortgage Loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		1,145
60%-69.99% | Commercial Mortgage Loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		42
60%-69.99% | Agricultural property loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	87
2019	72
2018	39
2017	3
2016	0
Prior	0
Revolving Loans	0
Recording investment gross of allowance for credit losses	201	112
60%-69.99% | Agricultural property loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		112
60%-69.99% | Agricultural property loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
60%-69.99% | Agricultural property loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
70%-79.99% | Commercial Mortgage Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1,744
2019	3,138
2018	2,530
2017	1,010
2016	613
Prior	654
Revolving Loans	0
Recording investment gross of allowance for credit losses	9,689	8,767
70%-79.99% | Commercial Mortgage Loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		8,020
70%-79.99% | Commercial Mortgage Loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		719
70%-79.99% | Commercial Mortgage Loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		28
70%-79.99% | Agricultural property loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Recording investment gross of allowance for credit losses	0	0
70%-79.99% | Agricultural property loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
70%-79.99% | Agricultural property loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
70%-79.99% | Agricultural property loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
80% or greater | Commercial Mortgage Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	10
2018	0
2017	18
2016	24
Prior	128
Revolving Loans	0
Recording investment gross of allowance for credit losses	180	374
80% or greater | Commercial Mortgage Loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		209
80% or greater | Commercial Mortgage Loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		143
80% or greater | Commercial Mortgage Loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		22
80% or greater | Agricultural property loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans	0
Recording investment gross of allowance for credit losses	$ 0	0
80% or greater | Agricultural property loans | ≥ 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
80% or greater | Agricultural property loans | 1.0X to 1.2X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		0
80% or greater | Agricultural property loans | Less than 1.0X
Financing Receivable, Credit Quality Indicator [Line Items]
Recording investment gross of allowance for credit losses		$ 0

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Investments (Analysis of Past Due Commercial Mortgage and Other Loans) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Current	$ 64,748	$ 63,663
Total Past Due	28	17
Total Loans	64,776	63,680
Non-Accrual Status	43	59
30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1	2
60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	24	0
90 days or more past due
Financing Receivable, Past Due [Line Items]
Total Past Due	3	15
Commercial Mortgage Loans
Financing Receivable, Past Due [Line Items]
Current	59,794	59,363
Total Past Due	25	0
Total Loans	59,819	59,363
Non-Accrual Status	27	44
Commercial Mortgage Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Commercial Mortgage Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	24	0
Commercial Mortgage Loans | 90 days or more past due
Financing Receivable, Past Due [Line Items]
Total Past Due	1	0
Agricultural property loans
Financing Receivable, Past Due [Line Items]
Current	4,014	3,458
Total Past Due	1	14
Total Loans	4,015	3,472
Non-Accrual Status	15	13
Agricultural property loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	1
Agricultural property loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Agricultural property loans | 90 days or more past due
Financing Receivable, Past Due [Line Items]
Total Past Due	1	13
Residential Property Loans
Financing Receivable, Past Due [Line Items]
Current	102	121
Total Past Due	2	3
Total Loans	104	124
Non-Accrual Status	1	2
Residential Property Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1	1
Residential Property Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Residential Property Loans | 90 days or more past due
Financing Receivable, Past Due [Line Items]
Total Past Due	1	2
Other Collateralized Loans
Financing Receivable, Past Due [Line Items]
Current	115	65
Total Past Due	0	0
Total Loans	115	65
Non-Accrual Status	0	0
Other Collateralized Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Other Collateralized Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Other Collateralized Loans | 90 days or more past due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Uncollateralized loans
Financing Receivable, Past Due [Line Items]
Current	723	656
Total Past Due	0	0
Total Loans	723	656
Non-Accrual Status	0	0
Uncollateralized loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Uncollateralized loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Uncollateralized loans | 90 days or more past due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Loans | 90 days or more past due
Financing Receivable, Past Due [Line Items]
Accruing Interest	$ 0	$ 0

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Investments (Other Invested Assets) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
Other Invested Assets [Line Items]
Other invested assets	[1]	$ 16,921	[2]	$ 15,606
LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		11,858		11,157
Real estate held through direct ownership
Other Invested Assets [Line Items]
Other invested assets		2,517		2,388
Derivative instruments
Other Invested Assets [Line Items]
Other invested assets		1,201		877
Other
Other Invested Assets [Line Items]
Other invested assets		1,345		1,184
Mortgage Debt | Real estate-related
Other Invested Assets [Line Items]
Other invested assets		436		537
Equity method | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		7,881		6,944
Equity method | Private equity | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		4,139		3,625
Equity method | Hedge funds | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		2,333		1,947
Equity method | Real estate-related | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		1,409		1,372
Fair Value
Other Invested Assets [Line Items]
Other invested assets		177		36
Fair Value | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		3,977		4,213
Fair Value | Private equity | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		1,679		1,705
Fair Value | Hedge funds | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		1,965		2,172
Fair Value | Real estate-related | LPs/LLCs
Other Invested Assets [Line Items]
Other invested assets		$ 333		$ 336

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

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Investments (Accrued Investment Income) (Details) - USD ($) $ in Millions		Sep. 30, 2020	Dec. 31, 2019
Net Investment Income [Line Items]
Accrued investment income	[1]	$ 3,129	$ 3,330
Fixed maturities
Net Investment Income [Line Items]
Accrued investment income		2,586
Equity securities
Net Investment Income [Line Items]
Accrued investment income		17
Commercial mortgage and other loans
Net Investment Income [Line Items]
Accrued investment income		203
Policy loans
Net Investment Income [Line Items]
Accrued investment income		289
Other invested assets
Net Investment Income [Line Items]
Accrued investment income		28
Short-term investments and cash equivalents
Net Investment Income [Line Items]
Accrued investment income		$ 6

[1] See Note 4 for details of balances associated with variable interest entities.

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Investments (Net Investment Income) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	$ 4,619	$ 4,685	$ 13,405	$ 13,797
Less: investment expenses	(173)	(247)	(571)	(753)
Net investment income	4,446	4,438	12,834	13,044
Assets supporting experience-rated contractholder liabilities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	179	191	527	558
Equity securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	36	38	119	119
Commercial mortgage and other loans
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	608	636	1,866	1,863
Policy loans
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	147	160	450	463
Other invested assets
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	415	251	693	727
Short-term investments and cash equivalents
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	30	123	182	356
Available-for-sale | Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	3,113	3,191	9,292	9,429
Held-to-maturity | Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	59	58	176	173
Trading | Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	$ 32	$ 37	$ 100	$ 109

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Investments (Realized Investment Gains Losses, Net) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	$ (79)	$ 853	$ (2,164)	$ (249)
Fixed maturities
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	401	360	671	689
Commercial mortgage and other loans
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	41	20	65	34
Investment real estate
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	5	38	15	38
LPs/LLCs
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	8	2	2	(1)
Derivatives
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	(537)	433	(2,926)	(1,010)
Other
Gain (Loss) on Securities [Line Items]
Realized investment gains (losses), net	$ 3	$ 0	$ 9	$ 1

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Investments (Net Unrealized Gains Losses on Investments) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments	$ 55,844	$ 45,339
Fixed maturities | Available-for-sale | OTTI
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments		243
Fixed maturities | Available-for-sale | All Other
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments		44,279
Fixed maturities | Available-for-sale | With an allowance
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments	(23)
Fixed maturities | Available-for-sale | Without an allowance
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments	54,480
Derivatives designated as cash flow hedges
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments	1,407	832
Other investments
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments	(20)	$ (15)
Other investments | Held-to-maturity
Gain (Loss) on Securities [Line Items]
Net unrealized gains (losses) on investments	$ 0

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Investments (Repurchase Agreements and Securities Lending Transactions) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	$ 10,874	$ 9,681
Total cash collateral for loaned securities	3,071	4,213
Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	10,321	9,681
Total cash collateral for loaned securities	3,071	4,213
Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	553	0
Total cash collateral for loaned securities	0	0
30 days or greater
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	0	0
Total cash collateral for loaned securities	0	0
U.S. Treasury securities and obligations of U.S. government authorities and agencies
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	10,497	9,431
Total cash collateral for loaned securities	0	9
U.S. Treasury securities and obligations of U.S. government authorities and agencies | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	9,944	9,431
Total cash collateral for loaned securities	0	9
U.S. Treasury securities and obligations of U.S. government authorities and agencies | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	553	0
Total cash collateral for loaned securities	0	0
Obligations of U.S. states and their political subdivisions
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	108	33
Obligations of U.S. states and their political subdivisions | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	108	33
Obligations of U.S. states and their political subdivisions | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	0
Foreign government bonds
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	353	244
Foreign government bonds | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	353	244
Foreign government bonds | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	0
U.S. public corporate securities
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	2,161	2,996
U.S. public corporate securities | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	2,161	2,996
U.S. public corporate securities | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	0
Foreign public corporate securities
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	425	762
Foreign public corporate securities | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	425	762
Foreign public corporate securities | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	0
Commercial mortgage-backed securities
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	2
Commercial mortgage-backed securities | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	2
Commercial mortgage-backed securities | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	0	0
Residential mortgage-backed securities
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	377	250
Residential mortgage-backed securities | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	377	250
Residential mortgage-backed securities | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total securities sold under agreements to repurchase	0	0
Equity securities
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	24	167
Equity securities | Overnight & Continuous
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	24	167
Equity securities | Up to 30 Days
Transfer Of Certain Financial Assets Accounted For As Secured Borrowings [Line Items]
Total cash collateral for loaned securities	$ 0	$ 0

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Variable Interest Entities (Assets and Liabilities of Consolidated VIEs) (Details) - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2020	Dec. 31, 2019
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		$ 911,589	$ 896,552
Total liabilities of consolidated VIEs		844,699	832,833
Consolidated VIEs for Which the Company is the Investment Manager
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		5,365	5,048
Total liabilities of consolidated VIEs		1,533	1,578
Consolidated VIEs for Which the Company is the Investment Manager | Assets supporting experience-rated contractholder liabilities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		0	0
Consolidated VIEs for Which the Company is the Investment Manager | Equity securities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		44	47
Consolidated VIEs for Which the Company is the Investment Manager | Commercial mortgage and other loans
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		976	883
Consolidated VIEs for Which the Company is the Investment Manager | Other
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		2,502	2,199
Consolidated VIEs for Which the Company is the Investment Manager | Cash and cash equivalents
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		140	166
Consolidated VIEs for Which the Company is the Investment Manager | Accrued investment income
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		6	4
Consolidated VIEs for Which the Company is the Investment Manager | Other assets
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		424	450
Consolidated VIEs for Which the Company is the Investment Manager | Other liabilities
Variable Interest Entity [Line Items]
Total liabilities of consolidated VIEs		291	304
Consolidated VIEs for Which the Company is the Investment Manager | Notes Issued by Consolidated VIEs
Variable Interest Entity [Line Items]
Total liabilities of consolidated VIEs	[1]	1,242	1,274
Consolidated VIEs for Which the Company is the Investment Manager | Available-for-sale | Fixed maturities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		107	104
Consolidated VIEs for Which the Company is the Investment Manager | Held-to-maturity | Fixed maturities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		85	83
Consolidated VIEs for Which the Company is the Investment Manager | Trading | Fixed maturities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		1,081	1,112
Consolidated VIEs for Which the Company is the Investment Manager | ASU 2015-02, Wholly-owned by consolidated subsidiaries
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		$ 2,892	2,668
Consolidated VIEs for Which the Company is the Investment Manager | Minimum | Notes Issued by Consolidated VIEs
Variable Interest Entity [Line Items]
VIEs Liabilities, maturities obligations (greater than)		3 years
Consolidated VIEs for Which the Company is the Investment Manager | Maximum | Notes Issued by Consolidated VIEs
Variable Interest Entity [Line Items]
VIEs Liabilities, maturities obligations (greater than)		9 years
Other Consolidated VIEs
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		$ 1,999	1,910
Total liabilities of consolidated VIEs		11	13
Other Consolidated VIEs | Assets supporting experience-rated contractholder liabilities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		1	4
Other Consolidated VIEs | Equity securities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		0	0
Other Consolidated VIEs | Commercial mortgage and other loans
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		0	0
Other Consolidated VIEs | Other
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		152	89
Other Consolidated VIEs | Cash and cash equivalents
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		0	0
Other Consolidated VIEs | Accrued investment income
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		4	4
Other Consolidated VIEs | Other assets
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		689	689
Other Consolidated VIEs | Other liabilities
Variable Interest Entity [Line Items]
Total liabilities of consolidated VIEs		11	13
Other Consolidated VIEs | Notes Issued by Consolidated VIEs
Variable Interest Entity [Line Items]
Total liabilities of consolidated VIEs		0	0
Other Consolidated VIEs | Available-for-sale | Fixed maturities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		290	285
Other Consolidated VIEs | Held-to-maturity | Fixed maturities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		863	839
Other Consolidated VIEs | Trading | Fixed maturities
Variable Interest Entity [Line Items]
Total assets of consolidated VIEs		$ 0	$ 0

[1] See Note 4 for details of balances associated with variable interest entities.

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Variable Interest Entities (Narrative) (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Variable Interest Entity [Line Items]
Total liabilities	$ 844,699,000,000	$ 832,833,000,000
Unconsolidated VIEs
Variable Interest Entity [Line Items]
Total liabilities	0
Unconsolidated VIEs | Fixed maturities, available-for-sale, Fixed maturities, trading, Equity securities and Other invested assets
Variable Interest Entity [Line Items]
Maximum exposure to loss on these investments	1,098,000,000	1,021,000,000
VIEs and Non-VIEs | LPs/LLCs | Other invested assets
Variable Interest Entity [Line Items]
Maximum exposure to loss on these investments	$ 11,858,000,000	$ 11,157,000,000

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Derivative Instruments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Asset	$ 1,190		$ 1,190		$ 867
Total derivative liabilities	573		573		831
Anticipated pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to earnings			$ 271
Maximum Length of Time Hedged in Cash Flow Hedge			10 years
Net Investment Hedges income (loss) before taxes	(160)	$ 9	$ (150)	$ 12
Non-derivative Net Investment Hedges income (loss) before taxes	(17)	$ 0	(17)	$ 0
Credit Derivatives [Line Items]
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	8		8		21
Credit Derivative Protection Purchased Notional Amount	440		440		6
Single Name Credit Default Swaps
Credit Derivatives [Line Items]
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0		$ 0		1
Credit Default Swaps Referencing Indices
Credit Derivatives [Line Items]
Credit Derivatives Written Max Length Of Maturities (less than)			27 years
Credit Default Swap, Buying Protection
Credit Derivatives [Line Items]
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	$ (21)		$ (21)		$ 0

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Derivative Instruments (Gross Notional Amount and Fair Value of Derivatives Contracts) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	$ 27,422	$ 14,386
Derivative Liability, Fair Value, Gross Liability	(12,763)	(7,536)
Derivative, Notional Amount	428,742	379,860
Net Embedded Derivative Liability	(24,153)	(14,035)
Designated as Hedging Instrument
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	3,213	2,121
Derivative Liability, Fair Value, Gross Liability	(396)	(433)
Derivative, Notional Amount	27,429	27,669
Designated as Hedging Instrument | Interest Rate Swap
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	1,128	628
Derivative Liability, Fair Value, Gross Liability	(100)	(73)
Derivative, Notional Amount	3,101	3,257
Designated as Hedging Instrument | Interest Rate Forward
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	11	4
Derivative Liability, Fair Value, Gross Liability	(2)	(1)
Derivative, Notional Amount	249	205
Designated as Hedging Instrument | Foreign Exchange Forward
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	51	22
Derivative Liability, Fair Value, Gross Liability	(48)	(57)
Derivative, Notional Amount	2,194	1,461
Designated as Hedging Instrument | Currency Swap
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	2,023	1,467
Derivative Liability, Fair Value, Gross Liability	(246)	(302)
Derivative, Notional Amount	21,885	22,746
Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	24,209	12,265
Derivative Liability, Fair Value, Gross Liability	(12,367)	(7,103)
Derivative, Notional Amount	401,313	352,191
Not Designated as Hedging Instrument | Interest Rate Swap
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	20,256	10,249
Derivative Liability, Fair Value, Gross Liability	(10,295)	(4,861)
Derivative, Notional Amount	151,469	141,162
Not Designated as Hedging Instrument | Interest Rate Forward
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	22	18
Derivative Liability, Fair Value, Gross Liability	0	(3)
Derivative, Notional Amount	3,077	2,218
Not Designated as Hedging Instrument | Foreign Exchange Forward
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	746	208
Derivative Liability, Fair Value, Gross Liability	(517)	(214)
Derivative, Notional Amount	36,539	26,604
Not Designated as Hedging Instrument | Foreign Exchange Option
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	0	0
Derivative Liability, Fair Value, Gross Liability	0	0
Derivative, Notional Amount	0	0
Not Designated as Hedging Instrument | Currency Swap
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	814	740
Derivative Liability, Fair Value, Gross Liability	(355)	(345)
Derivative, Notional Amount	14,164	13,874
Not Designated as Hedging Instrument | Interest Rate Future
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	12	4
Derivative Liability, Fair Value, Gross Liability	(77)	(38)
Derivative, Notional Amount	16,651	17,095
Not Designated as Hedging Instrument | Interest Rate Option
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	1,353	339
Derivative Liability, Fair Value, Gross Liability	(257)	(238)
Derivative, Notional Amount	13,418	16,496
Not Designated as Hedging Instrument | Credit Default Swap
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	10	21
Derivative Liability, Fair Value, Gross Liability	(23)	0
Derivative, Notional Amount	1,667	798
Not Designated as Hedging Instrument | Equity Future
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	7	0
Derivative Liability, Fair Value, Gross Liability	(31)	(3)
Derivative, Notional Amount	7,742	1,802
Not Designated as Hedging Instrument | Equity Option
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	854	679
Derivative Liability, Fair Value, Gross Liability	(403)	(765)
Derivative, Notional Amount	46,829	32,657
Not Designated as Hedging Instrument | Total Return Swap
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	134	6
Derivative Liability, Fair Value, Gross Liability	(409)	(636)
Derivative, Notional Amount	24,407	18,218
Not Designated as Hedging Instrument | Other Contract
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	0	0
Derivative Liability, Fair Value, Gross Liability	0	0
Derivative, Notional Amount	1,262	1,258
Not Designated as Hedging Instrument | Synthetic Gics
Derivative [Line Items]
Derivative Asset, Fair Value, Gross Asset	1	1
Derivative Liability, Fair Value, Gross Liability	0	0
Derivative, Notional Amount	$ 84,088	$ 80,009

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Derivative Instruments (Hedged Item Offset By Derivatives Achieving Fair Value Hedge Accounting) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
Derivative [Line Items]
Fixed maturities, available-for-sale	[1]	$ 400,816		$ 391,096
Commercial mortgage and other loans	[1]	64,541	[2]	63,559
Policyholders’ account balances		(159,346)		(152,110)
Future policy benefits		(303,733)		(293,527)
Carrying Amount of the Hedged Assets (Liabilities)
Derivative [Line Items]
Fixed maturities, available-for-sale		402		389
Commercial mortgage and other loans		21		23
Policyholders’ account balances		(1,686)		(1,376)
Future policy benefits		(1,248)		(676)
Cumulative Adjustment Included in Carrying Amount
Derivative [Line Items]
Fixed maturities, available-for-sale		86		64
Commercial mortgage and other loans		2		2
Policyholders’ account balances		(376)		(107)
Future policy benefits		$ (410)		$ (172)

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

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Derivative Instruments (Offsetting Assets and Liabilities) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Derivative Assets
Gross Amounts of Recognized Financial Instruments	$ 27,270	$ 14,303
Gross Amounts Offset in the Statements of Financial Position	(26,232)	(13,519)
Net Amounts Presented in the Statements of Financial Position	1,038	784
Financial Instruments/Collateral	(569)	(607)
Net Amount	469	177
Securities purchased under agreement to resell
Gross Amounts of Recognized Financial Instruments	641	1,012
Gross Amounts Offset in the Statements of Financial Position	0	0
Net Amounts Presented in the Statements of Financial Position	641	1,012
Financial Instruments/Collateral	(641)	(1,012)
Net Amount	0	0
Total assets
Gross Amounts of Recognized Financial Instruments	27,911	15,315
Gross Amounts Offset in the Statements of Financial Position	(26,232)	(13,519)
Net Amounts Presented in the Statements of Financial Position	1,679	1,796
Financial Instruments/Collateral	(1,210)	(1,619)
Net Amount	469	177
Derivative Liabilities
Gross Amounts of Recognized Financial Instruments	12,757	7,528
Gross Amounts Offset in the Statements of Financial Position	(12,190)	(6,705)
Net Amounts Presented in the Statements of Financial Position	567	823
Financial Instruments/Collateral	(140)	(244)
Net Amount	427	579
Securities sold under agreement to repurchase
Gross Amounts of Recognized Financial Instruments	10,874	9,681
Gross Amounts Offset in the Statements of Financial Position	0	0
Net Amounts Presented in the Statements of Financial Position	10,874	9,681
Financial Instruments/Collateral	(10,874)	(9,681)
Net Amount	0	0
Total liabilities
Gross Amounts of Recognized Financial Instruments	23,631	17,209
Gross Amounts Offset in the Statements of Financial Position	(12,190)	(6,705)
Net Amounts Presented in the Statements of Financial Position	11,441	10,504
Financial Instruments/Collateral	(11,014)	(9,925)
Net Amount	$ 427	$ 579

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Derivative Instruments (Financial Statement Classification and Impact of Derivatives Used in Qualifying and Non-qualifying Hedge Relationships) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Realized Investment Gains (Losses)
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	$ (538)	$ 438	$ (2,925)	$ (1,006)
Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(604)	322	(3,070)	(1,160)
Net Investment Income
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	80	75	247	221
Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(69)	147	119	141
Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1)	7	(6)	6
Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Credited To Policyholders’ Account Balances
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	14	(1)	26	3
Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Policyholder Benefts
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	10	(1)	19	11
Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1,232)	576	441	776
AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Fair value hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	4	(9)	(23)	(22)
Fair value hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(2)	(2)	(6)	(5)
Fair value hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Fair value hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Fair value hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(35)	115	295	283
Fair value hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(22)	102	259	233
Fair value hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Fair Value Hedged Item | Realized Investment Gains (Losses)
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	(6)	9	22	20
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	(2)	0	(1)	(2)
Fair Value Hedged Item | Net Investment Income
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	4	6	14	18
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	2	4	8	13
Fair Value Hedged Item | Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	0	0	0	0
Fair Value Hedged Item | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	0	0	0	0
Fair Value Hedged Item | Interest Credited To Policyholders’ Account Balances
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	49	(116)	(269)	(280)
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	14	(1)	26	3
Fair Value Hedged Item | Policyholder Benefts
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	33	(103)	(239)	(222)
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	10	(1)	19	11
Fair Value Hedged Item | AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Change In Unrealized Gain (Loss) On Hedged Item In Fair Value Net Of Hedging Instrument	2	0	(1)	0
Cash flow hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	74	116	152	156
Cash flow hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	78	71	239	208
Cash flow hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(210)	140	(17)	135
Cash flow hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Cash flow hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Cash flow hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Cash flow hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1,091)	567	575	764
Net investment hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(6)	0	(6)	0
Net investment hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Net investment hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	142	0	142	0
Net investment hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Net investment hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Net investment hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Net investment hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(143)	9	(133)	12
Interest Rate | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1,163)	3,356	7,829	7,090
Interest Rate | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Fair value hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	5	(10)	(24)	(24)
Interest Rate | Fair value hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(2)	(2)	(6)	(5)
Interest Rate | Fair value hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Fair value hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Fair value hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(35)	115	295	283
Interest Rate | Fair value hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(37)	102	242	233
Interest Rate | Fair value hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Fair Value Hedged Item | Realized Investment Gains (Losses)
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	(6)	10	23	21
Interest Rate | Fair Value Hedged Item | Net Investment Income
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	4	5	13	16
Interest Rate | Fair Value Hedged Item | Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Interest Rate | Fair Value Hedged Item | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Interest Rate | Fair Value Hedged Item | Interest Credited To Policyholders’ Account Balances
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	49	(116)	(269)	(280)
Interest Rate | Fair Value Hedged Item | Policyholder Benefts
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	48	(103)	(222)	(222)
Interest Rate | Fair Value Hedged Item | AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Interest Rate | Cash flow hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	19	56	27	55
Interest Rate | Cash flow hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	1	0	1
Interest Rate | Cash flow hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Cash flow hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Cash flow hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Cash flow hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Interest Rate | Cash flow hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(15)	(38)	29	(16)
Currency | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(44)	158	186	242
Currency | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	2	5	(5)	4
Currency | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Fair value hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1)	1	1	2
Currency | Fair value hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Fair value hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Fair value hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Fair value hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Fair value hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	15	0	17	0
Currency | Fair value hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Fair Value Hedged Item | Realized Investment Gains (Losses)
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	(1)	(1)	(1)
Currency | Fair Value Hedged Item | Net Investment Income
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	1	1	2
Currency | Fair Value Hedged Item | Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Currency | Fair Value Hedged Item | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Currency | Fair Value Hedged Item | Interest Credited To Policyholders’ Account Balances
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Currency | Fair Value Hedged Item | Policyholder Benefts
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	(15)	0	(17)	0
Currency | Fair Value Hedged Item | AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | Realized Investment Gains (Losses)
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0		0
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | Net Investment Income
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0		0
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0		0
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0		0
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | Interest Credited To Policyholders’ Account Balances
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0		0
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | Policyholder Benefts
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1)		(1)
Currency | Amortization of Gain(loss) excluded from assessment of effectiveness | AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	2		(1)
Currency | Cash flow hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	3	4	5
Currency | Cash flow hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Cash flow hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Cash flow hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Cash flow hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Cash flow hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Cash flow hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(65)	4	27	9
Currency | Net investment hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(6)	0	(6)	0
Currency | Net investment hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Net investment hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	142	0	142	0
Currency | Net investment hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Net investment hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Net investment hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency | Net investment hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(143)	9	(133)	12
Currency/Interest Rate | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(394)	364	337	568
Currency/Interest Rate | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(3)	2	(1)	2
Currency/Interest Rate | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Cash flow hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	55	57	121	96
Currency/Interest Rate | Cash flow hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	78	70	239	207
Currency/Interest Rate | Cash flow hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(210)	140	(17)	135
Currency/Interest Rate | Cash flow hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Cash flow hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Cash flow hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Cash flow hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(1,011)	601	519	771
Currency/Interest Rate | Net investment hedges | Realized Investment Gains (Losses) | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Net investment hedges | Net Investment Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Net investment hedges | Other Income | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Net investment hedges | Interest Expense | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Net investment hedges | Interest Credited To Policyholders’ Account Balances | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Net investment hedges | Policyholder Benefts | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Currency/Interest Rate | Net investment hedges | AOCI | Derivatives Designated as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Credit | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(15)	4	(56)	107
Credit | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Credit | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Credit | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Credit | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Credit | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Credit | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Equity | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	(2,243)	(133)	(2,028)	(2,560)
Equity | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Equity | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Equity | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Equity | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Equity | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Equity | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	1	0	1	0
Other | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Other | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Embedded Derivatives | Realized Investment Gains (Losses) | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	3,254	(3,427)	(9,339)	(6,607)
Embedded Derivatives | Net Investment Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Embedded Derivatives | Other Income | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Embedded Derivatives | Interest Expense | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Embedded Derivatives | Interest Credited To Policyholders’ Account Balances | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Embedded Derivatives | Policyholder Benefts | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	0	0	0	0
Embedded Derivatives | AOCI | Derivatives Not Qualifying as Hedge Accounting Instruments:
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Gain (Loss) Recognized In Income Net	$ 0	$ 0	$ 0	$ 0

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Derivative Instruments (Current Period Cash Flow Hedges in AOCI (loss) before Taxes) (Details) - Cash flow hedges in AOCI $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($)
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Balance, beginning	$ 832
Amount recorded in AOCI	949
Amount reclassified from AOCI to income	(374)
Balance, ending	1,407
Interest Rate
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Amount recorded in AOCI	56
Amount reclassified from AOCI to income	(27)
Currency
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Amount recorded in AOCI	31
Amount reclassified from AOCI to income	(4)
Currency/Interest Rate
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Amount recorded in AOCI	862
Amount reclassified from AOCI to income	$ (343)

XML

Derivative Instruments Derivative Instruments (Credit Derivatives) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	$ 1,227	$ 792
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	8	21
Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	100
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	1
Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	1,227	692
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	8	20
NAIC 1
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	50	86
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 1 | Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	36
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 1 | Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	50	50
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 2
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	60
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	1
NAIC 2 | Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	60
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	1
NAIC 2 | Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 3
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	577	574
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	6	13
NAIC 3 | Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	4
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 3 | Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	577	570
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	6	13
NAIC 4
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	600	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	2	0
NAIC 4 | Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 4 | Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	600	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	2	0
NAIC 5
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 5 | Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 5 | Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 6
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	72
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	7
NAIC 6 | Single Name
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	0
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	0	0
NAIC 6 | Credit Default Index
Derivative [Line Items]
Credit Derivative, Maximum Exposure, Undiscounted	0	72
Credit Risk Derivatives, at Fair Value, Asset Net (Liability)	$ 0	$ 7

XML

Fair Value of Assets and Liabilities (Balances of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale	[1]	$ 400,816		$ 391,096
Assets supporting experience-rated contractholder liabilities	[1]	23,961		21,597
Fixed maturities, trading	[1]	4,371		3,884
Equity securities	[1]	7,025		7,522
Commercial mortgage and other loans	[1]	64,541	[2]	63,559
Other invested assets	[1]	16,921	[2]	15,606
Short-term investments		10,015		5,467
Other assets	[1]	21,536	[2]	20,832
Separate account assets		305,483		312,281
TOTAL ASSETS		911,589		896,552
Future policy benefits		303,733		293,527
Other liabilities	[1]	18,579	[2]	20,802
Total liabilities		844,699		832,833
Netting		(26,232)		(13,519)
Embedded Derivative, Fair Value of Embedded Derivative, Net Liability		24,153		14,035
Future policy benefits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Embedded Derivative, Fair Value of Embedded Derivative, Net Liability		23,300		12,800
Embedded Derivative, Fair Value Of Embedded Derivative Gross Asset		300		700
Embedded Derivative, Fair Value Of Embedded Derivative Gross Liability		23,700		13,500
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		400,816		391,096
Assets supporting experience-rated contractholder liabilities		23,930		21,581
Fixed maturities, trading		4,371		3,884
Equity securities		6,888		7,385
Commercial mortgage and other loans		915		228
Other invested assets		1,972		1,433
Short-term investments		8,140		3,936
Cash equivalents		12,085		9,006
Other assets		332		113
Separate account assets		282,444		288,724
TOTAL ASSETS		741,893		727,386
Future policy benefits		23,340		12,831
Policyholders' account balances		1,549		1,316
Other liabilities		171		936
Notes issued by consolidated VIEs		775		800
Total liabilities		25,835		15,883
Assets Netting		(26,232)		(13,519)
Liabilities Netting		(12,190)		(6,705)
Netting		(14,042)		(6,814)
Fair Value, Measurements, Recurring | Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Netting		(26,232)		(13,519)
Fair Value, Measurements, Recurring | Other liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities Netting		(12,190)		(6,705)
Fair Value, Measurements, Recurring | U.S. Treasury securities and obligations of U.S. government authorities and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		42,112		35,659
Assets supporting experience-rated contractholder liabilities		209		185
Fair Value, Measurements, Recurring | Obligations of U.S. states and their political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		12,603		11,497
Assets supporting experience-rated contractholder liabilities		229		212
Fair Value, Measurements, Recurring | Foreign government bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		107,036		119,054
Assets supporting experience-rated contractholder liabilities		898		814
Fair Value, Measurements, Recurring | U.S. public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		108,729		98,339
Fair Value, Measurements, Recurring | U.S. private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		39,211		36,533
Fair Value, Measurements, Recurring | Foreign public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		28,330		29,825
Fair Value, Measurements, Recurring | Foreign private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		29,204		28,240
Fair Value, Measurements, Recurring | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		14,909		13,603
Fair Value, Measurements, Recurring | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		14,134		13,174
Assets supporting experience-rated contractholder liabilities		1,716		1,662
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		16,349		15,574
Assets supporting experience-rated contractholder liabilities		1,946		1,896
Fair Value, Measurements, Recurring | Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		3,108		3,201
Assets supporting experience-rated contractholder liabilities		1,126		1,158
Fair Value, Measurements, Recurring | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		1,825		1,790
Fair Value, Measurements, Recurring | All other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		1,072		261
Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		1,662		1,505
Fixed maturities, trading		0		0
Equity securities		5,118		5,813
Commercial mortgage and other loans		0		0
Other invested assets		115		6
Short-term investments		1,124		1,806
Cash equivalents		3,686		2,079
Other assets		0		0
Separate account assets		46,517		46,574
TOTAL ASSETS		58,222		57,783
Future policy benefits		0		0
Policyholders' account balances		0		0
Other liabilities		110		41
Notes issued by consolidated VIEs		0		0
Total liabilities		110		41
Fair Value, Measurements, Recurring | Level 1 | U.S. Treasury securities and obligations of U.S. government authorities and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | Obligations of U.S. states and their political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | Foreign government bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | U.S. public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Fair Value, Measurements, Recurring | Level 1 | U.S. private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Fair Value, Measurements, Recurring | Level 1 | Foreign public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Fair Value, Measurements, Recurring | Level 1 | Foreign private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Fair Value, Measurements, Recurring | Level 1 | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | Commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		0		0
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 1 | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		1,582		1,505
Fair Value, Measurements, Recurring | Level 1 | All other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		80		0
Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		395,001		386,781
Assets supporting experience-rated contractholder liabilities		21,448		19,346
Fixed maturities, trading		4,131		3,597
Equity securities		1,097		939
Commercial mortgage and other loans		915		228
Other invested assets		27,307		14,379
Short-term investments		6,833		1,975
Cash equivalents		8,398		6,796
Other assets		0		0
Separate account assets		234,126		240,433
TOTAL ASSETS		699,256		674,474
Future policy benefits		0		0
Policyholders' account balances		0		0
Other liabilities		12,251		7,495
Notes issued by consolidated VIEs		0		0
Total liabilities		12,251		7,495
Fair Value, Measurements, Recurring | Level 2 | U.S. Treasury securities and obligations of U.S. government authorities and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		41,980		35,554
Assets supporting experience-rated contractholder liabilities		209		185
Fair Value, Measurements, Recurring | Level 2 | Obligations of U.S. states and their political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		12,599		11,493
Assets supporting experience-rated contractholder liabilities		229		212
Fair Value, Measurements, Recurring | Level 2 | Foreign government bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		107,026		119,032
Assets supporting experience-rated contractholder liabilities		876		790
Fair Value, Measurements, Recurring | Level 2 | U.S. public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		108,346		97,959
Fair Value, Measurements, Recurring | Level 2 | U.S. private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		37,245		34,749
Fair Value, Measurements, Recurring | Level 2 | Foreign public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		28,170		29,756
Fair Value, Measurements, Recurring | Level 2 | Foreign private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		26,610		27,237
Fair Value, Measurements, Recurring | Level 2 | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		14,331		12,966
Fair Value, Measurements, Recurring | Level 2 | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		13,593		12,238
Assets supporting experience-rated contractholder liabilities		1,607		1,593
Fair Value, Measurements, Recurring | Level 2 | Commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		16,335		15,574
Assets supporting experience-rated contractholder liabilities		1,945		1,896
Fair Value, Measurements, Recurring | Level 2 | Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		3,097		3,189
Assets supporting experience-rated contractholder liabilities		1,126		1,158
Fair Value, Measurements, Recurring | Level 2 | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		243		285
Fair Value, Measurements, Recurring | Level 2 | All other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		882		261
Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		5,815		4,315
Assets supporting experience-rated contractholder liabilities		820		730
Fixed maturities, trading		240		287
Equity securities		673		633
Commercial mortgage and other loans		0		0
Other invested assets		782		567
Short-term investments		183		155
Cash equivalents		1		131
Other assets		332		113
Separate account assets		1,801		1,717
TOTAL ASSETS		10,647		8,648
Future policy benefits		23,340		12,831
Policyholders' account balances		1,549		1,316
Other liabilities		0		105
Notes issued by consolidated VIEs		775		800
Total liabilities		25,664		15,052
Fair Value, Measurements, Recurring | Level 3 | U.S. Treasury securities and obligations of U.S. government authorities and agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		132		105
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 3 | Obligations of U.S. states and their political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		4		4
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 3 | Foreign government bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		10		22
Assets supporting experience-rated contractholder liabilities		22		24
Fair Value, Measurements, Recurring | Level 3 | U.S. public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		383		380
Fair Value, Measurements, Recurring | Level 3 | U.S. private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		1,966		1,784
Fair Value, Measurements, Recurring | Level 3 | Foreign public corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		160		69
Fair Value, Measurements, Recurring | Level 3 | Foreign private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		2,594		1,003
Fair Value, Measurements, Recurring | Level 3 | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		578		637
Fair Value, Measurements, Recurring | Level 3 | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		541		936
Assets supporting experience-rated contractholder liabilities		109		69
Fair Value, Measurements, Recurring | Level 3 | Commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		14		0
Assets supporting experience-rated contractholder liabilities		1		0
Fair Value, Measurements, Recurring | Level 3 | Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		11		12
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 3 | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		0		0
Fair Value, Measurements, Recurring | Level 3 | All other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets supporting experience-rated contractholder liabilities		110		0
Prudential Netting Agreement | U.S. private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		6,466		4,751
Prudential Netting Agreement | Fair Value, Measurements, Recurring | U.S. private corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities, available-for-sale		6,594		4,757
Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value investment measured at NAV per share		3,977		4,213
Separate account assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value investment measured at NAV per share		$ 23,039		$ 23,557

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

XML

Fair Value of Assets and Liabilities (Quantitative Info for Level 3 Inputs) (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Future policy benefits	$ 303,733	$ 293,527
Fair Value, Measurements, Recurring
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Future policy benefits	23,340	12,831
Policyholders' account balances	$ 1,549	1,316
Level 3 | Minimum
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair Value Inputs, Policyholder Age	45 years
Level 3 | Minimum | Future policy benefits
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Mortality rate	0.00%
Level 3 | Maximum
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair Value Inputs, Policyholder Age	90 years
Level 3 | Fair Value, Measurements, Recurring
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Future policy benefits	$ 23,340	12,831
Policyholders' account balances	$ 1,549	$ 1,316
Level 3 | Internal | Minimum | Discounted cash flow | Future policy benefits
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Lapse rate	1.00%	1.00%
Spread over LIBOR	0.09%	0.10%
Utilization rate	39.00%	43.00%
Withdrawal rate (greater than maximum range)	76.00%	78.00%
Mortality rate	0.00%	0.00%
Equity volatility curve	18.00%	13.00%
Level 3 | Internal | Minimum | Discounted cash flow | Policyholders' account balances
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Lapse rate	1.00%	1.00%
Spread over LIBOR	0.09%	0.10%
Mortality rate	0.00%	0.00%
Equity volatility curve	6.00%	6.00%
Level 3 | Internal | Minimum | Discounted cash flow | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Discount rate	0.50%	0.49%
Level 3 | Internal | Minimum | Discounted cash flow | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Discount rate	0.50%	10.00%
Level 3 | Internal | Minimum | Discounted cash flow | Separate accounts commercial mortgage loan
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Spread	1.68%	1.11%
Level 3 | Internal | Minimum | Market comparables | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
EBITDA multiples	6.5	5.7
Level 3 | Internal | Minimum | Market comparables | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
EBITDA multiples	1	1
Level 3 | Internal | Minimum | Liquidation | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liquidation value	15.06%	14.25%
Level 3 | Internal | Minimum | Net asset value | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Share price	1	5
Level 3 | Internal | Maximum | Discounted cash flow | Future policy benefits
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Lapse rate	20.00%	18.00%
Spread over LIBOR	1.59%	1.23%
Utilization rate	96.00%	97.00%
Withdrawal rate (greater than maximum range)	100.00%	100.00%
Mortality rate	15.00%	15.00%
Equity volatility curve	26.00%	23.00%
Level 3 | Internal | Maximum | Discounted cash flow | Policyholders' account balances
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Lapse rate	42.00%	42.00%
Spread over LIBOR	1.59%	1.23%
Mortality rate	24.00%	24.00%
Equity volatility curve	38.00%	25.00%
Level 3 | Internal | Maximum | Discounted cash flow | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Discount rate	30.00%	20.00%
Level 3 | Internal | Maximum | Discounted cash flow | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Discount rate	20.00%	30.00%
Level 3 | Internal | Maximum | Discounted cash flow | Separate accounts commercial mortgage loan
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Spread	3.29%	1.85%
Level 3 | Internal | Maximum | Market comparables | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
EBITDA multiples	15.0	9.2
Level 3 | Internal | Maximum | Market comparables | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
EBITDA multiples	8.8	10.1
Level 3 | Internal | Maximum | Liquidation | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liquidation value	77.34%	83.61%
Level 3 | Internal | Maximum | Net asset value | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Share price	1,414	1,353
Level 3 | Internal | Weighted Average | Discounted cash flow | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Discount rate	5.03%	7.41%
Level 3 | Internal | Weighted Average | Discounted cash flow | Separate accounts commercial mortgage loan
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Spread	1.90%	1.26%
Level 3 | Internal | Weighted Average | Market comparables | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
EBITDA multiples	9.1	7.3
Level 3 | Internal | Weighted Average | Market comparables | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
EBITDA multiples	3.3	5.4
Level 3 | Internal | Weighted Average | Liquidation | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Liquidation value	53.84%	59.47%
Level 3 | Internal | Weighted Average | Net asset value | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Share price	509	451
Level 3 | Internal | Fair Value, Measurements, Recurring | Future policy benefits
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Future policy benefits	$ 23,340	$ 12,831
Level 3 | Internal | Fair Value, Measurements, Recurring | Policyholders' account balances
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Policyholders' account balances	1,549	1,316
Level 3 | Internal | Fair Value, Measurements, Recurring | Corporate securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Corporate securities	3,491	1,424
Level 3 | Internal | Fair Value, Measurements, Recurring | Equity securities
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Equity securities	231	210
Level 3 | Internal | Fair Value, Measurements, Recurring | Separate accounts commercial mortgage loan
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Commercial mortgage loans	$ 797	$ 796

XML

Fair Value of Assets and Liabilities (Changes in Level 3 Assets and Liabilities) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Equity securities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	$ 594	$ 624	$ 633	$ 671
Purchases	15	27	43	73
Sales	(3)	(20)	(13)	(44)
Issuances	0	0	0	0
Settlements	(4)	(1)	(4)	(75)
Other	5	(2)	6	2
Transfers into Level 3	0	0	0	1
Transfers out of Level 3	(1)	0	(1)	(24)
Fair Value, end of period	673	643	673	643
Total gains (losses) (realized/unrealized):
Included in earnings	67	15	9	39
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	66	7	6	30
Equity securities | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	3	0	3
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Equity securities | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	67	12	9	36
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	66	7	6	30
Equity securities | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Equity securities | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Equity securities | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Assets supporting experience-rated contractholder liabilities | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Assets supporting experience-rated contractholder liabilities | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	4	(8)	(25)	1
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	4	(8)	(22)	0
Assets supporting experience-rated contractholder liabilities | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Assets supporting experience-rated contractholder liabilities | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Assets supporting experience-rated contractholder liabilities | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	2	3	2	6
Assets supporting experience-rated contractholder liabilities | Foreign government bonds
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	24	26	24	225
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(2)	0	(2)	(3)
Other	0	0	0	(196)
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	22	26	22	26
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Assets supporting experience-rated contractholder liabilities | Corporate securities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	624	553	637	444
Purchases	1	103	5	144
Sales	0	0	(9)	0
Issuances	0	0	0	0
Settlements	(6)	(27)	(71)	(170)
Other	(22)	0	(22)	196
Transfers into Level 3	0	36	92	46
Transfers out of Level 3	(24)	0	(32)	(5)
Fair Value, end of period	578	660	578	660
Total gains (losses) (realized/unrealized):
Included in earnings	5	(5)	(22)	5
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	3	(8)	(25)	(2)
Assets supporting experience-rated contractholder liabilities | Structured securities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	99	57	69	149
Purchases	19	22	174	28
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(9)	(4)	(19)	(29)
Other	0	0	0	0
Transfers into Level 3	1	0	1	0
Transfers out of Level 3	(1)	0	(114)	(74)
Fair Value, end of period	110	75	110	75
Total gains (losses) (realized/unrealized):
Included in earnings	1	0	(1)	1
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	1	0	3	1
Assets supporting experience-rated contractholder liabilities | Equity securities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	0	1	0	1
Purchases	0	0	0	0
Sales	0	0	0	(1)
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	0	1	0	1
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	1
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	1
Assets supporting experience-rated contractholder liabilities | All other activity
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	7	1	0	0
Purchases	107	3	114	6
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(4)	(1)	(4)	(3)
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	110	3	110	3
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Other invested assets
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	658	436	567	263
Purchases	101	28	182	246
Sales	0	0	0	0
Issuances	1	0	5	0
Settlements	2	0	(2)	(42)
Other	9	0	15	(2)
Transfers into Level 3	8	0	8	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	782	464	782	464
Total gains (losses) (realized/unrealized):
Included in earnings	3	0	7	(1)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	4	0	9	(1)
Other invested assets | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	(1)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	1	(1)
Other invested assets | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	3	0	7	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	4	0	8	0
Other invested assets | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Other invested assets | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Other invested assets | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Short-term investments
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	44	288	155	89
Purchases	145	127	189	553
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(5)	(121)	(115)	(348)
Other	0	0	(47)	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	183	294	183	294
Total gains (losses) (realized/unrealized):
Included in earnings	(1)	0	1	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Short-term investments | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	(1)	0	1	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Short-term investments | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Short-term investments | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Short-term investments | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Short-term investments | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Cash equivalents
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	1	1	131	77
Purchases	0	0	0	1
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	(77)
Other	0	0	(130)	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	1	1	1	1
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Cash equivalents | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Cash equivalents | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Cash equivalents | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Cash equivalents | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Cash equivalents | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Other assets
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	377	98	113	25
Purchases	19	10	55	27
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	332	179	332	179
Total gains (losses) (realized/unrealized):
Included in earnings	(64)	71	164	127
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(62)	73	165	127
Other assets | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	(64)	71	164	127
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(62)	73	165	127
Other assets | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Other assets | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Other assets | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Other assets | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Separate accounts assets
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	1,684	1,708	1,717	1,534
Purchases	65	54	169	282
Sales	(5)	(88)	(26)	(105)
Issuances	0	0	0	0
Settlements	(14)	(62)	(47)	(112)
Other	0	0	0	0
Transfers into Level 3	10	43	43	43
Transfers out of Level 3	(23)	(4)	(113)	(116)
Fair Value, end of period	1,801	1,660	1,801	1,660
Total gains (losses) (realized/unrealized):
Included in earnings	84	9	58	134
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	87	8	70	122
Separate accounts assets | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Separate accounts assets | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Separate accounts assets | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	84	8	58	131
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	87	8	70	122
Separate accounts assets | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Separate accounts assets | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	1	0	3
Future policy benefits
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	(26,439)	(12,723)	(12,831)	(8,926)
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	(331)	(314)	(972)	(902)
Settlements	0	0	0	0
Other	91	2	93	3
Transfers Into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	(23,340)	(16,452)	(23,340)	(16,452)
Total gains (losses) (realized/unrealized):
Included in earnings	3,339	(3,417)	(9,630)	(6,627)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	3,069	(3,570)	(9,940)	(6,870)
Future policy benefits | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	3,339	(3,417)	(9,630)	(6,627)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	3,069	(3,570)	(9,940)	(6,870)
Future policy benefits | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Future policy benefits | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Future policy benefits | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Future policy benefits | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Policyholders' account balances
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	(1,441)	(1,047)	(1,316)	(56)
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	(74)	(62)	(271)	(171)
Settlements	0	0	0	0
Other	0	0	0	(3)
Transfers Into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	(1,549)	(1,188)	(1,549)	(1,188)
Total gains (losses) (realized/unrealized):
Included in earnings	(34)	(79)	38	(958)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(6)	(66)	80	(938)
Policyholders' account balances | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	(34)	(79)	38	(958)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(6)	(66)	80	(938)
Policyholders' account balances | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Policyholders' account balances | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Policyholders' account balances | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Policyholders' account balances | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Other liabilities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	0	0	(105)	0
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	0
Transfers Into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	0	0	0	0
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	105	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	105	0
Other liabilities | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Other liabilities | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	105	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	105	0
Other liabilities | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Other liabilities | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Other liabilities | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Notes Issued by Consolidated VIEs
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	(741)	(816)	(800)	(595)
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	(858)
Settlements	0	0	0	638
Other	0	0	0	0
Transfers Into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	(775)	(807)	(775)	(807)
Total gains (losses) (realized/unrealized):
Included in earnings	(34)	9	25	8
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(34)	9	25	8
Notes Issued by Consolidated VIEs | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	9	0	8
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	9	0	8
Notes Issued by Consolidated VIEs | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	(34)	0	25	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(34)	0	25	0
Notes Issued by Consolidated VIEs | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Notes Issued by Consolidated VIEs | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Notes Issued by Consolidated VIEs | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Available-for-sale | Fixed maturities | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	3	(25)	(112)	(38)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	(12)	(27)	(118)	(53)
Available-for-sale | Fixed maturities | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Available-for-sale | Fixed maturities | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Available-for-sale | Fixed maturities | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	217	(3)	141	37
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	210		137
Available-for-sale | Fixed maturities | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	1	4	6	14
Available-for-sale | Fixed maturities | U.S. government
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	122	94	105	81
Purchases	10	5	27	18
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	132	99	132	99
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Available-for-sale | Fixed maturities | U.S. states
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	4	4	4	5
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	(1)
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	4	4	4	4
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Available-for-sale | Fixed maturities | Foreign government bonds
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	21	24	22	125
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	(1)
Transfers into Level 3	0	0	1	9
Transfers out of Level 3	(12)	0	(13)	(111)
Fair Value, end of period	10	22	10	22
Total gains (losses) (realized/unrealized):
Included in earnings	1	(2)	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	1	(2)	0	(2)
Available-for-sale | Fixed maturities | Corporate securities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	4,904	2,792	3,236	2,685
Purchases	165	509	584	1,116
Sales	(8)	(7)	(126)	(36)
Issuances	0	0	0	0
Settlements	(160)	(203)	(490)	(807)
Other	(23)	(1)	(22)	(2)
Transfers into Level 3	113	136	2,136	319
Transfers out of Level 3	(103)	(21)	(248)	(80)
Fair Value, end of period	5,103	3,179	5,103	3,179
Total gains (losses) (realized/unrealized):
Included in earnings	215	(26)	33	(16)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	193	(25)	19	(51)
Available-for-sale | Fixed maturities | Structured securities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	801	861	948	1,339
Purchases	96	439	484	870
Sales	0	(1)	(17)	(48)
Issuances	0	0	0	0
Settlements	(147)	(74)	(444)	(406)
Other	1	(14)	156	(7)
Transfers into Level 3	68	5	160	755
Transfers out of Level 3	(258)	(45)	(723)	(1,357)
Fair Value, end of period	566	1,175	566	1,175
Total gains (losses) (realized/unrealized):
Included in earnings	5	4	2	29
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	4	0	0	0
Trading | Fixed maturities
Fair Value, Assets And Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, beginning of period	236	296	287	206
Purchases	(1)	16	21	90
Sales	(1)	(6)	(33)	(20)
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	1	(1)	9	2
Transfers into Level 3	4	2	19	41
Transfers out of Level 3	1	0	(47)	(1)
Fair Value, end of period	240	304	240	304
Total gains (losses) (realized/unrealized):
Included in earnings	0	(3)	(16)	(14)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	1	(3)	(16)	(15)
Trading | Fixed maturities | Realized investment gains (losses), net
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Trading | Fixed maturities | Other income
Total gains (losses) (realized/unrealized):
Included in earnings	0	(3)	(17)	(15)
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	1	(3)	(16)	(15)
Trading | Fixed maturities | Interest credited to policyholders’ account balances
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0	0	0	0
Trading | Fixed maturities | Included in other comprehensive income (loss)
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized gains (losses) for assets/liabilities still held:
Included in earnings	0		0
Trading | Fixed maturities | Net investment income
Total gains (losses) (realized/unrealized):
Included in earnings	$ 0	$ 0	$ 1	$ 1

XML

Fair Value of Assets and Liabilities (Derivative Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	$ 1,190	$ 867
Netting	(26,232)	(13,519)
Total derivative liabilities	573	831
Netting	(12,190)	(6,705)
Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	22,783	11,243
Total derivative liabilities	10,731	5,214
Currency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	797	230
Total derivative liabilities	565	271
Credit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	10	21
Total derivative liabilities	23	0
Currency/Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	2,837	2,207
Total derivative liabilities	601	647
Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	995	685
Total derivative liabilities	843	1,404
Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	114	6
Total derivative liabilities	108	41
Level 1 | Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	12	4
Total derivative liabilities	77	38
Level 1 | Currency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 1 | Credit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 1 | Currency/Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 1 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	102	2
Total derivative liabilities	31	3
Level 1 | Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	27,307	14,379
Total derivative liabilities	12,655	7,495
Level 2 | Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	22,770	11,238
Total derivative liabilities	10,654	5,176
Level 2 | Currency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	797	230
Total derivative liabilities	565	271
Level 2 | Credit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	10	21
Total derivative liabilities	23	0
Level 2 | Currency/Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	2,837	2,207
Total derivative liabilities	601	647
Level 2 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	893	683
Total derivative liabilities	812	1,401
Level 2 | Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	1	1
Total derivative liabilities	0	0
Level 3 | Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	1	1
Total derivative liabilities	0	0
Level 3 | Currency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 3 | Credit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 3 | Currency/Interest Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 3 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Level 3 | Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Total derivative liabilities	0	0
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Netting	$ (14,042)	$ (6,814)

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Fair Value of Assets and Liabilities (Changes in Level 3 Derivative Assets and Liabilities) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net Derivative- Equity
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair Value, beginning of period	$ 0	$ 0	$ 0	$ 0
Total gains (losses) (realized/unrealized):
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	0	0	0	0
Net Derivative- Interest Rate
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair Value, beginning of period	1	1	1	2
Total gains (losses) (realized/unrealized):
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Other	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair Value, end of period	1	1	1	1
Realized investment gains (losses), net | Net Derivative- Equity
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	0
Unrealized Gain (Loss) for assets still held
Included in earnings	0	0	0	0
Realized investment gains (losses), net | Net Derivative- Interest Rate
Total gains (losses) (realized/unrealized):
Included in earnings	0	0	0	(1)
Unrealized Gain (Loss) for assets still held
Included in earnings	$ 0	$ 0	$ 0	$ (1)

XML

Fair Value of Assets and Liabilities (Nonrecurring Fair Value Measurements) (Details) - Fair Value, Measurements, Nonrecurring - Level 3 - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Commercial Mortgage Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized investment gains (losses) net	$ 3	$ 1	$ 0	$ 1
Carrying value after measurement as of period end	0		0		$ 15
Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized investment gains (losses) net	5	$ (3)	(24)	$ (5)
Carrying value after measurement as of period end	$ 280		$ 280		$ 87

XML

Fair Value of Assets and Liabilities (Changes in Fair Values Recorded in Earnings for FVO Assets-Liabilities) (Details) - USD ($) $ in Millions		3 Months Ended			9 Months Ended
		Sep. 30, 2020		Sep. 30, 2019	Sep. 30, 2020		Sep. 30, 2019	Dec. 31, 2019
Fair Value, Option, Quantitative Disclosures [Line Items]
Commercial mortgage and other loans	[1]	$ 64,541	[2]		$ 64,541	[2]		$ 63,559
Other assets	[1]	21,536	[2]		21,536	[2]		20,832
Commercial mortgage and other loans
Fair Value, Option, Quantitative Disclosures [Line Items]
Interest income		4		$ 5	10		$ 16
Fair value option loans in non-accrual status		0			0
Fair value option loans in more than 90 days past due and still accruing		0			0
Notes Issued by Consolidated VIEs
Fair Value, Option, Quantitative Disclosures [Line Items]
Changes in fair value		34		(9)	(25)		(8)
Interest expense		10		$ 11	32		$ 33
Fair value option
Fair Value, Option, Quantitative Disclosures [Line Items]
Commercial mortgage and other loans		915			915			228
Other assets		10			10			10
Notes issued by consolidated VIEs		775			775			800
Fair value option, aggregate contractual principal
Fair Value, Option, Quantitative Disclosures [Line Items]
Commercial mortgage and other loans		896			896			224
Notes issued by consolidated VIEs		$ 857			$ 857			$ 857

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

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Fair Value of Assets and Liabilities (Financial Instruments where Carrying Amounts and Fair Values May Differ) (Details) - USD ($) $ in Millions		Sep. 30, 2020		Dec. 31, 2019		Sep. 30, 2019
Assets:
Fixed maturities, held-to-maturity	[1]	$ 1,901	[2]	$ 1,933
Assets supporting experience-rated contractholder liabilities	[1]	23,961		21,597
Commercial mortgage and other loans	[1]	64,541	[2]	63,559
Policy loans		11,502		12,096
Other invested assets	[1]	16,921	[2]	15,606
Cash and cash equivalents		20,658	[1]	16,327	[1]	$ 18,289
Accrued investment income	[1]	3,129		3,330
Liabilities:
Securities sold under agreements to repurchase		10,874		9,681
Cash collateral for loaned securities		3,071		4,213
Short-term debt		1,113		1,933
Long-term Debt, Excluding Current Maturities		20,169		18,646
Fair Value
Assets:
Fixed maturities, held-to-maturity		2,264		2,302
Assets supporting experience-rated contractholder liabilities		31		16
Commercial mortgage and other loans		66,917		65,665
Policy loans		11,502		12,096
Other invested assets		177		36
Short-term Investments		1,875		1,531
Cash and cash equivalents		8,573		7,321
Accrued investment income		3,129		3,330
Other assets		3,051		3,316
Total assets		97,519		95,613
Liabilities:
Policyholders’ account balances—investment contracts		110,313		102,156
Securities sold under agreements to repurchase		10,874		9,681
Cash collateral for loaned securities		3,071		4,213
Short-term debt		1,115		1,953
Long-term Debt, Excluding Current Maturities		23,320		21,324
Notes issued by consolidated VIEs		467		474
Other liabilities		7,486		6,982
Separate account liabilities—investment contracts		102,982		101,541
Total liabilities		259,628		248,324
Carrying Amount
Assets:
Fixed maturities, held-to-maturity		1,901		1,933
Assets supporting experience-rated contractholder liabilities		31		16
Commercial mortgage and other loans		63,626		63,331
Policy loans		11,502		12,096
Other invested assets		177		36
Short-term Investments		1,875		1,531
Cash and cash equivalents		8,573		7,321
Accrued investment income		3,129		3,330
Other assets		3,050		3,315
Total assets		93,864		92,909
Liabilities:
Policyholders’ account balances—investment contracts		107,498		101,241
Securities sold under agreements to repurchase		10,874		9,681
Cash collateral for loaned securities		3,071		4,213
Short-term debt		1,113		1,933
Long-term Debt, Excluding Current Maturities		20,169		18,646
Notes issued by consolidated VIEs		467		474
Other liabilities		7,486		6,982
Separate account liabilities—investment contracts		102,982		101,541
Total liabilities		253,660		244,711
Level 1 | Fair Value
Assets:
Fixed maturities, held-to-maturity		0		0
Assets supporting experience-rated contractholder liabilities		31		16
Commercial mortgage and other loans		0		0
Policy loans		0		0
Other invested assets		0		0
Short-term Investments		1,855		1,492
Cash and cash equivalents		7,919		6,278
Accrued investment income		0		0
Other assets		146		147
Total assets		9,951		7,933
Liabilities:
Policyholders’ account balances—investment contracts		0		0
Securities sold under agreements to repurchase		0		0
Cash collateral for loaned securities		0		0
Short-term debt		0		0
Long-term Debt, Excluding Current Maturities		622		1,950
Notes issued by consolidated VIEs		0		0
Other liabilities		0		0
Separate account liabilities—investment contracts		0		0
Total liabilities		622		1,950
Level 2 | Fair Value
Assets:
Fixed maturities, held-to-maturity		2,177		2,217
Assets supporting experience-rated contractholder liabilities		0		0
Commercial mortgage and other loans		105		107
Policy loans		0		0
Other invested assets		177		36
Short-term Investments		20		39
Cash and cash equivalents		654		1,043
Accrued investment income		3,129		3,330
Other assets		2,513		2,526
Total assets		8,775		9,298
Liabilities:
Policyholders’ account balances—investment contracts		37,425		32,940
Securities sold under agreements to repurchase		10,874		9,681
Cash collateral for loaned securities		3,071		4,213
Short-term debt		1,011		1,748
Long-term Debt, Excluding Current Maturities		21,514		18,188
Notes issued by consolidated VIEs		0		0
Other liabilities		7,438		6,403
Separate account liabilities—investment contracts		79,329		77,134
Total liabilities		160,662		150,307
Level 3 | Fair Value
Assets:
Fixed maturities, held-to-maturity		87		85
Assets supporting experience-rated contractholder liabilities		0		0
Commercial mortgage and other loans		66,812		65,558
Policy loans		11,502		12,096
Other invested assets		0		0
Short-term Investments		0		0
Cash and cash equivalents		0		0
Accrued investment income		0		0
Other assets		392		643
Total assets		78,793		78,382
Liabilities:
Policyholders’ account balances—investment contracts		72,888		69,216
Securities sold under agreements to repurchase		0		0
Cash collateral for loaned securities		0		0
Short-term debt		104		205
Long-term Debt, Excluding Current Maturities		1,184		1,186
Notes issued by consolidated VIEs		467		474
Other liabilities		48		579
Separate account liabilities—investment contracts		23,653		24,407
Total liabilities		98,344		96,067
Prudential Netting Agreement | Fair Value
Assets:
Fixed maturities, held-to-maturity		5,814		5,401
Liabilities:
Long-term Debt, Excluding Current Maturities		12,408		10,158
Prudential Netting Agreement | Carrying Amount
Assets:
Fixed maturities, held-to-maturity		4,998		4,998
Liabilities:
Long-term Debt, Excluding Current Maturities		$ 11,464		$ 9,749

[1] See Note 4 for details of balances associated with variable interest entities.

[2] September 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.

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Closed Block (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Closed Block Dividend Obligation	$ 8,141	$ 6,149
Accumulated Distributions in Excess of Net Income
Closed Block Dividend Obligation	2,611	2,816
Net Unrealized Investment Gains (Losses)
Closed Block Dividend Obligation	$ 5,530	$ 3,332

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Closed Block (Closed Block Liabilities and Assets Designated to Closed Block; Maximum Future Earnings to be Recognized) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Closed Block liabilities
Future policy benefits	$ 46,918	$ 47,613
Policyholders’ dividends payable	754	717
Policyholders’ dividend obligation	8,141	6,149
Policyholders’ account balances	4,894	4,973
Other Closed Block liabilities	3,224	4,049
Total Closed Block liabilities	63,931	63,501
Closed Block assets
Fixed maturities, available-for-sale, at fair value	41,973	41,146
Fixed maturities, trading, at fair value	257	256
Equity securities, at fair value	2,074	2,245
Commercial mortgage and other loans	8,419	8,629
Policy loans	4,106	4,264
Other invested assets	3,418	3,333
Short-term investments	79	227
Total investments	60,326	60,100
Cash and cash equivalents	385	191
Accrued investment income	459	456
Other Closed Block assets	141	93
Total Closed Block assets	61,311	60,840
Excess of reported Closed Block liabilities over Closed Block assets	2,620	2,661
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	5,473	3,280
Allocated to policyholder dividend obligation	(5,530)	(3,332)
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$ 2,563	$ 2,609

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Closed Block (Information Regarding Policyholder Dividend Obligation) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($)
Movement in Closed Block Dividend Obligation [Roll Forward]
Balance, beginning	$ 6,149
Impact from earnings allocable to policyholder dividend obligation	(192)
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	2,197
Balance, ending	8,141
ASU 2016-13
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Closed Block Dividend Obligation, Period Increase (Decrease)	$ (13)

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Closed Block (Closed Block Revenues and Benefits and Expenses) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues
Premiums	$ 459	$ 510	$ 1,457	$ 1,618
Net investment income	586	591	1,649	1,732
Realized investment gains (losses), net	18	351	266	456
Other income (loss)	242	31	(43)	356
Total Closed Block revenues	1,305	1,483	3,329	4,162
Benefits and Expenses
Policyholders’ benefits	641	659	2,013	2,148
Interest credited to policyholders’ account balances	32	33	96	97
Dividends to policyholders	532	649	955	1,617
General and administrative expenses	81	88	248	266
Total Closed Block benefits and expenses	1,286	1,429	3,312	4,128
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes	19	54	17	34
Income tax expense (benefit)	4	39	(30)	(14)
Closed Block revenues, net of Closed Block benefits and expenses and income taxes	$ 15	$ 15	$ 47	$ 48

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2017	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Total income tax expense (benefit)	$ (50)	$ 332		$ 7	$ 726
Effective Income Tax Rate, Percent				(0.60%)	19.40%
Federal Statutory Income Tax Rate, Percent			35.00%	21.00%
GILTI Tax on NOL Carryback				$ 13
YTD CARES Act NOL Carryback				38
NOL Carryback				$ (47)
High Tax Exception Percentage				18.90%
Percentage of the Effective Income Tax Rate Rec at Federal Statutory Income				90.00%
CARES Act NOL Carryback				$ (325)

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Short-Term and Long-Term Debt (Short-Term Debt) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Short-term Debt [Line Items]
Short-term debt		$ 1,113	$ 1,933
Weighted average interest rate on outstanding short-term debt		0.11%	1.61%
Commercial paper
Short-term Debt [Line Items]
Short-term debt		$ 480	$ 549
Weighted average maturity of outstanding commercial paper, in days	6 days	14 days
Long-term debt
Short-term Debt [Line Items]
Long-term Debt, Current Maturities		$ 876	1,371
Short-term Debt
Short-term Debt [Line Items]
Long-term Debt, Current Maturities		1,363	1,933
Borrowings due overnight | Commercial paper
Short-term Debt [Line Items]
Short-term debt		224	224
Daily average outstanding | Commercial paper
Short-term Debt [Line Items]
Short-term debt		1,733	1,702
Prudential Financial
Short-term Debt [Line Items]
Short-term debt		553	1,204
Prudential Financial | Commercial paper
Short-term Debt [Line Items]
Short-term debt		25	25
Prudential Funding, LLC | Commercial paper
Short-term Debt [Line Items]
Short-term debt		455	524
Mortgages
Short-term Debt [Line Items]
Long-term Debt, Current Maturities		97	192
Line of Credit
Short-term Debt [Line Items]
Short-term debt		7
Long-term Debt, Current Maturities		7	13
Senior notes
Short-term Debt [Line Items]
Short-term debt		1,500
Long-term Debt, Current Maturities		651
Senior notes | Long-term debt
Short-term Debt [Line Items]
Long-term Debt, Current Maturities		529	1,179
Surplus notes subject to set-off arrangements
Short-term Debt [Line Items]
Long-term Debt, Current Maturities		250	0
Assets Under Set-Off Arrangements
Short-term Debt [Line Items]
Short-term debt		$ 250	$ 0

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Short-Term and Long-Term Debt (Narrative) (Details)		1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 02, 2019 USD ($)	Jun. 14, 2020	Sep. 30, 2020 USD ($) Rate	Sep. 30, 2020 USD ($) Rate	Aug. 21, 2020 USD ($)	Jun. 11, 2020 USD ($)	May 15, 2020 USD ($) Rate	Dec. 31, 2019 USD ($)	Feb. 18, 2015 USD ($)	Sep. 30, 2009 USD ($)
Debt Instrument [Line Items]
Long-term debt			$ 20,169,000,000	$ 20,169,000,000				$ 18,646,000,000
Debt, Current			1,113,000,000	$ 1,113,000,000				1,933,000,000
Document Period End Date				Sep. 30, 2020
Amounts drawn on credit facilities			0	$ 0
Assets Under Set-Off Arrangements
Debt Instrument [Line Items]
Long-term debt			11,214,000,000	11,214,000,000				9,749,000,000
Debt, Current			250,000,000	250,000,000				0
Senior notes
Debt Instrument [Line Items]
Debt, Current			1,500,000,000	1,500,000,000
Increase (decrease) of debt				800,000,000
Senior Notes			12,100,000,000	12,100,000,000
Long-term Debt, Current Maturities			651,000,000	651,000,000
Junior Subordinated Debt
Debt Instrument [Line Items]
Long-term debt			$ 7,611,000,000	$ 7,611,000,000				7,575,000,000
Junior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			4.125%	4.125%
5.70% Junior Subordinated Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage			5.70%	5.70%
5.75% Junior Subordinated Note
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage			5.75%	5.75%
Parent Company
Debt Instrument [Line Items]
Long-term debt			$ 18,956,000,000	$ 18,956,000,000				17,430,000,000
Debt, Current			553,000,000	553,000,000				1,204,000,000
Parent Company | Junior Subordinated Debt
Debt Instrument [Line Items]
Long-term debt			7,552,000,000	7,552,000,000				7,518,000,000
Subsidiaries | Junior Subordinated Debt
Debt Instrument [Line Items]
Long-term debt			59,000,000	59,000,000				57,000,000
Private Placement | Parent Company
Debt Instrument [Line Items]
Debt Instrument, Face Amount							$ 1,500,000,000
Debt Instrument, Interest Rate, Stated Percentage | Rate							2.85%
Debt Instrument, Interest Rate, Effective Percentage | Rate							2.175%
Private Placement | Parent Company | Senior notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount							$ 1,500,000,000
Private Placement | Parent Company | Maturity in 2030
Debt Instrument [Line Items]
Debt Instrument, Face Amount							$ 1,500,000,000
Long-term debt
Debt Instrument [Line Items]
Long-term Debt, Current Maturities			876,000,000	876,000,000				1,371,000,000
Long-term debt | Senior notes
Debt Instrument [Line Items]
Long-term Debt, Current Maturities			529,000,000	529,000,000				1,179,000,000
Exhangeable Surplus Notes | Long-term debt
Debt Instrument [Line Items]
Debt Instrument, Face Amount										$ 500,000,000
Debt Instrument, Convertible, Terms of Conversion Feature	12.3877
Debt Instrument, Interest Rate, Stated Percentage										5.36%
Surplus Notes	$ 1,000
Put Option | Parent Company
Debt Instrument [Line Items]
Derivative, Time to Cure		30 days
Minimum Equity Less AOCI for Automatic Exercise			$ 9,000,000,000.0	$ 9,000,000,000.0
Medium-term Notes | Junior Notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount					$ 1,300,000,000
Debt Instrument, Interest Rate, Stated Percentage			3.70%	3.70%
Debt Instrument, Interest Rate Terms				3.035
Debt Instrument, Redemption Price, Percentage				102.00%
Junior Subordinated Debt
Debt Instrument [Line Items]
Repayments of Senior Debt			$ 575,000,000
Junior Subordinated Debt | Senior notes
Debt Instrument [Line Items]
Repayments of Senior Debt			710,000,000
Junior Subordinated Debt | Bond Issuance Cost
Debt Instrument [Line Items]
Repayments of Senior Debt			30,000,000
Federal Home Loan Bank of New York | Subsidiaries
Debt Instrument [Line Items]
Debt Issuance Costs, Net			3,600,000,000	$ 3,600,000,000
Federal Home Loan Bank of New York | Long-term debt | Subsidiaries
Debt Instrument [Line Items]
Debt Issuance Costs, Net			3,000,000,000.0	3,000,000,000.0
Maturing in 2026 | Senior notes
Debt Instrument [Line Items]
Debt, Current			$ 500,000,000	$ 500,000,000
Debt Instrument, Interest Rate, Stated Percentage | Rate			1.50%	1.50%
Maturity in 2030 | Senior notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount			$ 500,000,000	$ 500,000,000
Debt Instrument, Interest Rate, Stated Percentage | Rate			2.10%	2.10%
Maturing in 2040 | Senior notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount			$ 500,000,000	$ 500,000,000
Debt Instrument, Interest Rate, Stated Percentage | Rate			3.00%	3.00%
Maturing in 2050 | Medium-term Notes | Junior Notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount					800,000,000
Maturity in 2060 | Medium-term Notes | Junior Notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount					$ 500,000,000
Captive Reinsurance Subsidiary | Floating Rate Debt Surplus Notes Subject To Set Off Arrangement
Debt Instrument [Line Items]
Line of Credit Facility, Fair Value of Amount Outstanding			$ 900,000,000	$ 900,000,000
Surplus Notes			800,000,000	800,000,000
Prudential Legacy Insurance Company
Debt Instrument [Line Items]
Future Debt Instrument Authorized									$ 4,000,000,000
Prudential Arizona Reinsurance Universal Company
Debt Instrument [Line Items]
Debt Instrument, Face Amount						$ 700,000,000
Future Debt Instrument Authorized						$ 1,200,000,000
Prudential Arizona Reinsurance Universal Company | Floating Rate Debt Surplus Notes Subject To Set Off Arrangement
Debt Instrument [Line Items]
Line of Credit Facility, Fair Value of Amount Outstanding			$ 700,000,000	$ 700,000,000
Minimum | Federal Home Loan Bank of New York | Subsidiaries
Debt Instrument [Line Items]
Weighted average maturity of outstanding commercial paper, in days				5 months
Debt Instrument, Interest Rate, Stated Percentage			0.43%	0.43%
Maximum | Federal Home Loan Bank of New York | Subsidiaries
Debt Instrument [Line Items]
Weighted average maturity of outstanding commercial paper, in days				7 years
Debt Instrument, Interest Rate, Stated Percentage			1.925%	1.925%
Fed Funds Effective Rate Overnight Index Swap Rate | Senior notes
Debt Instrument [Line Items]
Long-term debt			$ 11,577,000,000	$ 11,577,000,000				10,084,000,000
Fed Funds Effective Rate Overnight Index Swap Rate | Mortgages
Debt Instrument [Line Items]
Long-term debt			67,000,000	67,000,000				104,000,000
Fed Funds Effective Rate Overnight Index Swap Rate | Debt denominated in foreign currency | Mortgages
Debt Instrument [Line Items]
Long-term debt			$ 43,000,000	$ 43,000,000				$ 43,000,000

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Short-Term and Long-Term Debt (Long-Term Debt) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term debt	$ 20,169	$ 18,646
Surplus notes | Fixed-rate notes:
Debt Instrument [Line Items]
Long-term debt	343	342
Surplus notes subject to set-off arrangements | Fixed-rate notes:
Debt Instrument [Line Items]
Long-term debt	8,884	7,484
Surplus notes subject to set-off arrangements | Floating-rate notes:
Debt Instrument [Line Items]
Long-term debt	2,330	2,265
Senior notes | Fixed-rate notes:
Debt Instrument [Line Items]
Long-term debt	11,577	10,084
Mortgages | Fixed-rate notes:
Debt Instrument [Line Items]
Long-term debt	67	104
Mortgages | Floating-rate notes:
Debt Instrument [Line Items]
Long-term debt	271	241
Line of Credit
Debt Instrument [Line Items]
Long-term Line of Credit, Noncurrent	300	300
Junior subordinated notes
Debt Instrument [Line Items]
Long-term debt	7,611	7,575
Subtotal
Debt Instrument [Line Items]
Long-term debt	31,383	28,395
Less: assets under set-off arrangements
Debt Instrument [Line Items]
Long-term debt	11,214	9,749
Debt denominated in foreign currency | Mortgages | Fixed-rate notes:
Debt Instrument [Line Items]
Long-term debt	43	43
Debt denominated in foreign currency | Mortgages | Floating-rate notes:
Debt Instrument [Line Items]
Long-term debt	29	53
Prudential Financial
Debt Instrument [Line Items]
Long-term debt	18,956	17,430
Prudential Financial | Junior subordinated notes
Debt Instrument [Line Items]
Long-term debt	7,552	7,518
Subsidiaries | Junior subordinated notes
Debt Instrument [Line Items]
Long-term debt	59	$ 57
Maturing in 2040 | Senior notes
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 500

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Employee Benefit Plans (Narrative) (Details) - Other Postretirement Benefits	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Minimum
Defined Benefit Plan Disclosure [Line Items]
Deferred Compensation Arrangement with Individual, Requisite Age		50 years
Deferred Compensation Arrangement with Individual, Requisite Service Period	10 years
Maximum
Defined Benefit Plan Disclosure [Line Items]
Deferred Compensation Arrangement with Individual, Requisite Age		55 years
Deferred Compensation Arrangement with Individual, Requisite Service Period	20 years

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Employee Benefit Plans (Components of Net Periodic Benefit Cost Included in General and Administrative Expenses) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 80	$ 73	$ 241	$ 218
Interest cost	108	122	323	368
Expected return on plan assets	(201)	(204)	(604)	(612)
Amortization of prior service cost	(1)	(1)	(3)	(3)
Amortization of actuarial (gain) loss, net	65	54	196	162
Settlements	(1)	4	3	52
Special termination benefits(1)(2)	5	2	7	3
Net periodic (benefit) cost	55	50	163	188
Other Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	6	5	18	16
Interest cost	15	20	47	59
Expected return on plan assets	(25)	(24)	(75)	(71)
Amortization of prior service cost	2	1	5	3
Amortization of actuarial (gain) loss, net	4	6	12	18
Settlements	0	0	0	0
Special termination benefits(1)(2)	0	0	0	0
Net periodic (benefit) cost	$ 2	$ 8	$ 7	$ 25

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Equity (Common Stock Changes in Number of Shares Issued, Held in Treasury and Outstanding) (Details)		3 Months Ended		9 Months Ended
	Aug. 02, 2019 USD ($) shares	Sep. 30, 2020 shares	Sep. 30, 2019 shares	Sep. 30, 2020 shares	Sep. 30, 2019 shares	Sep. 30, 2009 USD ($)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning				666,305,189
Balance, ending		666,305,189		666,305,189
Exchangeable surplus notes (in shares)		0.0	2,200,000	0.0	4,800,000
Issued
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning				666,300,000
Common Stock issued				0.0
Common Stock acquired				0.0
Stock-based compensation programs				0.0
Balance, ending		666,300,000		666,300,000
Held In Treasury
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning				267,500,000
Common Stock issued				0.0
Common Stock acquired				6,700,000
Stock-based compensation programs				(3,300,000)
Balance, ending		270,900,000		270,900,000
Outstanding
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning				398,800,000
Common Stock issued				0.0
Common Stock acquired				(6,700,000)
Stock-based compensation programs				3,300,000
Balance, ending		395,400,000		395,400,000
Long-term Debt | Exhangeable Surplus Notes
Class of Stock [Line Items]
Debt Instrument, Face Amount | $						$ 500,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exchangeable surplus notes (in shares)	6,200,000
Debt Instrument, Convertible, Conversion Ratio	12.3877
Surplus notes principal amount, for each | $	$ 1,000

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Equity (Dividends Declared) (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Equity [Abstract]
Dividends declared per share of Common Stock	$ 1.10	$ 1.00	$ 3.30	$ 3.00

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Equity (Narrative) (Details) - USD ($) shares in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Class of Stock [Line Items]
Cost of Treasury Stock Acquired	$ 500,000,000	$ 1,940,000,000
Under December 2018 Board Of Directors Authorization
Class of Stock [Line Items]
Amount of Stock Repurchases Authorized by the Board of Directors			$ 2,000,000,000.0
Under December 2018 Board Of Directors Authorization | Common Stock
Class of Stock [Line Items]
Number of Treasury Stock Shares Acquired	6.7
Cost of Treasury Stock Acquired	$ 500,000,000

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Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			$ 24,039
Income tax benefit (expense)	$ 620	$ (1,051)	(1,265)	$ (4,961)
Ending balance	30,001		30,001
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			(536)	(564)
Change in OCI before reclassifications			69	(74)
Amounts reclassified from AOCI			46	5
Income tax benefit (expense)			73	20
Cumulative effect of adoption of ASU 2017-12				0
Ending balance	(348)	(613)	(348)	(613)
Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			28,112	14,745
Change in OCI before reclassifications			7,939	22,759
Amounts reclassified from AOCI			(1,045)	(1,188)
Income tax benefit (expense)			(1,289)	(4,956)
Cumulative effect of adoption of ASU 2017-12				7
Ending balance	33,717	31,367	33,717	31,367
Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			(3,537)	(3,275)
Change in OCI before reclassifications			8	(76)
Amounts reclassified from AOCI			210	180
Income tax benefit (expense)			(49)	(25)
Cumulative effect of adoption of ASU 2017-12				0
Ending balance	(3,368)	(3,196)	(3,368)	(3,196)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			24,039	10,906
Change in OCI before reclassifications			8,016	22,609
Amounts reclassified from AOCI			(789)	(1,003)
Income tax benefit (expense)			(1,265)	(4,961)
Cumulative effect of adoption of ASU 2017-12				7
Ending balance	30,001	27,558	30,001	27,558
Cash flow hedges | Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			832	811
Ending balance	1,407	$ 1,584	1,407	$ 1,584
Fair value hedges | Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			0
Ending balance	$ (1)		$ (1)

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Equity (Reclassifications out of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Realized investment gains (losses), net	$ (79)	$ 853	$ (2,164)	$ (249)
Other income	992	320	(125)	2,217
Total foreign currency translation adjustment
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI			46	5
Net Unrealized Investment Gains (Losses)
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI			(1,045)	(1,188)
Total amortization of defined benefit pension items
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI			210	180
Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI			(789)	(1,003)
Amounts reclassified from AOCI
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Realized investment gains (losses), net	(2)	0	(7)	(5)
Other income	(39)	0	(39)	0
Amortization of defined benefit pension items:
Prior service cost	(1)	0	(2)	0
Actuarial gain (loss)	(69)	(60)	(208)	(180)
Amounts reclassified from AOCI | Total foreign currency translation adjustment
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI	(41)	0	(46)	(5)
Amounts reclassified from AOCI | Net Unrealized Investment Gains (Losses)
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI	343	687	1,045	1,188
Amounts reclassified from AOCI | Total amortization of defined benefit pension items
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI	(70)	(60)	(210)	(180)
Amounts reclassified from AOCI | Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Amounts reclassified from AOCI	232	627	789	1,003
Amounts reclassified from AOCI | Net unrealized investment gains (losses) on available-for-sale securities
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net unrealized investment gains (losses)	401	360	671	689
Amounts reclassified from AOCI | Interest Rate | Cash flow hedges
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net unrealized investment gains (losses)	19	57	27	56
Amounts reclassified from AOCI | Currency | Cash flow hedges
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net unrealized investment gains (losses)	0	3	4	5
Amounts reclassified from AOCI | Currency/Interest rate | Cash flow hedges
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net unrealized investment gains (losses)	$ (77)	$ 267	$ 343	$ 438

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Equity (Net Unrealized Investment Gains and Losses in AOCI with Allowance for Credit Losses) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ 24,039
Ending balance	30,001
Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	28,112
Ending balance	33,717
With an allowance | Net Unrealized Gains (Losses) on Investments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	0
Net investment gains (losses) on investments arising during the period	41
Reclassification adjustment for (gains) losses included in net income	23
Increase (decrease) due to non-credit related losses recognized in AOCI during the period	(87)
Ending balance	(23)
With an allowance | DAC, DSI, VOBA and Reinsurance Recoverables
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	0
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables	2
Ending balance	2
With an allowance | Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	0
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables	0
Ending balance	0
With an allowance | Policyholders’ Dividends
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	0
Impact of net unrealized investment (gains) losses on policyholders’ dividends	(3)
Ending balance	(3)
With an allowance | Deferred Income Tax (Liability) Benefit
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	0
Net investment gains (losses) on investments arising during the period	(8)
Reclassification adjustment for (gains) losses included in net income	(4)
Increase (decrease) due to non-credit related losses recognized in AOCI during the period	17
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables	0
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables	0
Impact of net unrealized investment (gains) losses on policyholders’ dividends	1
Ending balance	6
With an allowance | Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	0
Net investment gains (losses) on investments arising during the period	33
Reclassification adjustment for (gains) losses included in net income	19
Increase (decrease) due to non-credit related losses recognized in AOCI during the period	(70)
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables	2
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables	0
Impact of net unrealized investment (gains) losses on policyholders’ dividends	(2)
Ending balance	$ (18)

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Equity (All Other Net Unrealized Investment Gains and Losses in AOCI) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ 24,039
Ending balance	30,001
Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	28,112
Ending balance	33,717
All Other | Net Unrealized Gains (Losses) on Investments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	45,339
Net investment gains (losses) on investments arising during the period	11,509
Reclassification adjustment for (gains) losses included in net income	(1,068)
Reclassification due to allowance for credit loses recorded during the period	87
Ending balance	55,867
All Other | DAC, DSI, VOBA and Reinsurance Recoverables
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(1,585)
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables	336
Ending balance	(1,249)
All Other | Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(2,909)
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables	(1,764)
Ending balance	(4,673)
All Other | Policyholders’ Dividends
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(3,366)
Impact of net unrealized investment (gains) losses on policyholders’ dividends	(2,182)
Ending balance	(5,548)
All Other | Deferred Income Tax (Liability) Benefit
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(9,367)
Net investment gains (losses) on investments arising during the period	(2,232)
Reclassification adjustment for (gains) losses included in net income	207
Reclassification due to allowance for credit loses recorded during the period	(17)
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables	(68)
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables	357
Impact of net unrealized investment (gains) losses on policyholders’ dividends	458
Ending balance	(10,662)
All Other | Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	28,112
Net investment gains (losses) on investments arising during the period	9,277
Reclassification adjustment for (gains) losses included in net income	(861)
Reclassification due to allowance for credit loses recorded during the period	70
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables	268
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables	(1,407)
Impact of net unrealized investment (gains) losses on policyholders’ dividends	(1,724)
Ending balance	$ 33,735

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Earnings Per Share (Reconciliation of the Numerators and Denominators of the Basic and Diluted Per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Basic earnings per share
Net income (loss)	$ 1,507	$ (2,405)	$ (270)	$ 1,425	$ 738	$ 937	$ (1,168)	$ 3,100
Less: Income (loss) attributable to noncontrolling interests	20			7			25	42
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	18			15			16	33
Net income (loss) attributable to Prudential Financial available to holders of Common Stock, Basic Income	$ 1,469			$ 1,403			$ (1,209)	$ 3,025
Net income (loss) attributable to Prudential Financial available to holders of Common Stock, Basic Weighted Average Shares	395.3			404.1			395.6	406.2
Net income (loss) attributable to Prudential Financial available to holders of Common Stock, Basic Per Share Amount	$ 3.72			$ 3.47			$ (3.06)	$ 7.45
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$ 18			$ 15			$ 16	$ 33
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	$ 18			$ 15			$ 16	$ 33
Stock options, Weighted Average Shares	0.3			1.0			0.0	1.1
Deferred and long-term compensation programs, Weighted Average Shares	1.5			1.2			0.0	1.1
Exchangeable Surplus Notes	$ 0			$ 1			$ 0	$ 12
Exchangeable Surplus Notes, Weighted Average Shares	0.0			2.2			0.0	4.8
Diluted earnings per share
Net income (loss) attributable to Prudential Financial available to holders of Common Stock, Diluted Income	$ 1,469			$ 1,404			$ (1,209)	$ 3,037
Net income (loss) attributable to Prudential Financial available to holders of Common Stock, Diluted Weighted Average Shares	397.1			408.5			395.6	413.2
Net income (loss) attributable to Prudential Financial available to holders of Common Stock, Diluted Per Share Amount	$ 3.70			$ 3.44			$ (3.06)	$ 7.35

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Earnings Per Share (Narrative) (Details) shares in Millions		3 Months Ended		9 Months Ended
	Aug. 02, 2019 USD ($) shares	Sep. 30, 2020 shares	Sep. 30, 2019 shares	Sep. 30, 2020 shares	Sep. 30, 2019 shares	Sep. 30, 2009 USD ($)
Debt Instrument [Line Items]
Exchangeable surplus notes (in shares)		0.0	2.2	0.0	4.8
Undistributed earnings allocated to participating unvested share-based payment awards, weighted outstanding shares		4.9	4.5	5.0	4.6
Long-term Debt | Exhangeable Surplus Notes
Debt Instrument [Line Items]
Debt instrument, face amount | $						$ 500,000,000
Surplus notes principal amount, for each | $	$ 1,000
Interest rate						5.36%
Debt Instrument, Convertible, Conversion Ratio	12.3877
Exchangeable surplus notes (in shares)	6.2

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Earnings Per Share (Antidilutive Securities Excluded From the Computation of Diluted Earnings Per Share) (Details) - $ / shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings, Shares	3.4	1.4	5.6	1.2
Antidilutive stock options based on application of the treasury stock method
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings, Shares	3.2	1.4	3.4	1.2
Antidilutive securities excluded from computation of earnings, Exercise Price Per Share	$ 84.17	$ 101.57	$ 80.64	$ 103.35
Antidilutive stock options due to net loss available to holders of Common Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings, Shares	0.0	0.0	0.4	0.0
Antidilutive shares based on application of the treasury stock method
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings, Shares	0.2	0.0	0.2	0.0
Antidilutive shares due to net loss available to holders of Common Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings, Shares	0.0	0.0	1.6	0.0

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Segment Information (Reconciliation of Adjusted Operating Income and Net Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	$ 1,447	$ 1,725	$ (1,223)	$ 3,741
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	1,563	1,582	3,629	4,712
Operating Segments | Total PGIM division | PGIM
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	370	232	858	710
Operating Segments | Total U.S. Workplace Solutions division
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	394	392	969	1,244
Operating Segments | Total U.S. Workplace Solutions division | Retirement
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	372	302	898	1,020
Operating Segments | Total U.S. Workplace Solutions division | Group Insurance
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	22	90	71	224
Operating Segments | Total U.S. Individual Solutions division
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	509	518	1,047	1,422
Operating Segments | Total U.S. Individual Solutions division | Individual Annuities
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	408	459	1,030	1,393
Operating Segments | Total U.S. Individual Solutions division | Individual Life
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	101	59	17	29
Operating Segments | Assurance IQ division
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(30)	0	(69)	0
Operating Segments | Assurance IQ division | Assurance IQ
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(30)	0	(69)	0
Operating Segments | Total International Insurance division | International Insurance
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	775	721	2,162	2,364
Operating Segments | Total Corporate and Other | Corporate and Other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(455)	(281)	(1,338)	(1,028)
Segment Reconciling Items | Realized investment gains (losses), net, and related adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	223	331	(2,746)	(882)
Segment Reconciling Items | Charges related to realized investment gains (losses), net
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(70)	(92)	(353)	(149)
Segment Reconciling Items | Market experience updates
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(134)	(314)	(1,016)	(515)
Segment Reconciling Items | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	1	(34)	(62)	(71)
Segment Reconciling Items | Segment Reconciling Items, Other Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(12)	0	65	0
Segment Reconciling Items | Closed Block division
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	8	45	(15)	5
Segment Reconciling Items | Other Divested and Run-off businesses
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(132)	207	(725)	641
U.S. Businesses | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	$ 873	$ 910	$ 1,947	$ 2,666

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Segment Information (Reconciliation of Select Financial Information) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Segment Reporting Information [Line Items]
Revenues	$ 15,425	$ 15,105	$ 41,004	$ 45,584
Total Assets	911,589		911,589		$ 896,552
Operating Segments
Segment Reporting Information [Line Items]
Revenues	13,336	12,373	39,073	38,992
Operating Segments | Total PGIM division | PGIM
Segment Reporting Information [Line Items]
Revenues	1,066	855	2,801	2,651
Total Assets	48,507		48,507		47,655
Operating Segments | Total U.S. Workplace Solutions division
Segment Reporting Information [Line Items]
Revenues	4,147	3,699	12,471	12,826
Total Assets	249,729		249,729		241,865
Operating Segments | Total U.S. Workplace Solutions division | Retirement
Segment Reporting Information [Line Items]
Revenues	2,690	2,261	8,119	8,486
Total Assets	205,878		205,878		198,153
Operating Segments | Total U.S. Workplace Solutions division | Group Insurance
Segment Reporting Information [Line Items]
Revenues	1,457	1,438	4,352	4,340
Total Assets	43,851		43,851		43,712
Operating Segments | Total U.S. Individual Solutions division
Segment Reporting Information [Line Items]
Revenues	2,757	2,780	7,951	8,293
Total Assets	297,545		297,545		285,112
Operating Segments | Total U.S. Individual Solutions division | Individual Annuities
Segment Reporting Information [Line Items]
Revenues	1,148	1,251	3,249	3,774
Total Assets	193,509		193,509		189,040
Operating Segments | Total U.S. Individual Solutions division | Individual Life
Segment Reporting Information [Line Items]
Revenues	1,609	1,529	4,702	4,519
Total Assets	104,036		104,036		96,072
Operating Segments | Assurance IQ division
Segment Reporting Information [Line Items]
Revenues	75	0	194	0
Total Assets	2,621		2,621		2,639
Operating Segments | Assurance IQ division | Assurance IQ
Segment Reporting Information [Line Items]
Revenues	75	0	194	0
Total Assets	2,621		2,621		2,639
Operating Segments | Total International Insurance division | International Insurance
Segment Reporting Information [Line Items]
Revenues	5,481	5,216	16,201	15,734
Total Assets	224,932		224,932		213,335
Operating Segments | Total Corporate and Other | Corporate and Other
Segment Reporting Information [Line Items]
Revenues	(190)	(177)	(545)	(512)
Total Assets	26,433		26,433		44,619
Operating Segments | Total Closed Block division | Closed Block division
Segment Reporting Information [Line Items]
Total Assets	61,822		61,822		61,327
Segment Reconciling Items | Realized investment gains (losses), net, and related adjustments
Segment Reporting Information [Line Items]
Revenues	392	491	(2,290)	(6)
Segment Reconciling Items | Charges related to realized investment gains (losses), net
Segment Reporting Information [Line Items]
Revenues	(40)	(62)	(121)	(187)
Segment Reconciling Items | Market experience updates
Segment Reporting Information [Line Items]
Revenues	(58)	(67)	(406)	(74)
Segment Reconciling Items | Segment Reconciling Items, Other Adjustments
Segment Reporting Information [Line Items]
Revenues	0	0	105	0
Segment Reconciling Items | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
Segment Reporting Information [Line Items]
Revenues	(17)	(40)	(86)	(111)
Segment Reconciling Items | Closed Block division
Segment Reporting Information [Line Items]
Revenues	1,301	1,482	3,318	4,157
Segment Reconciling Items | Other Divested and Run-off businesses
Segment Reporting Information [Line Items]
Revenues	511	928	1,411	2,813
Intersegment Eliminations | Total PGIM division | PGIM
Segment Reporting Information [Line Items]
Revenues	215	197	640	571
U.S. Businesses | Operating Segments
Segment Reporting Information [Line Items]
Revenues	6,979	$ 6,479	20,616	$ 21,119
Total Assets	$ 549,895		$ 549,895		$ 529,616

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Segment Information Segment Information (Asset Management and Service Fees) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Asset management and service fees	$ 1,120	$ 1,038	$ 3,144	$ 3,137
Asset-based management fees
Asset management and service fees	930	881	2,644	2,596
Performance-based incentive fees
Asset management and service fees	43	10	73	108
Other fees
Asset management and service fees	$ 147	$ 147	$ 427	$ 433

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Commitments and Contingent Liabilities (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Commitments and Contingent Liabilities [Line Items]
Fair value of collateral supporting these assets	$ 569	$ 569	$ 607
Commitments | Commercial Mortgage Loans
Commitments and Contingent Liabilities [Line Items]
Total outstanding mortgage loan commitments	1,701	1,701	2,129
Portion of commitment where prearrangement to sell to investor exists	959	959	751
Allowance for credit losses	1	1
Change in allowance for credit losses	(1)	(1)
Expected to be funded from the GA and other operations outside the SA
Commitments and Contingent Liabilities [Line Items]
Commitments to Purchase Investment (excluding Commercial Mortgage Loans)	8,968	8,968	7,372
Expected to be funded from separate accounts
Commitments and Contingent Liabilities [Line Items]
Commitments to Purchase Investment (excluding Commercial Mortgage Loans)	120	120	49
Indemnification | Securities Lending and Securities Repurchase Transactions
Commitments and Contingent Liabilities [Line Items]
Indemnification provided to certain clients for securities lending and securities repurchase transactions	7,328	7,328	5,071
Fair value of related collateral associated with above indemnifications	7,480	7,480	5,204
Accrued liability associated with guarantee	0	0	0
Indemnification | Securities Repurchase Transactions
Commitments and Contingent Liabilities [Line Items]
Indemnification provided to certain clients for securities lending and securities repurchase transactions	34	34	38
Fair value of related collateral associated with above indemnifications	34	34	37
Indemnification | Serviced Mortgage Loans
Commitments and Contingent Liabilities [Line Items]
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company	2,451	2,451	2,113
First-loss exposure portion of above	718	718	622
Accrued liability associated with guarantee	39	39	19
Allowance for credit losses	18	18
Change in allowance for credit losses	1	0
Guarantees of Asset Values
Commitments and Contingent Liabilities [Line Items]
Guaranteed value of third-parties’ assets	84,088	84,088	80,009
Fair value of collateral supporting these assets	88,425	88,425	81,604
Asset (liability) associated with guarantee, carried at fair value	1	1	1
Other Guarantees
Commitments and Contingent Liabilities [Line Items]
Other guarantees where amount can be determined	52	52	55
Accrued liability associated with guarantee	$ 0	$ 0	$ 0

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Commitments and Contingent Liabilities (Narrative Excluding Litigation) (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Commitments | Commercial Mortgage Loans
Commitments and Contingent Liabilities [Line Items]
Allowance for credit losses	$ 1	$ 1
Change in allowance for credit losses	(1)	(1)
Purchase Investments
Commitments and Contingent Liabilities [Line Items]
Change in allowance for credit losses	0	$ 0
Indemnification | Securities Lending and Securities Repurchase Transactions
Commitments and Contingent Liabilities [Line Items]
Guarantor Obligations, Liquidation Proceeds, Percentage		102.00%
Indemnification | Securities Repurchase Transactions
Commitments and Contingent Liabilities [Line Items]
Guarantor Obligations, Liquidation Proceeds, Percentage		95.00%
Indemnification | Serviced Mortgage Loans
Commitments and Contingent Liabilities [Line Items]
Allowance for credit losses	18	$ 18
Change in allowance for credit losses	1	0
Mortgages subject to loss-sharing arrangements	$ 19,411	$ 19,411		$ 16,878
Weighted-average debt service coverage ratio of mortgages subject to loss-sharing arrangements	1.89	1.89		1.88
Weighted-average loan-to-value ratio of mortgages subject to loss-sharing arrangements	62.00%	62.00%		61.00%
Losses related to indemnifications that were settled		$ 0	$ 0
Indemnification | Minimum | Serviced Mortgage Loans
Commitments and Contingent Liabilities [Line Items]
Percentage share of losses incurred on certain loans serviced		4.00%
Indemnification | Maximum | Serviced Mortgage Loans
Commitments and Contingent Liabilities [Line Items]
Percentage share of losses incurred on certain loans serviced		20.00%
Yield Maintenance Guarantee
Commitments and Contingent Liabilities [Line Items]
Guarantees related to certain investments the Company sold	$ 9	$ 9		$ 12

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Commitments and Contingent Liabilities (Assurance IQ Contingent Consideration Liability Narrative) (Details) - USD ($)	3 Months Ended						9 Months Ended		36 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2022	Dec. 31, 2019	Oct. 31, 2019	Sep. 04, 2019
Business Acquisition [Line Items]
Net income (loss)	$ 1,507,000,000	$ (2,405,000,000)	$ (270,000,000)	$ 1,425,000,000	$ 738,000,000	$ 937,000,000	$ (1,168,000,000)	$ 3,100,000,000
Share price (usd per share)												$ 83.71
Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Contingent consideration, liability	$ 0						$ 0			$ 105,000,000
Cash | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Equity interest in acquiree											25.00%
Common Stock | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Equity interest in acquiree											75.00%
Condition Three | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Contingent liability, stock based compensation component										$ 900,000,000
Condition Four - Quotient - Denominator | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Consideration payable, cash and equity interests											$ 400,000,000
Condition Four - Multiplier | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Consideration payable, cash and equity interests											1,150,000,000
Subsequent Event | Condition One | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Net income (loss)									$ 900,000,000
Subsequent Event | Condition Four - Quotient - Numerator | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Net income (loss)									900,000,000
Minimum | Condition One | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Consideration payable, cash and equity interests											0
Minimum | Subsequent Event | Condition Two | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Net income (loss)									1,300,000,000
Minimum | Subsequent Event | Condition Three | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Net income (loss)									900,000,000
Maximum | Condition Two | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Consideration payable, cash and equity interests											$ 1,150,000,000
Maximum | Subsequent Event | Condition Three | Acquisition of Assurance IQ, Inc.
Business Acquisition [Line Items]
Net income (loss)									$ 1,300,000,000

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Commitments and Contingent Liabilities (Litigation Narrative) (Details) $ in Millions	Sep. 30, 2020 USD ($)
Loss Contingencies [Line Items]
Estimate of possible losses in excess of accruals (less than) for litigation and regulatory matters	$ 250