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INVESTMENTS

12 Months Ended

Dec. 31, 2024

Net Investment Income

The components of net investment income for the years ended December 31 were as follows:


(In millions)	2024			2023			2022
Fixed maturity securities		$	2,894		$	2,873		$	2,926
Equity securities		24			28			31
Commercial mortgage and other loans		1,046			1,002			716
Other investments (1)		130			(70)			131
Short-term investments and cash equivalents		258			213			78
Gross investment income		4,352			4,046			3,882
Less investment expenses		236			235			226
Net investment income		$	4,116		$	3,811		$	3,656

(1) The change in value of federal historic rehabilitation and solar investments in partnerships of $165, $343 and $91 in 2024, 2023, and 2022, respectively, is included as a reduction to net investment income. Tax credits on these investments of $164, $334, and $83 in 2024, 2023, and 2022, respectively, have been recorded as an income tax benefit in the consolidated statement of earnings.

Investment Holdings

The amortized cost and allowance for credit losses for the Company's investments in fixed maturity securities and the fair values of these investments as well as the fair value of the Company's investments in equity securities are shown in the following tables.


	2024
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	19,409	$	0	$	465	$	2,234	$	17,640
Municipalities	869		0		65		79		855
Mortgage- and asset-backed securities	327		0		4		23		308
Public utilities	2,746		0		202		108		2,840
Sovereign and supranational	330		0		16		8		338
Banks/financial institutions	5,376		0		267		342		5,301
Other corporate	5,329		0		568		305		5,592
Total yen-denominated	34,386		0		1,587		3,099		32,874
U.S. dollar-denominated:
U.S. government and agencies	208		0		1		3		206
Municipalities	1,167		0		65		53		1,179
Mortgage- and asset-backed securities	2,987		0		302		34		3,255
Public utilities	3,938		0		418		151		4,205
Sovereign and supranational	57		0		21		0		78
Banks/financial institutions	3,271		0		420		36		3,655
Other corporate	18,050		0		2,493		752		19,791
Total U.S. dollar-denominated	29,678		0		3,720		1,029		32,369
Other currencies:
Other corporate	25		0		1		0		26
Total other currencies	25		0		1		0		26
Total securities available-for-sale	$	64,089	$	0	$	5,308	$	4,128	$	65,269


	2023
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	23,067	$	0	$	1,040	$	1,696	$	22,411
Municipalities	968		0		115		58		1,025
Mortgage- and asset-backed securities	215		0		6		11		210
Public utilities	3,757		0		325		82		4,000
Sovereign and supranational	373		0		24		7		390
Banks/financial institutions	5,896		0		320		365		5,851
Other corporate	5,898		0		699		294		6,303
Total yen-denominated	40,174		0		2,529		2,513		40,190
U.S. dollar-denominated:
U.S. government and agencies	191		0		2		4		189
Municipalities	1,246		0		65		38		1,273
Mortgage- and asset-backed securities	2,748		0		184		56		2,876
Public utilities	3,346		0		360		114		3,592
Sovereign and supranational	122		0		33		8		147
Banks/financial institutions	2,676		0		359		51		2,984
Other corporate	20,186		0		2,518		665		22,039
Total U.S. dollar-denominated	30,515		0		3,521		936		33,100
Total securities available-for-sale	$	70,689	$	0	$	6,050	$	3,449	$	73,290


	2024
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	15,311	$	2	$	15,309	$	759	$	9	$	16,059
Municipalities	235		0		235		22		0		257

Public utilities	32		0		32		1		0		33
Sovereign and supranational	377		3		374		31		0		405

Other corporate	16		0		16		2		0		18
Total yen-denominated	15,971		5		15,966		815		9		16,772
Total securities held-to-maturity	$	15,971	$	5	$	15,966	$	815	$	9	$	16,772


	2023
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	17,085	$	2	$	17,083	$	1,746	$	0	$	18,829
Municipalities	266		0		266		41		0		307

Public utilities	34		0		34		4		0		38
Sovereign and supranational	421		3		418		44		0		462

Other corporate	18		0		18		3		0		21
Total yen-denominated	17,824		5		17,819		1,838		0		19,657
Total securities held-to-maturity	$	17,824	$	5	$	17,819	$	1,838	$	0	$	19,657


	2024			2023
(In millions)	Fair Value			Fair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated		$	484		$	751
U.S. dollar-denominated		312			252
Other currencies		0			85
Total equity securities		$	796		$	1,088

The methods of determining the fair values of the Company's investments in fixed maturity securities and equity securities are described in Note 5.

During 2024 and 2023, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at December 31, 2024, were as follows:


(In millions)	Amortized Cost (1)			Fair Value
Available-for-sale:
Due in one year or less		$	1,369		$	1,536
Due after one year through five years		7,522			8,424
Due after five years through 10 years		17,302			18,495
Due after 10 years		34,582			33,251
Mortgage- and asset-backed securities		3,314			3,563
Total fixed maturity securities available-for-sale		$	64,089		$	65,269
Held-to-maturity:
Due in one year or less		$	0		$	0
Due after one year through five years		34			34
Due after five years through 10 years		8,516			9,045
Due after 10 years		7,416			7,693

Total fixed maturity securities held-to-maturity		$	15,966		$	16,772

(1) Net of allowance for credit losses

Economic maturities are used for certain debt instruments with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates.

Investment Concentrations

The Company's process for investing in credit-related investments begins with an independent approach to underwriting each issuer's fundamental credit quality. The Company evaluates independently those factors that it believes could influence an issuer's ability to make payments under the contractual terms of the Company's instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). The Company further evaluates the investment considering broad business and portfolio management objectives, including asset/liability needs, portfolio diversification, and expected income.

Investment exposures that individually exceeded 10% of shareholders' equity as of December 31 were as follows:

2024

2023

(In millions)

Credit
Rating

Amortized
Cost

Fair
Value

Credit
Rating

Amortized
Cost

Fair
Value

Japan National Government(1)

A+

$33,822

$32,844

A+

$39,151

$40,222

(1) Japan Government Bonds (JGBs) or JGB-backed securities

Net Investment Gains and Losses

Information regarding pretax net gains and losses from investments for the years ended December 31 follows:


(In millions)	2024		2023		2022
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales	$	80	$	24	$	93
Gross losses from sales	(634)		(61)		(78)
Foreign currency gains (losses)	806		204		442
Other investments:
Gross gains (losses) from sales and redemptions	7		33		10
Total sales and redemptions	259		200		467
Equity securities	140		88		(341)
Credit losses:

Fixed maturity securities held-to-maturity	0		1		0
Commercial mortgage and other loans	(207)		(146)		(18)
Impairment losses	(55)		0		(25)
Loan commitments	1		9		9
Reinsurance recoverables and other	5		(3)		(2)
Total credit losses	(256)		(139)		(36)
Derivatives and other:
Derivative gains (losses)	(363)		(531)		(1,151)
Foreign currency gains (losses)	1,491		972		1,424
Total derivatives and other	1,128		441		273
Total net investment gains (losses)	$	1,271	$	590	$	363

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the year ended December 31, 2024, that relate to equity securities held at the December 31, 2024, reporting date were $118 million. The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the year ended December 31, 2023, that relate to equity securities held at the December 31, 2023, reporting date were $63 million. The unrealized holding losses, net of gains, recorded as a component of net investment gains and losses for the year ended December 31, 2022, that relate to equity securities held at the December 31, 2022, reporting date were $340 million.

Unrealized Investment Gains and Losses

Information regarding changes in unrealized gains and losses from investments recorded in AOCI for the years ended December 31 follows:


(In millions)	2024			2023			2022
Changes in unrealized gains (losses):
Fixed maturity securities, available-for-sale		$	(1,421)		$	2,327		$	(13,056)
Total change in unrealized gains (losses)		$	(1,421)		$	2,327		$	(13,056)

Effect on Shareholders' Equity

The net effect on shareholders' equity of unrealized gains and losses from fixed maturity securities at December 31 was as follows:


(In millions)	2024			2023
Unrealized gains (losses) on securities available-for-sale		$	1,180		$	2,601
Deferred income taxes		(1,156)			(1,462)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities		$	24		$	1,139

Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31.


	2024
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available- for-sale:
U.S. government and agencies:
U.S. dollar-denominated		$	106		$	3		$	59		$	1		$	47		$	2
Japan government and agencies:
Yen-denominated		8,136			2,234			2,070			57			6,066			2,177
Municipalities:
U.S. dollar-denominated		666			53			67			3			599			50
Yen-denominated		341			79			96			2			245			77
Mortgage- and asset- backed securities:
U.S. dollar-denominated		567			34			173			2			394			32
Yen-denominated		196			23			12			0			184			23
Public utilities:
U.S. dollar-denominated		1,570			151			699			19			871			132
Yen-denominated		1,020			108			368			11			652			97
Sovereign and supranational:

Yen-denominated		47			8			0			0			47			8
Banks/financial institutions:
U.S. dollar-denominated		625			36			376			7			249			29
Yen-denominated		3,197			342			471			22			2,726			320
Other corporate:
U.S. dollar-denominated		6,097			752			2,036			59			4,061			693
Yen-denominated		1,733			305			289			14			1,444			291
Total		$	24,301		$	4,128		$	6,716		$	197		$	17,585		$	3,931


	2023
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available- for-sale:
U.S. government and agencies:
U.S. dollar-denominated		$	123		$	4		$	53		$	1		$	70		$	3
Japan government and agencies:
Yen-denominated		8,393			1,696			1,657			303			6,736			1,393
Municipalities:
U.S. dollar-denominated		703			38			31			1			672			37
Yen-denominated		301			58			34			0			267			58
Mortgage- and asset- backed securities:
U.S. dollar-denominated		925			56			340			6			585			50
Yen-denominated		58			11			0			0			58			11
Public utilities:
U.S. dollar-denominated		1,120			114			228			4			892			110
Yen-denominated		1,028			82			444			13			584			69
Sovereign and supranational:
U.S. dollar-denominated		35			8			0			0			35			8
Yen-denominated		60			7			0			0			60			7
Banks/financial institutions:
U.S. dollar-denominated		655			51			159			4			496			47
Yen-denominated		3,673			365			186			4			3,487			361
Other corporate:
U.S. dollar-denominated		6,380			665			799			19			5,581			646
Yen-denominated		1,948			294			308			9			1,640			285
Total		$	25,402		$	3,449		$	4,239		$	364		$	21,163		$	3,085

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's available-for-sale securities have been primarily related to general market factors such as changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For available-for-sale securities in an unrealized loss position, the Company performs detailed analyses to identify whether the drivers of the decline in fair value are due to general market factors, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company's resources to the review and monitoring of securities with real credit-related concerns that could impact ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market-related, the Company performs a more focused review of the related issuers' specific credit profile.

For corporate issuers, the Company evaluates their assets and business profile, including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.

Assuming no credit-related factors develop, unrealized gains and losses on available-for-sale securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its available-for-sale investments in the sectors shown in the table above have the ability to service their obligations to the Company. Further, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

However, if the Company identifies certain available-for-sale securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors, an allowance for credit losses is recognized. Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of December 31, 2024. Refer to the Allowance for Credit Losses section below for additional information.

As of December 31, 2024 and 2023, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

Commercial Mortgage and Other Loans

The Company classifies its TREs, CMLs, MMLs, and other loans as held-for-investment and includes them in the commercial mortgage and other loans line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for credit losses.

The following table reflects the composition of the carrying value for commercial mortgage and other loans by property type as of December 31.


	2024				2023
(In millions)	Amortized Cost		% of Total		Amortized Cost		% of Total
Commercial Mortgage and other loans:
Transitional real estate loans:
Office	$	1,361	12.1	%	$	1,807	14.1	%
Retail	349		3.1		473		3.7
Apartments/Multi-Family	2,201		19.6		2,608		20.4
Industrial	117		1.1		157		1.2
Hospitality	556		5.0		814		6.4
Other	318		2.8		255		2.0
Total transitional real estate loans	4,902		43.7		6,114		47.8
Commercial mortgage loans:
Office	300		2.7		359		2.8
Retail	214		1.9		301		2.4
Apartments/Multi-Family	572		5.1		586		4.6
Industrial	436		3.9		463		3.6

Other	15		.1		0		.0
Total commercial mortgage loans	1,537		13.7		1,709		13.4
Middle market loans	4,423		39.4		4,677		36.5
Other loans	362		3.2		301		2.3
Total commercial mortgage and other loans	$	11,224	100.0	%	$	12,801	100.0	%
Allowance for credit losses	(355)				(274)
Total net commercial mortgage and other loans	$	10,869			$	12,527

CMLs and TREs are secured by properties entirely within the U.S. (with the largest concentrations in California (21%), Texas (13%) and Florida (10%)). MMLs are issued only to companies domiciled within the U.S. and Canada.

Transitional Real Estate Loans

TREs are relatively short-term floating rate commercial mortgage loans that are secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date.

As of December 31, 2024, the Company had $273 million in outstanding commitments to fund TREs. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

CMLs are typically fixed rate loans on commercial real estate with partial repayment of principal over the life of the loan with the remaining outstanding principal being repaid upon maturity. This loan portfolio is generally considered higher quality investment grade loans.

Middle Market Loans

MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade.

As of December 31, 2024, the Company had commitments of approximately $739 million to fund future MMLs. These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

Other Loans

Other loans are primarily infrastructure loans. Infrastructure loans are typically senior secured, financing operating portfolios of renewable and conventional energy generation assets characterized by predictable, often contractual cash flows for loan repayment. The infrastructure loan portfolio weighted average rating is investment grade.

As of December 31, 2024, the Company had commitments of approximately $1 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

Credit Quality Indicators

For TREs, the Company’s key credit quality indicators include performance of the loan and loan-to-value (LTV), which is calculated by dividing the current outstanding loan balance by the estimated property value, primarily using values at origination. Given that TREs involve properties undergoing a repositioning of their commercial profile, LTV provides the most insight into the credit risk of the loan. The Company monitors the performance of the loans periodically, but not less frequently than quarterly. The monitoring process also focuses on higher risk loans, which include those that are delinquent or for which foreclosure or deed in lieu of foreclosure is anticipated.

For CMLs, the Company’s key credit quality indicators include LTV and debt service coverage ratios (DSCR). DSCR is the most recently available net operating income of the underlying property compared to the required debt service of the loan.

For MMLs and held-to-maturity fixed maturity securities, the Company’s key credit quality indicator is credit ratings. The Company’s held-to-maturity portfolio is composed of investment grade securities that are senior unsecured instruments, while its MMLs generally have below-investment-grade ratings but are typically senior secured instruments. The Company monitors the credit ratings periodically, but not less frequently than quarterly.

For other loans, the Company's key credit quality indicator is credit ratings. The Company monitors these credit ratings periodically, but not less frequently than quarterly.

The following tables present as of December 31, 2024 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and credit quality indicator.


Transitional Real Estate Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Total
Loan-to-Value Ratio:
0%-59.99%	$	0	$	0	$	314	$	357	$	36	$	11	$	718
60%-69.99%	0		116		500		599		18		390		1,623
70%-79.99%	0		14		903		660		24		58		1,659
80% or greater	0		0		259		271		104		268		902
Total	$	0	$	130	$	1,976	$	1,887	$	182	$	727	$	4,902
Current-period gross writeoffs:	$	0	$	0	$	0	$	5	$	0	$	57	$	62


Commercial Mortgage Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Total		Weighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%	$	0	$	32	$	0	$	266	$	58	$	920	$	1,276	2.78
60%-69.99%	0		0		0		25		0		47		72		2.11
70%-79.99%	13		0		0		0		0		87		100		1.19
80% or greater	0		0		0		0		0		89		89		0.57
Total	$	13	$	32	$	0	$	291	$	58	$	1,143	$	1,537	2.52
Weighted Average DSCR	1.21		2.62		0.00		3.16		2.52		2.37
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	19	$	19


Middle Market Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Credit Ratings:
BBB	$	12	$	27	$	4	$	84	$	43	$	95	$	11	$	276
BB	394		45		413		396		282		339		68		1,937
B	220		41		238		486		264		501		41		1,791
CCC	0		0		5		61		74		142		17		299
CC	0		0		13		0		0		24		5		42
C and lower	0		0		0		6		0		68		4		78
Total	$	626	$	113	$	673	$	1,033	$	663	$	1,169	$	146	$	4,423
Current-period gross writeoffs:	$	0	$	0	$	0	$	27	$	0	$	23	$	0	$	50


Other Loans
(In millions)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Credit Ratings:
A	$	0	$	0	$	82	$	0	$	0	$	0	$	0	$	82
AA	0		0		8		3		0		0		0		11
BBB	130		66		0		0		0		0		0		196
BB	0		0		73		0		0		0		0		73




Total	$	130	$	66	$	163	$	3	$	0	$	0	$	0	$	362
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Past Due and Nonaccrual Loans

The following tables present an aging of past due and nonaccrual loans at amortized cost, before allowance for credit losses, as of December 31.


	2024
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	4,364	$	195	$	343	$	538	$	4,902	$	378
Commercial mortgage loans	1,537		0		0		0		1,537		0
Middle market loans	4,295		63		65		128		4,423		108
Other loans	362		0		0		0		362		0
Total	$	10,558	$	258	$	408	$	666	$	11,224	$	486

(1) As of December 31, 2024, there were no loans that were 90 days or more past due that continued to accrue interest.


	2023
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	5,481	$	108	$	525	$	633	$	6,114	$	633
Commercial mortgage loans	1,676		33		0		33		1,709		0
Middle market loans	4,592		0		85		85		4,677		85
Other loans	301		0		0		0		301		0
Total	$	12,050	$	141	$	610	$	751	$	12,801	$	718

(1) As of December 31, 2023, there were no loans that were 90 days or more past due that continued to accrue interest.

For the year ended December 31, 2024, the Company recognized $2 million of interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. For the years ended December 31, 2023 and 2022, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. Of these loans, TREs with an amortized cost of $140 million and $160 million had no credit loss allowance as of December 31, 2024 and December 31, 2023, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost. As of December 31, 2024, MMLs with an amortized cost of $5 million were on nonaccrual status without an allowance for credit losses. As of December 31, 2023, there were no MMLs on nonaccrual status without an allowance for credit losses.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during 2024 and 2023. The types of modifications granted may include interest rate reductions, principal forgiveness, other-than-insignificant payment delays, term extensions or a combination of these types of modifications. The amount, timing, and extent of modifications granted are considered in determining any credit loss allowance recorded.

Loans that have both been modified and are paid or written off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below.

The following table presents the amortized cost basis of modified loans to borrowers experiencing financial difficulty and the financial effect of the modifications, disaggregated by loan classification and type of modification, for the year ended December 31.


2024
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:


Other-than-insignificant payment delays	$	125	2.7	%	Delay in payments of 24 months on average
Other-than-insignificant payment delays and interest rate reduction	278		5.9		Delay in payments of 44 months on average and reduction in the weighted-average contractual interest rate from 8.0% to 6.6%
Other-than-insignificant payment delays, principal forgiveness and interest rate reduction	81		1.7		Delay in payments of 33 months on average, $1.3 million of principal forgiven, and reduction in the weighted-average contractual interest rate from 8.2% to 7.3%

(1) Net of allowance for credit losses

Additionally, an immaterial percentage of MMLs with an amortized cost of $15 million were modified in the form of interest rate reductions and maturity extensions during the year ended December 31, 2024.

Loan modifications to borrowers experiencing financial difficulty for the year ended December 31, 2023, were immaterial.

The following table presents an aging of loans that received modifications in the 12 months preceding the period presented, at amortized cost.


	December 31, 2024
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due
Transitional real estate loans	$	403	$	81	$	0

Middle market loans	15		0		0

Total	$	418	$	81	$	0

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Loans that were granted a modification in the past 12 months, as of December 31, 2024, and subsequently defaulted in the year ended December 31, 2024, were immaterial. There were no modified loans to borrowers experiencing financial difficulties in the past 12 months, as of December 31, 2023, that subsequently defaulted in the year ended December 31, 2023.

As of December 31, 2024, the Company had $14 million of outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification.

Allowance for Credit Losses

The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset. For held-to-maturity securities, MMLs, and MML commitments, the Company groups assets by credit ratings, industry, and country.

The Company groups CMLs and TREs and respective loan commitments by property type, property location and the property’s LTV and DSCR. On a quarterly basis, CMLs and TREs within a portfolio segment that share similar risk characteristics are pooled for calculation of credit loss allowance. On an ongoing basis, TREs, CMLs and other loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable), are evaluated individually for credit loss. For example, the credit loss allowance for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of the collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the credit loss allowance as a component of net investment gains (losses) in the consolidated statements of earnings.

The credit allowance for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses. The Company’s methodology for estimating credit losses utilizes the contractual maturity date of the financial asset, adjusted when necessary to reflect the expected timing of repayment (such as prepayment options, renewal options, call options, or extension options). The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity securities and MMLs. The Company reverts to historical loss information over one year, following the two-year forecast period. For the CML and TRE portfolio, the Company applies reasonable and supportable forecasts of macroeconomic variables as well as national and local real-estate market factors to estimate future credit losses where the market factors revert back to historical levels over time with the period being dependent on current market conditions, projected market conditions and difference in the current and historical market levels for each factor. The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

The Company’s held-to-maturity portfolio includes Japan Government and Agency securities of $15.2 billion amortized cost as of December 31, 2024 that meet the requirements for zero-credit-loss expectation and therefore these asset classes have been excluded from the current expected credit loss measurement.

An investment in an available-for-sale security may be impaired if the fair value falls below amortized cost. The Company regularly reviews its available-for-sale portfolio for declines in fair value. The Company's available-for-sale impairment model focuses on the ultimate collection of the cash flows from its investments and whether the Company has the intent to sell or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. The determination of the amount of impairments under this model is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective securities. Such evaluations and assessments are revised as conditions change and new information becomes available.

When determining the Company's intention to sell a security prior to recovery of its amortized cost basis, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings. The Company performs ongoing analyses of its liquidity needs, which includes cash flow testing of its policy liabilities, debt maturities, projected dividend payments, and other cash flow and liquidity needs.

The Company’s methodology for estimating credit losses for available-for-sale securities utilizes the discounted cash flow model, based on past events, current market conditions and future economic conditions, as well as industry analysis and credit ratings of the securities. In addition, the Company evaluates the specific issuer’s probability of default and expected recovery of its position in the event of default based on the underlying financial condition and assets of the borrower as well as seniority and/or security of other debt holders in the issuer when developing management’s best estimate of expected cash flows.

The following table presents the roll forward of the allowance for credit losses by portfolio segment for loans and by accounting classification for securities.


(In millions)	Transitional Real Estate Loans		Commercial Mortgage Loans		Middle Market Loans		Other Loans and Loan Commitments		Held-to- Maturity Securities		Available- for-Sale Securities		Total
Balance at December 31, 2021	$	(68)	$	(10)	$	(96)	$	(31)	$	(8)	$	0	$	(213)
(Addition to) release of allowance for credit losses	14		1		(39)		7		0		0		(17)
Writeoffs, net of recoveries	0		0		6		0		0		0		6
Change in foreign exchange	0		0		0		0		1		0		1
Balance at December 31, 2022	(54)		(9)		(129)		(24)		(7)		0		(223)
(Addition to) release of allowance for credit losses (1)	(124)		(7)		(17)		8		1		0		(139)
Writeoffs, net of recoveries	66		0		0		0		0		0		66
Change in foreign exchange	0		0		0		0		1		0		1
Balance at December 31, 2023	(112)		(16)		(146)		(16)		(5)		0		(295)
(Addition to) release of allowance for credit losses	(148)		(17)		(44)		(1)		0		0		(210)
Writeoffs, net of recoveries	61		19		50		0		0		0		130
Change in foreign exchange	0		0		0		0		0		0		0
Balance at December 31, 2024	$	(199)	$	(14)	$	(140)	$	(17)	$	(5)	$	0	$	(375)

(1) Includes an allowance for credit losses of $4 recognized on financial assets accounted for as purchased financial assets with credit deterioration that is not recorded in earnings upon recognition.

As of December 31, 2024, the Company identified TREs with an amortized cost of $390 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions. As of December 31, 2024, the Company established a credit allowance of $57 million related to these loans.

Other Investments

The table below reflects the composition of the carrying value for other investments as of December 31.


(In millions)	2024			2023
Other investments:
Policy loans		$	203		$	214
Short-term investments (1)		1,599			1,304
Limited partnerships (2)		3,435			2,750
Real estate owned		682			227
Other		39			35
Total other investments		$	5,958		$	4,530

(1) Includes securities lending collateral

(2) Includes tax credit investments and asset classes such as private equity and real estate funds

The Parent Company invests in partnerships that specialize in rehabilitating historic structures or the installation of solar equipment in order to receive federal historic rehabilitation and solar tax credits. These investments are classified as limited partnerships and included in other investments in the consolidated balance sheets. The change in value of each investment is recorded as a reduction to net investment income. Tax credits generated by these investments are recorded as an income tax benefit in the consolidated statements of earnings.

REO consists of office buildings or other commercial properties obtained through foreclosure or deed in lieu of foreclosure of certain of the Company’s TREs. As of December 31, 2024, all REO was classified as held-and-used for the production of income and is carried at cost less accumulated depreciation. As of December 31, 2023, $210 million of REO was classified as held-and-used with the remaining $17 million classified as held-for-sale, which is carried at the lower of depreciated cost or fair value less cost to sell and is not further depreciated once classified as such. Depreciation expense was $13 million and an immaterial amount for the years ended December 31, 2024 and 2023, respectively. Additionally, as of December 31, 2024 and 2023, accumulated depreciation was $14 million and an immaterial amount, respectively.

The Company had $2.8 billion and $2.3 billion in outstanding commitments to fund investments in limited partnerships, which includes $2.1 billion and $2.0 billion of unfunded commitments related to VIEs that are non-consolidated as of December 31, 2024 and 2023, respectively.

Variable Interest Entities (VIEs)

In the normal course of its activities, the Company invests in legal entities that are VIEs. The Company's variable interests in VIEs are limited to the debt and equity instruments issued by them. With the exception of commitments to limited partnerships and to certain loan investments made in the normal course of business, the Company has not provided any direct or contingent obligations to fund the limited activities of these VIEs, or support related to the limited activities of these VIEs and does not have any intention to do so in the future, nor has it provided any direct or indirect financial guarantees.

The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments, and in certain cases, to any unfunded commitments held in the VIE.

For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature.

VIEs - Consolidated

If the Company determines that it is the VIE’s primary beneficiary, it consolidates the VIE. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company except to the extent of the unfunded commitments referenced above, as the Company’s obligation to each VIE is limited to the amount of its committed investment.

The following table presents carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported as of December 31.

Investments in Consolidated Variable Interest Entities


(In millions)	2024			2023
Assets:
Fixed maturity securities, available-for-sale		$	3,428		$	3,712
Commercial mortgage and other loans		8,693			10,150
Other investments (1)		2,176			2,381
Other assets (2)		53			55
Total assets of consolidated VIEs		$	14,350		$	16,298
Liabilities:
Other liabilities (2)		$	604		$	507
Total liabilities of consolidated VIEs		$	604		$	507

(1) Consists entirely of alternative investments in limited partnerships, which represent VIEs where the Company is not the primary beneficiary and, therefore, are not consolidated

(2) Consists entirely of derivatives

The Company is the sole investor in the consolidated VIEs listed in the table above. The Company invests in fixed maturity securities issued by VIEs that in turn hold U.S. dollar-denominated fixed maturity securities coupled with foreign currency swap agreements. The weighted-average lives of the Company's investments in these VIEs are very similar to the underlying collateral held by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps and utilizing the cash flows from these securities to service the VIEs' debt. Neither the Company nor any of its creditors are able to obtain the underlying collateral of these VIEs unless there is an event of default or other specified event. The Company is not a direct counterparty to the foreign currency swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. These consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and foreign currency swap contracts, if applicable. The underlying collateral assets and funding of these consolidated VIEs are generally static in nature.

Investments in Unit Trust Structures

The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships. As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S. GAAP. The limited partnership investments are comprised of private equity and real estate funds. The Company's loss exposure to these VIEs is limited to its original investments, together with any unfunded portion of the Company's commitments made in the normal course of business to fund certain loan investments and limited partnership investments, as described in the Commercial Mortgage and Other Loans and Other Investments sections of this note. Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs.

VIEs - Not Consolidated

The table below reflects the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported as of December 31.

Investments in Variable Interest Entities Not Consolidated


(In millions)	2024			2023
Assets:
Fixed maturity securities, available-for-sale		$	6,243		$	6,424

Other investments (1)		1,124			369
Total investments in VIEs not consolidated		$	7,367		$	6,793

(1) Consists entirely of alternative investments in limited partnerships

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations issued by the VIEs. These fixed maturity securities include structured securities, primarily asset-backed securities. The Company's involvement in the related VIEs is limited to that of a passive investor in asset-backed securities issued by the VIEs. The Company also invests in VIEs that are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the VIE entity or the right to receive benefits from the entity that could be significant to the entity. As such, the Company is not the primary beneficiary of these VIEs and therefore is not required to consolidate them.

The Company also holds equity investments in limited partnerships that have been determined to be VIEs. These partnerships primarily invest in private equity and real estate funds. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment and any unfunded commitments. As described in the Other Investments section of this note, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to unconsolidated VIEs. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as other investments in the consolidated balance sheets.

Securities Lending and Pledged Securities

The Company lends fixed maturity securities and, from time to time, public equity securities to financial institutions in short-term securities lending transactions. These short-term securities lending arrangements increase investment income with minimal risk. The Company receives cash or other securities as collateral for such loans. The Company's securities lending policy requires that the fair value of the securities received as collateral be 102% or more of the fair value of the loaned securities and that unrestricted cash received as collateral be 100% or more of the fair value of the loaned securities. The securities loaned continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected in the consolidated financial statements.

Details of collateral by loaned security type and remaining maturity of the agreements as of December 31 were as follows:


Securities Lending Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
	2024				2023
(In millions)	Overnight and Continuous(1)		Up to 30 days		Total		Overnight and Continuous(1)		Up to 30 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	1,027	$	1,027	$	0	$	737	$	737

Public utilities	34		0		34		19		0		19

Banks/financial institutions	193		0		193		72		0		72
Other corporate	783		0		783		675		0		675
Total borrowings	$	1,010	$	1,027	$	2,037	$	766	$	737	$	1,503
Gross amount of recognized liabilities for securities lending transactions					$	2,037					$	1,503

(1) The related loaned security, under the Company's U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $3.0 billion and $4.3 billion at December 31, 2024, and 2023, respectively, which may not be sold or re-pledged, unless the counterparty is in default. Such securities collateral is not reflected on the consolidated financial statements.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of December 31, 2024 and 2023, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.

At December 31, 2024, debt securities with a fair value of $20 million were on deposit with regulatory authorities in the U.S. (including U.S. territories). The Company retains ownership of all securities on deposit and receives the related investment income.

For general information regarding the Company's investment accounting policies, see Note 1.