DAC, VOBA, DSI and DFEL

6 Months Ended

Jun. 30, 2024

Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Net [Abstract]

DAC, VOBA, DSI and DFEL

DAC, VOBA, DSI and DFEL

The following table reconciles deferred acquisition costs (“DAC”), value of business acquired (“VOBA”) and deferred sales inducements (“DSI”) (in millions) to the Consolidated Balance Sheets:

	As of June 30,		As of December 31,
	2024		2023
DAC, VOBA and DSI
Variable Annuities	$	3,878	$	3,873
Fixed Annuities	444		455
Traditional Life	1,399		1,418
UL and Other	6,264		6,232
Group Protection	172		154
Retirement Plan Services	278		265
Total DAC, VOBA and DSI	$	12,435	$	12,397

The following table reconciles deferred front-end loads (“DFEL”) (in millions) to the Consolidated Balance Sheets:

	As of June 30,		As of December 31,
	2024		2023
DFEL
Variable Annuities	$	275	$	278
UL and Other (1)	5,984		5,579
Other Operations (2)	47		44
Total DFEL	$	6,306	$	5,901

(1) We reported $257 million of ceded DFEL in reinsurance recoverables on the Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023.

(2) Represents DFEL reported in Other Operations attributable to the indemnity reinsurance agreement with Protective that is excluded from the following tables. We reported $47 million and $44 million of ceded DFEL in reinsurance recoverables on the Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023, respectively.

The following tables summarize the changes in DAC (in millions):

	For the Six Months Ended June 30, 2024
	Variable Annuities		Fixed Annuities		Traditional Life		UL and Other		Group Protection		Retirement Plan Services
Balance as of beginning-of-year	$	3,751	$	421	$	1,376	$	5,791	$	154	$	239
Deferrals	190		23		59		205		71		10
Amortization	(180)		(32)		(74)		(153)		(53)		(9)
Balance as of end-of-period	$	3,761	$	412	$	1,361	$	5,843	$	172	$	240

	For the Six Months Ended June 30, 2023
	Variable Annuities		Fixed Annuities		Traditional Life		UL and Other		Group Protection		Retirement Plan Services
Balance as of beginning-of-year	$	3,751	$	439	$	1,333	$	5,605	$	141	$	236
Deferrals	176		23		104		239		53		10
Amortization	(181)		(34)		(72)		(147)		(49)		(9)
Balance as of end-of-period	$	3,746	$	428	$	1,365	$	5,697	$	145	$	237

DAC amortization expense of $252 million and $501 million was recorded in commissions and other expenses on the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2024, respectively, and $247 million and $492 million, respectively, for the corresponding periods in 2023.

The following tables summarize the changes in VOBA (in millions):

	For the Six Months Ended June 30, 2024
	Fixed Annuities		Traditional Life		UL and Other
Balance as of beginning-of-year	$	15	$	42	$	413
Deferrals	–		–		1
Amortization	(1)		(4)		(20)
Balance as of end-of-period	$	14	$	38	$	394

	For the Six Months Ended June 30, 2023
	Fixed Annuities		Traditional Life		UL and Other
Balance as of beginning-of-year	$	17	$	50	$	465
Deferrals	–		–		1
Amortization	(1)		(4)		(23)
Balance as of end-of-period	$	16	$	46	$	443

VOBA amortization expense of $12 million and $25 million was recorded in commissions and other expenses on the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2024, respectively, and $14 million and $28 million, respectively, for the corresponding periods in 2023. No additions or write-offs were recorded for each respective period.

The following tables summarize the changes in DSI (in millions):

	For the Six Months Ended June 30, 2024
	Variable Annuities		Fixed Annuities		UL and Other		Retirement Plan Services
Balance as of beginning-of-year	$	122	$	19	$	28	$	26
Deferrals	1		–		–		12
Amortization	(6)		(1)		(1)		–
Balance as of end-of-period	$	117	$	18	$	27	$	38

	For the Six Months Ended June 30, 2023
	Variable Annuities		Fixed Annuities		UL and Other		Retirement Plan Services
Balance as of beginning-of-year	$	128	$	23	$	30	$	17
Deferrals	2		–		–		2
Amortization	(6)		(2)		(1)		–
Balance as of end-of-period	$	124	$	21	$	29	$	19

DSI amortization expense of $4 million and $8 million was recorded in interest credited on the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2024, respectively, and $4 million and $9 million, respectively, for the corresponding periods in 2023.

The following tables summarize the changes in DFEL (in millions):

	For the Six Months Ended June 30, 2024				For the Six Months Ended June 30, 2023
	Variable Annuities		UL and Other		Variable Annuities		UL and Other
Balance as of beginning-of-year	$	278	$	5,579	$	286	$	4,766
Deferrals	9		544		10		528
Amortization	(12)		(139)		(14)		(126)
Balance as of end-of-period	275		5,984		282		5,168
Less: ceded DFEL	–		257		–		–
Balance as of end-of-period, net of reinsurance	$	275	$	5,727	$	282	$	5,168

DFEL amortization of $77 million and $151 million was recorded in fee income on the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2024, respectively, and $71 million and $140 million, respectively, for the corresponding periods in 2023.