DAC, VOBA, DSI and DFEL

9 Months Ended

Sep. 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 September 30,		As of December 31,
	2024		2023
DAC, VOBA and DSI
Variable Annuities	$	3,911	$	3,873
Fixed Annuities	431		455
Traditional Life	1,386		1,418
UL and Other	6,292		6,232
Group Protection	173		154
Retirement Plan Services	282		265
Total DAC, VOBA and DSI	$	12,475	$	12,397

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

	As of September 30,		As of December 31,
	2024		2023
DFEL
Variable Annuities	$	274	$	278
UL and Other (1)	6,193		5,579
Other Operations (2)	50		44
Total DFEL	$	6,517	$	5,901

(1) We reported $257 million of ceded DFEL in reinsurance recoverables on the Consolidated Balance Sheets as of September 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 $50 million and $44 million of ceded DFEL in reinsurance recoverables on the Consolidated Balance Sheets as of September 30, 2024, and December 31, 2023, respectively.

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

	For the Nine Months Ended September 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	307		35		85		320		100		15
Amortization	(262)		(55)		(111)		(231)		(81)		(14)
Balance as of end-of-period	$	3,796	$	401	$	1,350	$	5,880	$	173	$	240

	For the Nine Months Ended September 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	269		31		148		346		79		16
Amortization	(272)		(51)		(108)		(221)		(73)		(14)
Balance as of end-of-period	$	3,748	$	419	$	1,373	$	5,730	$	147	$	238

DAC amortization expense of $253 million and $754 million was recorded in commissions and other expenses on the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024, respectively, and $247 million and $739 million, respectively, for the corresponding periods in 2023.

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

	For the Nine Months Ended September 30, 2024
	Fixed Annuities		Traditional Life		UL and Other
Balance as of beginning-of-year	$	15	$	42	$	413
Deferrals	–		–		1
Amortization	(2)		(6)		(29)
Balance as of end-of-period	$	13	$	36	$	385

	For the Nine Months Ended September 30, 2023
	Fixed Annuities		Traditional Life		UL and Other
Balance as of beginning-of-year	$	17	$	50	$	465
Deferrals	–		–		1
Amortization	(2)		(6)		(33)
Balance as of end-of-period	$	15	$	44	$	433

VOBA amortization expense of $12 million and $37 million was recorded in commissions and other expenses on the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024, respectively, and $13 million and $41 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 Nine Months Ended September 30, 2024
	Variable Annuities		Fixed Annuities		UL and Other		Retirement Plan Services
Balance as of beginning-of-year	$	122	$	19	$	28	$	26
Deferrals	1		–		1		17
Amortization	(8)		(2)		(2)		(1)
Balance as of end-of-period	$	115	$	17	$	27	$	42

	For the Nine Months Ended September 30, 2023
	Variable Annuities		Fixed Annuities		UL and Other		Retirement Plan Services
Balance as of beginning-of-year	$	128	$	23	$	30	$	17
Deferrals	4		–		1		5
Amortization	(9)		(3)		(2)		–
Balance as of end-of-period	$	123	$	20	$	29	$	22

DSI amortization expense of $4 million and $13 million was recorded in interest credited on the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024, respectively, and $5 million and $14 million, respectively, for the corresponding periods in 2023.

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

	For the Nine Months Ended September 30, 2024				For the Nine Months Ended September 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	14		826		14		800
Amortization	(18)		(212)		(20)		(193)
Balance as of end-of-period	274		6,193		280		5,373
Less: ceded DFEL	–		257		–		–
Balance as of end-of-period, net of reinsurance	$	274	$	5,936	$	280	$	5,373

DFEL amortization of $79 million and $230 million was recorded in fee income on the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024, respectively, and $74 million and $213 million, respectively, for the corresponding periods in 2023.