21. Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments. As discussed in Note 3, we completed the acquisition of Liberty Life during the second quarter of 2018. Related results are included within the Group Protection segment. We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments. Our reporting segments reflect the manner by which our chief operating decision makers view and manage the business. The following is a brief description of these segments and Other Operations.

The Annuities segment provides tax-deferred investment growth and lifetime income opportunities for its clients by offering fixed (including indexed) and variable annuities.

The Retirement Plan Services segment provides employer-sponsored defined benefit and individual retirement accounts, as well as individual and group variable annuities, group fixed annuities and mutual-fund based programs in the retirement plan marketplace.

The Life Insurance segment focuses in the creation and protection of wealth through life insurance products, including term insurance, a linked-benefit product (which is a UL policy linked with riders that provide for long-term care costs), IUL and both single and survivorship versions of UL and VUL, including corporate-owned UL and VUL insurance and bank-owned UL and VUL insurance products.

The Group Protection segment offers group non-medical insurance products, including short and long-disability, absence management services, term life, dental, vision and accident and critical illness benefits and services to the employer marketplace through various forms of employee-paid and employer-paid plans.

Other Operations includes investments related to our excess capital; benefit plan net liability; the unamortized deferred gain on indemnity reinsurance related to the sale of reinsurance; the results of certain disability income business; our run-off institutional pension business, the majority of which was sold on a group annuity basis; debt costs; strategic digitization expense; and other corporate investments.

Segment operating revenues and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments. Income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable:

Realized gains and losses associated with the following (“excluded realized gain (loss)”):

Sales or disposals and impairments of securities;

Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities;

GLB rider fees ceded to LNBAR;

The net valuation premium of the GLB attributed rider fees;

Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for at fair value; and

Changes in the fair value of equity securities;

Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;

Gains (losses) on early extinguishment of debt;

Losses from the impairment of intangible assets;

Income (loss) from discontinued operations;

Acquisition and integration costs related to mergers and acquisitions; and

Income (loss) from the initial adoption of new accounting standards, regulations, and policy changes including the net impact from the Tax Cuts and Jobs Act.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

Excluded realized gain (loss);

Revenue adjustments from the initial adoption of new accounting standards;

Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and

Amortization of deferred gains arising from reserve changes on business sold through reinsurance.

We use our prevailing corporate federal income tax rates of 21% and 35%, where applicable, while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns when reconciling our segment measures of performance to the GAAP measures presented in our consolidated results of operations. Operating revenues and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

Segment information (in millions) was as follows:



	For the Years Ended December 31,
	2018			2017			2016
Revenues
Operating revenues:
Annuities	$	4,025		$	4,034		$	3,710
Retirement Plan Services		1,164			1,152			1,092
Life Insurance		6,489			6,128			5,798
Group Protection		3,756			2,200			2,129
Other Operations		209			263			301
Excluded realized gain (loss), pre-tax		(285	)		(630	)		(690	)
Amortization of deferred gain arising from reserve changes
on business sold through reinsurance, pre-tax		-			1			3
Total revenues	$	15,358		$	13,148		$	12,343



	For the Years Ended December 31,
	2018			2017			2016
Net Income (Loss)
Income (loss) from operations:
Annuities	$	1,122		$	1,072		$	971
Retirement Plan Services		160			142			121
Life Insurance		530			522			464
Group Protection		186			103			65
Other Operations		(130	)		(30	)		-
Excluded realized gain (loss), after-tax		(225	)		(409	)		(450	)
Gain (loss) on early extinguishment of debt, after-tax		-			(3	)		-
Income (loss) from reserve changes (net of related amortization)
on business sold through reinsurance, after-tax		-			-			2
Net impact from the Tax Cuts and Jobs Act		(3	)		1,526			-
Impairment of intangibles, after-tax		-			(905	)		-
Acquisition and integration costs related to mergers and acquisitions, after-tax		(67	)		-			-
Net income (loss)	$	1,573		$	2,018		$	1,173



	For the Years Ended December 31,
	2018		2017		2016
Net Investment Income
Annuities	$	947	$	982	$	983
Retirement Plan Services		892		893		855
Life Insurance		2,546		2,496		2,403
Group Protection		259		167		176
Other Operations		200		222		214
Total net investment income	$	4,844	$	4,760	$	4,631



	For the Years Ended December 31,
	2018		2017		2016
Amortization of DAC and VOBA, Net of Interest
Annuities	$	347	$	402	$	310
Retirement Plan Services		27		26		27
Life Insurance		701		455		709
Group Protection		92		79		126
Total amortization of DAC and VOBA, net of interest	$	1,167	$	962	$	1,172



	For the Years Ended December 31,
	2018			2017			2016
Federal Income Tax Expense (Benefit)
Annuities	$	187		$	198		$	261
Retirement Plan Services		28			50			43
Life Insurance		116			236			210
Group Protection		50			55			35
Other Operations		(48	)		(78	)		(42	)
Excluded realized gain (loss)		(61	)		(220	)		(241	)
Gain (loss) on early extinguishment of debt		-			(2	)		-
Reserve changes (net of related amortization)
on business sold through reinsurance		-			-			1
Net impact from the Tax Cuts and Jobs Act		3			(1,526	)		-
Acquisition and integration costs related to
mergers and acquisitions		(18	)
Total federal income tax expense (benefit)	$	257		$	(1,287	)	$	267



	As of December 31,
	2018		2017
Assets
Annuities	$	145,462	$	144,035
Retirement Plan Services		35,742		37,077
Life Insurance		82,153		81,565
Group Protection		8,495		4,033
Other Operations		27,293		15,162
Total assets	$	299,145	$	281,872

Revenue from Contracts with Customers

As discussed in Note 2, we adopted ASU 2014-09, Revenue from Contracts with Customers, as of January 1, 2018, that applies primarily to commissions and advisory fees earned by our broker dealer operation. The following table illustrates the revenue recognized from contracts with customers reported within fee income and other revenues on our Consolidated Statements of Comprehensive Income (Loss) and timing of revenue recognition by segment (in millions):


	For the Year Ended December 31, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	534	$	167	$	22	$	-	$	-	$	723
Other revenues		372		17		10		114		-		513
Total revenue from contracts
with customers	$	906	$	184	$	32	$	114	$	-	$	1,236

Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	24	$	5	$	7	$	-	$	-	$	36
Transferred over time		882		179		25		114		-		1,200
Total revenue from contracts
with customers	$	906	$	184	$	32	$	114	$	-	$	1,236

Revenue recognized from contracts with customers included in fee income consists primarily of wholesaling-related 12b-1 fees and net investment advisory fees. The 12b-1 fees are received from separate account fund sponsors as compensation for servicing the underlying mutual funds. The net investment advisory fees are related to asset management of certain separate account funds. Such revenues are recorded based on a contractual percentage of the market value of mutual fund assets over the period shares are owned by customers, and on a contractual percentage of the customer’s managed assets over the period advisory services are provided, respectively.

Revenue recognized from contracts with customers included in other revenues primarily relates to our retail sales network and consists of commission revenue for the sale of non-affiliated securities recorded on a trade-date basis and advisory fee income. Advisory fee income is asset-based revenues recorded as earned based on a contractual percentage of customer account values. Other revenues earned by our Group Protection segment consist of fees from administrative services performed, which are recognized as performance obligations are met over the terms of the underlying agreements.