Segment Information

6 Months Ended

Jun. 30, 2023

Segment Information [Abstract]

Segment Information

16. Segment Information

We provide products and services and report results through our Life Insurance, Annuities, Group Protection and Retirement Plan Services segments. 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. A discussion of these segments and Other Operations is found in Note 21 in our 2022 Form 10-K, as updated by Note 20 in the May 2023 Form 8-K.

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:

Changes in MRBs, including gains and losses and benefit payments (“MRB-related impacts”);

Investment and reinsurance-related realized gain (loss):

Changes in the carrying value of mortgage loans on real estate attributable to current expected credit losses (“CECL”) (“changes in CECL reserve for mortgage loans on real estate”);

Changes in the carrying value of reinsurance-related assets attributable to CECL (“changes in CECL reserve for reinsurance-related assets”);

Changes in the carrying value of fixed maturity AFS securities attributable to the estimation of credit losses (“changes in the credit loss allowance for fixed maturity AFS securities”); and

Changes in the fair value of investments, including trading securities, equity securities, certain derivatives, and mortgage loans on real estate electing the fair value option, and of embedded derivatives within certain reinsurance arrangements, as well as sales or disposals of investments (“changes in investments and reinsurance-related embedded derivatives”);

GLB rider fees ceded to LNBAR;

Fee income allocated to support the cost of hedging GLB and GDB riders (“GLB and GDB hedge allowance”);

Changes in the fair value of the embedded derivative liabilities of our indexed annuity and IUL contracts and the associated index options we hold to hedge them, including collateral expense associated with hedge programs; (“indexed product net derivative results”);

Changes in reserves resulting from benefit ratio unlocking (“benefit ratio unlocking”);

Income (loss) from the initial adoption of new accounting standards, regulations and policy changes;

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

Transaction and integration costs related to mergers and acquisitions including the acquisition or divestiture, through reinsurance or other means, of businesses or blocks of business;

Gains (losses) on modification or early extinguishment of debt;

Losses from the impairment of intangible assets and gains (losses) on other non-financial assets; and

Income (loss) from discontinued operations.

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

Investment and reinsurance-related realized gain (loss);

GLB rider fees ceded to LNBAR;

Fee income allocated to support the cost of hedging GLB and GDB riders (“GLB and GDB hedge allowance”);

Indexed product net derivative results;

Revenue adjustments from the initial adoption of new accounting standards; and

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

‎

The tables below reconcile our segment measures of performance to the GAAP measures presented in the Consolidated Statements of Comprehensive Income (Loss) (in millions):

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues
Operating revenues:
Life Insurance	$	1,656		$	1,602		$	3,294		$	3,220
Annuities		1,097			1,003			2,140			2,048
Group Protection		1,400			1,323			2,787			2,626
Retirement Plan Services		328			310			650			624
Other Operations		36			28			75			65
Investment and reinsurance-related realized gain (loss)		(3,175	)		159			(3,388	)		444
GLB rider fees ceded to LNBAR		(232	)		(233	)		(465	)		(471	)
GLB and GDB hedge allowance		204			193			409			396
Indexed product net derivative results		(67	)		29			(238	)		138
Total revenues	$	1,247		$	4,414		$	5,264		$	9,090

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net Income (Loss)
Income (loss) from operations:
Life Insurance	$	32		$	11		$	-		$	-
Annuities		218			242			435			502
Group Protection		109			49			179			3
Retirement Plan Services		43			52			81			106
Other Operations		(75	)		(66	)		(127	)		(126	)
MRB-related impacts, after-tax		977			(570	)		129			(661	)
Investment and reinsurance-related realized gain (loss), after-tax (1)		(2,509	)		126			(2,676	)		351
GLB rider fees ceded to LNBAR, after-tax		(184	)		(184	)		(367	)		(372	)
GLB and GDB hedge allowance, after-tax		160			151			323			312
Indexed product net derivative results, after-tax		(53	)		23			(188	)		109
Benefit ratio unlocking, after-tax (2)		333			(6	)		334			(6	)
Transaction and integration costs related to mergers,
acquisitions and divestitures, after-tax (3)		(7	)		-			(7	)		-
Net income (loss)	$	(956	)	$	(172	)	$	(1,884	)	$	218

⁽¹⁾Includes a $2.4 billion after-tax impairment of fixed maturity AFS securities in an unrealized loss position for the three and six months ended June 30, 2023, resulting from the Company’s intent to sell these securities as part of the previously announced Fortitude Re reinsurance transaction. Within the investment portfolio anticipated to be sold in the transaction, there are additional fixed maturity AFS securities in an unrealized gain position of approximately $377 million after-tax as of June 30, 2023. Pursuant to the applicable accounting guidance, the Company impaired the securities in a loss position down to fair market value upon entry into the agreement in the second quarter and will recognize a gain for any securities in an unrealized gain position at the time when the transaction closes. For more information, see Notes 4 and 8.

⁽²⁾Includes $330 million after-tax related to the Fortitude Re reinsurance transaction.

⁽³⁾Includes costs pertaining to the Fortitude Re reinsurance transaction. For more information, see Note 8.

Other segment information (in millions) was as follows:

	As of			As of
	June 30,		December 31,
	2023			2022
Assets
Life Insurance	$	100,129		$	97,412
Annuities		179,000			165,711
Group Protection		9,570			9,828
Retirement Plan Services		43,086			42,117
Other Operations		20,988			20,595
Total assets	$	352,773		$	335,663