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INSURANCE LIABILITIES AND ANNUITY BENEFITS | 6 Months Ended
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Jun. 30, 2026
Insurance [Abstract] |
INSURANCE LIABILITIES AND ANNUITY BENEFITS | INSURANCE LIABILITIES AND ANNUITY BENEFITS. Insurance liabilities and annuity benefits are comprised of obligations to annuitants and insureds in our run-off insurance operations. Our insurance operations (net of eliminations) generated revenue of $715 million and $872 million, profit was $171 million and $147 million and net income was $136 million and $118 million for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, revenues were $1,493 million and $1,806 million, profit was $301 million and $353 million and net income was $240 million and $280 million, respectively. Th ese operations were primarily supported by investment securities, substantially all debt securities, of $37,305 million and $37,842 million, limited partnerships of $5,288 million and $5,089 million, a diversified commercial mortgage loan portfolio collateralized by first liens on U.S. commercial real estate properties of $1,786 million and $1,802 million (net of allowance for credit losses of $19 million and $19 million) and residential mortgage loans of $442 million and $395 million (net of allowance for credit losses of an insignificant amount), as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, the commercial mortgage loan portfolio had no delinquent or non-accrual loans and about one-fourth of the portfolio was held in the office sector, which had a weighted average loan-to-value ratio of 59%, debt service coverage of 1.7, and an insignificant amount of scheduled maturities through 2026. A summary of our insurance liabilities and annuity benefits is presented below.
June 30, 2026 | Long-term care | Structured settlement annuities | Life | Other contracts | Total
Future policy benefit reserves | $ | 25,468 |  | $ | 8,145 |  | $ | 868 |  | $ | 337 |  | $ | 34,819 |
Investment contracts | — |  | 625 |  | — |  | 468 |  | 1,093 |
Other | — |  | — |  | 109 |  | 175 |  | 283 |
Total | $ | 25,468 |  | $ | 8,770 |  | $ | 977 |  | $ | 979 |  | $ | 36,195 |
December 31, 2025 |  |  |  |  |
Future policy benefit reserves | $ | 25,792 |  | $ | 8,383 |  | $ | 906 |  | $ | 357 |  | $ | 35,438 |
Investment contracts | — | 647 | — | 493 |  | 1,140 |
Other | — | — | 113 | 203 |  | 316 |
Total | $ | 25,792 |  | $ | 9,031 |  | $ | 1,019 |  | $ | 1,053 |  | $ | 36,894 |
The following tables summarize balances of and changes in future policy benefit reserves.
| June 30, 2026 |  |  |  | June 30, 2025 |  |
| Long-term care | Structured settlement annuities | Life |  |  |  | Long-term care | Structured settlement annuities | Life |  |
Present value of expected net premiums |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 4,426 |  | $ | — |  | $ | 1,833 |  |  |  |  | $ | 4,144 |  | $ | — |  | $ | 4,318 |  |  |
Beginning balance at locked-in discount rate | 4,140 |  | — |  | 1,714 |  |  |  |  | 3,991 |  | — |  | 4,415 |  |  |
Effect of changes in cash flow assumptions | 67 |  | — |  | — |  |  |  |  | 16 |  | — |  | — |  |  |
Effect of actual variances from expected experience | (16) |  | — |  | (19) |  |  |  |  | 12 |  | — |  | 8 |  |  |
Adjusted beginning of year balance | 4,191 |  | — |  | 1,695 |  |  |  |  | 4,018 |  | — |  | 4,423 |  |  |
Interest accrual | 114 |  | — |  | 46 |  |  |  |  | 108 |  | — |  | 92 |  |  |
Net premiums collected | (205) |  | — |  | (96) |  |  |  |  | (197) |  | — |  | (148) |  |  |
Effect of foreign currency | — |  | — |  | (2) |  |  |  |  | — |  | — |  | 130 |  |  |
Ending balance at locked-in discount rate | 4,100 |  | — |  | 1,644 |  |  |  |  | 3,930 |  | — |  | 4,496 |  |  |
Effect of changes in discount rate assumptions | 218 |  | — |  | 92 |  |  |  |  | 211 |  | — |  | (104) |  |  |
Balance, end of period | $ | 4,318 |  | $ | — |  | $ | 1,736 |  |  |  |  | $ | 4,141 |  | $ | — |  | $ | 4,392 |  |  |
Present value of expected future policy benefits |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 30,218 |  | $ | 8,383 |  | $ | 2,739 |  |  |  |  | $ | 28,820 |  | $ | 8,426 |  | $ | 5,336 |  |  |
Beginning balance at locked-in discount rate | 27,976 |  | 8,048 |  | 2,582 |  |  |  |  | 27,448 |  | 8,301 |  | 5,411 |  |  |
Effect of changes in cash flow assumptions | (48) |  | — |  | — |  |  |  |  | (68) |  | — |  | — |  |  |
Effect of actual variances from expected experience | 72 |  | (19) |  | (18) |  |  |  |  | 152 |  | (6) |  | 24 |  |  |
Adjusted beginning of year balance | 28,001 |  | 8,029 |  | 2,564 |  |  |  |  | 27,533 |  | 8,295 |  | 5,435 |  |  |
Interest accrual | 770 |  | 212 |  | 65 |  |  |  |  | 748 |  | 217 |  | 112 |  |  |
Benefit payments | (800) |  | (316) |  | (141) |  |  |  |  | (743) |  | (325) |  | (222) |  |  |
Effect of foreign currency | — |  | — |  | (6) |  |  |  |  | — |  | — |  | 136 |  |  |
Ending balance at locked-in discount rate | 27,971 |  | 7,926 |  | 2,483 |  |  |  |  | 27,537 |  | 8,187 |  | 5,461 |  |  |
Effect of changes in discount rate assumptions | 1,815 |  | 220 |  | 121 |  |  |  |  | 1,654 |  | 195 |  | (75) |  |  |
Balance, end of period | $ | 29,786 |  | $ | 8,145 |  | $ | 2,604 |  |  |  |  | $ | 29,192 |  | $ | 8,382 |  | $ | 5,386 |  |  |
Net future policy benefit reserves | $ | 25,468 |  | $ | 8,145 |  | $ | 868 |  |  |  |  | $ | 25,051 |  | $ | 8,382 |  | $ | 994 |  |  |
Less: Reinsurance recoverables, net of allowance for credit losses | (165) |  | — |  | (141) |  |  |  |  | (157) |  | — |  | (248) |  |  |
Net future policy benefit reserves, after reinsurance recoverables | $ | 25,303 |  | $ | 8,145 |  | $ | 727 |  |  |  |  | $ | 24,895 |  | $ | 8,382 |  | $ | 746 |  |  |
Weighted-average duration of liability (years)(a) | 10.9 | 10.1 | 6.0 |  |  |  | 11.3 | 10.1 | 5.3 |  |
Weighted-average interest accretion rate | 5.7 | % | 5.4 | % | 5.4 | % |  |  |  | 5.6 | % | 5.4 | % | 5.3 | % |  |
Current discount rate | 5.5 | % | 5.4 | % | 5.1 | % |  |  |  | 5.5 | % | 5.5 | % | 4.9 | % |  |
Gross premiums or assessments recognized during period | $ | 225 |  | $ | — |  | $ | 101 |  |  |  |  | $ | 231 |  | $ | — |  | $ | 163 |  |  |
Expected future gross premiums, undiscounted | 7,396 |  | — |  | 2,968 |  |  |  |  | 7,321 |  | — |  | 11,569 |  |  |
Expected future gross premiums, discounted(a) | 4,711 |  | — |  | 1,839 |  |  |  |  | 4,694 |  | — |  | 5,303 |  |  |
Expected future benefit payments, undiscounted | 60,456 |  | 17,465 |  | 3,921 |  |  |  |  | 61,410 |  | 18,249 |  | 10,442 |  |  |
Expected future benefit payments, discounted(a) | 29,786 |  | 8,145 |  | 2,604 |  |  |  |  | 29,192 |  | 8,382 |  | 5,386 |  |  |
(a) Determined using the current discount rate as of June 30, 2026 and 2025. As of June 30, 2026 and 2025, policyholders account balances totaled $1,321 million and $1,499 million, respectively. As our insurance operations are in run-off, changes in policyholder account balances for the six months ended June 30, 2026 and 2025 are primarily attributed to surrenders, withdrawals and benefit payments of $175 million and $211 million, partially offset by net additions from separate accounts and interest credited of $119 million and $134 million, respectively. Interest on policyholder account balances is generally credited at minimum guaranteed rates, primarily between 3.0% and 6.0% at both June 30, 2026 and 2025, respectively. In the third quarter, we will complete our annual review of future policy benefit reserves cash flow assumptions, except related claim expenses which remain locked-in. If the review concludes that the assumptions need to be updated, future policy benefit reserves will be adjusted retroactively based on the revised net premium ratio using actual historical experience, updated cash flow assumptions, and the locked-in discount rate with the effect of those changes recognized in current period earnings. See Notes 3 and 9 for further information related to our run-off insurance operations.

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