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PRIVATE LOANS | 6 Months Ended
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Jun. 30, 2024
Receivables [Abstract] |
PRIVATE LOANS | MORTGAGE LOANS ON REAL ESTATE The Company disaggregates its mortgage loan investments into two portfolio segments: commercial and residential. Commercial mortgage loans include agricultural mortgage loans. The breakdown of mortgage loans on real estate by portfolio segment is as follows:
AS OF US$ MILLIONS |  | June 30, 2024 |  | December 31, 2023
Commercial mortgage loans |  | $ | 9,588 |  |  | $ | 6,022 |
Residential mortgage loans |  | 2,922 |  |  | — |
Total |  | $ | 12,510 |  |  | $ | 6,022 |
Allowance for credit losses |  | (66) |  |  | (60) |
Total, net of allowance |  | $ | 12,444 |  |  | $ | 5,962 |
The Company’s commercial mortgage loan portfolio consists of loans collateralized by the related properties and diversified as to property type, location and loan size. The geographic categories come from the U.S. Census Bureau’s “Census Regions and Divisions of the United States”. The commercial mortgage loan portfolio is summarized by geographic region and property type as follows:
AS OF US$ MILLIONS, EXCEPT FOR PERCENTAGES |  | June 30, 2024 |  | December 31, 2023
| Amount |  | Percentage |  | Amount |  | Percentage
Geographic distribution: |  |  |  |  |  |  |  |
Pacific |  | $ | 1,893 |  |  | 20 | % |  | $ | 983 |  |  | 16 | %
Mountain |  | 1,811 |  |  | 19 | % |  | 1,336 |  |  | 22 | %
West North Central |  | 280 |  |  | 3 | % |  | 178 |  |  | 3 | %
West South Central |  | 1,486 |  |  | 15 | % |  | 1,122 |  |  | 19 | %
East North Central |  | 1,064 |  |  | 11 | % |  | 861 |  |  | 14 | %
East South Central |  | 152 |  |  | 2 | % |  | 49 |  |  | 1 | %
Middle Atlantic |  | 528 |  |  | 6 | % |  | 203 |  |  | 3 | %
South Atlantic |  | 2,050 |  |  | 21 | % |  | 1,097 |  |  | 18 | %
New England |  | 127 |  |  | 1 | % |  | 36 |  |  | 1 | %
Other (multi-region, non-US) |  | 197 |  |  | 2 | % |  | 157 |  |  | 3 | %
Total |  | $ | 9,588 |  |  | 100 | % |  | $ | 6,022 |  |  | 100 | %
Allowance for credit loss |  | (66) |  |  |  |  | (60) |  |  |
Total, net of allowance |  | $ | 9,522 |  |  |  |  | $ | 5,962 |  |  |
AS OF US$ MILLIONS, EXCEPT FOR PERCENTAGES |  | June 30, 2024 |  | December 31, 2023
| Amount |  | Percentage |  | Amount |  | Percentage
Property type distribution: |  |  |  |  |  |  |  |
Apartment |  | $ | 2,250 |  |  | 23 | % |  | $ | 1,266 |  |  | 21 | %
Hotel |  | 1,248 |  |  | 13 | % |  | 1,012 |  |  | 17 | %
Industrial |  | 2,031 |  |  | 21 | % |  | 1,083 |  |  | 18 | %
Office |  | 1,240 |  |  | 13 | % |  | 990 |  |  | 16 | %
Parking |  | 319 |  |  | 3 | % |  | 413 |  |  | 7 | %
Retail |  | 1,527 |  |  | 16 | % |  | 832 |  |  | 14 | %
Storage |  | 196 |  |  | 2 | % |  | 132 |  |  | 2 | %
Other 1 |  | 777 |  |  | 8 | % |  | 294 |  |  | 5 | %
Total |  | $ | 9,588 |  |  | 100 | % |  | $ | 6,022 |  |  | 100 | %
Allowance for credit loss |  | (66) |  |  |  |  | (60) |  |  |
Total, net of allowance |  | $ | 9,522 |  |  |  |  | $ | 5,962 |  |  |
1.Balance includes $473 million of agricultural mortgage loans as of June 30, 2024. The Company held no agricultural mortgage loans as of December 31, 2023. There was $1 million and no interest income recognized on loans in non-accrual status for the six months ended June 30, 2024 and 2023. Impaired loans were not significant for any of the periods presented. Allowance for Credit Losses The Company establishes a valuation allowance to provide for the risk of credit losses inherent in its mortgage loan portfolios. The valuation allowance is maintained at a level believed adequate by management to absorb estimated expected credit losses. The valuation allowance is based on amortized cost, which excludes accrued interest receivable. The Company does not measure a credit loss allowance on accrued interest receivable any uncollectible accrued interest receivable balances are written off to net investment income in a timely manner. The Company did not write off any uncollectible accrued interest receivable on its commercial or residential mortgage loan portfolios for the six months ended June 30, 2024 and 2023, respectively. The rollforward of the allowance for credit losses for mortgage loans is shown below:
FOR THE PERIODS ENDED JUN. 30 US$ MILLIONS |  | 2024 |  | 2023
| Commercial mortgage loans |  | Residential mortgage loans |  | Commercial mortgage loans |  | Residential mortgage loans
Balance as of January 1 |  | $ | (60) |  |  | $ | — |  |  | $ | (41) |  |  | $ | — |
Recovery (provision) |  | (1) |  |  | — |  |  | (11) |  |  | — |
Balance as of March 31 |  | $ | (61) |  |  | $ | — |  |  | $ | (52) |  |  | $ | — |
Recovery (provision) |  | (5) |  |  | — |  |  | 5 |  |  | — |
Balance at June 30 |  | $ | (66) |  |  | $ | — |  |  | $ | (47) |  |  | $ | — |
Credit Quality Indicators Mortgage loans are segregated by property-type and quantitative and qualitative allowance factors are applied. Qualitative factors are developed quarterly based on the pooling of assets with similar risk characteristics and historical loss experience adjusted for the expected trend in the current market environment. Credit losses are pooled by property type as it represents the most similar and reliable risk characteristics in our portfolio. The amortized cost of mortgage loans by year of origination by property-type are shown below:
AS OF JUN. 30, 2024 US$ MILLIONS |  | Amortized Cost Basis by Origination Year |  |
| 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Total
Commercial mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 353 |  |  | $ | 393 |  |  | $ | 2,463 |  |  | $ | 1,293 |  |  | $ | 983 |  |  | $ | 3,866 |  |  | $ | 9,351 |
30-59 days past due |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 24 |  |  | 24 |
60-89 days past due |  | — |  |  | 2 |  |  | 50 |  |  | — |  |  | — |  |  | 42 |  |  | 94 |
Non-accrual |  | — |  |  | 3 |  |  | — |  |  | 11 |  |  | — |  |  | 105 |  |  | 119 |
Residential mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | 65 |  |  | 1,030 |  |  | 1,193 |  |  | 251 |  |  | 127 |  |  | 17 |  |  | 2,683 |
30-59 days past due |  | 3 |  |  | 16 |  |  | 41 |  |  | 10 |  |  | 5 |  |  | — |  |  | 75 |
60-89 days past due |  | — |  |  | 14 |  |  | 21 |  |  | 7 |  |  | 4 |  |  | 1 |  |  | 47 |
Non-accrual |  | — |  |  | 36 |  |  | 50 |  |  | 20 |  |  | 9 |  |  | 2 |  |  | 117 |
Total mortgage loans on real estate |  | $ | 421 |  |  | $ | 1,494 |  |  | $ | 3,818 |  |  | $ | 1,592 |  |  | $ | 1,128 |  |  | $ | 4,057 |  |  | $ | 12,510 |
Allowance for credit losses |  | (66) |
Total, net of allowance |  | $ | 12,444 |
AS OF DEC. 31, 2023 US$ MILLIONS |  | Amortized Cost Basis by Origination Year |  |
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Total
Commercial mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 305 |  |  | $ | 1,750 |  |  | $ | 731 |  |  | 490 |  |  | $ | 493 |  |  | $ | 2,115 |  |  | $ | 5,884 |
30-59 days past due |  | — |  |  | 26 |  |  | — |  |  | — |  |  | — |  |  | 26 |  |  | 52 |
60-89 days past due |  | — |  |  | 50 |  |  | 9 |  |  | — |  |  | — |  |  | 13 |  |  | 72 |
Non-accrual |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14 |  |  | 14 |
Total mortgage loans on real estate |  | $ | 305 |  |  | $ | 1,826 |  |  | $ | 740 |  |  | $ | 490 |  |  | $ | 493 |  |  | $ | 2,168 |  |  | $ | 6,022 |
Allowance for credit losses |  | (60) |
Total, net of allowance |  | $ | 5,962 |
Generally, mortgage loans are secured by first liens on income-producing real estate with a loan-to-value ratio of up to 75%. It is the Company’s policy to not accrue interest on loans that are 90 days delinquent and where amounts are determined to be uncollectible. As of June 30, 2024, 195 mortgage loans were past due over 90 days or in non-accrual status (December 31, 2023 – three mortgage loans). The Company’s commercial and residential mortgage loans may be subject to loan modifications. Loan modifications may be granted to borrowers experiencing financial difficulty and could include principal forgiveness, interest rate reduction, an other-than-significant delay or a term extension. A loan modification typically does not result in a change in valuation allowance as it is already incorporated into the Company’s allowance methodology. However, if the Company grants a borrower experiencing financial difficulty principal forgiveness, the amount of principal forgiven would be written off, which would reduce the amortized cost of the loan and result in an adjustment to the valuation allowance. The carrying amount of mortgage loans experiencing financial difficulty, for which modifications have been granted during the quarter ended June 30, 2024 and 2023 is $85 million and $86 million, respectively. PRIVATE LOANS The following table summarizes the credit ratings for private loans:
AS OF US$ MILLIONS |  | June 30, 2024 |  | December 31, 2023
A or higher |  | $ | 1,170 |  |  | $ | 20 |
BBB |  | 72 |  |  | 29 |
BB and below |  | 788 |  |  | 272 |
Unrated 1 |  | 841 |  |  | 877 |
Total |  | $ | 2,871 |  |  | $ | 1,198 |
1.Due to the nature of private loans, external agency credit ratings may not be readily available. Where appropriate, the Company obtains non-published credit ratings from one or more third-party rating agencies, which are determined based on an independent evaluation of the transaction. For other loans without published or private credit ratings, the Company assigns internal risk ratings, based on our investment selection and monitoring process and policies. These internal risk ratings are categorized as “Unrated” above. Allowance for Credit Losses The rollforward of the allowance for credit losses for private loans is shown below:
FOR THE PERIODS ENDED JUN. 30 US$ MILLIONS |  | 2024 |  | 2023
Balance as of January 1 |  | $ | (44) |  |  | $ | (28) |
Recoveries |  | 2 |  |  | 1 |
Write-offs charged against the allowance |  | 1 |  |  | — |
Balance as of March 31 |  | $ | (41) |  |  | $ | (27) |
Provision |  | (15) |  |  | (3) |
Balance as of June 30 |  | $ | (56) |  |  | $ | (30) |

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