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Derivatives
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
6. DERIVATIVES
The Company utilizes a variety of OTC, OTC-cleared and exchange traded derivative instruments as a part of its overall risk management strategy as well as to enter into replication transactions or income generation covered call transactions. Derivative instruments are used to manage risk associated with interest rate, equity market, commodity market, credit spread, issuer default, price, and currency exchange rate or volatility. Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies.
Strategies that Qualify for Hedge Accounting
Some of the Company's derivatives satisfy hedge accounting requirements as outlined in Note 1 - Basis of Presentation and Significant Accounting Policies. Typically, these hedging instruments include interest rate swaps and, to a lesser extent, foreign currency swaps where the terms or expected cash flows of the hedged item closely match the terms of the swap.
Cash Flow Hedges
Interest rate swaps are predominantly used to manage portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities. These derivatives primarily convert interest receipts on variable-rate fixed maturity securities to fixed rates. The Company has also entered into interest rate swaps to convert the variable interest payments on the $500 junior subordinated debentures due 2067 to fixed interest payments. For further information, see the Junior Subordinated Debentures section within Note 13 - Debt.
Foreign currency swaps are used to convert foreign currency-denominated cash flows related to certain investment receipts to U.S. dollars in order to reduce cash flow fluctuations due to changes in currency rates.
Non-qualifying Strategies
Derivative relationships that do not qualify for hedge accounting (“non-qualifying strategies”) primarily include hedges of interest rate, foreign currency, equity, and commodity risk of certain fixed maturities and equities. In addition, hedging and replication strategies that utilize credit default swaps do not qualify for hedge accounting. The non-qualifying strategies include:
Credit Contracts
Credit default swaps are used to purchase credit protection on an individual entity or referenced index to economically hedge against default risk and credit-related changes in the value of fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity or referenced index as a part of replication transactions. These contracts require the Company to pay or receive a periodic fee in
exchange for compensation from the counterparty or the Company should the referenced security issuers experience a credit event, as defined in the contract. The Company also enters into credit default swaps to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward.
Interest Rate Swaps and Futures
The Company uses interest rate swaps and, to a lesser extent, futures to manage interest rate duration between assets and liabilities. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap going forward. As of December 31, 2024 and December 31, 2023, the notional amount of interest rate swaps in offsetting relationships was $344 and $6.6 billion, respectively.
Foreign Currency Swaps and Forwards
The Company enters into foreign currency swaps to convert the foreign currency exposures of certain foreign currency-denominated fixed maturity investments to U.S. dollars.
Equity Index Options
The Company enters into equity index options to hedge the impact of a decline in the equity markets on the investment portfolio.
Commodity Options
The Company previously purchased call option contracts on oil futures in order to partially offset potential changes in value related to certain fixed maturity securities that could arise if oil prices increased substantially.
Derivative Balance Sheet Classification
For reporting purposes, the Company has elected to offset within assets or liabilities based upon the net of the fair value amounts, income accruals, and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset. The following fair value amounts do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation. The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity. Notional amounts are not necessarily reflective of credit risk.
Derivative Balance Sheet Presentation
 Net DerivativesAsset Derivatives Liability Derivatives
 Notional AmountFair ValueFair ValueFair Value
Hedge Designation/ Derivative TypeDec 31, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023
Cash flow hedges
Interest rate swaps$4,225 $3,450 $— $(1)$— $1 $— $(2)
Foreign currency swaps646 644 41 13 52 29 (11)(16)
Total cash flow hedges4,871 4,094 41 12 52 30 (11)(18)
Non-qualifying strategies
Interest rate contracts
Interest rate swaps and futures344 6,626 — (5)1 — (1)(5)
Foreign exchange contracts
Foreign currency swaps and forwards647 645 — — — — — — 
Credit contracts
Credit derivatives in offsetting positions986 998 — — 31 27 (31)(27)
Equity contracts
Equity index options233 — 4 — 4 — — — 
Total non-qualifying strategies2,210 8,269 4 (5)36 27 (32)(32)
Total cash flow hedges and non-qualifying strategies$7,081 $12,363 $45 $7 $88 $57 $(43)$(50)
Balance Sheet Location
Fixed maturities, AFS$647 $645 $— $— $— $— $— $— 
Other investments3,011 1,662 57 (1)66 18 (9)(19)
Other liabilities3,423 10,056 (12)8 22 39 (34)(31)
Total derivatives$7,081 $12,363 $45 $7 $88 $57 $(43)$(50)
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Offsetting of Derivative Assets/Liabilities
The following tables present the gross fair value amounts, the amounts offset, and net position of derivative instruments eligible for offset in the Company's Consolidated Balance Sheets. Offsetting amounts include fair value amounts, income accruals
and related cash collateral receivables and payables associated with derivative instruments that are traded under a common master netting agreement, as described in the preceding discussion. Also included in the tables are financial collateral receivables and payables, which are contractually permitted to be offset upon an event of default, although are disallowed for offsetting under U.S. GAAP.
Offsetting Derivative Assets and Liabilities
(i)(ii)(iii) = (i) - (ii)(iv)(v) = (iii) - (iv)
Net Amounts Presented in the Statement of Financial PositionCollateral Disallowed for Offset in the Statement of Financial Position
Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the Statement of Financial PositionDerivative Assets [1] (Liabilities) [2]Accrued Interest and Cash Collateral (Received) [3] Pledged [2]Financial Collateral (Received) Pledged [4]Net Amount
As of December 31, 2024
Other investments$88 $86 $57 $(55)$— $2 
Other liabilities$(43)$(42)$(12)$11 $(1)$— 
As of December 31, 2023
Other investments$57 $55 $(1)$3 $— $2 
Other liabilities$(50)$(36)$8 $(22)$(13)$(1)
[1]Included in other investments in the Company's Consolidated Balance Sheets.
[2]Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.
[3]Included in other investments in the Company's Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.
[4]Excludes collateral associated with exchange-traded derivative instruments.
Cash Flow Hedges
For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported
as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Gain (Loss) Recognized in OCI
Year Ended December 31,
202420232022
Interest rate swaps$(14)$6 $— 
Foreign currency swaps41 (31)56 
Total$27 $(25)$56 

Gain (Loss) Reclassified from AOCI into Income
Year Ended December 31,
202420232022
Net Investment IncomeInterest ExpenseNet Investment IncomeInterest ExpenseNet Investment IncomeInterest Expense
Interest rate swaps$(25)$16 $(26)$15 $6 $(2)
Foreign currency swaps12 — 10 — 9 — 
Total$(13)$16 $(16)$15 $15 $(2)
Total amounts presented on the Consolidated Statement of Operations$2,568 $199 $2,305 $199 $2,177 $213 
As of December 31, 2024, the before tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $40. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities and long-term debt that will occur over the next twelve months. Over that time, the Company will recognize the deferred net gains (losses) as an adjustment to net investment income or interest expense, as applicable, over the term of the hedged instrument cash flows.
During the years ended December 31, 2024, 2023, and 2022, the Company had no net reclassifications from AOCI to earnings
resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.
Non-qualifying Strategies
For non-qualifying strategies, including embedded derivatives that are required to be bifurcated from their host contracts and accounted for as derivatives, the gain or loss on the derivative is recognized currently in earnings within net realized gains (losses).
Non-Qualifying Strategies Recognized within Net Realized Gains (Losses)
For the Year Ended December 31,
202420232022
Foreign exchange contracts
Foreign currency swaps and forwards$— $— $5 
Interest rate contracts
Interest rate swaps and futures8 (3)25 
Credit contracts
Credit derivatives that purchase credit protection— (105)4 
Equity contracts
Equity index options5 — (2)
Commodity contracts
Commodity options— — 14 
Total [1]$13 $(108)$46 
[1]Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 4 - Fair Value Measurements.
Credit Risk Assumed through Credit Derivatives
The Company enters into credit default swaps that assume credit risk of a single entity or referenced index in order to synthetically replicate investment transactions that are permissible under the Company's investment policies. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment will typically be
equal to the notional value of the swap contract less the value of the referenced security issuer’s debt obligation after the occurrence of the credit event. A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk may reference investment grade single corporate issuers and baskets, which include standard diversified portfolios of corporate and CMBS issuers.
Credit Risk Assumed Derivatives by Type
Underlying Referenced Credit Obligation(s) [1]
Notional Amount [2]Fair ValueWeighted Average Years to MaturityTypeAverage Credit RatingOffsetting Notional Amount [3]Offsetting Fair Value [3]
As of December 31, 2024
Basket credit default swaps [4]
Investment grade risk exposure$100 $— 4 yearsCMBS CreditAAA$100 $— 
Below investment grade risk exposure392 30 3 yearsCorporate CreditB+392 (30)
Below investment grade risk exposure1 (1)Less than 1 yearCMBS CreditCCC1 1 
Total [5]$493 $29 $493 $(29)
As of December 31, 2023
Basket credit default swaps [4]
Investment grade risk exposure$101 $(1)5 yearsCMBS CreditAAA$101 $1 
Below investment grade risk exposure396 24 4 yearsCorporate CreditB+396 (24)
Below investment grade risk exposure2 (1)Less than 1 yearCMBS CreditCCC-2 1 
Total [5]$499 $22 $499 $(22)
[1]The average credit ratings are based on availability and are generally the midpoint of the available ratings among Moody’s, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.
[2]Notional amount is equal to the maximum potential future loss amount. These derivatives are governed by agreements and applicable law which include collateral posting requirements. There is no additional specific collateral related to these contracts or recourse provisions included in the contracts to offset losses.
[3]The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of, or losses paid related to, the original swap.
[4]Comprised of swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.
[5]Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 4 - Fair Value Measurements.
Derivative Collateral Arrangements
The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, 2024 and 2023, the Company has pledged cash collateral associated with derivative instruments of $31 and $25, respectively. In general, collateral receivable is recorded in other assets or other liabilities on the Company's Consolidated Balance Sheets as determined by the Company's election to offset on the balance sheet. As of December 31, 2024 and 2023, the Company pledged securities collateral associated with derivative instruments with a fair value of $1 and $14, respectively, which have been included in fixed maturities on the Consolidated Balance Sheets. The counterparties have the right to sell or re-pledge these securities.
In addition, as of December 31, 2024 and 2023, the Company has pledged initial margin of cash related to OTC-cleared and exchange traded derivatives with a fair value of $10 and $16 respectively, which is recorded in other investments or other assets on the Company's Consolidated Balance Sheets. As of December 31, 2024 and 2023, the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $103 and $112, respectively, which are included within fixed maturities on the Company's Consolidated Balance Sheets.
As of December 31, 2024 and 2023, the Company accepted cash collateral associated with derivative instruments of $78 and $49, respectively, which was invested and recorded in the Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other investments or other liabilities as determined by the Company's election to offset on the balance sheet. Also as of December 31, 2024 and 2023, the Company did not hold securities collateral.