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BUSINESS SEGMENT INFORMATION | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION The Company has four reportable segments: Individual Retirement, Group Retirement, Investment Management and Research and Protection Solutions. These segments reflect the manner by which the Company’s chief operating decision maker views and manages the business. A brief description of these segments follows: •The Individual Retirement segment offers a diverse suite of variable annuity products which are primarily sold to affluent and high net worth individuals saving for retirement or seeking retirement income. •The Group Retirement segment offers tax-deferred investment and retirement services or products to plans sponsored by educational entities, municipalities and not-for-profit entities, as well as small and medium-sized businesses. •The Investment Management and Research segment provides diversified investment management, research and related solutions globally to a broad range of clients through three main client channels - Institutional, Retail and Private Wealth - and distributes its institutional research products and solutions through Bernstein Research Services. •The Protection Solutions segment includes our life insurance and group employee benefits businesses. Our life insurance business offers a variety of VUL, UL and term life products to help affluent and high net worth individuals, as well as small and medium-sized business owners, with their wealth protection, wealth transfer and corporate needs. Our group employee benefits business offers a suite of dental, vision, life, and short- and long-term disability and other insurance products to small and medium-size businesses across the United States. Measurement Operating earnings (loss) is the financial measure which primarily focuses on the Company’s segments’ results of operations as well as the underlying profitability of the Company’s core business. By excluding items that can be distortive and unpredictable such as investment gains (losses) and investment income (loss) from derivative instruments, the Company believes operating earnings (loss) by segment enhances the understanding of the Company’s underlying drivers of profitability and trends in the Company’s segments. Operating earnings is calculated by adjusting each segment’s net income (loss) attributable to Holdings for the following items: •Items related to variable annuity product features, which include: (i) certain changes in the fair value of the derivatives and other securities we use to hedge these features; (ii) the effect of benefit ratio unlock adjustments, including extraordinary economic conditions or events such as COVID-19; (iii) changes in the fair value of the embedded derivatives reflected within variable annuity products’ net derivative results and the impact of these items on DAC amortization on our SCS product; and (iv) DAC amortization for the SCS variable annuity product arising from near-term fluctuations in index segment returns; •Investment (gains) losses, which includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances; •Net actuarial (gains) losses, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period related to pension, other postretirement benefit obligations, and the one-time impact of the settlement of the defined benefit obligation; •Other adjustments, which primarily include restructuring costs related to severance and separation, COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses associated with equity securities, certain legal accruals; and a bespoke deal to repurchase UL policies from one entity that had invested in numerous policies purchased in the life settlement market, which disposed of the risk of additional COI litigation by that entity related to those UL policies; and •Income tax expense (benefit) related to the above items and non-recurring tax items, which includes the effect of uncertain tax positions for a given audit period. In the first quarter 2022, the Company updated its Operating earnings measure to exclude the DAC amortization impact of near-term fluctuations in indexed segment returns on the SCS variable annuity product to reflect the impact of market fluctuations consistently with the long term duration of the product. Operating earnings was favorably impacted by this change in the amount of $24 million and $94 million for the three and nine months ended September 30, 2022, respectively. The presentation of Operating earnings in prior periods was not revised to reflect this modification, however, the Company estimated that had the treatment in the Company’s Operating earnings measure of the Amortization of DAC for SCS been modified in 2020, the pre-tax impact on Operating earnings of excluding the SCS-related DAC amortization from Operating earnings would have been an increase of $7 million for the three months ended September 30, 2021, and a decrease of $7 million, $16 million and $34 million for the nine months ended September 30, 2021, and years ended December 31, 2021 and 2020, respectively. The General Account investment portfolio is used to support the insurance and annuity liabilities of our Individual Retirement, Group Retirement and Protection Solutions businesses segments. In the first quarter 2022, the Company changed its methodology for allocating its General Account investment portfolio, which resulted in a change in the asset and net investment income allocation amongst the Company’s business segments. Following this change the segmentation of the general account investments is now more closely aligned with the liability characteristics of the product groups. Management determined that the change in the allocation methodology allows for improved flexibility and infuses an active asset liability management practice into the segmentation process. Additionally, the Company also changed its basis for allocating the spread earned from our FHLB investment borrowing and FABN programs. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the assets less interest credited on the funding agreements. The net spread as reflected in net investment income is allocated to the segments based on the percentage of the individual segment insurance liabilities over the combined segments insurance liabilities. This change in measurement only impacts our segment disclosures, and thus it has no impact on our overall consolidated financial statements. Historical segment operating income (loss), revenues and assets have not been recast in the tables as the impact was immaterial. Revenues derived from any customer did not exceed 10% of revenues for the three and nine months ended September 30, 2022 and 2021. The table below presents operating earnings (loss) by segment and Corporate and Other and a reconciliation to net income (loss) attributable to Holdings for the three and nine months ended September 30, 2022 and 2021, respectively:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
| (in millions)
Net income (loss) attributable to Holdings | $ | 273 |  |  | $ | 672 |  |  | $ | 2,574 |  |  | $ | (693) |  |  |
Adjustments related to: |  |  |  |  |  |  |  |  |
Variable annuity product features | (114) |  |  | 172 |  |  | (2,639) |  |  | 3,632 |  |  |
Investment (gains) losses | 333 |  |  | (164) |  |  | 890 |  |  | (767) |  |  |
Net actuarial (gains) losses related to pension and other postretirement benefit obligations | 19 |  |  | 27 |  |  | 57 |  |  | 87 |  |  |
Other adjustments (1) (2) (3) | 39 |  |  | 141 |  |  | 407 |  |  | 672 |  |  |
Income tax expense (benefit) related to above adjustments | (59) |  |  | (35) |  |  | 270 |  |  | (761) |  |  |
Non-recurring tax items | 7 |  |  | 5 |  |  | 13 |  |  | 6 |  |  |
Non-GAAP Operating Earnings | $ | 498 |  |  | $ | 818 |  |  | $ | 1,572 |  |  | $ | 2,176 |  |  |
Operating earnings (loss) by segment: |  |  |  |  |  |  |  |  |
Individual Retirement | $ | 270 |  |  | $ | 316 |  |  | $ | 837 |  |  | $ | 1,093 |  |  |
Group Retirement | $ | 134 |  |  | $ | 192 |  |  | $ | 415 |  |  | $ | 514 |  |  |
Investment Management and Research | $ | 94 |  |  | $ | 134 |  |  | $ | 330 |  |  | $ | 381 |  |  |
Protection Solutions | $ | 72 |  |  | $ | 160 |  |  | $ | 208 |  |  | $ | 264 |  |  |
Corporate and Other (4) | $ | (72) |  |  | $ | 16 |  |  | $ | (218) |  |  | $ | (76) |  |  |
______________ (1)Includes separation costs of $25 million and $62 million for the three and nine months ended September 30, 2021, respectively. Separation costs were completed during 2021. (2)Includes certain gross legal expenses related to the COI litigation of $2 million, $0 million, $168 million and $180 million for the three and nine months ended September 30, 2022 and 2021, respectively. Includes policyholder benefit costs of $0 million and $75 million for the three and nine months ended September 30, 2022 stemming from a deal to repurchase UL policies from one entity that had invested in numerous policies purchased in the life settlement market. (3)Includes Non-GMxB related derivative hedge gains and losses of ($28) million, ($4) million, ($68) million and $140 million for the three and nine months ended September 30, 2022 and 2021, respectively. (4)Includes interest expense and financing fees of $51 million, $65 million, $156 million and $180 million for the three and nine months ended September 30, 2022 and 2021, respectively. Segment revenues is a measure of the Company’s revenue by segment as adjusted to exclude certain items. The following table reconciles segment revenues to total revenues by excluding the following items: •Items related to variable annuity product features, which include certain changes in the fair value of the derivatives and other securities we use to hedge these features and changes in the fair value of the embedded derivatives reflected within the net derivative results of variable annuity product features; •Investment (gains) losses, which includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances; •Other adjustments, which primarily includes net derivative gains (losses) on certain Non-GMxB derivatives and net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments and unrealized gain/losses associated with equity securities. The table below presents segment revenues for the three and nine months ended September 30, 2022 and 2021.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
| (in millions)
Segment revenues: |  |  |  |  |  |  |  |  |
Individual Retirement (1) | $ | 1,017 |  |  | $ | 998 |  |  | $ | 3,061 |  |  | $ | 2,957 |  |  |
Group Retirement (1) | 289 |  |  | 343 |  |  | 924 |  |  | 1,018 |  |  |
Investment Management and Research (2) | 996 |  |  | 1,093 |  |  | 3,134 |  |  | 3,169 |  |  |
Protection Solutions (1) | 791 |  |  | 838 |  |  | 2,478 |  |  | 2,496 |  |  |
Corporate and Other (1) | 363 |  |  | 479 |  |  | 1,087 |  |  | 1,199 |  |  |
Adjustments related to: |  |  |  |  |  |  |  |  |
Variable annuity product features | (107) |  |  | (256) |  |  | 2,468 |  |  | (3,750) |  |  |
Investment gains (losses), net | (333) |  |  | 164 |  |  | (890) |  |  | 767 |  |  |
Other adjustments to segment revenues | (7) |  |  | (44) |  |  | (141) |  |  | (138) |  |  |
Total revenues | $ | 3,009 |  |  | $ | 3,615 |  |  | $ | 12,121 |  |  | $ | 7,718 |  |  |
______________ (1)Includes investment expenses charged by AB of $33 million, $20 million, $77 million and $59 million for the three and nine months ended September 30, 2022 and 2021, respectively, for services provided to the Company. (2)Inter-segment investment management and other fees of $41 million $32 million, $101 million and $94 million for the three and nine months ended September 30, 2022 and 2021, respectively, are included in segment revenues of the Investment Management and Research segment. The table below presents total assets by segment as of September 30, 2022 and 2021:
| September 30, 2022 |  | December 31, 2021
| (in millions)
Total assets by segment: |  |  |
Individual Retirement | $ | 119,883 |  |  | $ | 143,663 |
Group Retirement | 38,908 |  |  | 55,368 |
Investment Management and Research | 12,370 |  |  | 11,602 |
Protection Solutions | 36,998 |  |  | 50,686 |
Corporate and Other | 37,441 |  |  | 30,943 |
Total assets | $ | 245,600 |  |  | $ | 292,262 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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