XML 22 R12.htm IDEA: XBRL DOCUMENT
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Accounting Changes and Error Corrections | 9 Months Ended
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Sep. 30, 2023
Accounting Changes and Error Corrections [Abstract] |
New Accounting Standards | IMPACT OF NEW ACCOUNTING STANDARD As discussed in Note 1, the Company adopted ASU 2018-12 during the first quarter of 2023. The updated guidance materially changed how the Company accounts for its long-duration insurance contracts. Below is a summary of the impact of adopting ASU 2018-12: •For the liability for future policy benefits, the net transition adjustment recorded in accumulated other comprehensive income (loss) is related to the difference in the discount rate used prior to the adoption of ASU 2018-12 and the discount rate at January 1, 2021, and the removal of shadow adjustments previously recorded in accumulated other comprehensive income (loss) for the impact of unrealized gains and losses that were included in the expected gross profits amortization calculation as of the transition date of $8,593 million, pretax. •At transition, the Company identified certain cohorts in its Traditional segments where the present value of future expected benefits and expenses exceeded the sum of existing benefit reserve and the present value of future gross premiums, resulting in a decrease to retained earnings, net of reinsurance (and a corresponding increase in the liabilities for future policy benefits and reinsurance recoverable) of approximately $1,462 million, pretax. See “Impact of Adoption by Segment” for the transition impact by reportable segment. •At transition, the Company identified certain cohorts, primarily longevity swaps, where the present value of future premiums exceeded the present value of future benefits resulting in a negative liability. The elimination of the negative liability at transition resulted in a decrease to retained earnings (and a corresponding increase in the liabilities for future policy benefits) of $284 million, pretax. See “Impact of Adoption by Segment” for the transition impact by reportable segment. •For DAC, the Company removed shadow adjustments previously recorded in AOCI in the amount of $114 million, pretax, for the impact of unrealized gains and losses that were included in the pre-ASU 2018-12 expected gross profits amortization calculation as of the transition date. See “Impact of Adoption by Segment” for the transition impact by reportable segment. •For market risk benefits, the transition adjustment of $45 million, pretax, recognized in AOCI relates to the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date. The remaining difference of $(72) million, pretax between the fair value and carrying value of the market risk benefits at transition, excluding the amounts recorded in AOCI, was recorded as an adjustment to retained earnings as of the transition date. See “Impact of Adoption by Segment” for the transition impact by reportable segment. Impact on Shareholders’ Equity The following table provides the after-tax transition impact on January 1, 2021, to the reinsurance ceded receivables, liability for future policy benefits, market risk benefits, deferred policy acquisition costs and deferred tax asset and liability for the Company's adoption of ASU 2018-12 (dollars in millions):
|  | January 1, 2021
|  | Retained Earnings |  | Accumulated Other Comprehensive Income (Loss)
Reinsurance ceded receivables and other |  | $ | 254 |  |  | $ | 388 |
Future policy benefits |  | (1,746) |  |  | (8,593) |
Market risk benefits |  | (72) |  |  | 45 |
Deferred policy acquisition costs |  | — |  |  | 114 |
Deferred tax asset (included in other assets) |  | 8 |  |  | — |
Deferred tax liability (included in deferred income taxes) |  | 311 |  |  | 1,778 |
Total |  | $ | (1,245) |  |  | $ | (6,268) |
Impact of Adoption by Segment Traditional Business The following table provides the pre-tax transition impact to the liability for future policy benefits for the Company's adoption of Financial Services – Insurance on January 1, 2021, for its Traditional business (dollars in millions):
|  | U.S. and Latin America – Traditional |  | Canada – Traditional |  | Europe, Middle East and Africa – Traditional |  | Asia Pacific – Traditional
Future policy benefits |  |  |  |  |  |  |  |
Balance, January 1, 2021 pre-adoption |  | $ | 10,444 |  |  | $ | 3,477 |  |  | $ | 1,379 |  |  | $ | 3,568 |
Adjustment to retained earnings (1) |  | 896 |  |  | 33 |  |  | 70 |  |  | 463 |
Effect of changes in discount rate assumptions |  | 4,542 |  |  | 2,651 |  |  | 320 |  |  | (772) |
Reclassification of claims and benefits payable (2) |  | 1,750 |  |  | 203 |  |  | 901 |  |  | 1,160 |
Balance, January 1, 2021 post-adoption |  | $ | 17,632 |  |  | $ | 6,364 |  |  | $ | 2,670 |  |  | $ | 4,419 |
Less: reinsurance recoverable |  | (1,123) |  |  | (386) |  |  | (85) |  |  | (212) |
Balance, January 1, 2021 post-adoption, after reinsurance |  | $ | 16,509 |  |  | $ | 5,978 |  |  | $ | 2,585 |  |  | $ | 4,207 |
(1)Includes adjustments for capping the net premium ratio at 100% and eliminating negative reserves on certain issue year cohorts. (2)Amount includes certain reclassifications to conform with the revised presentation upon adoption of ASU 2018-12, such as reclassifying claims and benefits payable on long-duration contracts to liability for future policy benefits. Financial Solutions Business The following table provides the pre-tax transition impact to the liability for future policy benefits, market risk benefits and deferred policy acquisitions costs for the Company's adoption of Financial Services – Insurance on January 1, 2021, for its Financial Solutions business (dollars in millions):
|  | U.S. and Latin America – Financial Solutions |  | Canada – Financial Solutions |  | Europe, Middle East and Africa – Financial Solutions |  | Asia Pacific – Financial Solutions
Future policy benefits |  |  |  |  |  |  |  |
Balance, January 1, 2021 pre-adoption |  | $ | 5,037 |  |  | $ | 16 |  |  | $ | 5,657 |  |  | $ | 1,874 |
Adjustment to retained earnings (1) |  | — |  |  | 20 |  |  | 256 |  |  | 8 |
Effect of changes in discount rate assumptions |  | 857 |  |  | 9 |  |  | 1,011 |  |  | 3 |
Amounts previously recorded in AOCI (2) |  | (28) |  |  | — |  |  | — |  |  | — |
Reclassification of claims and benefits payable (3) |  | 17 |  |  | 4 |  |  | 67 |  |  | 2 |
Balance, January 1, 2021 post-adoption |  | $ | 5,883 |  |  | $ | 49 |  |  | $ | 6,991 |  |  | $ | 1,887 |
Less: reinsurance recoverable |  | — |  |  | — |  |  | — |  |  | — |
Balance, January 1, 2021 post-adoption, after reinsurance |  | $ | 5,883 |  |  | $ | 49 |  |  | $ | 6,991 |  |  | $ | 1,887 |
Market risk benefits |  |  |  |  |  |  |  |
Balance, January 1, 2021 pre-adoption |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Cumulative effect of change in credit risk in AOCI |  | (45) |  |  | — |  |  | — |  |  | — |
Cumulative effect to retained earnings |  | 72 |  |  | — |  |  | — |  |  | — |
Reclassification from interest-sensitive contract liabilities |  | 239 |  |  | — |  |  | — |  |  | — |
Balance, January 1, 2021 post-adoption |  | $ | 266 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Less: reinsurance recoverable |  | — |  |  | — |  |  | — |  |  | — |
Balance, January 1, 2021 post-adoption, after reinsurance |  | $ | 266 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred policy acquisition costs |  |  |  |  |  |  |  |
Balance, January 1, 2021 pre-adoption |  | $ | 254 |  |  | $ | — |  |  | $ | — |  |  | $ | 41 |
Amounts previously recorded in AOCI (2) |  | 114 |  |  | — |  |  | — |  |  | — |
Balance, January 1, 2021 post-adoption |  | $ | 368 |  |  | $ | — |  |  | $ | — |  |  | $ | 41 |
(1)Includes adjustments for capping the net premium ratio at 100% and eliminating negative reserves on certain issue year cohorts. (2)Adjustment to remove amounts associated with unrealized gains and losses previously recorded in AOCI (i.e., “shadow adjustments”). (3)Amount includes certain reclassifications to conform with the revised presentation upon adoption of ASU 2018-12, such as reclassifying claims and benefits payable on long-duration contracts to liability for future policy benefits. Impact to Previously Reported Amounts The adoption of ASU 2018-12 impacted the Company’s previously reported consolidated balance sheets as of December 31, 2021 and 2022, and related statements of income, comprehensive income and equity for the each of the two years in the period ended December 31, 2022 as follows (dollars in millions). The adoption of ASU 2018-12 did not materially impact the Company’s previously reported consolidated statements of cash flows for the two years in the period ended December 31, 2022.
|  | As Previously Reported |  | Adoption of ASU 2018-12 |  | As Adjusted
Consolidated Balance Sheets |  |  |  |  |  |
December 31, 2022 |  |  |  |  |  |
Assets |  |  |  |  |  |
Fixed maturity securities available-for-sale, at fair value |  | $ | 52,901 |  |  | $ | — |  |  | $ | 52,901 |
Equity securities, at fair value |  | 134 |  |  | — |  |  | 134 |
Mortgage loans |  | 6,590 |  |  | — |  |  | 6,590 |
Policy loans |  | 1,231 |  |  | — |  |  | 1,231 |
Funds withheld at interest |  | 6,003 |  |  | — |  |  | 6,003 |
Limited partnerships and real estate joint ventures |  | 2,327 |  |  | — |  |  | 2,327 |
Short-term investments |  | 154 |  |  | — |  |  | 154 |
Other invested assets |  | 1,140 |  |  | — |  |  | 1,140 |
Total investments |  | 70,480 |  |  | — |  |  | 70,480 |
Cash and cash equivalents |  | 2,927 |  |  | — |  |  | 2,927 |
Accrued investment income |  | 630 |  |  | — |  |  | 630 |
Premiums receivable and other reinsurance balances |  | 3,013 |  |  | — |  |  | 3,013 |
Reinsurance ceded receivables and other |  | 2,462 |  |  | 209 |  |  | 2,671 |
Deferred policy acquisition costs |  | 3,974 |  |  | 154 |  |  | 4,128 |
Other assets |  | 1,220 |  |  | (165) |  |  | 1,055 |
Total assets |  | $ | 84,706 |  |  | $ | 198 |  |  | $ | 84,904 |
Liabilities and equity |  |  |  |  |  |
Future policy benefits |  | 35,220 |  |  | 469 |  |  | 35,689 |
Interest-sensitive contract liabilities |  | 30,572 |  |  | (230) |  |  | 30,342 |
Market risk benefits, at fair value |  | — |  |  | 247 |  |  | 247 |
Other policy claims and benefits |  | 6,571 |  |  | (4,091) |  |  | 2,480 |
Other reinsurance balances |  | 756 |  |  | (31) |  |  | 725 |
Deferred income taxes |  | 736 |  |  | 647 |  |  | 1,383 |
Other liabilities |  | 2,655 |  |  | 251 |  |  | 2,906 |
Long-term debt |  | 3,961 |  |  | — |  |  | 3,961 |
Total liabilities |  | 80,471 |  |  | (2,738) |  |  | 77,733 |
Equity |  |  |  |  |  |
Preferred stock |  | — |  |  | — |  |  | — |
Common stock |  | 1 |  |  | — |  |  | 1 |
Additional paid-in-capital |  | 2,502 |  |  | — |  |  | 2,502 |
Retained earnings |  | 8,967 |  |  | (798) |  |  | 8,169 |
Treasury stock, at cost |  | (1,720) |  |  | — |  |  | (1,720) |
Accumulated other comprehensive income (loss) |  | (5,605) |  |  | 3,734 |  |  | (1,871) |
Total RGA, Inc. shareholders’ equity |  | 4,145 |  |  | 2,936 |  |  | 7,081 |
Noncontrolling interest |  | 90 |  |  | — |  |  | 90 |
Total equity |  | 4,235 |  |  | 2,936 |  |  | 7,171 |
Total liabilities and shareholders’ equity |  | $ | 84,706 |  |  | $ | 198 |  |  | $ | 84,904 |
|  | As Previously Reported |  | Adoption of ASU 2018-12 |  | As Adjusted
December 31, 2021 |  |  |  |  |  |
Assets |  |  |  |  |  |
Fixed maturity securities available-for-sale, at fair value |  | $ | 60,749 |  |  | $ | — |  |  | $ | 60,749 |
Equity securities, at fair value |  | 151 |  |  | — |  |  | 151 |
Mortgage loans |  | 6,283 |  |  | — |  |  | 6,283 |
Policy loans |  | 1,234 |  |  | — |  |  | 1,234 |
Funds withheld at interest |  | 6,954 |  |  | — |  |  | 6,954 |
Limited partnerships and real estate joint ventures |  | 1,996 |  |  | — |  |  | 1,996 |
Short-term investments |  | 87 |  |  | — |  |  | 87 |
Other invested assets |  | 1,074 |  |  | — |  |  | 1,074 |
Total investments |  | 78,528 |  |  | — |  |  | 78,528 |
Cash and cash equivalents |  | 2,948 |  |  | — |  |  | 2,948 |
Accrued investment income |  | 533 |  |  | — |  |  | 533 |
Premiums receivable and other reinsurance balances |  | 2,888 |  |  | — |  |  | 2,888 |
Reinsurance ceded receivables and other |  | 2,580 |  |  | 585 |  |  | 3,165 |
Deferred policy acquisition costs |  | 3,690 |  |  | 170 |  |  | 3,860 |
Other assets |  | 1,008 |  |  | 11 |  |  | 1,019 |
Total assets |  | $ | 92,175 |  |  | $ | 766 |  |  | $ | 92,941 |
Liabilities and equity |  |  |  |  |  |
Future policy benefits |  | 35,782 |  |  | 11,667 |  |  | 47,449 |
Interest-sensitive contract liabilities |  | 26,377 |  |  | (258) |  |  | 26,119 |
Market risk benefits, at fair value |  | — |  |  | 262 |  |  | 262 |
Other policy claims and benefits |  | 6,993 |  |  | (4,883) |  |  | 2,110 |
Other reinsurance balances |  | 613 |  |  | (56) |  |  | 557 |
Deferred income taxes |  | 2,886 |  |  | (1,387) |  |  | 1,499 |
Other liabilities |  | 2,663 |  |  | 255 |  |  | 2,918 |
Long-term debt |  | 3,667 |  |  | — |  |  | 3,667 |
Collateral finance and securitization notes |  | 180 |  |  | — |  |  | 180 |
Total liabilities |  | 79,161 |  |  | 5,600 |  |  | 84,761 |
Equity |  |  |  |  |  |
Preferred stock |  | — |  |  | — |  |  | — |
Common stock |  | 1 |  |  | — |  |  | 1 |
Additional paid-in-capital |  | 2,461 |  |  | — |  |  | 2,461 |
Retained earnings |  | 8,563 |  |  | (692) |  |  | 7,871 |
Treasury stock, at cost |  | (1,653) |  |  | — |  |  | (1,653) |
Accumulated other comprehensive income (loss) |  | 3,642 |  |  | (4,142) |  |  | (500) |
Total RGA, Inc. shareholders’ equity |  | 13,014 |  |  | (4,834) |  |  | 8,180 |
Noncontrolling interest |  | — |  |  | — |  |  | — |
Total equity |  | 13,014 |  |  | (4,834) |  |  | 8,180 |
Total liabilities and shareholders’ equity |  | $ | 92,175 |  |  | $ | 766 |  |  | $ | 92,941 |
|  | As Previously Reported |  | Adoption of ASU 2018-12 |  | As Adjusted
Consolidated Statements of Income |  |  |  |  |  |
Year ended December 31, 2022 |  |  |  |  |  |
Revenues |  |  |  |  |  |
Net premiums |  | $ | 13,078 |  |  | $ | — |  |  | $ | 13,078 |
Net investment income |  | 3,161 |  |  | — |  |  | 3,161 |
Investment related gains (losses), net |  | (506) |  |  | (33) |  |  | (539) |
Other revenues |  | 525 |  |  | 2 |  |  | 527 |
Total revenues |  | 16,258 |  |  | (31) |  |  | 16,227 |
Benefits and expenses |  |  |  |  |  |
Claims and other policy benefits |  | 12,046 |  |  | (64) |  |  | 11,982 |
Future policy benefits remeasurement (gains) losses |  | — |  |  | 291 |  |  | 291 |
Market risk benefits remeasurement (gains) losses |  | — |  |  | 10 |  |  | 10 |
Interest credited |  | 682 |  |  | — |  |  | 682 |
Policy acquisition costs and other insurance expenses |  | 1,499 |  |  | (155) |  |  | 1,344 |
Other operating expenses |  | 1,009 |  |  | — |  |  | 1,009 |
Interest expense |  | 184 |  |  | — |  |  | 184 |
Collateral finance and securitization expense |  | 7 |  |  | — |  |  | 7 |
Total benefits and expenses |  | 15,427 |  |  | 82 |  |  | 15,509 |
Income before income taxes |  | 831 |  |  | (113) |  |  | 718 |
Provision for income taxes |  | 204 |  |  | (7) |  |  | 197 |
Net income |  | $ | 627 |  |  | $ | (106) |  |  | $ | 521 |
Net income attributable to noncontrolling interest |  | 4 |  |  | — |  |  | 4 |
Net income available to RGA, Inc. shareholders |  | $ | 623 |  |  | $ | (106) |  |  | $ | 517 |
|  | As Previously Reported |  | Adoption of ASU 2018-12 |  | As Adjusted
Year ended December 31, 2021 |  |  |  |  |  |
Revenues |  |  |  |  |  |
Net premiums |  | $ | 12,513 |  |  | $ | — |  |  | $ | 12,513 |
Net investment income |  | 3,138 |  |  | — |  |  | 3,138 |
Investment related gains (losses), net |  | 560 |  |  | 7 |  |  | 567 |
Other revenues |  | 447 |  |  | 2 |  |  | 449 |
Total revenues |  | 16,658 |  |  | 9 |  |  | 16,667 |
Benefits and expenses |  |  |  |  |  |
Claims and other policy benefits |  | 12,776 |  |  | (1,103) |  |  | 11,673 |
Future policy benefits remeasurement (gains) losses |  | — |  |  | 567 |  |  | 567 |
Market risk benefits remeasurement (gains) losses |  | — |  |  | (58) |  |  | (58) |
Interest credited |  | 700 |  |  | — |  |  | 700 |
Policy acquisition costs and other insurance expenses |  | 1,416 |  |  | (91) |  |  | 1,325 |
Other operating expenses |  | 936 |  |  | — |  |  | 936 |
Interest expense |  | 127 |  |  | — |  |  | 127 |
Collateral finance and securitization expense |  | 12 |  |  | — |  |  | 12 |
Total benefits and expenses |  | 15,967 |  |  | (685) |  |  | 15,282 |
Income before income taxes |  | 691 |  |  | 694 |  |  | 1,385 |
Provision for income taxes |  | 74 |  |  | 141 |  |  | 215 |
Net income |  | $ | 617 |  |  | $ | 553 |  |  | $ | 1,170 |
Net income attributable to noncontrolling interest |  | — |  |  | — |  |  | — |
Net income available to RGA, Inc. shareholders |  | $ | 617 |  |  | $ | 553 |  |  | $ | 1,170 |
|  | As Previously Reported |  | Adoption of ASU 2018-12 |  | As Adjusted
Consolidated Statements of Comprehensive Income |  |  |  |  |  |
Year ended December 31, 2022 |  |  |  |  |  |
Net income |  | $ | 627 |  |  | $ | (106) |  |  | $ | 521 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |
Foreign currency translation adjustments |  | (162) |  |  | 60 |  |  | (102) |
Net unrealized investment gains (losses) |  | (9,108) |  |  | (168) |  |  | (9,276) |
Effect of updating discount rates on future policy benefits |  | — |  |  | 7,964 |  |  | 7,964 |
Change in instrument-specific credit risk for market risk benefits |  | — |  |  | 20 |  |  | 20 |
Defined benefit pension and postretirement plan adjustments |  | 23 |  |  | — |  |  | 23 |
Total other comprehensive income (loss), net of tax |  | (9,247) |  |  | 7,876 |  |  | (1,371) |
Total comprehensive income (loss) |  | (8,620) |  |  | 7,770 |  |  | (850) |
Comprehensive income (loss) attributable to noncontrolling interest |  | 4 |  |  | — |  |  | 4 |
Total comprehensive income (loss) available to RGA, Inc. |  | $ | (8,624) |  |  | $ | 7,770 |  |  | $ | (854) |
Year ended December 31, 2021 |  |  |  |  |  |
Net income |  | $ | 617 |  |  | $ | 553 |  |  | $ | 1,170 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |
Foreign currency translation adjustments |  | 60 |  |  | (4) |  |  | 56 |
Net unrealized investment gains (losses) |  | (1,799) |  |  | (34) |  |  | (1,833) |
Effect of updating discount rates on future policy benefits |  | — |  |  | 2,207 |  |  | 2,207 |
Change in instrument-specific credit risk for market risk benefits |  | — |  |  | (43) |  |  | (43) |
Defined benefit pension and postretirement plan adjustments |  | 22 |  |  | — |  |  | 22 |
Total other comprehensive income (loss), net of tax |  | (1,717) |  |  | 2,126 |  |  | 409 |
Total comprehensive income (loss) |  | (1,100) |  |  | 2,679 |  |  | 1,579 |
Comprehensive income (loss) attributable to noncontrolling interest |  | — |  |  | — |  |  | — |
Total comprehensive income (loss) available to RGA, Inc. |  | $ | (1,100) |  |  | $ | 2,679 |  |  | $ | 1,579 |
| RGA, Inc. Shareholders’ Equity |  |  |  |
| Common Stock |  |  |  | Additional Paid In Capital |  | Retained Earnings |  | Treasury Stock |  | Accumulated Other Comprehensive Income (Loss) |  | Total RGA, Inc. Shareholders’Equity |  | Noncontrolling Interest |  | Total Equity
Balance, December 31, 2020 as previously reported | $ | 1 |  |  |  |  | $ | 2,406 |  |  | $ | 8,148 |  |  | $ | (1,562) |  |  | $ | 5,359 |  |  | $ | 14,352 |  |  | $ | — |  |  | $ | 14,352 |
Cumulative effect of modified retrospective adoption of Financial Services – Insurance on long-duration contracts |  |  |  |  |  |  | (1,187) |  |  |  |  | (6,304) |  |  | (7,491) |  |  |  |  | (7,491) |
Cumulative effect of full retrospective adoption of Financial Services – Insurance on market risk benefits |  |  |  |  |  |  | (58) |  |  |  |  | 36 |  |  | (22) |  |  |  |  | (22) |
Adjusted balance, January 1, 2021 | 1 |  |  |  |  | 2,406 |  |  | 6,903 |  |  | (1,562) |  |  | (909) |  |  | 6,839 |  |  | — |  |  | 6,839 |
Net income |  |  |  |  |  |  | 1,170 |  |  |  |  |  |  | 1,170 |  |  |  |  | 1,170 |
Total other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  | 409 |  |  | 409 |  |  |  |  | 409 |
Dividends to shareholders, $2.86 per share |  |  |  |  |  |  | (194) |  |  |  |  |  |  | (194) |  |  |  |  | (194) |
Purchase of treasury stock |  |  |  |  |  |  |  |  | (99) |  |  |  |  | (99) |  |  |  |  | (99) |
Reissuance of treasury stock |  |  |  |  | 55 |  |  | (8) |  |  | 8 |  |  |  |  | 55 |  |  |  |  | 55 |
Balance, December, 31, 2021 | 1 |  |  |  |  | 2,461 |  |  | 7,871 |  |  | (1,653) |  |  | (500) |  |  | 8,180 |  |  | — |  |  | 8,180 |
Issuance of preferred interests by subsidiary |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 |  |  | 90 |
Change in equity of noncontrolling interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (4) |  |  | (4) |
Net income |  |  |  |  |  |  | 517 |  |  |  |  |  |  | 517 |  |  | 4 |  |  | 521 |
Total other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  | (1,371) |  |  | (1,371) |  |  |  |  | (1,371) |
Dividends to shareholders, $3.06 per share |  |  |  |  |  |  | (205) |  |  |  |  |  |  | (205) |  |  |  |  | (205) |
Purchase of treasury stock |  |  |  |  |  |  |  |  | (81) |  |  |  |  | (81) |  |  |  |  | (81) |
Reissuance of treasury stock |  |  |  |  | 41 |  |  | (14) |  |  | 14 |  |  |  |  | 41 |  |  |  |  | 41 |
Balance, December 31, 2022 | $ | 1 |  |  |  |  | $ | 2,502 |  |  | $ | 8,169 |  |  | $ | (1,720) |  |  | $ | (1,871) |  |  | $ | 7,081 |  |  | $ | 90 |  |  | $ | 7,171 |
Additional Transition and Other Disclosures ASU 2018-12 expanded the disclosure requirements for long-duration contracts in the annual and interim financial statements. The following tables provide additional information regarding the transition adjustments and disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits and deferred policy acquisition costs for the years ended December 31, 2022 and 2021 (dollars in millions). Liability for Future Policy Benefits
For the year ended December 31, 2022: |  | U.S. and Latin America – Traditional |  | Canada – Traditional |  | Europe, Middle East and Africa – Traditional |  | Asia Pacific – Traditional
Present Value of Expected Net Premiums |  |  |  |  |  |  |  |
Beginning of year balance at original discount rate |  | $ | 73,447 |  |  | $ | 21,989 |  |  | $ | 14,440 |  |  | $ | 37,943 |
Effect of changes in cash flow assumptions |  | (805) |  |  | 189 |  |  | 123 |  |  | 1,604 |
Effect of actual variances from expected experience |  | (4) |  |  | 212 |  |  | 835 |  |  | 197 |
Adjusted balance, beginning of year |  | 72,638 |  |  | 22,390 |  |  | 15,398 |  |  | 39,744 |
Issuances (1) |  | 3,329 |  |  | 635 |  |  | 1,083 |  |  | 3,663 |
Interest accrual (2) |  | 3,423 |  |  | 748 |  |  | 500 |  |  | 1,032 |
Net premiums collected (3) |  | (5,182) |  |  | (950) |  |  | (1,324) |  |  | (1,989) |
Derecognition (4) |  | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation |  | (1) |  |  | (1,493) |  |  | (1,413) |  |  | (1,944) |
Ending balance at original discount rate |  | 74,207 |  |  | 21,330 |  |  | 14,244 |  |  | 40,506 |
Effect of changes in discount rate assumptions |  | (6,303) |  |  | (4,899) |  |  | (2,639) |  |  | (10,927) |
Balance, end of period |  | $ | 67,904 |  |  | $ | 16,431 |  |  | $ | 11,605 |  |  | $ | 29,579 |
Present Value of Expected Future Policy Benefits |  |  |  |  |  |  |  |
Beginning of year balance at original discount rate |  | $ | 84,075 |  |  | $ | 25,440 |  |  | $ | 15,664 |  |  | $ | 41,971 |
Effect of changes in cash flow assumptions |  | (675) |  |  | 191 |  |  | 136 |  |  | 1,681 |
Effect of actual variances from expected experience |  | 85 |  |  | 212 |  |  | 813 |  |  | 234 |
Adjusted balance, beginning of year |  | 83,485 |  |  | 25,843 |  |  | 16,613 |  |  | 43,886 |
Issuances (1) |  | 3,333 |  |  | 635 |  |  | 1,083 |  |  | 3,667 |
Interest accrual (2) |  | 3,940 |  |  | 958 |  |  | 530 |  |  | 1,171 |
Benefit payments (5) |  | (5,472) |  |  | (1,051) |  |  | (1,260) |  |  | (1,832) |
Derecognition (4) |  | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation |  | (1) |  |  | (1,730) |  |  | (1,512) |  |  | (2,107) |
Ending balance at original discount rate |  | 85,285 |  |  | 24,655 |  |  | 15,454 |  |  | 44,785 |
Effect of changes in discount rate assumptions |  | (7,907) |  |  | (4,273) |  |  | (2,808) |  |  | (12,858) |
Balance, end of period |  | $ | 77,378 |  |  | $ | 20,382 |  |  | $ | 12,646 |  |  | $ | 31,927 |
Liability for future policy benefits |  | $ | 9,474 |  |  | $ | 3,951 |  |  | $ | 1,041 |  |  | $ | 2,348 |
Less: reinsurance recoverable |  | (421) |  |  | (265) |  |  | (31) |  |  | (100) |
Net liability for future policy benefits |  | $ | 9,053 |  |  | $ | 3,686 |  |  | $ | 1,010 |  |  | $ | 2,248 |
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts. (2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate. (3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments. (4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model. (5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
For the year ended December 31, 2021: |  | U.S. and Latin America – Traditional |  | Canada – Traditional |  | Europe, Middle East and Africa – Traditional |  | Asia Pacific – Traditional
Present Value of Expected Net Premiums |  |  |  |  |  |  |  |
Balance, beginning of year |  | $ | 70,319 |  | $ | 21,332 |  | $ | 14,033 |  | $ | 34,167
Effect of adoption of Financial Services – Insurance |  | 20,758 |  | 1,785 |  | 2,599 |  | (3,385)
Adjusted balance, beginning of year |  | $ | 91,077 |  | $ | 23,117 |  | $ | 16,632 |  | $ | 30,782
Beginning of year balance at original discount rate |  | $ | 70,317 |  | $ | 21,299 |  | $ | 13,999 |  | $ | 34,133
Effect of changes in cash flow assumptions |  | 984 |  | (45) |  | 48 |  | 600
Effect of actual variances from expected experience |  | 254 |  | (24) |  | 379 |  | 402
Adjusted balance, beginning of year |  | 71,555 |  | 21,230 |  | 14,426 |  | 35,135
Issuances (1) |  | 3,522 |  | 761 |  | 2,417 |  | 4,575
Interest accrual (2) |  | 3,400 |  | 775 |  | 553 |  | 970
Net premiums collected (3) |  | (5,025) |  | (947) |  | (1,488) |  | (2,038)
Derecognition (4) |  | — |  | — |  | (1,167) |  | —
Foreign currency translation |  | (5) |  | 170 |  | (301) |  | (699)
Ending balance at original discount rate |  | 73,447 |  | 21,989 |  | 14,440 |  | 37,943
Effect of changes in discount rate assumptions |  | 15,771 |  | (199) |  | 1,280 |  | (5,458)
Balance, end of period |  | $ | 89,218 |  | $ | 21,790 |  | $ | 15,720 |  | $ | 32,485
Present Value of Expected Future Policy Benefits |  |  |  |  |  |  |  |
Balance, beginning of year |  | $ | 80,275 |  | $ | 24,587 |  | $ | 15,246 |  | $ | 37,335
Effect of adoption of Financial Services – Insurance |  | 26,196 |  | 4,469 |  | 2,989 |  | (3,694)
Adjusted balance, beginning of year |  | 106,471 |  | 29,056 |  | 18,235 |  | 33,641
Beginning of year balance at original discount rate |  | $ | 81,172 |  | $ | 24,587 |  | $ | 15,281 |  | $ | 37,765
Effect of changes in cash flow assumptions |  | 1,021 |  | (45) |  | 42 |  | 699
Effect of actual variances from expected experience |  | 517 |  | (24) |  | 422 |  | 559
Adjusted balance, beginning of year |  | 82,710 |  | 24,518 |  | 15,745 |  | 39,023
Issuances (1) |  | 3,537 |  | 761 |  | 2,436 |  | 4,585
Interest accrual (2) |  | 3,916 |  | 992 |  | 598 |  | 1,107
Benefit payments (5) |  | (6,083) |  | (1,025) |  | (1,609) |  | (1,971)
Derecognition (4) |  | — |  | — |  | (1,176) |  | —
Foreign currency translation |  | (5) |  | 194 |  | (330) |  | (773)
Ending balance at original discount rate |  | 84,075 |  | 25,440 |  | 15,664 |  | 41,971
Effect of changes in discount rate assumptions |  | 19,185 |  | 1,905 |  | 1,445 |  | (6,475)
Balance, end of period |  | $ | 103,260 |  | $ | 27,345 |  | $ | 17,109 |  | $ | 35,496
Liability for future policy benefits |  | $ | 14,042 |  | $ | 5,555 |  | $ | 1,389 |  | $ | 3,011
Less: reinsurance recoverable |  | (697) |  | (367) |  | (34) |  | (116)
Net liability for future policy benefits |  | $ | 13,345 |  | $ | 5,188 |  | $ | 1,355 |  | $ | 2,895
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts. (2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate. (3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments. (4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model. (5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on the revised assumptions.
For the year ended December 31, 2022: |  | U.S. and Latin America – Financial Solutions |  | Canada – Financial Solutions |  | Europe, Middle East and Africa – Financial Solutions |  | Asia Pacific – Financial Solutions
Present Value of Expected Net Premiums |  |  |  |  |  |  |  |
Beginning of year balance at original discount rate |  | $ | 228 |  |  | $ | 3,329 |  |  | $ | 31,973 |  |  | $ | 1,051 |
Effect of changes in cash flow assumptions |  | (31) |  |  | — |  |  | (126) |  |  | 3 |
Effect of actual variances from expected experience |  | (22) |  |  | (12) |  |  | 573 |  |  | 29 |
Adjusted balance, beginning of year |  | 175 |  |  | 3,317 |  |  | 32,420 |  |  | 1,083 |
Issuances (1) |  | 1,580 |  |  | 574 |  |  | 12,594 |  |  | 1,465 |
Interest accrual (2) |  | 41 |  |  | 112 |  |  | 698 |  |  | 24 |
Net premiums collected (3) |  | (125) |  |  | (354) |  |  | (3,169) |  |  | (764) |
Derecognition (4) |  | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation |  | — |  |  | (255) |  |  | (3,761) |  |  | (203) |
Ending balance at original discount rate |  | 1,671 |  |  | 3,394 |  |  | 38,782 |  |  | 1,605 |
Effect of changes in discount rate assumptions |  | (284) |  |  | (433) |  |  | (8,805) |  |  | 25 |
Balance, end of period |  | $ | 1,387 |  |  | $ | 2,961 |  |  | $ | 29,977 |  |  | $ | 1,630 |
Present Value of Expected Future Policy Benefits |  |  |  |  |  |  |  |
Beginning of year balance at original discount rate |  | $ | 4,628 |  |  | $ | 3,393 |  |  | $ | 38,196 |  |  | $ | 6,062 |
Effect of changes in cash flow assumptions |  | (34) |  |  | — |  |  | (140) |  |  | 3 |
Effect of actual variances from expected experience |  | (46) |  |  | (24) |  |  | 566 |  |  | 36 |
Adjusted balance, beginning of year |  | 4,548 |  |  | 3,369 |  |  | 38,622 |  |  | 6,101 |
Issuances (1) |  | 1,580 |  |  | 574 |  |  | 12,594 |  |  | 1,465 |
Interest accrual (2) |  | 220 |  |  | 115 |  |  | 856 |  |  | 70 |
Benefit payments (5) |  | (525) |  |  | (351) |  |  | (3,355) |  |  | (227) |
Derecognition (4) |  | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation |  | — |  |  | (260) |  |  | (4,387) |  |  | (848) |
Ending balance at original discount rate |  | 5,823 |  |  | 3,447 |  |  | 44,330 |  |  | 6,561 |
Effect of changes in discount rate assumptions |  | (617) |  |  | (432) |  |  | (9,719) |  |  | (435) |
Balance, end of period |  | $ | 5,206 |  |  | $ | 3,015 |  |  | $ | 34,611 |  |  | $ | 6,126 |
Liability for future policy benefits |  | $ | 3,819 |  |  | $ | 54 |  |  | $ | 4,634 |  |  | $ | 4,496 |
Less: reinsurance recoverable |  | — |  |  | — |  |  | — |  |  | — |
Net liability for future policy benefits |  | $ | 3,819 |  |  | $ | 54 |  |  | $ | 4,634 |  |  | $ | 4,496 |
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts. (2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate. (3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments. (4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model. (5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
For the year ended December 31, 2021: |  | U.S. and Latin America – Financial Solutions |  | Canada – Financial Solutions |  | Europe, Middle East and Africa – Financial Solutions |  | Asia Pacific – Financial Solutions
Present Value of Expected Net Premiums |  |  |  |  |  |  |  |
Balance, beginning of year |  | $ | 285 |  |  | $ | 3,568 |  |  | $ | 28,055 |  |  | $ | 781 |
Effect of adoption of Financial Services – Insurance |  | 102 |  |  | 343 |  |  | 3,634 |  |  | 114 |
Adjusted balance, beginning of year |  | 387 |  |  | 3,911 |  |  | 31,689 |  |  | 895 |
Beginning of year balance at original discount rate |  | $ | 314 |  |  | $ | 3,556 |  |  | $ | 27,799 |  |  | $ | 781 |
Effect of changes in cash flow assumptions |  | (33) |  |  | (30) |  |  | (76) |  |  | — |
Effect of actual variances from expected experience |  | (29) |  |  | 17 |  |  | 997 |  |  | 777 |
Adjusted balance, beginning of year |  | 252 |  |  | 3,543 |  |  | 28,720 |  |  | 1,558 |
Issuances (1) |  | — |  |  | — |  |  | 8,357 |  |  | 3,156 |
Interest accrual (2) |  | 3 |  |  | 109 |  |  | 714 |  |  | 28 |
Net premiums collected (3) |  | (27) |  |  | (349) |  |  | (3,590) |  |  | (3,621) |
Derecognition (4) |  | — |  |  | — |  |  | (1,669) |  |  | — |
Foreign currency translation |  | — |  |  | 26 |  |  | (559) |  |  | (70) |
Ending balance at original discount rate |  | 228 |  |  | 3,329 |  |  | 31,973 |  |  | 1,051 |
Effect of changes in discount rate assumptions |  | 28 |  |  | 97 |  |  | 668 |  |  | 247 |
Balance, end of period |  | $ | 256 |  |  | $ | 3,426 |  |  | $ | 32,641 |  |  | $ | 1,298 |
Present Value of Expected Future Policy Benefits |  |  |  |  |  |  |  |
Balance, beginning of year |  | $ | 4,951 |  |  | $ | 3,584 |  |  | $ | 33,410 |  |  | $ | 2,645 |
Effect of adoption of Financial Services – Insurance |  | 931 |  |  | 372 |  |  | 4,901 |  |  | 125 |
Adjusted balance, beginning of year |  | 5,882 |  |  | 3,956 |  |  | 38,311 |  |  | 2,770 |
Beginning of year balance at original discount rate |  | $ | 4,951 |  |  | $ | 3,592 |  |  | $ | 33,410 |  |  | $ | 2,653 |
Effect of changes in cash flow assumptions |  | (33) |  |  | 6 |  |  | (76) |  |  | — |
Effect of actual variances from expected experience |  | (37) |  |  | 6 |  |  | 1,000 |  |  | 777 |
Adjusted balance, beginning of year |  | 4,881 |  |  | 3,604 |  |  | 34,334 |  |  | 3,430 |
Issuances (1) |  | — |  |  | — |  |  | 8,357 |  |  | 3,156 |
Interest accrual (2) |  | 193 |  |  | 112 |  |  | 890 |  |  | 63 |
Benefit payments (5) |  | (446) |  |  | (350) |  |  | (3,064) |  |  | (162) |
Derecognition (4) |  | — |  |  | — |  |  | (1,682) |  |  | — |
Foreign currency translation |  | — |  |  | 27 |  |  | (639) |  |  | (425) |
Ending balance at original discount rate |  | 4,628 |  |  | 3,393 |  |  | 38,196 |  |  | 6,062 |
Effect of changes in discount rate assumptions |  | 575 |  |  | 114 |  |  | 1,174 |  |  | 250 |
Balance, end of period |  | $ | 5,203 |  |  | $ | 3,507 |  |  | $ | 39,370 |  |  | $ | 6,312 |
Liability for future policy benefits |  | $ | 4,947 |  |  | $ | 81 |  |  | $ | 6,729 |  |  | $ | 5,014 |
Less: reinsurance recoverable |  | — |  |  | — |  |  | — |  |  | — |
Net liability for future policy benefits |  | $ | 4,947 |  |  | $ | 81 |  |  | $ | 6,729 |  |  | $ | 5,014 |
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts. (2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate. (3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments. (4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model. (5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions. Policyholder Account Balances The following tables provide the balances and changes in the Company’s policyholder account balances as of and for the years ending December 31, 2022 and 2021 (dollars in millions):
For the year ended December 31, 2022: |  | U.S. and Latin America – Traditional |  | U.S. and Latin America – Financial Solutions |  | Asia Pacific – Financial Solutions
Balance, beginning of year |  | $ | 1,719 |  |  | $ | 18,758 |  |  | $ | 1,621 |
Deposits |  | 24 |  |  | 1,289 |  |  | 2,521 |
Policy charges |  | (32) |  |  | (33) |  |  | (134) |
Surrenders and withdrawals |  | (17) |  |  | (1,258) |  |  | (639) |
Benefit payments |  | (76) |  |  | (448) |  |  | (46) |
Interest credited |  | 65 |  |  | 598 |  |  | 51 |
Foreign currency translation |  | — |  |  | — |  |  | (23) |
Balance, end of period |  | $ | 1,683 |  |  | $ | 18,906 |  |  | $ | 3,351 |
Less: reinsurance recoverable |  | — |  |  | (1,543) |  |  | — |
Balance, end of period, after reinsurance |  | $ | 1,683 |  |  | $ | 17,363 |  |  | $ | 3,351 |
For the year ended December 31, 2021: |  | U.S. and Latin America – Traditional |  | U.S. and Latin America – Financial Solutions |  | Asia Pacific – Financial Solutions
Balance, beginning of year |  | $ | 1,752 |  |  | $ | 16,273 |  |  | $ | 809 |
Deposits |  | 25 |  |  | 3,290 |  |  | 868 |
Policy charges |  | (32) |  |  | (31) |  |  | (1) |
Surrenders and withdrawals |  | (13) |  |  | (1,015) |  |  | (36) |
Benefit payments |  | (79) |  |  | (404) |  |  | (24) |
Interest credited |  | 66 |  |  | 645 |  |  | 19 |
Foreign currency translation |  | — |  |  | — |  |  | (14) |
Balance, end of period |  | $ | 1,719 |  |  | $ | 18,758 |  |  | $ | 1,621 |
Less: reinsurance recoverable |  | — |  |  | (1,561) |  |  | — |
Balance, end of period, after reinsurance |  | $ | 1,719 |  |  | $ | 17,197 |  |  | $ | 1,621 |
Market Risk Benefits The following tables provide the balances and changes in the Company’s liabilities for market risk benefits as of and for the years ending December 31, 2022 and 2021 (dollars in millions):
For the year ended December 31, 2022: |  | U.S. and Latin America – Financial Solutions
Balance, beginning of year |  | $ | 262 |
Balance, beginning of year, before effect of changes in the instrument-specific credit risk |  | 254 |
Interest accrual |  | 54 |
Attributed fees collected |  | 28 |
Benefit payments |  | (9) |
Effect of changes in future assumptions |  | 18 |
Effect of changes in interest rates |  | (175) |
Effect of changes in equity markets |  | 48 |
Effect of changes in volatility |  | 19 |
Other market impacts |  | 7 |
Actual policyholder behavior different from expected behavior |  | 19 |
Balance, end of period, before effect of changes in the instrument-specific credit risk |  | 263 |
Effect of changes in the instrument-specific credit risk |  | (16) |
Balance, end of period |  | 247 |
Less: reinsurance recoverable |  | — |
Balance, end of period, after reinsurance |  | $ | 247 |
For the year ended December 31, 2021: |  | U.S. and Latin America – Financial Solutions
Balance, beginning of year |  | $ | — |
Effect of adoption of Financial Services – Insurance |  | 266 |
Adjusted balance, beginning of year |  | 266 |
Balance, beginning of year, before effect of changes in the instrument-specific credit risk |  | 311 |
Interest accrual |  | 3 |
Attributed fees collected |  | 12 |
Benefit payments |  | (14) |
Effect of changes in future assumptions |  | 25 |
Effect of changes in interest rates |  | (51) |
Effect of changes in equity markets |  | (49) |
Effect of changes in volatility |  | (2) |
Other market impacts |  | 5 |
Actual policyholder behavior different from expected behavior |  | 14 |
Balance, end of period, before effect of changes in the instrument-specific credit risk |  | 254 |
Effect of changes in the instrument-specific credit risk |  | 8 |
Balance, end of period |  | 262 |
Less: reinsurance recoverable |  | — |
Balance, end of period, after reinsurance |  | $ | 262 |
Deferred Policy Acquisition Costs The following tables provide the balances and changes in the Company’s deferred policy acquisition costs as of and for the years ending December 31, 2022 and 2021 (dollars in millions):
For the year ended December 31, 2022: |  | U.S. and Latin America – Traditional |  | Canada – Traditional |  | Europe, Middle East and Africa – Traditional |  | Asia Pacific – Traditional
Balance, beginning of year |  | $ | 1,947 |  |  | $ | 191 |  |  | $ | 270 |  |  | $ | 1,056 |
Capitalization |  | 284 |  |  | 10 |  |  | 83 |  |  | 86 |
Amortization expense |  | (144) |  |  | (17) |  |  | (38) |  |  | (67) |
Foreign currency translation |  | — |  |  | (13) |  |  | (21) |  |  | (32) |
Balance, end of period |  | $ | 2,087 |  |  | $ | 171 |  |  | $ | 294 |  |  | $ | 1,043 |
For the year ended December 31, 2022: |  | U.S. and Latin America – Financial Solutions |  | Canada – Financial Solutions |  | Europe, Middle East and Africa – Financial Solutions |  | Asia Pacific – Financial Solutions
Balance, beginning of year |  | $ | 312 |  |  | $ | — |  |  | $ | — |  |  | $ | 81 |
Capitalization |  | 87 |  |  | — |  |  | — |  |  | 121 |
Amortization expense |  | (58) |  |  | — |  |  | — |  |  | (13) |
Foreign currency translation |  | — |  |  | — |  |  | — |  |  | (1) |
Balance, end of period |  | $ | 341 |  |  | $ | — |  |  | $ | — |  |  | $ | 188 |
For the year ended December 31, 2021: |  | U.S. and Latin America – Traditional |  | Canada – Traditional |  | Europe, Middle East and Africa – Traditional |  | Asia Pacific – Traditional
Balance, beginning of year |  | $ | 1,816 |  |  | $ | 195 |  |  | $ | 264 |  |  | $ | 1,046 |
Effect of adoption of Financial Services – Insurance |  | — |  |  | — |  |  | — |  |  | — |
Adjusted balance, beginning of year |  | 1,816 |  |  | 195 |  |  | 264 |  |  | 1,046 |
Capitalization |  | 254 |  |  | 8 |  |  | 42 |  |  | 83 |
Amortization expense |  | (123) |  |  | (13) |  |  | (24) |  |  | (55) |
Foreign currency translation |  | — |  |  | 1 |  |  | (12) |  |  | (18) |
Balance, end of period |  | $ | 1,947 |  |  | $ | 191 |  |  | $ | 270 |  |  | $ | 1,056 |
For the year ended December 31, 2021: |  | U.S. and Latin America – Financial Solutions |  | Canada – Financial Solutions |  | Europe, Middle East and Africa – Financial Solutions |  | Asia Pacific – Financial Solutions
Balance, beginning of year |  | $ | 254 |  |  | $ | — |  |  | $ | — |  |  | $ | 41 |
Effect of adoption of Financial Services – Insurance |  | 114 |  |  | — |  |  | — |  |  | — |
Adjusted balance, beginning of year |  | 368 |  |  | — |  |  | — |  |  | 41 |
Capitalization |  | 8 |  |  | — |  |  | — |  |  | 49 |
Amortization expense |  | (64) |  |  | — |  |  | — |  |  | (8) |
Foreign currency translation |  | — |  |  | — |  |  | — |  |  | (1) |
Balance, end of period |  | $ | 312 |  |  | $ | — |  |  | $ | — |  |  | $ | 81 |

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- References No definition available. + Details
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- Definition The entire disclosure for change in accounting principle. 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