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Adoption of ASU 2018-12 (Tables) | 3 Months Ended
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Mar. 31, 2023
Adoption of ASU 2018-12 [Abstract] |
Cumulative Effect Adjustments to Components of Stockholders' Equit |
|  |  |  |  | Total |
| Retained |  |  |  | Stockholders’ |
| Earnings |  | AOCI |  | Equity |
Shadow impacts: |  |  |  |  |  |  |  |  |
DAC, VOBA, DSI and DFEL | $ | - |  | $ | 2,271 |  | $ | 2,271 |
Additional liabilities for other |  |  |  |  |  |  |  |  |
insurance benefits |  | - |  |  | 1,197 |  |  | 1,197 |
LFPB and Other (1) |  | (187 | ) |  | (1,715 | ) |  | (1,902 | )
MRBs (2) |  | (6,086 | ) |  | 2,874 |  |  | (3,212 | )
Total | $ | (6,273 | ) | $ | 4,627 |  | $ | (1,646 | )
(1)Includes impacts to reserves and ceded reserves reported within future contract benefits and reinsurance recoverables, respectively on the Consolidated Balance Sheets, excluding shadow impacts on additional liabilities for other insurance benefits. (2)Includes impacts related to MRB assets and MRB liabilities reported on the Consolidated Balance Sheets, and ceded MRBs reported within other assets on the Consolidated Balance Sheets.
Effect of Accounting Adoption to Consolidated Balance Sheets |
|  |  |  |  | Total |
| Retained |  |  |  | Stockholders’ |
| Earnings |  | AOCI |  | Equity |
DAC, VOBA and DSI | $ | - |  | $ | 6,079 |  | $ | 6,079 |
Reinsurance recoverables |  | 607 |  |  | 2,431 |  |  | 3,038 |
Other assets (1) |  | 242 |  |  | - |  |  | 242 |
Future contract benefits |  | (844 | ) |  | (3,088 | ) |  | (3,932 | )
MRBs, net |  | (7,956 | ) |  | 3,656 |  |  | (4,300 | )
DFEL |  | - |  |  | (3,190 | ) |  | (3,190 | )
Other liabilities (2) |  | 1,678 |  |  | (1,261 | ) |  | 417 |
Total | $ | (6,273 | ) | $ | 4,627 |  | $ | (1,646 | )
(1)Consists primarily of ceded MRB adjustments. (2)Consists of state and federal tax adjustments.
Summary of Changes in DAC, VOBA and DSI |
|  |  | Impact from |  |  |
| Balance |  | Removal of |  | Balance |
| Pre-Adoption |  | Shadow |  | Post-Adoption |
| December 31, |  | Balances |  | January 1, |
| 2020 |  | from AOCI |  | 2021 |
DAC |  |  |  |  |  |  |  |  |
Traditional Life | $ | 1,082 |  | $ | - |  | $ | 1,082 |
UL and Other |  | 394 |  |  | 5,031 |  |  | 5,425 |
Variable Annuities |  | 3,518 |  |  | 52 |  |  | 3,570 |
Fixed Annuities |  | 264 |  |  | 215 |  |  | 479 |
Group Protection |  | 187 |  |  | - |  |  | 187 |
Retirement Plan Services |  | 120 |  |  | 112 |  |  | 232 |
Total DAC |  | 5,565 |  |  | 5,410 |  |  | 10,975 |
VOBA |  |  |  |  |  |  |  |  |
Traditional Life |  | 67 |  |  | - |  |  | 67 |
UL and Other |  | 180 |  |  | 630 |  |  | 810 |
Fixed Annuities |  | - |  |  | 23 |  |  | 23 |
Total VOBA |  | 247 |  |  | 653 |  |  | 900 |
DSI (1) |  |  |  |  |  |  |  |  |
UL and Other |  | 35 |  |  | - |  |  | 35 |
Variable Annuities |  | 148 |  |  | 2 |  |  | 150 |
Fixed Annuities |  | 17 |  |  | 13 |  |  | 30 |
Retirement Plan Services |  | 13 |  |  | 1 |  |  | 14 |
Total DSI |  | 213 |  |  | 16 |  |  | 229 |
Total DAC, VOBA and DSI | $ | 6,025 |  | $ | 6,079 |  | $ | 12,104 |
(1)Pre-adoption DSI balance was previously reported in other assets on the Consolidated Balance Sheets.
Summary of Changes in DFEL |
|  |  |  | Impact from |  |  |  |
| Balance |  | Removal of |  | Balance |
| Pre-Adoption |  | Shadow |  | Post-Adoption |
| December 31, |  | Balances |  | January 1, |
| 2020 |  | from AOCI |  | 2021 |
DFEL (1) |  |  |  |  |  |  |  |  |
UL and Other | $ | 113 |  | $ | 3,185 |  | $ | 3,298 |
Variable Annuities |  | 288 |  |  | 5 |  |  | 293 |
Total DFEL | $ | 401 |  | $ | 3,190 |  | $ | 3,591 |
(1)Pre-adoption DFEL balance was previously reported in other contract holder funds on the Consolidated Balance Sheets.
Summary of Changes in Future Contract Benefits |
|  |  |  | Impact from |  | Single-A |  |  |  |  |  |  |
| Balance |  | Removal of |  | Discount |  | Cumulative |  | Balance |
| Pre-Adoption |  | Shadow |  | Rate |  | Effect to |  | Post-Adoption |
| December 31, |  | Balances |  | Measurement |  | Retained |  | January 1, |
| 2020 (1) |  | from AOCI |  | in AOCI |  | Earnings |  | 2021 |
LFPB |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Traditional Life | $ | 3,483 |  | $ | - |  | $ | 943 |  | $ | - |  | $ | 4,426 |
Payout Annuities |  | 2,314 |  |  | (105 | ) |  | 415 |  |  | 44 |  |  | 2,668 |
Liability for Future Claims |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Group Protection |  | 5,422 |  |  | - |  |  | 517 |  |  | - |  |  | 5,939 |
Additional Liabilities for Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance Benefits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
UL and Other |  | 13,649 |  |  | (1,515 | ) |  | - |  |  | 174 |  |  | 12,308 |
Other Operations (2) |  | 10,463 |  |  | (80 | ) |  | 2,913 |  |  | 626 |  |  | 13,922 |
Other (3) |  | 3,565 |  |  | - |  |  | - |  |  | - |  |  | 3,565 |
Total future contract benefits | $ | 38,896 |  | $ | (1,700 | ) | $ | 4,788 |  | $ | 844 |  | $ | 42,828 |
(1)Balance pre-adoption excludes features that meet the definition of an MRB upon transition, including features that were previously accounted for as an additional liability. Also, balance pre-adoption reflects certain reclassifications of non-life contingent account balances from future contract benefits to policyholder account balances within the Consolidated Balance Sheets. (2)Represents future contract benefits reported in Other Operations primarily attributable to the indemnity reinsurance agreements with Protective ($6.3 billion and $7.4 billion as of December 31, 2020, and January 1, 2021, respectively) and Swiss Re ($2.0 billion and $3.5 billion as of December 31, 2020, and January 1, 2021, respectively). Includes LFPB and additional liabilities balances. (3)Represents other miscellaneous reserves outside the scope of ASU 2018-12.
Summary of Balances of LFPB Liability for Future Claims |
|  |  |  | Single-A |  |  |  |  |  |  |
| Balance |  | Discount |  | Cumulative |  | Balance |
| Pre-Adoption |  | Rate |  | Effect to |  | Post-Adoption |
| December 31, |  | Measurement |  | Retained |  | January 1, |
| 2020 (1) |  | in AOCI |  | Earnings |  | 2021 |
Reinsured LFPB |  |  |  |  |  |  |  |  |  |  |  |
Traditional Life | $ | 755 |  | $ | 151 |  | $ | - |  | $ | 906 |
Payout Annuities |  | 2 |  |  | - |  |  | - |  |  | 2 |
Reinsured Liability for Future |  |  |  |  |  |  |  |  |  |  |  |
Claims |  |  |  |  |  |  |  |  |  |  |  |
Group Protection |  | 148 |  |  | 14 |  |  | - |  |  | 162 |
Reinsured Additional Liabilities |  |  |  |  |  |  |  |  |  |  |  |
for Other Insurance Benefits |  |  |  |  |  |  |  |  |  |  |  |
UL and Other |  | 335 |  |  | - |  |  | (3 | ) |  | 332 |
Reinsured Other Operations (2) |  | 14,320 |  |  | 2,266 |  |  | 610 |  |  | 17,196 |
Reinsured Other (3) |  | 790 |  |  | - |  |  | - |  |  | 790 |
Total reinsurance recoverables | $ | 16,350 |  | $ | 2,431 |  | $ | 607 |  | $ | 19,388 |
(1)Balance pre-adoption excludes features that meet the definition of a ceded MRB upon transition, including features that were previously accounted for as reinsured additional liabilities. (2)Represents reinsurance recoverables reported in Other Operations primarily attributable to the indemnity reinsurance agreements with Protective ($12.0 billion and $13.2 billion as of December 31, 2020, and January 1, 2021, respectively) and Swiss Re ($1.3 billion and $2.6 billion as of December 31, 2020, and January 1, 2021, respectively). Includes reinsured LFPB and reinsured additional liabilities balances. (3)Represents other miscellaneous reinsurance recoverables outside the scope of ASU 2018-12.
Summary of Changes in Net Liability Position of MRBs |
| Balance |  | Cumulative |  | Cumulative |  | Balance |
| Pre-Adoption |  | Effect of |  | Effect to |  | Post-Adoption |
| December 31, |  | Credit Risk |  | Retained |  | January 1, |
| 2020 (1) |  | to AOCI |  | Earnings |  | 2021 |
MRBs, Net |  |  |  |  |  |  |  |  |  |  |  |
Variable Annuities | $ | 831 |  | $ | (3,592 | ) | $ | 7,968 |  | $ | 5,207 |
Fixed Annuities |  | 192 |  |  | (52 | ) |  | (22 | ) |  | 118 |
Retirement Plan Services |  | 11 |  |  | (12 | ) |  | 10 |  |  | 9 |
Total MRBs, net | $ | 1,034 |  | $ | (3,656 | ) | $ | 7,956 |  | $ | 5,334 |
(1)Balance pre-adoption includes all features that meet the definition of an MRB upon transition, including features that were previously accounted for as additional liabilities or embedded derivatives.
Summary of Changes in Net Asset Position of Ceded MRBs |
| Balance |  | Cumulative |  | Balance |
| Pre-Adoption |  | Effect to |  | Post-Adoption |
| December 31, |  | Retained |  | January 1, |
| 2020 (1) |  | Earnings |  | 2021 |
Ceded MRBs, Net |  |  |  |  |  |  |  |  |
Variable Annuities | $ | 215 |  | $ | 121 |  | $ | 336 |
Total ceded MRBs, net | $ | 215 |  | $ | 121 |  | $ | 336 |
(1)Balance pre-adoption includes all features that meet the definition of a ceded MRB upon transition, including features that were previously accounted for as reinsured additional liabilities or embedded derivatives.
Summary of Effects of Adoption of ASU 2018-12 | The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Balance Sheets:
| As of December 31, 2022 |
|  |  | Adoption |  |  |  |
| As |  | of New |  |  |  |
| Previously |  | Accounting |  | As |
| Reported (1) |  | Standard |  | Adjusted |
Deferred acquisition costs, value of business acquired and |  |  |  |  |  |  |  |  |
deferred sales inducements (2) | $ | 13,803 |  | $ | (1,568 | ) | $ | 12,235 |
Reinsurance recoverables, net of allowance for credit losses |  | 19,882 |  |  | (439 | ) |  | 19,443 |
Market risk benefit assets |  | - |  |  | 2,807 |  |  | 2,807 |
Other assets (2) |  | 20,493 |  |  | (1,691 | ) |  | 18,802 |
Total assets |  | 335,108 |  |  | (891 | ) |  | 334,217 |
Future contract benefits (2) |  | 41,756 |  |  | (2,930 | ) |  | 38,826 |
Market risk benefit liabilities |  | - |  |  | 2,078 |  |  | 2,078 |
Deferred front-end loads (2) |  | 5,669 |  |  | (617 | ) |  | 5,052 |
Other liabilities (2) |  | 11,976 |  |  | 45 |  |  | 12,021 |
Total liabilities |  | 330,539 |  |  | (1,424 | ) |  | 329,115 |
Retained earnings |  | 6,707 |  |  | (783 | ) |  | 5,924 |
Accumulated other comprehensive income (loss) |  | (7,668 | ) |  | 1,316 |  |  | (6,352 | )
Total stockholders’ equity |  | 4,569 |  |  | 533 |  |  | 5,102 |
(1)The amounts as previously reported were derived from our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed on March 30, 2023, and disclosed in “Impacts to our Consolidated Financial Statements Related to the Restatement of Previously Issued Consolidated Financial Statements and the adoption of ASU 2018-12” in Note 1. (2)Certain amounts have been reclassified to conform to the presentation adopted in the current period. The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Statements of Comprehensive Income (Loss):
| For the Three Months Ended
| March 31, 2022
|  |  | Adoption |  |  |  |
| As |  | of New |  |  |  |
| Previously |  | Accounting |  | As |
| Reported (1) |  | Standard |  | Adjusted |
Fee income | $ | 1,568 |  | $ | (110 | ) | $ | 1,458 |
Realized gain (loss) |  | 25 |  |  | 156 |  |  | 181 |
Total revenues |  | 4,674 |  |  | 46 |  |  | 4,720 |
Benefits |  | 2,568 |  |  | (412 | ) |  | 2,156 |
Market risk benefit (gain) loss |  | - |  |  | (1,359 | ) |  | (1,359 | )
Policyholder liability remeasurement (gain) loss |  | - |  |  | 41 |  |  | 41 |
Commissions and other expenses |  | 1,235 |  |  | 18 |  |  | 1,253 |
Total expenses |  | 4,597 |  |  | (1,712 | ) |  | 2,885 |
Income (loss) before taxes |  | 77 |  |  | 1,758 |  |  | 1,835 |
Federal income tax expense (benefit) |  | (15 | ) |  | 368 |  |  | 353 |
Net income (loss) |  | 92 |  |  | 1,390 |  |  | 1,482 |
Unrealized investment gain (loss) |  | (5,187 | ) |  | (2,311 | ) |  | (7,498 | )
Market risk benefit non-performance risk gain (loss) |  | - |  |  | 20 |  |  | 20 |
Policyholder liability discount rate remeasurement gain (loss) |  | - |  |  | 811 |  |  | 811 |
Total other comprehensive income (loss), net of tax |  | (5,189 | ) |  | (1,480 | ) |  | (6,669 | )
Comprehensive income (loss) |  | (5,097 | ) |  | (90 | ) |  | (5,187 | )
Net income (loss) per common share: |  |  |  |  |  |  |  |  |
Basic |  | 0.53 |  |  | 7.97 |  |  | 8.50 |
Diluted |  | 0.52 |  |  | 7.87 |  |  | 8.39 |
(1)The amounts as previously reported were derived from our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed on March 30, 2023, and disclosed in Note 23. The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Statements of Stockholders’ Equity:
| For the Three Months Ended
| March 31, 2022
|  |  | Adoption |  |  |  |
| As |  | of New |  |  |  |
| Previously |  | Accounting |  | As |
| Reported (1) |  | Standard |  | Adjusted |
Retained earnings balance as of beginning-of-year | $ | 9,578 |  | $ | (4,382 | ) | $ | 5,196 |
Net income (loss) |  | 92 |  |  | 1,390 |  |  | 1,482 |
Retained earnings balance as of end-of-period |  | 9,346 |  |  | (2,992 | ) |  | 6,354 |
Accumulated other comprehensive income (loss) balance |  |  |  |  |  |  |  |  |
as of beginning-of-year |  | 6,411 |  |  | 3,573 |  |  | 9,984 |
Other comprehensive income (loss), net of tax |  | (5,189 | ) |  | (1,480 | ) |  | (6,669 | )
Accumulated other comprehensive income (loss) balance |  |  |  |  |  |  |  |  |
as of end-of-period |  | 1,252 |  |  | 2,063 |  |  | 3,315 |
Total stockholders’ equity as of end-of-period |  | 15,184 |  |  | (929 | ) |  | 14,255 |
(1)The amounts as previously reported were derived from our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed on March 30, 2023, and disclosed in Note 23. The following summarizes the effect of the adoption of ASU 2018-12 (in millions) on certain financial statement line items within the previously reported Consolidated Statements of Cash Flows:
| For the Three Months Ended
| March 31, 2022
|  |  | Adoption |  |  |  |
| As |  | of New |  |  |  |
| Previously |  | Accounting |  | As |
| Reported (1) |  | Standard |  | Adjusted |
Net income (loss) | $ | 92 |  | $ | 1,390 |  | $ | 1,482 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) |  |  |  |  |  |  |  |  |
operating activities: |  |  |  |  |  |  |  |  |
Realized (gain) loss |  | (25 | ) |  | (156 | ) |  | (181 | )
Market risk benefit (gain) loss |  | - |  |  | (1,359 | ) |  | (1,359 | )
Change in: |  |  |  |  |  |  |  |  |
Deferred acquisition costs, value of business acquired, deferred sales |  |  |  |  |  |  |  |  |
inducements and deferred front-end loads |  | 31 |  |  | 91 |  |  | 122 |
Insurance liabilities and reinsurance-related balances (2) |  | 999 |  |  | (363 | ) |  | 636 |
Federal income tax accruals |  | 39 |  |  | 368 |  |  | 407 |
Other (2) |  | (165 | ) |  | 29 |  |  | (136 | )
(1)The amounts as previously reported were derived from our Annual Report on Form 10-K/A for the year ended December 31, 2022, originally filed on March 30, 2023, and disclosed in Note 23. (2)Certain amounts have been reclassified to conform to the presentation adopted in the current period.

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