Variable Interest Entities and Equity Method Investments

6 Months Ended

Jun. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

Variable Interest Entities and Equity Method Investments

8. Variable Interest Entities and Equity Method Investments

The Company regularly invests in real estate partnerships and investment funds and frequently participates in the design with the sponsor, but in most cases, its involvement is limited to financing. Some of these investments have been determined to be variable interest entities (“VIEs”). In certain instances, in addition to an economic interest in the entity, the Company holds the power to direct the most significant activities of the entity and is deemed the primary beneficiary. The Company consolidates all VIEs in which it is the primary beneficiary. The assets of consolidated VIEs are restricted and must first be used to settle their liabilities. Creditors or beneficial interest holders of these VIEs have no recourse to the general credit of the Company, as the Company’s obligation is limited to the amount of its committed investment. The Company has not provided financial or other support to these consolidated VIEs in the form of liquidity arrangements, guarantees or other commitments to third-parties that may affect the fair value or risk of its variable interest in these VIEs as of June 30, 2024 and December 31, 2023.

Consolidated Variable Interest Entities

The assets and liabilities relating to the consolidated VIEs included in the financial statements are as follows:


	June 30, 2024		December 31, 2023
	(Dollars in millions)
Fixed maturity securities, available for sale	$	44	$	63
Equity securities, at fair value	115		15

Private loans	196		188
Real estate	1,628		172
Real estate partnerships	1,055		—
Investment funds	487		4
Short-term investments	—		4
Other invested assets	150		—
Cash and cash equivalents	132		26
Other assets	158		61
Total assets of consolidated VIEs	$	3,965	$	533

Notes payable	$	175	$	174
Other liabilities	94		14
Total liabilities of consolidated VIEs	$	269	$	188

Unconsolidated Variable Interest Entities

For unconsolidated VIEs, the Company is not the primary beneficiary as major decisions impacting the economic activities of the VIE require consent from one or more other partners. These unconsolidated VIEs are accounted for using the equity method of accounting or at amortized cost. In addition, certain equity securities and available-for-sale fixed maturity securities at fair value are the Company’s interests in limited partnerships that are unconsolidated VIEs. Creditors or beneficial interest holders of these VIEs have no recourse to the general credit of the Company, as the Company’s obligation is limited to the amount of its committed investment. The Company has not provided financial or other support to these unconsolidated VIEs in the form of liquidity arrangements, guarantees or other commitments to third-parties that may affect the fair value or risk of its variable interest in these VIEs as of June 30, 2024 and December 31, 2023.

The carrying amount and maximum exposure to loss relating to these unconsolidated VIEs are as follows:


	June 30, 2024				December 31, 2023
	Carrying Amount		Maximum Exposure to Loss		Carrying Amount		Maximum Exposure to Loss
	(Dollars in millions)
Fixed maturity securities, available for sale	$	2,100	$	2,100	$	—	$	—

Mortgage loans on real estate	673		746		632		632


Real estate partnerships	889		892		301		301

Short-term investments	57		57		—		—
Other invested assets	157		157		—		—
Total	$	3,876	$	3,952	$	933	$	933

Equity Method Investments

The Company’s investments in investment funds, real estate partnerships, and other partnerships of which substantially all are limited liability companies (“LLCs”) or limited partnerships are accounted for using the equity method of accounting. As of June 30, 2024 and December 31, 2023, the Company’s equity accounted investments totaled $4.3 billion and $4.4 billion, respectively.

As described in Note 2 - Summary of Significant Accounting Policies, the Company generally recognizes its share of earnings in its equity method investments within “Net investment income” using a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period.

The following aggregated summarized financial data reflects the latest available financial information and does not represent the Company’s pro rata share of the assets, liabilities or earnings of such entities. Aggregated total assets of these entities totaled $37.8 billion and $4.4 billion as of June 30, 2024 and December 31, 2023, respectively. Aggregate net income of these entities totaled $65 million and $103 million for the three and six months ended June 30, 2024 and $30 million and $66 million for the three and six months ended June 30, 2023, respectively. Aggregate net income from the underlying entities in which the Company invests primarily comprise investment income, including recurring investment income (loss) and realized and unrealized investment gains (losses), from investment funds, real estate properties and real estate funds.