Mortgage Loans on Real Estate

9 Months Ended

Sep. 30, 2025

5. Mortgage Loans on Real Estate

The Company disaggregates its mortgage loan investments into two portfolio segments: commercial and residential. Commercial mortgage loans include agricultural mortgage loans. The breakdown of mortgage loans on real estate by portfolio segment is as follows:


	September 30, 2025		December 31, 2024
	(Dollars in millions)
Commercial mortgage loans	$	8,716	$	9,576
Residential mortgage loans	2,508		2,696
Total	11,224		12,272
Allowance for credit losses	(134)		(155)
Total, net of allowance	$	11,090	$	12,117

The Company’s commercial mortgage loan portfolio consists of loans collateralized by the related properties and diversified as to property type, location and loan size. The geographic categories come from the U.S. Census Bureau’s “Census Regions and Divisions of the United States”. The commercial mortgage loan portfolio is summarized by geographic region and property type as follows:


	September 30, 2025				December 31, 2024
	Amount		Percentage		Amount		Percentage
	(Dollars in millions)
Geographic distribution
Pacific	$	1,974	22.7	%	$	2,060	21.5	%
Mountain	1,391		16.0	%	1,678		17.5	%
West North Central	254		2.9	%	280		2.9	%
West South Central	1,287		14.8	%	1,443		15.1	%
East North Central	865		9.9	%	1,012		10.6	%
East South Central	135		1.5	%	144		1.5	%
Middle Atlantic	530		6.1	%	591		6.2	%
South Atlantic	1,919		22.0	%	1,993		20.8	%
New England	143		1.6	%	133		1.4	%
Other (multi-region, non-US)	218		2.5	%	242		2.5	%
	8,716		100.0	%	9,576		100.0	%
Allowance for credit losses	(125)				(146)
Total, net of allowance	$	8,591			$	9,430

Property type distribution
Agricultural	$	361	4.2	%	$	447	4.7	%
Apartment	2,242		25.7	%	2,325		24.3	%
Hotel	931		10.7	%	1,246		13.0	%
Industrial	1,860		21.3	%	1,859		19.4	%
Office	1,274		14.6	%	1,425		14.9	%
Parking	250		2.9	%	326		3.4	%
Retail	1,421		16.3	%	1,572		16.4	%
Storage	140		1.6	%	176		1.8	%
Other	237		2.7	%	200		2.1	%
	8,716		100.0	%	9,576		100.0	%
Allowance for credit losses	(125)				(146)
Total, net of allowance	$	8,591			$	9,430

There was $3 million and $4 million interest income recognized on loans in non-accrual status for the three and nine months ended September 30, 2025. There was $1 million and $2 million interest income recognized on loans in non-accrual status for the three and nine months ended September 30, 2024. Impaired loans were not significant for any of the periods presented.

Allowance for Credit Losses

The Company establishes a valuation allowance to provide for the risk of credit losses inherent in its mortgage loan portfolios. The valuation allowance is maintained at a level believed adequate by management to absorb estimated expected credit losses. The valuation allowance is based on amortized cost, which excludes accrued interest receivable. The Company does not measure a credit loss allowance on accrued interest receivable as any uncollectible accrued interest receivable balances are written off to net investment income in a timely manner. The Company charged off $0 million and $5 million of uncollectible accrued interest receivable on its mortgage loan portfolios for the three and nine months ended September 30, 2025. We charged off $0 million and $1 million of uncollectible accrued interest receivable on our mortgage loan portfolios for the three and nine months ended September 30, 2024.

The rollforward of the allowance for credit losses for mortgage loans for the three and nine months ended September 30, 2025 and 2024 is shown below:


	2025				2024
	Commercial Mortgage Loans		Residential Mortgage Loans		Commercial Mortgage Loans		Residential Mortgage Loans
	(Dollars in millions)
Balance, as of January 1	$	(146)	$	(9)	$	(53)	$	—

Provision	(1)		(1)		(1)		—
Writeoffs charged against the allowance	3		—		—		—

Balance, as of March 31	(144)		(10)		(54)		—

Provision	15		(3)		—		—

Recoveries of amounts previously written off	4		—		—		—
Balance, as of June 30	(125)		(13)		(54)		—

Provision	(2)		4		(26)		(8)
Writeoffs charged against the allowance	2		—		—		—

Balance, as of September 30	$	(125)	$	(9)	$	(80)	$	(8)

Credit Quality Indicators

Mortgage loans are segregated by property-type and quantitative and qualitative allowance factors are applied. Qualitative factors are developed quarterly based on the pooling of assets with similar risk characteristics and historical loss experience adjusted for the expected trend in the current market environment. Credit losses are pooled by property type as it represents the most similar and reliable risk characteristics in our portfolio. The amortized cost of mortgage loans by year of origination by aging category are shown below:


	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Total
As of September 30, 2025:	(Dollars in millions)
Commercial mortgage loans
Current	$	548	$	429	$	527	$	2,063	$	1,080	$	3,795	$	8,442
30 - 59 days past due	1		—		—		9		4		—		14
60 - 89 days past due	—		—		—		40		—		14		54
Non-accrual	—		—		—		4		5		197		206
Residential mortgage loans
Current	297		314		494		817		195		116		2,233
30 - 59 days past due	3		5		22		30		5		8		73
60 - 89 days past due	2		4		9		26		4		3		48
Non-accrual	2		3		68		63		10		8		154
Total mortgage loans on real estate	$	853	$	755	$	1,120	$	3,052	$	1,303	$	4,141	11,224
Allowance for credit losses													(134)
Total, net of allowance													$	11,090

	Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Total
As of December 31, 2024:	(Dollars in millions)
Commercial mortgage loans
Current	$	487	$	649	$	2,204	$	1,270	$	943	$	3,736	$	9,289
30 - 59 days past due	—		25		4		—		10		48		87
60 - 89 days past due	—		—		50		30		—		—		80
Non-accrual	—		8		42		16		6		48		120
Residential mortgage loans
Current	294		790		970		222		121		7		2,404
30 - 59 days past due	3		41		45		2		4		—		95
60 - 89 days past due	—		7		20		2		4		5		38
Non-accrual	3		51		76		18		8		3		159
Total mortgage loans on real estate	$	787	$	1,571	$	3,411	$	1,560	$	1,096	$	3,847	12,272
Allowance for credit losses													(155)
Total, net of allowance													$	12,117

Generally, mortgage loans are secured by first liens on income-producing real estate with a loan-to-value ratio of up to 75%. It is the Company’s policy to not accrue interest on loans that are 90 days delinquent and where amounts are determined to be uncollectible. As of September 30, 2025 and December 31, 2024, 275 mortgage loans and 263 mortgage loans, respectively, were past due over 90 days or in nonaccrual status.

The Company’s commercial and residential mortgage loans may be subject to loan modifications. Loan modifications may be granted to borrowers experiencing financial difficulty and could include principal forgiveness, interest rate reduction, an other-than-significant delay or a term extension. A loan modification typically does not result in a change in valuation allowance as it is already incorporated into the Company’s allowance methodology. However, if the Company grants a borrower experiencing financial difficulty principal forgiveness, the amount of principal forgiven would be written off, which would reduce the amortized cost of the loan and result in an adjustment to the valuation allowance. The carrying amount of mortgage loans experiencing financial difficulty, for which modifications have been granted, was $84 million and $143 million for the nine months ended September 30, 2025 and 2024, respectively.

6. Private Loans

The following table summarizes the credit ratings of our private loans:


	September 30, 2025		December 31, 2024
	(Dollars in millions)
A or higher	$	2,005	$	1,443
BBB	1,246		669
BB and below	2,825		710
Unrated (1)	2,311		2,910
Total	$	8,387	$	5,732

(1)Due to the nature of private loans, external agency credit ratings may not be readily available. Where appropriate, the Company obtains non-published credit ratings from one or more third-party rating agencies, which are determined based on an independent evaluation of the transaction. For other loans without published or private credit ratings, the Company assigns internal risk ratings, based on its investment selection and monitoring process and policies. These internal risk ratings are categorized as “Unrated” above.

Allowance for Credit Losses

The rollforward of the allowance for credit losses for private loans for the three and nine months ended September 30, 2025 and 2024 is shown below:


	2025		2024
	(Dollars in millions)
Balance at January 1	$	(66)	$	(8)

Provision	(11)		1


Balance at March 31	(77)		(7)

Provision	(8)		(14)
Writeoffs charged against the allowance	(2)		—

Balance at June 30	(87)		(21)

Provision	(55)		(5)


Balance at September 30	$	(142)	$	(26)

The Company’s private loans may be subject to loan modifications. Loan modifications may be granted to borrowers experiencing financial difficulties and could include term extensions. For the nine months ended September 30, 2025 and 2024, the Company did not have a significant amount of private loans that it modified to borrowers experiencing financial difficulty. Impaired loans were not significant for any of the periods presented.