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Derivative Instruments
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
9. Derivative Instruments
The Company manages risks associated with certain assets and liabilities by using derivative instruments. Derivative instruments are financial contracts whose value is derived from underlying interest rates, exchange rates or other financial instruments. The Company does not invest in derivatives for speculative purposes.
Foreign exchange forwards and equity-indexed options are over-the-counter contractual agreements negotiated between counterparties. The Company purchases equity-indexed options as economic hedges against fluctuations in the equity markets to which equity-indexed products are exposed. Equity-indexed contracts include a fixed host universal-life insurance or annuity contract and an equity-indexed embedded derivative.
The notional principal represents the amount to which a rate or price is applied to determine the cash flows to be exchanged periodically and does not represent credit exposure. Maximum credit risk is the estimated cost of replacing derivative instruments which have a positive value, should the counterparty default.
Derivatives, except for embedded derivatives, are included in “Other invested assets” or “Other liabilities”, at fair value in the Condensed Consolidated Statements of Financial Position. Embedded derivative liabilities on funds withheld and modified coinsurance (“Modco”) arrangements and embedded derivative liabilities on indexed annuity and variable annuity products are included in the Condensed Consolidated Statements of Financial Position within the “Reinsurance funds withheld” and “Policyholders’ account balances” lines respectively, at fair value.
The notional and fair values of derivative instruments, presented in the Condensed Consolidated Statements of Financial Position, are shown below:
Primary
Underlying
Risk		Location in the Condensed
Consolidated Statements of
Financial Position		September 30, 2025December 31, 2024
Notional
Amount		Carrying Value / Fair ValueNotional
Amount		Carrying Value / Fair Value
AssetsLiabilitiesAssetsLiabilities
(Dollars in millions)
Derivatives Designated as Hedging Instruments:
Foreign exchange forwardsForeign CurrencyOther invested assets, Other liabilities$1,088 $— $46 $897 $20 $— 
Interest rate swapsInterest rateOther invested assets, Other liabilities1,789 20 — — — — 
Derivatives Not Designated as Hedging Instruments:
Equity-indexed optionsEquityOther invested assets, Other liabilities46,599 1,486 2 46,374 1,303 5 
Foreign exchange forwardsForeign CurrencyOther invested assets, Other liabilities2,621 4 81 1,066 23 — 
Cross currency swapsForeign CurrencyOther invested assets, Other liabilities792 6 15 — — — 
Embedded Derivatives:
Indexed annuity and variable annuity productInterest ratePolicyholders’ account balances— — 6,341 — — 1,123 
Funds withheld and Modco arrangementsInterest rateFunds withheld for reinsurance liabilities— — 83 — — 37 
$52,889 $1,516 $6,568 $48,337 $1,346 $1,165 
Derivatives Designated as Hedging Instruments
The Company has designated and accounted for certain foreign exchange forwards (“foreign currency derivatives”) as fair value hedges to protect a portion of the available-for-sale fixed maturity securities against changes in fair value due to changes in exchange rates. The Company has also designated and accounted for certain interest rate swaps (“interest rate derivatives”) as fair value hedges to convert a portion of PAB from a fixed rate liability to a floating rate liability.
For derivative financial instruments that were designated and qualified as fair value hedges, the gain or loss on the portion of the derivative instrument included in the assessment of hedge effectiveness and the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in the same line item in the Condensed Consolidated Statements of Operations. The unrealized gain or loss attributable to changes in exchange rates on the available-for-sale fixed maturity securities that were designated as part of the hedge are reclassified out of other comprehensive income (“OCI”) into “Investment related gains (losses)” in the Condensed Consolidated Statements of Operations. The remaining change in unrealized gain or loss on the hedged item not associated with the risk being hedged remains as a component of OCI. The gains (losses) on interest rate derivatives designated as hedging instruments for certain PAB are included in “Interest sensitive contract benefits” in the Condensed Consolidated Statements of Operations.
The following represents the amount of gains (losses) related to the derivatives and hedged items that qualify for fair value hedges:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2025202420252024
(Dollars in millions)
Foreign currency derivatives:
Hedged items$(7)$13 $66 $13 
Derivatives designated as hedging instruments7 (13)(66)(13)
Interest rate derivatives:
Hedged items(38)— (20)— 
Derivatives designated as hedging instruments38 — 20 — 
Gains (losses) on fair value hedges$— $— $— $— 
The following table presents the carrying amount and cumulative fair value hedging adjustments for a portion of PAB designated and qualifying as hedged items in fair value hedges:
Carrying Amount of the
Hedged Assets (Liabilities)
Cumulative Amount of Fair
Value Hedging Adjustments Included
in the Carrying Amount of
Hedge Assets (Liabilities)
September 30, 2025December 31, 2024September 30, 2025December 31, 2024
(Dollars in millions)
Location in the Condensed Consolidated
Statements of Financial Position:
Policyholders’ account balances$(912)$— $(20)$— 
Derivatives Not Designated as Hedging Instruments
The following represents the financial statement location and amount of gains (losses) related to the derivatives not designated as hedging instruments:
Derivative Gains (Losses) Recognized in Income
Three Months Ended
September 30,		Nine Months Ended
September 30,
Location in the Condensed Consolidated
Statements of Operations		2025202420252024
(Dollars in millions)
Equity-indexed optionsChange in fair value of insurance-related derivatives and embedded derivatives$348 $382 $246 $747 
Equity total return swapsInvestment related gains (losses)— (18)— (18)
Foreign exchange forwardsInvestment related gains (losses)122 — (82)— 
Cross currency swapsInvestment related gains (losses)(23)— (8)— 
Embedded derivatives:
Indexed annuity and variable annuity productChange in fair value of insurance-related derivatives and embedded derivatives(141)(527)(340)(815)
Funds withheld and Modco arrangementsChange in fair value of insurance-related derivatives and embedded derivatives(20)(199)(49)(278)
$286 $(362)$(233)$(364)
Derivative Exposure
The Company’s use of derivative instruments exposes it to credit risk in the event of non-performance by counterparties. The Company has a policy of only dealing with counterparties it believes are creditworthy and obtaining sufficient collateral where appropriate, as a means of mitigating the financial loss from defaults. The minimum credit rating of our counterparties is A- as of September 30, 2025 and BBB+ as of December 31, 2024, and all derivatives have been appropriately collateralized by the Company and the counterparties in accordance with the terms of the derivative agreements. The Company holds collateral in cash and notes secured by U.S. government-backed assets. The non-performance risk is the net counterparty exposure based on fair value of open contracts less fair value of collateral held. The Company maintains master netting agreements with its current active trading partners. A right of offset has been applied to cash collateral that supports credit risk and has been recorded in the Condensed Consolidated Statements of Financial Position as an offset to “Other invested assets” with an associated payable to “Other liabilities” for non-cash and excess collateral. A right of offset has also been applied to derivative assets and liabilities with the same counterparty under the same master netting agreement, and such derivative instruments are presented on a net basis in the Condensed Consolidated Statements of Financial Position.
Information regarding the Company’s exposure to credit loss on the derivatives it holds, including the effect of rights of offset, is presented below:
Gross Amount
of Derivative
Instruments
(1)		Gross Amount
Offset in the
Condensed
Consolidated
Statements of
Financial Position (2)		Net Amount
Presented in the
Condensed
Consolidated
Statements of
Financial Position		Collateral
(Received)
Pledged
in Cash
(3)		Collateral
(Received)
Pledged in
Invested Assets
(3)		Exposure
of Net
Collateral
(Dollars in millions)
As of September 30, 2025
Derivative assets
Equity-indexed options$1,486 $(54)$1,432 $(1,364)$— $68 
Foreign exchange forwards4 (4)— — — — 
Cross currency swaps6 — 6 — — 6 
Interest rate swaps20 — 20 (20)— — 
Total derivative assets$1,516 $(58)$1,458 $(1,384)$— $74 
Derivative liabilities
Equity-indexed options$(2)$2 $— $— $— $— 
Foreign exchange forwards(127)56 (71)— — (71)
Cross currency swaps(15)— (15)— — (15)
Total derivative liabilities$(144)$58 $(86)$— $— $(86)
As of December 31, 2024
Derivative assets
Equity-indexed options$1,303 $(5)$1,298 $(1,298)$— $— 
Foreign exchange forwards43 — 43 — — 43 
Total derivative assets$1,346 $(5)$1,341 $(1,298)$— $43 
Derivative liabilities
Equity-indexed options$(5)$5 $— $— $— $— 
Total derivative liabilities$(5)$5 $— $— $— $— 
(1)Represents derivative assets and liabilities on a gross basis, which are not offset under enforceable master netting agreements that meet all offsetting criteria.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.
(3)Excludes a portion of collateral held in cash and invested assets that are excess collateral. As of September 30, 2025 and December 31, 2024, the Company held excess collateral of $56 million and $76 million, respectively.