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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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22-3703799
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, Par Value $.01
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New York Stock Exchange
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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ITEM 1.
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BUSINESS
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In 2008, we announced our intention to exit our financial advisory business, which consisted of our investment in a retail securities brokerage and clearing operations joint venture which was sold on December 31, 2009. Certain expenses relating to the businesses we originally contributed to the joint venture were retained, primarily for litigation and regulatory matters.
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In 2003, we sold our property and casualty insurance companies to Liberty Mutual Group (“Liberty Mutual”). We have reinsured Liberty Mutual for adverse loss development for specific property and casualty risks that they did not want to retain. We believe that we have adequately reserved for our remaining property and casualty obligations under these reinsurance contracts based on the current information available.
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We ceased writing individual disability income policies in 1992, and a year later ceased writing hospital expense and major medical policies. Most of our individual disability income policies are non-cancelable; however, we reinsured all of these policies as of July 1999. For our hospital expense and major medical policies, the 1996 Health Insurance Portability and Accountability Act guarantees renewal beyond age 65. Under certain circumstances, with appropriate approvals from state regulatory authorities, we are permitted to change the premiums charged for these policies if we can demonstrate the premiums have not been sufficient to pay claims. We establish reserves in accordance with U.S. GAAP for future policyholder benefits and expenses.
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We have not actively engaged in the assumed life reinsurance market in the United States since the early 1990s; however, we remain subject to mortality risk for certain assumed individual life insurance policies under the terms of the reinsurance treaties. We establish reserves in accordance with U.S. GAAP for future policyholder benefits and expenses.
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Dodd-Frank Wall Street Reform and Consumer Protection Act
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ERISA and DOL Fiduciary Rules
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U.S. State Insurance Holding Company Regulation
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U.S. Insurance Operations
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State Insurance Regulation
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U.S. Federal and State Securities Regulation Affecting Insurance Operations
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International Insurance Regulation
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U.S. Investment and Retirement Products and Investment Management Operations
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U.S. Securities and Commodity Operations
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International Regulation of Non-Insurance Operations
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Derivatives Regulation
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Privacy and Cybersecurity Regulation
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Anti-Money Laundering and Anti-Bribery Laws
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Environmental Laws and Regulations
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Unclaimed Property Laws
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Taxation
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U.S. Taxation
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International Taxation
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International and Global Regulatory Initiatives
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Capital, leverage and liquidity requirements
. Dodd-Frank requires the FRB to establish requirements and limitations relating to capital, leverage and liquidity. The FRB issued an advance notice of proposed rulemaking in June 2016 regarding approaches to minimum regulatory capital requirements, but otherwise has taken no public action.
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Corporate governance, risk management and liquidity risk requirements
. The FRB issued a proposed rule in June 2016 that would apply consistent liquidity risk, corporate governance, and risk-management standards to Designated Financial Companies, but has not issued a final rule.
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Stress testing
. Dodd-Frank requires us to be subject to stress tests to be promulgated by the FRB. Under FRB rules, Designated Financial Companies must comply with these requirements in the calendar year after the year in which a company first becomes subject to the FRB’s minimum regulatory capital requirements discussed above, although the FRB has the discretion to accelerate or extend the effective date.
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Early remediation
. The FRB is required under Dodd-Frank to prescribe regulations for the establishment of an “early remediation” regime for the financial distress of Designated Financial Companies.
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Resolution planning
. We are required to submit to the FRB and Federal Deposit Insurance Corporation (“FDIC”), and periodically update in the event of material events, a plan for rapid and orderly resolution in the event of severe financial distress. We submitted our last resolution plan in December 2015. In July 2017, the FRB and the FDIC announced that the next resolution plan filing deadline will be delayed from December 31, 2017 to December 31, 2018. If the FRB and the FDIC were to jointly determine that our 2015 resolution plan, or any future resolution plan, is not credible or would not facilitate an orderly resolution of the Company under applicable law, and the Company is unable to remedy the identified deficiencies in a timely manner, the regulators may jointly impose more stringent capital, leverage or liquidity requirements or restrictions on growth, activities or operations, or require us
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Recovery planning
. We are also required to submit to the FRB a recovery plan that describes the steps that the Company could take to reduce risk and conserve or restore liquidity and capital in the event of severe financial stress scenarios. We submitted our first recovery plan in 2016. We are scheduled to submit our next recovery plan in June 2019.
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Credit exposure limits
. Dodd-Frank requires the FRB to promulgate regulations that would prohibit Designated Financial Companies from having a credit exposure to any unaffiliated company in excess of 25% of the Designated Financial Company’s capital stock and surplus. The FRB has not proposed any such rule.
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Acquisitions.
As a Designated Financial Company, we must seek pre-approval from the FRB for the acquisition of specified interests in certain companies engaged in financial activities.
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Recommendations to other regulators.
The Council may recommend that state insurance regulators or other regulators apply new or heightened standards and safeguards for activities or practices we and other insurers or other financial services companies engage in.
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Activities based capital requirements
. As a Designated Financial Company, we could be subject to additional capital requirements for, and other restrictions on, proprietary trading and sponsorship of, and investment in, hedge, private equity and other covered funds.
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provide additional protections regarding the use and disclosure of certain information such as social security numbers;
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require notice to affected individuals, regulators and others if there is a breach of the security of certain personal information;
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require financial institutions and creditors to implement effective programs to detect, prevent, and mitigate identity theft;
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regulate the process by which financial institutions make telemarketing calls and send e-mail or fax messages to consumers and customers; and
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prescribe the permissible uses of certain personal information, including customer information and consumer report information.
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ITEM 1A.
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RISK FACTORS
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Mortality calamity
is the risk that mortality rates in a single year deviate adversely from what is expected as the result of pandemics, natural or man-made disasters, military actions or terrorism. A mortality calamity event will reduce our earnings and capital and we may be forced to liquidate assets before maturity in order to pay the excess claims. Mortality calamity risk is more pronounced in respect of geographic areas (including major metropolitan centers, where we have concentrations of customers, including under group and individual life insurance), concentrations of employees or significant operations, and in respect of countries and regions in which we operate that are subject to a greater potential threat of military action or conflict. Ultimate losses would depend on several factors, including the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our investment portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables.
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Mortality trend
is the risk that mortality improvements in the future deviate adversely from what is expected. Mortality trend is a long-term risk in that can emerge gradually over time. Longevity products, such as annuities and pension risk transfer, experience adverse impacts due to higher-than-expected mortality improvement. Mortality products, such as life insurance, experience adverse impacts due to lower-than-expected improvement. If this risk were to emerge, the Company would update assumptions used to calculate reserves for inforce business, which may result in additional assets needed to meet the higher expected annuity claims or earlier expected life claims. An increase in reserves due to revised assumptions has an immediate impact on our results of operations and financial condition; however, economically the impact is generally long term as the excess outflow is paid over time.
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Mortality base
is the risk that actual base mortality deviates adversely from what is expected in pricing and valuing our products. Base mortality risk can arise from a lack of credible data on which to base the assumptions.
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Morbidity incidence
is the risk that the rate at which policyholders become unhealthy (and qualify for benefits under insurance policies) deviates adversely from what is expected. We are primarily exposed to morbidity incidence risk through short-term disability products, long-term disability products, long-term care products, and the accident and health products we sell in Japan.
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Morbidity continuation
is the risk that the length of time for which policyholders remain unhealthy deviates adversely from what is expected. This risk is primarily in our disability and long-term care products.
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Lapse calamity
is the risk that lapse rates over the short-term deviate adversely from what is expected. Only certain products are exposed to this risk. Products that offer a cash surrender value that resides in the general account, such as general account stable value products, could pose a potential short-term lapse calamity risk. Surrender of these products can impact liquidity, and it may be necessary in certain market conditions to sell assets to meet surrender demands. Lapse calamity can also impact our earnings through its impact on estimated future profits.
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Policyholder behavior efficiency
is the risk that the behavior of our customers or policyholders deviates adversely from what is expected. Policyholder behavior efficiency risk arises through product features which provide some degree of choice or flexibility for the policyholder, which can impact the amount and/or timing of claims. Such choices include lapse, partial withdrawal, policy loan, utilization, and premium payment rates for contracts with flexible premiums. While some behavior is driven by macro factors such as market movements, policyholder behavior at a fundamental level is driven primarily by policyholders’ individual needs, which may differ significantly from product to product depending on many factors including the features offered, the approach taken to market each product, and competitor pricing. For example, persistency (the probability that a policy or contract will remain in force) within our annuities business may be significantly impacted by the value of guaranteed minimum benefits contained in many of our variable annuity products being higher than current account values in light of poor market performance as well as other factors. Many of our products also provide our customers with wide flexibility with respect to the amount and timing of premium deposits and the amount and timing of withdrawals from the policy’s value. Results may vary based on differences between actual and expected premium deposits and withdrawals for these products, especially if these product features are relatively new to the marketplace. The pricing of certain of our variable annuity products that contain certain living benefit guarantees is also based on assumptions about utilization rates, or the percentage of contracts that will utilize the benefit during the contract duration, including the timing of the first lifetime income withdrawal. Results may vary based on differences between actual and expected benefit utilization. Finally, surrenders of certain insurance products may increase following a downgrade of our financial strength ratings or adverse publicity. Policyholder behavior efficiency is generally a long-term risk that emerges over time. An increase in reserves due to revised assumptions has an immediate impact on our results of operations and financial condition; however, from an economic or cash flow perspective, the impact is generally long term as the excess outflow is paid over time.
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Derivative collateral market exposure:
Abrupt changes to interest rate, equity, and/or currency markets may increase collateral requirements to counterparties and create liquidity risk for the Company.
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Asset liability mismatch:
There are liquidity risks associated with liabilities coming due prior to the matching asset cash flows. Structural maturities mismatch can occur in activities such as securities lending, where the liabilities are effectively overnight open transactions used to fund longer term assets.
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Wholesale funding.
The Company depends upon the financial markets for funding (such as through the issuance of commercial paper, securities lending and repurchase arrangements and other forms of borrowings in the capital markets). These sources might not be available during times of stress, or may only be available on unfavorable terms, which can result in a decrease in our profitability and a significant reduction in our financial flexibility.
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Insurance cash flows.
The Company faces potential liquidity risks from unexpected cash demands due to severe mortality calamity or lapse events. If such events were to occur, the Company may face unexpectedly high levels of claim payments to policyholders.
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Processes
- Processing failure; failure to safeguard or retain documents/records; errors in valuation/pricing models and processes; project management or execution failures; improper sales practices.
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Systems
- Failures during the development and implementation of new systems; systems failures.
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People
- Internal fraud, breaches of employment law, unauthorized activities; loss or lack of key personnel, inadequate training; inadequate supervision.
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External Events
- External crime; outsourcing risk; vendor risk; natural and other disasters; changes in laws/regulations.
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Legal
- Legal and regulatory compliance failures.
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Financial losses
- The Company experiences a financial loss. This loss may originate from various causes including, but not limited to, transaction processing errors and fraud.
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Customer impacts
- The Company may not be able to service customers. This may result if the Company is unable to continue operations during a business continuation event or if systems are compromised due to malware or virus.
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Regulatory fines or sanctions
- When the Company fails to comply with applicable laws or regulations, regulatory fines or sanctions may be imposed. In addition, possible restrictions on business activities may result.
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Legal actions
- Failure to comply with laws and regulations also exposes the Company to litigation risk. This may also result in financial losses.
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Severe pandemic, either naturally occurring or intentionally manipulated pathogens.
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Geo-political risks, including armed conflict and civil unrest.
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Terrorist events.
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A significant natural or accidental disaster.
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Protecting both “structured” and “unstructured” sensitive information is a constant need. However, some risks associated with trusted insiders (i.e., employees, consultants, or vendors who are authorized to access the Company’s systems) remain and cannot be effectively mitigated using technology alone.
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Unsuspecting employees represent a primary avenue for external parties to gain access to our network and systems. Many attacks, even from sophisticated actors, include rudimentary techniques such as coaxing an internal user to click on a malicious attachment or link to introduce malware or steal their username and password.
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In the past, hackers went after credit and debit card data, which is easy to monetize. As credit card security improves, the hackers will look to other sources of monetization, specifically personally identifiable information or using cyber-attacks or the threat of cyber-attacks to extort money from companies.
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Nation-state sponsored organizations are engaged in cyber-attacks but not necessarily for monetization purposes. Nation states appear to be motivated by the desire to gain information about foreign citizens and governments or to influence or cause disruptions in commerce or political affairs. As evidenced by the ability of criminal organizations and nation-states to successfully breach large financial institutions and the U.S. government, no organization is fully immune to cyber-attacks.
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We have also seen an increase in non-technical attempts to commit fraud or solicit information via call centers and interactive voice response systems, and we anticipate the attempts will become more common.
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We rely on third parties to provide services as described further below. While we have certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, may become subject to a security breach, including as a result of their failure to perform in accordance with contractual arrangements.
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Our regulation as a Designated Financial Company and the associated enhanced prudential standards, many of which are subject to ongoing rule-making.
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Financial sector regulatory reform that may arise out of reports issued by the U.S. Treasury.
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Changes in tax law (including U.S. federal, state, and non-U.S.).
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The DOL fiduciary rules.
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Our regulation under U.S. state insurance laws and developments regarding group-wide supervision and capital standards, RBC factors for invested assets and reserves for life insurance, variable annuities and other products.
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Insurer capital standards in Japan, Korea and other non-U.S. jurisdictions.
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Privacy and cybersecurity regulation.
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Interaction with customers
. Technology is moving rapidly and as it does, it puts pressure on existing business models. Some of the changes we can anticipate are increased choices about how customers want to interact with the Company or how they want the Company to interact with them. Evolving customer preferences may drive a need to redesign products. Our distribution channels may change to become more automated, at the place and time of the customer’s choosing. Such changes clearly have the potential to disrupt our business model over the next 10 years.
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Investment Portfolio
. Technology may have a significant impact on the companies in which the Company invests. For example, environmental concerns spur scientific inquiry which may re-position the relative attractiveness of wind or sun power over oil and gas. The transportation industry may favor alternative modes of conveyance of goods which may shift trucking or air transport out of favor. Consumers may change their purchasing behavior to favor online activity which would change the role of malls and retail properties.
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Medical Advances
. The Company is exposed to the impact of medical advances in two major ways. Genetic testing and the availability of that information unequally to consumers and insurers can bring anti-selection risks. Specifically, data from genetic testing can give our prospective customers a clearer view into their future, allowing them to select products protecting them against likelihoods of mortality or longevity with more precision. Also, technologies that extend lives will challenge our actuarial assumptions especially in the annuity-based businesses.
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Changes to either the policies and procedures the Company uses to locate guaranteed group annuity customers, or its reserving policies for its guaranteed group annuities, may result in increased operational expenses and complexity, and increases in reserves, which could adversely impact our results of operations and financial position.
The Company’s retirement business provides guaranteed group annuity benefits under group annuity and structured settlement contracts. Under our policies and procedures, we use internal and external tools and resources to locate customers covered by our guaranteed group annuity benefits. We also have policies on the development of our reserve estimates, and we believe that we are complying with our policies and procedures and meeting our obligations to customers. The Company regularly reviews, tests and enhances the processes and tools used to locate customers, and over time, such processes and tools are expected to continue to evolve. However, in the normal course of business, at any given time there are a small number of customers covered by our guaranteed group annuity benefits that we cannot locate. In light of recent industry focus on missing retirement customers, the Company is reviewing this issue closely. Ultimately, we could see greater standardization of what may currently be divergent practices across the industry. Changes to either the policies and procedures the Company uses to locate customers, or its reserving policies, may result in increased operational expenses and complexity, and increases in reserves, which could adversely impact our results of operations and financial position.
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A downgrade in our financial strength or credit ratings could potentially, among other things, adversely impact our business prospects, results of operations, financial condition and liquidity
. For a discussion of our ratings and the potential impact of a ratings downgrade on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Ratings.” We cannot predict what additional actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business. Our ratings could be downgraded at any time and without notice by any rating agency. In addition, a sovereign downgrade could result in a downgrade of our subsidiaries operating in that jurisdiction, and ultimately of Prudential Financial and our other subsidiaries. For example, in September 2015, S&P downgraded Japan's sovereign rating to A+ with a 'Stable' outlook citing uncertainties around the strength of economic growth and weak fiscal positions. As a result, S&P subsequently lowered the ratings of a number of institutions in Japan, including our Japanese insurance subsidiaries. It is possible that Japan’s sovereign rating could be subject to further downgrades, which would result in further downgrades of our insurance subsidiaries in Japan. Given the importance of our operations in Japan to our overall results, such downgrades could lead to a downgrade of Prudential Financial and our domestic insurance companies.
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London Inter-Bank Offered Rate (LIBOR) reform may adversely affect the interest rates on and value of certain derivatives and floating rate securities we hold and floating rate securities we have issued, the value and profitability of certain real estate lending and related activities conducted in our investment management business, and any other assets or liabilities whose value may be tied to LIBOR.
Actions by regulators or law enforcement agencies, as well as ICE Benchmark Administration (the current administrator of LIBOR) may result in changes to the way LIBOR is determined or the establishment of alternative reference rates. For example, on July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. The U.S. Federal Reserve, based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (constituted of major derivative market participants and their regulators), has announced its plans to begin publishing, in mid-2018, a Secured Overnight Funding Rate (“SOFR”) which is intended to replace U.S. dollar LIBOR. Plans for alternative reference rates for other currencies have also been announced. At this time, it is not possible to predict how markets will respond to these new rates, and the effect of any changes or reforms to LIBOR or discontinuation of LIBOR on new or existing financial instruments to which we have exposure. If LIBOR ceases to exist or if the methods of calculating LIBOR change from current methods for any reason, interest rates on certain derivatives and floating rate securities we hold, securities we have issued, real estate lending and related activities we conduct in our investment management business, and any other assets or liabilities whose value is tied to LIBOR, may be adversely affected. Further, any uncertainty regarding the continued use and reliability of LIBOR as a benchmark interest rate could adversely affect the value of such instruments.
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The changing competitive landscape may adversely affect the Company.
In each of our businesses we face intense competition from insurance companies, asset managers and diversified financial institutions, both for the ultimate customers for our products and, in many businesses, for distribution through non-affiliated distribution channels. Technological advances, changing customer expectations, including related to digital offerings, or other changes in the marketplace may present opportunities for new or smaller competitors without established products or distribution channels to meet consumers’ increased expectations more efficiently than us. Fintech and insurtech companies have the potential to disrupt industries globally, and many participants have been partially funded by industry players. For example, in Investment Management, we expect to see continued pressure on fees given the focus on passive investment and the growth of the robo-advice channel.
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Climate Change may increase the severity and frequency of calamities, or adversely affect our investment portfolio.
Climate change may increase the frequency and severity of weather related disasters and pandemics. In addition, climate change regulation may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. It may also impact other counterparties, including reinsurers, and affect the value of investments, including real estate investments we hold or manage for others. We cannot predict the long-term impacts on us from climate change or related regulation.
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Market conditions and other factors may adversely impact product sales or increase expenses. Examples include:
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A change in market conditions, such as high inflation and high interest rates, could cause a change in consumer sentiment and behavior adversely affecting sales and persistency of our savings and protection products. Conversely, low inflation and low interest rates could cause persistency of these products to vary from that anticipated and adversely affect profitability. Similarly, changing economic conditions and unfavorable public perception of financial institutions can influence customer behavior, including increasing claims or surrenders in certain products.
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Sales of our investment-based and asset management products and services may decline, and lapses and surrenders of certain insurance products and withdrawals of assets from investment products may increase if a market downturn, increased market volatility or other market conditions result in customers becoming dissatisfied with their investments or products.
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Changes in our discount rate, expected rate of return, life expectancy, health care cost and assumptions regarding compensation increases for our pension and other postretirement benefit plans may result in increased expenses and reduce our profitability.
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Our reputation may be adversely impacted if any of the risks described in this section are realized.
Reputational risk
could manifest from any of the risks as identified in the Company’s risk identification process. Failure to effectively manage risks across a broad range of risk issues exposes the Company to reputational harm. If the Company were to suffer a significant loss in reputation, both policyholders and counterparties could seek to exit existing relationships. Additionally, large changes in credit worthiness, especially credit ratings, could impact access to funding markets while creating additional collateral requirements for existing relationships. The mismanagement of any such risks may potentially damage our reputational asset. Our business is anchored in the strength of our brand, our alignment to our values, and our proven commitment to keep our promises to our customers. Any negative public perception, founded or otherwise, can be widely and rapidly shared over social media or other means, and could cause damage to our reputation.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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High
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Low
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Dividends
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2017:
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Fourth Quarter
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$
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117.15
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$
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107.28
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$
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0.75
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Third Quarter
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$
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115.23
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$
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98.65
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$
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0.75
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Second Quarter
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$
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109.13
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$
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102.92
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$
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0.75
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First Quarter
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$
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113.82
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$
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103.92
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$
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0.75
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2016:
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Fourth Quarter
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$
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107.10
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$
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81.43
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$
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0.70
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Third Quarter
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$
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81.65
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$
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68.74
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$
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0.70
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Second Quarter
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$
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79.71
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$
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66.93
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$
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0.70
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First Quarter
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$
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79.84
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$
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58.00
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$
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0.70
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Period
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Total Number of
Shares
Purchased(1)
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Average
Price Paid
per Share
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Total Number of
Shares Purchased
as Part of
Publicly Announced
Program(2)
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Approximate Dollar Value of Shares that May Yet Be Purchased under the Program(2)
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October 1, 2017 through October 31, 2017
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950,996
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$
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109.90
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|
947,795
|
|
|
|
||
|
November 1, 2017 through November 30, 2017
|
|
939,124
|
|
|
$
|
111.56
|
|
|
933,657
|
|
|
|
||
|
December 1, 2017 through December 31, 2017
|
|
897,509
|
|
|
$
|
116.25
|
|
|
896,018
|
|
|
|
||
|
Total
|
|
2,787,629
|
|
|
$
|
112.50
|
|
|
2,777,470
|
|
|
$
|
0
|
|
|
(1)
|
Includes shares of Common Stock withheld from participants for income tax withholding purposes whose shares of restricted stock units vested during the period. Such restricted stock units were originally issued to participants pursuant to the Prudential Financial Inc. Omnibus Incentive Plan.
|
|
(2)
|
In December 2016, Prudential Financial’s Board of Directors authorized the Company to repurchase at management’s discretion up to $1.25 billion of its outstanding Common Stock during the period from January 1, 2017 through December 31, 2017.
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in millions, except per share and ratio information)
|
||||||||||||||||||
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Premiums
|
$
|
32,091
|
|
|
$
|
30,964
|
|
|
$
|
28,521
|
|
|
$
|
29,293
|
|
|
$
|
26,237
|
|
|
Policy charges and fee income
|
5,303
|
|
|
5,906
|
|
|
5,972
|
|
|
6,179
|
|
|
5,415
|
|
|||||
|
Net investment income
|
16,435
|
|
|
15,520
|
|
|
14,829
|
|
|
15,256
|
|
|
14,729
|
|
|||||
|
Asset management and service fees
|
4,127
|
|
|
3,752
|
|
|
3,772
|
|
|
3,719
|
|
|
3,485
|
|
|||||
|
Other income (loss)
|
1,301
|
|
|
443
|
|
|
0
|
|
|
(1,978
|
)
|
|
(3,199
|
)
|
|||||
|
Realized investment gains (losses), net
|
432
|
|
|
2,194
|
|
|
4,025
|
|
|
1,636
|
|
|
(5,206
|
)
|
|||||
|
Total revenues
|
59,689
|
|
|
58,779
|
|
|
57,119
|
|
|
54,105
|
|
|
41,461
|
|
|||||
|
Benefits and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Policyholders’ benefits
|
33,794
|
|
|
33,632
|
|
|
30,627
|
|
|
31,587
|
|
|
26,733
|
|
|||||
|
Interest credited to policyholders’ account balances
|
3,822
|
|
|
3,761
|
|
|
3,479
|
|
|
4,263
|
|
|
3,111
|
|
|||||
|
Dividends to policyholders
|
2,091
|
|
|
2,025
|
|
|
2,212
|
|
|
2,716
|
|
|
2,050
|
|
|||||
|
Amortization of deferred policy acquisition costs
|
1,580
|
|
|
1,877
|
|
|
2,120
|
|
|
1,973
|
|
|
240
|
|
|||||
|
General and administrative expenses
|
11,915
|
|
|
11,779
|
|
|
10,912
|
|
|
11,807
|
|
|
11,011
|
|
|||||
|
Total benefits and expenses
|
53,202
|
|
|
53,074
|
|
|
49,350
|
|
|
52,346
|
|
|
43,145
|
|
|||||
|
Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures
|
6,487
|
|
|
5,705
|
|
|
7,769
|
|
|
1,759
|
|
|
(1,684
|
)
|
|||||
|
Total income tax expense (benefit)
|
(1,438
|
)
|
|
1,335
|
|
|
2,072
|
|
|
349
|
|
|
(1,058
|
)
|
|||||
|
Income (loss) from continuing operations before equity in earnings of operating joint ventures
|
7,925
|
|
|
4,370
|
|
|
5,697
|
|
|
1,410
|
|
|
(626
|
)
|
|||||
|
Equity in earnings of operating joint ventures, net of taxes
|
49
|
|
|
49
|
|
|
15
|
|
|
16
|
|
|
59
|
|
|||||
|
Income (loss) from continuing operations
|
7,974
|
|
|
4,419
|
|
|
5,712
|
|
|
1,426
|
|
|
(567
|
)
|
|||||
|
Income (loss) from discontinued operations, net of taxes
|
0
|
|
|
0
|
|
|
0
|
|
|
12
|
|
|
7
|
|
|||||
|
Net income (loss)
|
7,974
|
|
|
4,419
|
|
|
5,712
|
|
|
1,438
|
|
|
(560
|
)
|
|||||
|
Less: Income (loss) attributable to noncontrolling interests
|
111
|
|
|
51
|
|
|
70
|
|
|
57
|
|
|
107
|
|
|||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
7,863
|
|
|
$
|
4,368
|
|
|
$
|
5,642
|
|
|
$
|
1,381
|
|
|
$
|
(667
|
)
|
|
EARNINGS PER SHARE(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic earnings per share—Common Stock:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income (loss) from continuing operations attributable to Prudential Financial, Inc.
|
$
|
18.19
|
|
|
$
|
9.85
|
|
|
$
|
12.37
|
|
|
$
|
3.23
|
|
|
$
|
(1.57
|
)
|
|
Income (loss) from discontinued operations, net of taxes
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.02
|
|
|
0.02
|
|
|||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
18.19
|
|
|
$
|
9.85
|
|
|
$
|
12.37
|
|
|
$
|
3.25
|
|
|
$
|
(1.55
|
)
|
|
Diluted earnings per share—Common Stock:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income (loss) from continuing operations attributable to Prudential Financial, Inc.
|
$
|
17.86
|
|
|
$
|
9.71
|
|
|
$
|
12.17
|
|
|
$
|
3.20
|
|
|
$
|
(1.57
|
)
|
|
Income (loss) from discontinued operations, net of taxes
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.03
|
|
|
0.02
|
|
|||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
17.86
|
|
|
$
|
9.71
|
|
|
$
|
12.17
|
|
|
$
|
3.23
|
|
|
$
|
(1.55
|
)
|
|
Dividends declared per share—Common Stock
|
$
|
3.00
|
|
|
$
|
2.80
|
|
|
$
|
2.44
|
|
|
$
|
2.17
|
|
|
$
|
1.73
|
|
|
Ratio of earnings to fixed charges(2)
|
2.18
|
|
|
2.10
|
|
|
2.64
|
|
|
1.25
|
|
|
0.00
|
||||||
|
|
As of December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total investments excluding policy loans
|
$
|
457,980
|
|
|
$
|
432,485
|
|
|
$
|
405,535
|
|
|
$
|
408,274
|
|
|
$
|
386,407
|
|
|
Separate account assets
|
306,617
|
|
|
287,636
|
|
|
285,570
|
|
|
296,435
|
|
|
285,060
|
|
|||||
|
Total assets
|
831,921
|
|
|
783,962
|
|
|
757,255
|
|
|
766,526
|
|
|
731,638
|
|
|||||
|
Future policy benefits and policyholders’ account balances
|
405,506
|
|
|
386,113
|
|
|
361,168
|
|
|
353,916
|
|
|
343,516
|
|
|||||
|
Separate account liabilities
|
306,617
|
|
|
287,636
|
|
|
285,570
|
|
|
296,435
|
|
|
285,060
|
|
|||||
|
Short-term debt
|
1,380
|
|
|
1,133
|
|
|
1,216
|
|
|
3,839
|
|
|
2,668
|
|
|||||
|
Long-term debt
|
17,172
|
|
|
18,041
|
|
|
19,594
|
|
|
19,702
|
|
|
23,411
|
|
|||||
|
Total liabilities
|
777,577
|
|
|
737,874
|
|
|
715,332
|
|
|
724,177
|
|
|
695,757
|
|
|||||
|
Prudential Financial, Inc. equity
|
54,069
|
|
|
45,863
|
|
|
41,890
|
|
|
41,770
|
|
|
35,278
|
|
|||||
|
Noncontrolling interests
|
275
|
|
|
225
|
|
|
33
|
|
|
579
|
|
|
603
|
|
|||||
|
Total equity
|
$
|
54,344
|
|
|
$
|
46,088
|
|
|
$
|
41,923
|
|
|
$
|
42,349
|
|
|
$
|
35,881
|
|
|
(1)
|
For 2017, 2016 and 2015, represents consolidated earnings per share of Common Stock. For 2014 and 2013, represents earnings of the Company’s former Financial Services Businesses per share of Common Stock.
|
|
(2)
|
For purposes of this computation, earnings are defined as income from continuing operations before income taxes excluding undistributed income (loss) from equity method investments, fixed charges and interest capitalized. Also excludes earnings attributable to noncontrolling interests. Fixed charges are the sum of gross interest expense, interest credited to policyholders’ account balances and an estimated interest component of rent expense. Due to the Company’s loss for the year ended December 31, 2013, the ratio coverage was less than 1:1 and is therefore not presented. Additional earnings of $1,935 million would have been required for the year ended December 31, 2013 to achieve a ratio of 1:1.
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Page
Number
|
|
•
|
investment-related activity, including: investment income returns, net interest margins, net investment spread results, new money rates, mortgage loan prepayments and bond redemptions;
|
|
•
|
insurance reserve levels, market experience true-ups, and amortization of both deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”);
|
|
•
|
customer account values, including their impact on fee income;
|
|
•
|
fair value of, and possible impairments on, intangible assets such as goodwill;
|
|
•
|
product offerings, design features, crediting rates and sales mix; and
|
|
•
|
policyholder behavior, including surrender or withdrawal activity.
|
|
|
As of
December 31, 2017
|
||
|
|
($ in billions)
|
||
|
Long-duration insurance products with fixed and guaranteed terms
|
$
|
115
|
|
|
Contracts with adjustable crediting rates subject to guaranteed minimums
|
56
|
|
|
|
Participating contracts where investment income risk ultimately accrues to contractholders
|
15
|
|
|
|
Total
|
$
|
186
|
|
|
(1)
|
Includes approximately $0.9 billion related to contracts that impose a market value adjustment if the invested amount is not held to maturity.
|
|
|
As of
December 31, 2017
|
||
|
|
($ in billions)
|
||
|
Long-duration insurance products with fixed and guaranteed terms
|
$
|
125
|
|
|
Contracts with a market value adjustment if invested amount is not held to maturity
|
24
|
|
|
|
Contracts with adjustable crediting rates subject to guaranteed minimums
|
10
|
|
|
|
Total
|
$
|
159
|
|
|
•
|
U.S. Individual Solutions.
Our Individual Annuities business remains focused on helping its customers meet their investment and retirement needs. We expect continued strong results with near-term returns on assets above our long-term target. In addition, we expect our free cash flow to be high given the stability in our block and the challenged industry-wide sales environment. We have been enhancing our risk management strategy to optimize the mix of derivatives and cash instruments which will cause some downward pressure on returns over time, but is expected to produce less volatile net income and cash flows, particularly in adverse scenarios. In addition, we expect a natural fee rate reduction due to the maturation of the existing block and due to sales of newer products which generally have lower rate structures. Furthermore, we expect our recent favorable hedging outcomes to normalize. We expect the combination of these factors to cause our returns on assets to migrate to the long-term target over time. We continue to execute on our product diversification strategy and remain focused on a broad range of outcome-oriented solutions for customers. Over the near-term, we expect the challenged industry sales environment to persist, and given a more muted equity growth assumption than in prior years, we expect a slight decline in account values. Our Individual Life business is continuing to execute on its product diversification strategy in order to maintain a diversified product mix and an attractive risk profile. We continue to deepen relationships with distribution partners while developing a more customer-oriented experience. Product actions over the last several months could result in a slightly higher portion of sales in term and variable life over the next several quarters, but we remain committed to achieving a diversified product offering.
|
|
•
|
U.S. Workplace Solutions.
In our Retirement business we continue to provide products that respond to the needs of plan sponsors to manage risk and control their benefit costs, while ensuring we maintain appropriate pricing and return expectations under changing market conditions. Our differentiated capabilities and demonstrated execution in the pension risk transfer business is expected to continue to generate attractive growth opportunities. We expect, however, that growth will not be linear given the episodic nature of larger cases, which is the segment of the market where we are most competitive and where the returns are the most compelling. In addition, while we foresee continuation of the spread and fee compression that we have been experiencing in our full-service business, we believe these are manageable headwinds. In our Group Insurance business, we are focused on expanding our premier market segment, while maintaining a leadership position in the national segment and deepening our customer relationships through our Financial Wellness platform. We are seeing benefits from our multi-year underwriting efforts, especially in our disability business where improved claims management and our continued pricing discipline have resulted in improvements to our benefits ratio.
|
|
•
|
Investment Management
. PGIM, our investment management business, is making targeted investments to further diversify its product offerings, continue to build a broader international presence, deepen its solutions capability, and further strengthen external recognition as a leading global asset manager. These capabilities will enable PGIM to continue to meet our clients’ evolving needs and, in turn, to generate flows across multiple asset classes, client segments and geographies. Underpinning our growth strategy is our ability to continue to deliver robust investment performance, and to attract and retain high-caliber investment talent. While we are experiencing fee pressure in line with the industry, our average fee yield has remained relatively flat due to new flows coming into higher fee yielding strategies within fixed income, equities and real estate, and because of our diverse business profile.
|
|
•
|
International Markets.
We continue to concentrate on deepening our presence in Japan and other markets in which we currently operate and expanding our distribution capabilities in emerging markets. The returns on our death protection products are largely driven by mortality margins which helps mitigate the exposure of results to interest rates. We have seen a shift in sales mix with a greater emphasis on U.S. dollar-denominated products in Japan. We expect this trend to continue. We are also focused on achieving scale in select growth markets outsides of Japan. With regard to distribution, we are seeking modest growth in our Life Planner count in Japan but we do expect a decline in Gibraltar Life Consultants as we continue to focus on increasing quality and productivity standards.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Revenues
|
|
$
|
59,689
|
|
|
$
|
58,779
|
|
|
$
|
57,119
|
|
|
Benefits and expenses
|
|
53,202
|
|
|
53,074
|
|
|
49,350
|
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
6,487
|
|
|
5,705
|
|
|
7,769
|
|
|||
|
Income tax expense (benefit)
|
|
(1,438
|
)
|
|
1,335
|
|
|
2,072
|
|
|||
|
Income (loss) before equity in earnings of operating joint ventures
|
|
7,925
|
|
|
4,370
|
|
|
5,697
|
|
|||
|
Equity in earnings of operating joint ventures, net of taxes
|
|
49
|
|
|
49
|
|
|
15
|
|
|||
|
Net income (loss)
|
|
7,974
|
|
|
4,419
|
|
|
5,712
|
|
|||
|
Less: Income attributable to noncontrolling interests
|
|
111
|
|
|
51
|
|
|
70
|
|
|||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
7,863
|
|
|
$
|
4,368
|
|
|
$
|
5,642
|
|
|
•
|
$2,773 million favorable impact reflecting a tax benefit in the current year compared to a tax expense in the prior year primarily as a result of tax reform (see “—Income Taxes”);
|
|
•
|
$1,927 million net favorable variance, on a pre-tax basis, primarily from higher operating results from our business segments and income in the current period from our Divested Businesses compared to a loss in the prior year;
|
|
•
|
$1,500 million favorable variance, on a pre-tax basis, reflecting changes to the way we manage interest rate risks for certain products. This variance is primarily attributed to changes in our Individual Annuities risk management strategy implemented in 2016, whereby we terminated the existing intercompany derivative transactions between our Corporate and Other operations and Individual Annuities related to managing interest rate risk and we now manage this risk within the Individual Annuities business segment (see “—Results of Operations by Segment—Corporate and Other—Capital Protection Framework” for additional information); and
|
|
•
|
$478 million favorable variance, on a pre-tax basis, from adjustments to DAC and other costs as well as reserves, reflecting updates to the estimated profitability of our businesses, including the impact of our annual reviews and update of assumptions and other refinements. This excludes the impact associated with the variable annuity hedging program discussed below (see “—Results of Operations by Segment—U.S. Individual Solutions Division—Individual Annuities” for additional information).
|
|
•
|
$2,373 million unfavorable variance, on a pre-tax basis, reflecting the net impact from changes in the value of our embedded derivatives and related hedge positions associated with certain variable annuities (see “—Results of Operations by Segment—U.S. Individual Solutions Division—Individual Annuities—Variable Annuity Risks and Risk Mitigants” for additional information); and
|
|
•
|
$810 million lower net pre-tax realized gains for PFI excluding the Closed Block division, and excluding the impact of the hedging program associated with certain variable annuities discussed above (see “—Realized Investment Gains and Losses” for additional information).
|
|
•
|
$980 million unfavorable variance, on a pre-tax basis, from adjustments to DAC and other costs as well as reserves, reflecting updates to the estimated profitability of our businesses, including the impact of our annual reviews and update of assumptions and other refinements. This excludes the impact associated with the variable annuity hedging program discussed below (see “—Results of Operations by Segment—U.S. Individual Solutions Division—Individual Annuities” for additional information);
|
|
•
|
$972 million unfavorable variance, on a pre-tax basis, reflecting our decision to manage a portion of our interest rate risk through our Capital Protection Framework (see “—Results of Operations by Segment—Corporate and Other—Capital Protection Framework” for additional information); and
|
|
•
|
$479 million lower net pre-tax realized gains for PFI excluding the Closed Block division, and excluding the impact of the hedging program associated with certain variable annuities, which is discussed below (see “—Realized Investment Gains and Losses” for additional information).
|
|
•
|
$737 million favorable impact of lower tax expense reflecting lower pre-tax income in 2016 compared to 2015; and
|
|
•
|
$660 million favorable variance, on a pre-tax basis, reflecting the net impact from changes in the value of our embedded derivatives and related hedge positions associated with certain variable annuities and other products (see “—Results of Operations by Segment—U.S. Individual Solutions Division—Individual Annuities—Variable Annuity Risks and Risk Mitigants” for additional information).
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Adjusted operating income before income taxes by segment:
|
|
|
|
|
|
|
||||||
|
Individual Annuities
|
|
$
|
2,198
|
|
|
$
|
1,765
|
|
|
$
|
1,797
|
|
|
Individual Life
|
|
(191
|
)
|
|
79
|
|
|
635
|
|
|||
|
Total U.S. Individual Solutions division(1)
|
|
2,007
|
|
|
1,844
|
|
|
2,432
|
|
|||
|
Retirement
|
|
1,244
|
|
|
1,012
|
|
|
931
|
|
|||
|
Group Insurance
|
|
253
|
|
|
220
|
|
|
176
|
|
|||
|
Total U.S. Workplace Solutions division(1)
|
|
1,497
|
|
|
1,232
|
|
|
1,107
|
|
|||
|
Investment Management
|
|
979
|
|
|
787
|
|
|
779
|
|
|||
|
Total Investment Management division(1)
|
|
979
|
|
|
787
|
|
|
779
|
|
|||
|
International Insurance
|
|
3,198
|
|
|
3,117
|
|
|
3,226
|
|
|||
|
Total International Insurance division
|
|
3,198
|
|
|
3,117
|
|
|
3,226
|
|
|||
|
Corporate and Other operations
|
|
(1,437
|
)
|
|
(1,581
|
)
|
|
(1,313
|
)
|
|||
|
Total Corporate and Other
|
|
(1,437
|
)
|
|
(1,581
|
)
|
|
(1,313
|
)
|
|||
|
Total segment adjusted operating income before income taxes
|
|
6,244
|
|
|
5,399
|
|
|
6,231
|
|
|||
|
Reconciling items:
|
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net, and related adjustments(2)
|
|
(602
|
)
|
|
989
|
|
|
2,258
|
|
|||
|
Charges related to realized investment gains (losses), net(3)
|
|
544
|
|
|
(466
|
)
|
|
(679
|
)
|
|||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net(4)
|
|
336
|
|
|
(17
|
)
|
|
(524
|
)
|
|||
|
Change in experience-rated contractholder liabilities due to asset value changes(5)
|
|
(151
|
)
|
|
21
|
|
|
433
|
|
|||
|
Divested businesses(6):
|
|
|
|
|
|
|
||||||
|
Closed Block division
|
|
45
|
|
|
(132
|
)
|
|
58
|
|
|||
|
Other divested businesses
|
|
38
|
|
|
(84
|
)
|
|
(66
|
)
|
|||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(7)
|
|
33
|
|
|
(5
|
)
|
|
58
|
|
|||
|
Consolidated income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
6,487
|
|
|
$
|
5,705
|
|
|
$
|
7,769
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See “—Overview” for additional information.
|
|
(2)
|
Represents “Realized investment gains (losses), net,” and related adjustments. See “—Realized Investment Gains and Losses” and Note 22 to our Consolidated Financial Statements for additional information.
|
|
(3)
|
Includes charges that represent the impact of realized investment gains (losses), net, on the amortization of DAC and other costs, and on changes in reserves. Also includes charges resulting from payments related to market value adjustment features of certain of our annuity products and the impact of realized investment gains (losses), net, on the amortization of unearned revenue reserves.
|
|
(4)
|
Represents net investment gains (losses) on trading account assets supporting insurance liabilities. See “—Experience-Rated Contractholder Liabilities, Trading Account Assets Supporting Insurance Liabilities and Other Related Investments.”
|
|
(5)
|
Represents changes in contractholder liabilities due to asset value changes in the pool of investments supporting these experience-rated contracts. See “—Experience-Rated Contractholder Liabilities, Trading Account Assets Supporting Insurance Liabilities and Other Related Investments.”
|
|
(6)
|
Represents the contribution to income (loss) of divested businesses that have been or will be sold or exited, including businesses that have been placed in wind down, but that did not qualify for “discontinued operations” accounting treatment under U.S. GAAP. See “—Divested Businesses.”
|
|
(7)
|
Equity in earnings of operating joint ventures are included in adjusted operating income but excluded from income before income taxes and equity in earnings of operating joint ventures as they are reflected on an after-tax U.S. GAAP basis as a separate line in our Consolidated Statements of Operations. Earnings attributable to noncontrolling interests are excluded from adjusted operating income but included in income before taxes and equity earnings of operating joint ventures as they are reflected on a U.S. GAAP basis as a separate line in our Consolidated Statements of Operations. Earnings attributable to noncontrolling interests represent the portion of earnings from consolidated entities that relates to the equity interests of minority investors.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in billions)
|
||||||
|
Instruments hedging foreign currency exchange rate exposure on U.S. dollar-equivalent earnings:
|
|
|
|
|
||||
|
Forward currency hedging program(1)
|
|
$
|
1.6
|
|
|
$
|
1.6
|
|
|
Instruments hedging foreign currency exchange rate exposure on U.S. dollar-equivalent equity:
|
|
|
|
|
||||
|
U.S. dollar-denominated assets held in yen-based entities(2):
|
|
|
|
|
||||
|
U.S. dollar-denominated investments, at amortized cost
|
|
13.7
|
|
|
12.6
|
|
||
|
Other
|
|
0.1
|
|
|
0.1
|
|
||
|
Subtotal
|
|
13.8
|
|
|
12.7
|
|
||
|
Dual currency and synthetic dual currency investments(3)
|
|
0.6
|
|
|
0.7
|
|
||
|
Total instruments hedging foreign currency exchange rate exposure on U.S. dollar-equivalent equity
|
|
14.4
|
|
|
13.4
|
|
||
|
Total hedges
|
|
$
|
16.0
|
|
|
$
|
15.0
|
|
|
(1)
|
Represents the notional amount of forward currency contracts outstanding.
|
|
(2)
|
Excludes $41.2 billion and $36.2 billion as of December 31, 2017 and 2016, respectively, of U.S. dollar-denominated assets supporting U.S. dollar-denominated liabilities related to U.S. dollar-denominated products issued by our Japanese insurance operations.
|
|
(3)
|
Dual currency and synthetic dual currency investments are held by our yen-based entities in the form of fixed maturities and loans with a yen-denominated principal component and U.S. dollar-denominated interest income. The amounts shown represent the present value of future U.S. dollar-denominated cash flows.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Segment impacts of intercompany arrangements:
|
|
|
|
|
|
|
||||||
|
International Insurance
|
|
$
|
3
|
|
|
$
|
23
|
|
|
$
|
331
|
|
|
Retirement
|
|
2
|
|
|
9
|
|
|
0
|
|
|||
|
Investment Management
|
|
0
|
|
|
6
|
|
|
0
|
|
|||
|
Impact of intercompany arrangements(1)
|
|
5
|
|
|
38
|
|
|
331
|
|
|||
|
Corporate and Other operations:
|
|
|
|
|
|
|
||||||
|
Impact of intercompany arrangements(1)
|
|
(5
|
)
|
|
(38
|
)
|
|
(331
|
)
|
|||
|
Settlement gains (losses) on forward currency contracts(2)
|
|
(16
|
)
|
|
38
|
|
|
286
|
|
|||
|
Net benefit (detriment) to Corporate and Other operations
|
|
(21
|
)
|
|
0
|
|
|
(45
|
)
|
|||
|
Net impact on consolidated revenues and adjusted operating income
|
|
$
|
(16
|
)
|
|
$
|
38
|
|
|
$
|
286
|
|
|
(1)
|
Represents the difference between non-U.S. dollar-denominated earnings translated on the basis of weighted average monthly currency exchange rates versus fixed currency exchange rates determined in connection with the foreign currency income hedging program.
|
|
(2)
|
As of December 31, 2017, 2016 and 2015, the notional amounts of these forward currency contracts within our Corporate and Other operations were $2.8 billion, $2.7 billion and $2.4 billion, respectively, of which $1.5 billion, $1.6 billion and $1.9 billion, respectively, were related to our Japanese insurance operations.
|
|
•
|
For most long-duration contracts, we utilize a net premium valuation methodology in measuring the liability for future policy benefits. Under this methodology, a liability for future policy benefits is accrued when premium revenue is recognized. The liability, which represents the present value of future benefits to be paid to or on behalf of policyholders and related expenses less the present value of future net premiums (portion of the gross premium required to provide for all benefits and expenses), is estimated using methods that include assumptions applicable at the time the insurance contracts are made with provisions for the risk of adverse deviation, as appropriate. Original assumptions continue to be used in subsequent accounting periods to determine changes in the liability for future policy benefits (often referred to as the “lock-in concept”) unless a premium deficiency exists. The result of the net premium valuation methodology is that the liability at any point in time represents an accumulation of the portion of premiums received to date expected to be needed to fund future benefits (i.e., net premiums received to date), less any benefits and expenses already paid. The liability does not necessarily reflect the full policyholder obligation the Company expects to pay at the conclusion of the contract since a portion of that obligation would be funded by net premiums received in the future and would be recognized in the liability at that time. We perform premium deficiency tests using best estimate assumptions as of the testing date without provisions for adverse deviation. If the liabilities determined based on these best estimate assumptions are greater than the net reserves (i.e., GAAP reserves net of any DAC, DSI or VOBA asset), the existing net reserves are adjusted by first reducing these assets by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than these asset balances for insurance contracts, we then increase the net reserves by the excess, again through a charge to current period earnings. If a premium deficiency is recognized, the assumptions as of the premium deficiency test date are locked in and used in subsequent valuations and the net reserves continue to be subject to premium deficiency testing. In addition, for limited-payment contracts, future policy benefit reserves also include a deferred profit liability representing gross premiums received in excess of net premiums. The deferred profits are recognized in revenue in a constant relationship with insurance in force or with the amount of expected future benefit payments.
|
|
•
|
For certain contract features, such as those related to guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”) and no-lapse guarantees, a liability is established when associated assessments (which include all policy charges including charges for administration, mortality, expense, surrender, and other. regardless of how characterized) are recognized. This liability is established utilizing current best estimate assumptions and is based on the ratio of the present value of total expected excess payments over the life of the contract divided by the present value of total expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. Similar to as described above for DAC, the reserves are subject to adjustments based on annual reviews of assumptions and quarterly adjustments for experience, including market performance. These adjustments reflect the impact on the benefit ratio of using actual historical experience from the issuance date to the balance sheet date plus updated estimates of future experience. The updated benefit ratio is then applied to all prior periods’ assessments to derive an adjustment to the reserve recognized through a benefit or charge to current period earnings.
|
|
•
|
For certain product guarantees, primarily certain optional living benefit features of the variable annuity products in our Individual Annuities segment including guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum income and withdrawal benefits (“GMIWB”), the benefits are accounted for as embedded derivatives using a fair value accounting framework. The fair value of these contracts is calculated as the present value of expected future benefit payments to contractholders less the present value of assessed rider fees attributable to the embedded derivative feature. Under U.S. GAAP, the fair values of these benefit features are based on assumptions a market participant would use in valuing these embedded derivatives. Changes in the fair value of the embedded derivatives are recorded quarterly through a benefit or charge to current period earnings.
|
|
|
|
December 31, 2017
|
||||||||||
|
|
|
Increase (Decrease) in
|
||||||||||
|
|
|
Deferred Policy Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired
|
|
Future Policy Benefits and Policyholders’ Account Balances(1)
|
|
Net Impact
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Assumptions:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Long-term interest rate(2):
|
|
|
|
|
|
|
||||||
|
Increase by 25 basis points
|
|
$
|
55
|
|
|
$
|
(45
|
)
|
|
$
|
100
|
|
|
Decrease by 25 basis points
|
|
$
|
(60
|
)
|
|
$
|
50
|
|
|
$
|
(110
|
)
|
|
|
|
|
|
|
|
|
||||||
|
Long-term equity expected rate of return(3):
|
|
|
|
|
|
|
||||||
|
Increase by 50 basis points
|
|
$
|
100
|
|
|
$
|
(45
|
)
|
|
$
|
145
|
|
|
Decrease by 50 basis points
|
|
$
|
(200
|
)
|
|
$
|
60
|
|
|
$
|
(260
|
)
|
|
|
|
|
|
|
|
|
||||||
|
NPR credit spread(4):
|
|
|
|
|
|
|
||||||
|
Increase by 50 basis points
|
|
$
|
(350
|
)
|
|
$
|
(1,715
|
)
|
|
$
|
1,365
|
|
|
Decrease by 50 basis points
|
|
$
|
385
|
|
|
$
|
1,890
|
|
|
$
|
(1,505
|
)
|
|
|
|
|
|
|
|
|
||||||
|
Mortality(5):
|
|
|
|
|
|
|
||||||
|
Increase by 1%
|
|
$
|
(85
|
)
|
|
$
|
(105
|
)
|
|
$
|
20
|
|
|
Decrease by 1%
|
|
$
|
85
|
|
|
$
|
105
|
|
|
$
|
(20
|
)
|
|
|
|
|
|
|
|
|
||||||
|
Lapse(6):
|
|
|
|
|
|
|
||||||
|
Increase by 10%
|
|
$
|
(165
|
)
|
|
$
|
(750
|
)
|
|
$
|
585
|
|
|
Decrease by 10%
|
|
$
|
175
|
|
|
$
|
780
|
|
|
$
|
(605
|
)
|
|
(1)
|
Includes GMDB/GMIB reserves, embedded derivative liabilities for certain living benefit guaranteed features, PFL liability, and URR.
|
|
(2)
|
Represents the impact of a parallel shift in the long-term interest rate yield curve for the Individual Life segment and the Japanese insurance operations.
|
|
(3)
|
Represents the impact of an increase or decrease in the long-term equity expected rate of return for the Individual Annuities segment.
|
|
(4)
|
Represents the impact of an increase or decrease in the NPR credit spread for the Individual Annuities segment.
|
|
(5)
|
Represents the impact of an increase or decrease in mortality rates for the Individual Life and Individual Annuities segments.
|
|
(6)
|
Represents the impact of an increase or decrease in lapse rates for the Individual Life and Individual Annuities segments, and the Long-Term Care business within our Corporate and Other operations.
|
|
•
|
Valuation of investments, including derivatives;
|
|
•
|
Recognition of other-than-temporary impairments (“OTTI”); and
|
|
•
|
Determination of the valuation allowance for losses on commercial mortgage and other loans.
|
|
|
|
For the year ended December 31, 2017
|
||||||
|
|
|
Increase/(Decrease) in Net
Periodic Pension Cost
|
|
Increase/(Decrease) in Net
Periodic Other Postretirement Cost
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Increase in expected rate of return by 100 bps
|
|
$
|
(122
|
)
|
|
$
|
(15
|
)
|
|
Decrease in expected rate of return by 100 bps
|
|
$
|
122
|
|
|
$
|
15
|
|
|
|
|
For the year ended December 31, 2017
|
||||||
|
|
|
Increase/(Decrease) in Net
Periodic Pension Cost
|
|
Increase/(Decrease) in Net
Periodic Other Postretirement Cost
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Increase in discount rate by 100 bps
|
|
$
|
(111
|
)
|
|
$
|
(7
|
)
|
|
Decrease in discount rate by 100 bps
|
|
$
|
140
|
|
|
$
|
5
|
|
|
|
|
December 31, 2017
|
||||||
|
|
|
Increase/(Decrease) in
Pension Benefits Obligation
|
|
Increase/(Decrease) in
Accumulated Postretirement
Benefits Obligation
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Increase in discount rate by 100 bps
|
|
$
|
(1,437
|
)
|
|
$
|
(187
|
)
|
|
Decrease in discount rate by 100 bps
|
|
$
|
1,653
|
|
|
$
|
208
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Operating results:
|
|
|
|
|
|
|
||||||
|
Revenues
|
|
$
|
5,110
|
|
|
$
|
4,666
|
|
|
$
|
4,695
|
|
|
Benefits and expenses
|
|
2,912
|
|
|
2,901
|
|
|
2,898
|
|
|||
|
Adjusted operating income
|
|
2,198
|
|
|
1,765
|
|
|
1,797
|
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
(1,157
|
)
|
|
2,031
|
|
|
1,588
|
|
|||
|
Related charges
|
|
577
|
|
|
68
|
|
|
(624
|
)
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
1,618
|
|
|
$
|
3,864
|
|
|
$
|
2,761
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Total Individual Annuities(1):
|
|
|
|
|
|
|
||||||
|
Beginning total account value
|
|
$
|
156,783
|
|
|
$
|
152,945
|
|
|
$
|
158,664
|
|
|
Sales
|
|
5,894
|
|
|
8,054
|
|
|
8,780
|
|
|||
|
Surrenders and withdrawals
|
|
(9,821
|
)
|
|
(7,881
|
)
|
|
(8,415
|
)
|
|||
|
Net sales
|
|
(3,927
|
)
|
|
173
|
|
|
365
|
|
|||
|
Benefit payments
|
|
(1,873
|
)
|
|
(1,794
|
)
|
|
(1,910
|
)
|
|||
|
Net flows
|
|
(5,800
|
)
|
|
(1,621
|
)
|
|
(1,545
|
)
|
|||
|
Change in market value, interest credited and other activity
|
|
21,355
|
|
|
9,012
|
|
|
(585
|
)
|
|||
|
Policy charges
|
|
(3,712
|
)
|
|
(3,553
|
)
|
|
(3,589
|
)
|
|||
|
Ending total account value
|
|
$
|
168,626
|
|
|
$
|
156,783
|
|
|
$
|
152,945
|
|
|
(1)
|
Includes variable and fixed annuities sold as retail investment products. Investments sold through defined contribution plan products are included with such products within the Retirement segment. Variable annuity account values were $165.1 billion, $153.3 billion and $149.4 billion as of December 31,
2017
,
2016
and
2015
, respectively. Fixed annuity account values were $3.5 billion as of December 31,
2017
,
2016
and
2015
.
|
|
|
|
As of December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
U.S. GAAP liability (including non-performance risk)
|
|
$
|
8,663
|
|
|
$
|
8,179
|
|
|
Non-performance risk adjustment
|
|
3,228
|
|
|
7,136
|
|
||
|
Subtotal
|
|
11,891
|
|
|
15,315
|
|
||
|
Adjustments including risk margins and valuation methodology differences
|
|
(2,742
|
)
|
|
(5,663
|
)
|
||
|
Economic liability managed through the ALM strategy
|
|
$
|
9,149
|
|
|
$
|
9,652
|
|
|
•
|
Different valuation methodologies in measuring the liability we intend to cover with fixed income instruments and derivatives versus the liability reported under U.S. GAAP
—The valuation methodology utilized in estimating the economic liability we intend to defray with fixed income instruments and derivatives is different from that required to be utilized to measure the liability under U.S. GAAP. The valuation of the economic liability excludes certain items that are included within the U.S. GAAP liability, such as NPR (in order to maximize protection irrespective of the possibility of our own default), as well as risk margins (required by U.S. GAAP but different from our best estimate).
|
|
•
|
Different accounting treatment between liabilities and assets supporting those liabilities
—Under U.S. GAAP, changes in value of the embedded derivative liability and derivative instruments used to hedge a portion of the economic liability are immediately reflected in net income. In contrast, changes in fair value of fixed income instruments that support a portion of the economic liability are designated as available-for-sale and are recorded as unrealized gains (losses) in other comprehensive income rather than within net income.
|
|
•
|
General hedge results
—For the derivative portion of the ALM strategy, the net hedging impact (the extent to which the changes in value of the hedging instruments offset the change in value of the portion of the economic liability we are hedging) may be impacted by a number of factors including: cash flow timing differences between our hedging instruments and the corresponding portion of the economic liability we are hedging, basis differences attributable to actual underlying contractholder funds to be hedged versus hedgeable indices, rebalancing costs related to dynamic rebalancing of hedging instruments as markets move, certain elements of the economic liability that may not be hedged (including certain actuarial assumptions), and implied and realized market volatility on the hedge positions relative to the portion of the economic liability we seek to hedge.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)(1)
|
||||||||||
|
Excluding impact of assumption updates and other refinements:
|
|
|
|
|
|
|
||||||
|
Net hedging impact(2)(3)
|
|
$
|
620
|
|
|
$
|
(692
|
)
|
|
$
|
(547
|
)
|
|
Change in portions of U.S. GAAP liability, before NPR(4)
|
|
2,477
|
|
|
1,745
|
|
|
(67
|
)
|
|||
|
Change in the NPR adjustment
|
|
(3,890
|
)
|
|
(1,097
|
)
|
|
2,243
|
|
|||
|
Net impact from changes in the U.S. GAAP embedded derivative and hedge positions-reported in Individual Annuities
|
|
(793
|
)
|
|
(44
|
)
|
|
1,629
|
|
|||
|
Related benefit (charge) to amortization of DAC and other costs
|
|
$
|
159
|
|
|
$
|
243
|
|
|
$
|
(701
|
)
|
|
Net impact of assumption updates and other refinements
|
|
(85
|
)
|
|
1,455
|
|
|
(34
|
)
|
|||
|
Net impact from changes in the U.S. GAAP embedded derivative and hedge positions, after the impact of NPR, DAC and other costs-reported in Individual Annuities(3)
|
|
$
|
(719
|
)
|
|
$
|
1,654
|
|
|
$
|
894
|
|
|
(1)
|
Positive amount represents income; negative amount represents a loss.
|
|
(2)
|
Net hedging impact represents the difference between the change in fair value of the risk we seek to hedge using derivatives and the change in fair value of the derivatives utilized with respect to that risk.
|
|
(3)
|
Excludes $0 million, $(1,523) million and $(585) million for
2017
,
2016
and
2015
, respectively, representing the impact of managing interest rate risk through capital management strategies other than hedging of particular exposures through September 30, 2016. Because this decision was based on the capital considerations of the Company as a whole, the impact was reported in Corporate and Other operations. See “—Corporate and Other.”
|
|
(4)
|
Represents risk margins and valuation methodology differences between the economic liability managed by the ALM strategy and the U.S. GAAP liability, as well as the portion of the economic liability managed with fixed income instruments.
|
|
|
|
December 31,
|
|||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
|
Account Value
|
|
% of Total
|
|
Account Value
|
|
% of Total
|
|
Account Value
|
|
% of Total
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
(in millions)
|
|||||||||||||||||||
|
Living benefit/GMDB features(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Both ALM strategy and automatic rebalancing(2)
|
|
$
|
114,686
|
|
|
69
|
%
|
|
$
|
106,585
|
|
|
69
|
%
|
|
$
|
106,018
|
|
|
71
|
%
|
|
ALM strategy only
|
|
9,317
|
|
|
6
|
%
|
|
9,409
|
|
|
6
|
%
|
|
9,994
|
|
|
7
|
%
|
|||
|
Automatic rebalancing only
|
|
1,003
|
|
|
1
|
%
|
|
1,168
|
|
|
1
|
%
|
|
1,393
|
|
|
1
|
%
|
|||
|
External reinsurance(3)
|
|
3,227
|
|
|
2
|
%
|
|
2,932
|
|
|
2
|
%
|
|
1,513
|
|
|
1
|
%
|
|||
|
PDI
|
|
9,996
|
|
|
5
|
%
|
|
7,926
|
|
|
5
|
%
|
|
4,664
|
|
|
3
|
%
|
|||
|
Other Products
|
|
2,791
|
|
|
2
|
%
|
|
2,730
|
|
|
2
|
%
|
|
2,870
|
|
|
2
|
%
|
|||
|
Total living benefit/GMDB features
|
|
$
|
141,020
|
|
|
|
|
$
|
130,750
|
|
|
|
|
$
|
126,452
|
|
|
|
|||
|
GMDB features and other(4)
|
|
24,133
|
|
|
15
|
%
|
|
22,545
|
|
|
15
|
%
|
|
22,989
|
|
|
15
|
%
|
|||
|
Total variable annuity account value
|
|
$
|
165,153
|
|
|
|
|
$
|
153,295
|
|
|
|
|
$
|
149,441
|
|
|
|
|||
|
(1)
|
All contracts with living benefit guarantees also contain GMDB features, covering the same insured contract.
|
|
(2)
|
Contracts with living benefits that are included in our ALM strategy, and have an automatic rebalancing feature.
|
|
(3)
|
Represents contracts subject to reinsurance transaction with external counterparty covering certain new HDI v.3.0 business for the period April 1, 2015 through December 31, 2016. These contracts with living benefits also have an automatic rebalancing feature.
|
|
(4)
|
Includes contracts that have a GMDB feature and do not have an automatic rebalancing feature.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Operating results:
|
|
|
|
|
|
|
||||||
|
Revenues
|
|
$
|
4,974
|
|
|
$
|
5,355
|
|
|
$
|
5,233
|
|
|
Benefits and expenses
|
|
5,165
|
|
|
5,276
|
|
|
4,598
|
|
|||
|
Adjusted operating income
|
|
(191
|
)
|
|
79
|
|
|
635
|
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
96
|
|
|
58
|
|
|
166
|
|
|||
|
Related charges
|
|
101
|
|
|
(223
|
)
|
|
(9
|
)
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
6
|
|
|
$
|
(86
|
)
|
|
$
|
792
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||
|
|
|
Prudential
Advisors
|
|
Third
Party
|
|
Total
|
|
Prudential
Advisors
|
|
Third
Party
|
|
Total
|
|
Prudential
Advisors
|
|
Third
Party
|
|
Total
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||||||||||
|
Term Life
|
|
$
|
30
|
|
|
$
|
183
|
|
|
$
|
213
|
|
|
$
|
32
|
|
|
$
|
168
|
|
|
$
|
200
|
|
|
$
|
33
|
|
|
$
|
171
|
|
|
$
|
204
|
|
|
Guaranteed Universal Life(1)
|
|
16
|
|
|
140
|
|
|
156
|
|
|
24
|
|
|
219
|
|
|
243
|
|
|
31
|
|
|
189
|
|
|
220
|
|
|||||||||
|
Other Universal Life(1)
|
|
37
|
|
|
88
|
|
|
125
|
|
|
34
|
|
|
61
|
|
|
95
|
|
|
28
|
|
|
61
|
|
|
89
|
|
|||||||||
|
Variable Life
|
|
35
|
|
|
95
|
|
|
130
|
|
|
26
|
|
|
66
|
|
|
92
|
|
|
22
|
|
|
56
|
|
|
78
|
|
|||||||||
|
Total
|
|
$
|
118
|
|
|
$
|
506
|
|
|
$
|
624
|
|
|
$
|
116
|
|
|
$
|
514
|
|
|
$
|
630
|
|
|
$
|
114
|
|
|
$
|
477
|
|
|
$
|
591
|
|
|
(1)
|
Single pay life premiums and excess (unscheduled) premiums are included in annualized new business premiums based on a 10% credit and represented approximately 15%, 13% and 17% of Guaranteed Universal Life and 1%, 3% and 7% of Other Universal Life annualized new business premiums for the years ended
December 31, 2017
,
2016
and
2015
, respectively.
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions)
|
||||||||||
|
Operating results(1):
|
|
|
|
|
|
||||||
|
Revenues
|
$
|
13,843
|
|
|
$
|
12,876
|
|
|
$
|
11,821
|
|
|
Benefits and expenses
|
12,599
|
|
|
11,864
|
|
|
10,890
|
|
|||
|
Adjusted operating income
|
1,244
|
|
|
1,012
|
|
|
931
|
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
(62
|
)
|
|
(281
|
)
|
|
255
|
|
|||
|
Related charges
|
(90
|
)
|
|
(272
|
)
|
|
(1
|
)
|
|||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
118
|
|
|
(21
|
)
|
|
(581
|
)
|
|||
|
Change in experience-rated contractholder liabilities due to asset value changes
|
67
|
|
|
25
|
|
|
490
|
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
1,277
|
|
|
$
|
463
|
|
|
$
|
1,094
|
|
|
(1)
|
Certain of our Retirement segment’s non-U.S. dollar-denominated earnings are from longevity reinsurance contracts, which are denominated in British pounds sterling, and are therefore subject to foreign currency exchange rate risk. Effective January 1, 2016, the financial results of our Retirement segment include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on the segment’s U.S. dollar-equivalent earnings. For more information related to this intercompany arrangement, see “—Results of Operations—Impact of Foreign Currency Exchange Rates,” above.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Full Service:
|
|
|
|
|
|
|
||||||
|
Beginning total account value
|
|
$
|
202,802
|
|
|
$
|
188,961
|
|
|
$
|
184,196
|
|
|
Deposits and sales
|
|
29,527
|
|
|
21,928
|
|
|
25,684
|
|
|||
|
Withdrawals and benefits
|
|
(24,811
|
)
|
|
(20,127
|
)
|
|
(21,559
|
)
|
|||
|
Change in market value, interest credited and interest income and other activity
|
|
27,098
|
|
|
12,040
|
|
|
640
|
|
|||
|
Ending total account value
|
|
$
|
234,616
|
|
|
$
|
202,802
|
|
|
$
|
188,961
|
|
|
Net additions (withdrawals)
|
|
$
|
4,716
|
|
|
$
|
1,801
|
|
|
$
|
4,125
|
|
|
Institutional Investment Products:
|
|
|
|
|
|
|
||||||
|
Beginning total account value
|
|
$
|
183,376
|
|
|
$
|
179,964
|
|
|
$
|
179,641
|
|
|
Additions(1)
|
|
21,630
|
|
|
16,140
|
|
|
15,572
|
|
|||
|
Withdrawals and benefits
|
|
(17,406
|
)
|
|
(12,161
|
)
|
|
(15,388
|
)
|
|||
|
Change in market value, interest credited and interest income
|
|
5,190
|
|
|
5,299
|
|
|
3,476
|
|
|||
|
Other(2)
|
|
1,702
|
|
|
(5,866
|
)
|
|
(3,337
|
)
|
|||
|
Ending total account value
|
|
$
|
194,492
|
|
|
$
|
183,376
|
|
|
$
|
179,964
|
|
|
Net additions (withdrawals)
|
|
$
|
4,224
|
|
|
$
|
3,979
|
|
|
$
|
184
|
|
|
(1)
|
Additions primarily include: group annuities calculated based on premiums received; longevity reinsurance contracts calculated as the present value of future projected benefits; and investment-only stable value contracts calculated as the fair value of customers’ funds held in a client-owned trust.
|
|
(2)
|
“Other” activity includes the effect of foreign exchange rate changes associated with our U.K. longevity reinsurance business and changes in asset balances for externally-managed accounts. For the years ended December 31, 2017 and 2016, “other” activity also includes $4,782 million in receipts offset by $4,375 million in payments and $2,914 million in receipts offset by $2,364 million in payments, respectively, related to funding agreements backed by commercial paper which typically have maturities of less than 90 days.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Operating results:
|
|
|
|
|
|
|
||||||
|
Revenues
|
|
$
|
5,471
|
|
|
$
|
5,343
|
|
|
$
|
5,143
|
|
|
Benefits and expenses
|
|
5,218
|
|
|
5,123
|
|
|
4,967
|
|
|||
|
Adjusted operating income
|
|
253
|
|
|
220
|
|
|
176
|
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
(53
|
)
|
|
(8
|
)
|
|
(1
|
)
|
|||
|
Related charges
|
|
0
|
|
|
(6
|
)
|
|
(4
|
)
|
|||
|
Income before income taxes and equity in earnings of operating joint ventures
|
|
$
|
200
|
|
|
$
|
206
|
|
|
$
|
171
|
|
|
Benefits ratio(1):
|
|
|
|
|
|
|
||||||
|
Group life(2)
|
|
88.9
|
%
|
|
89.1
|
%
|
|
88.7
|
%
|
|||
|
Group disability(2)
|
|
71.8
|
%
|
|
75.7
|
%
|
|
75.7
|
%
|
|||
|
Total group insurance(2)
|
|
85.8
|
%
|
|
86.7
|
%
|
|
86.6
|
%
|
|||
|
Administrative operating expense ratio(3):
|
|
|
|
|
|
|
||||||
|
Group life
|
|
11.2
|
%
|
|
10.6
|
%
|
|
11.0
|
%
|
|||
|
Group disability
|
|
29.4
|
%
|
|
31.4
|
%
|
|
34.1
|
%
|
|||
|
Total group insurance
|
|
14.6
|
%
|
|
14.3
|
%
|
|
15.0
|
%
|
|||
|
(1)
|
Ratio of policyholder benefits to earned premiums, policy charges and fee income.
|
|
(2)
|
Benefits ratios reflect the impacts of our annual reviews and updates of assumptions and other refinements. Excluding these impacts, the group life, group disability and total group insurance benefits ratios were
88.7%
,
78.9%
and
86.9%
for 2017, respectively,
88.5%
,
82.9%
and
87.5%
for 2016, respectively, and
89.2%
,
79.2%
and
87.5%
for 2015, respectively.
|
|
(3)
|
Ratio of general and administrative expenses (excluding commissions) to gross premiums plus policy charges and fee income.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Annualized new business premiums(1):
|
|
|
|
|
|
|
||||||
|
Group life
|
|
$
|
287
|
|
|
$
|
316
|
|
|
$
|
204
|
|
|
Group disability
|
|
153
|
|
|
119
|
|
|
69
|
|
|||
|
Total
|
|
$
|
440
|
|
|
$
|
435
|
|
|
$
|
273
|
|
|
(1)
|
Amounts exclude new premiums resulting from rate changes on existing policies, from additional coverage under our Servicemembers’ Group Life Insurance contract and from excess premiums on group universal life insurance that build cash value but do not purchase face amounts.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Operating results(1):
|
|
|
|
|
|
|
||||||
|
Revenues
|
|
$
|
3,355
|
|
|
$
|
2,961
|
|
|
$
|
2,944
|
|
|
Expenses
|
|
2,376
|
|
|
2,174
|
|
|
2,165
|
|
|||
|
Adjusted operating income
|
|
979
|
|
|
787
|
|
|
779
|
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
(4
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
95
|
|
|
45
|
|
|
50
|
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
1,070
|
|
|
$
|
826
|
|
|
$
|
825
|
|
|
(1)
|
Certain of our Investment Management segment’s investment activities are based in currencies other than the U.S. dollar and are therefore subject to foreign currency exchange rate risk. Effective January 1, 2016, the financial results of our Investment Management segment include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on the segment’s U.S. dollar-equivalent earnings. For more information related to this intercompany arrangement, see “—Results of Operations—Impact of Foreign Currency Exchange Rates,” above.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Revenues by type:
|
|
|
|
|
|
|
||||||
|
Asset management fees by source:
|
|
|
|
|
|
|
||||||
|
Institutional customers
|
|
$
|
1,147
|
|
|
$
|
1,046
|
|
|
$
|
923
|
|
|
Retail customers(1)
|
|
800
|
|
|
707
|
|
|
764
|
|
|||
|
General account
|
|
470
|
|
|
474
|
|
|
448
|
|
|||
|
Total asset management fees
|
|
2,417
|
|
|
2,227
|
|
|
2,135
|
|
|||
|
Other related revenues by source:
|
|
|
|
|
|
|
||||||
|
Incentive fees
|
|
197
|
|
|
108
|
|
|
88
|
|
|||
|
Transaction fees
|
|
27
|
|
|
19
|
|
|
20
|
|
|||
|
Strategic investing
|
|
88
|
|
|
25
|
|
|
30
|
|
|||
|
Commercial mortgage(2)
|
|
127
|
|
|
103
|
|
|
103
|
|
|||
|
Total other related revenues(3)
|
|
439
|
|
|
255
|
|
|
241
|
|
|||
|
Service, distribution and other revenues(4)
|
|
499
|
|
|
479
|
|
|
568
|
|
|||
|
Total revenues
|
|
$
|
3,355
|
|
|
$
|
2,961
|
|
|
$
|
2,944
|
|
|
(1)
|
Consists of fees from: individual mutual funds and variable annuities and variable life insurance separate account assets; funds invested in proprietary mutual funds through our defined contribution plan products; and third-party sub-advisory relationships. Revenues from fixed annuities and the fixed-rate accounts of variable annuities and variable life insurance are included in the general account.
|
|
(2)
|
Includes mortgage origination and spread lending revenues from our commercial mortgage origination and servicing business.
|
|
(3)
|
Future revenues will be impacted by the level and diversification of our strategic investments, the commercial real estate market, and other domestic and international markets.
|
|
(4)
|
Includes payments from Wells Fargo under an agreement dated as of July 30, 2004, implementing arrangements with respect to money market mutual funds in connection with the combination of our retail securities brokerage and clearing operations with those of Wells Fargo. The agreement extends for ten years after termination of the Wachovia Securities joint venture, which occurred on December 31, 2009. The revenue from Wells Fargo under this agreement was $80 million in
2017
, $84 million in
2016
and $78 million in
2015
.
|
|
|
|
December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in billions)
|
||||||||||
|
Assets Under Management (at fair value):
|
|
|
|
|
|
|
||||||
|
Institutional customers:
|
|
|
|
|
|
|
||||||
|
Equity
|
|
$
|
68.0
|
|
|
$
|
59.3
|
|
|
$
|
59.9
|
|
|
Fixed income
|
|
379.4
|
|
|
332.2
|
|
|
289.9
|
|
|||
|
Real estate
|
|
42.1
|
|
|
40.0
|
|
|
39.3
|
|
|||
|
Institutional customers(1)
|
|
489.5
|
|
|
431.5
|
|
|
389.1
|
|
|||
|
Retail customers:
|
|
|
|
|
|
|
||||||
|
Equity
|
|
132.4
|
|
|
112.4
|
|
|
121.4
|
|
|||
|
Fixed income
|
|
111.5
|
|
|
94.5
|
|
|
73.7
|
|
|||
|
Real estate
|
|
1.7
|
|
|
2.3
|
|
|
2.2
|
|
|||
|
Retail customers(2)
|
|
245.6
|
|
|
209.2
|
|
|
197.3
|
|
|||
|
General account:
|
|
|
|
|
|
|
||||||
|
Equity
|
|
5.8
|
|
|
6.4
|
|
|
7.4
|
|
|||
|
Fixed income
|
|
412.5
|
|
|
391.3
|
|
|
367.5
|
|
|||
|
Real estate
|
|
1.9
|
|
|
1.7
|
|
|
1.8
|
|
|||
|
General account
|
|
420.2
|
|
|
399.4
|
|
|
376.7
|
|
|||
|
Total assets under management
|
|
$
|
1,155.3
|
|
|
$
|
1,040.1
|
|
|
$
|
963.1
|
|
|
(1)
|
Consists of third-party institutional assets and group insurance contracts.
|
|
(2)
|
Consists of: individual mutual funds and variable annuities and variable life insurance separate account assets; funds invested in proprietary mutual funds through our defined contribution plan products; and third-party sub-advisory relationships. Fixed annuities and the fixed-rate accounts of variable annuities and variable life insurance are included in the general account.
|
|
|
|
December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in billions)
|
||||||||||
|
Institutional Customers:
|
|
|
|
|
|
|
||||||
|
Beginning assets under management
|
|
$
|
431.5
|
|
|
$
|
389.1
|
|
|
$
|
370.0
|
|
|
Net additions (withdrawals), excluding money market activity:
|
|
|
|
|
|
|
||||||
|
Third-party
|
|
11.6
|
|
|
5.3
|
|
|
21.2
|
|
|||
|
Third-party via affiliates(1)
|
|
2.4
|
|
|
0.8
|
|
|
(4.8
|
)
|
|||
|
Total
|
|
14.0
|
|
|
6.1
|
|
|
16.4
|
|
|||
|
Market appreciation (depreciation)(2)
|
|
42.9
|
|
|
24.2
|
|
|
2.6
|
|
|||
|
Other increases (decreases)(3)
|
|
1.1
|
|
|
12.1
|
|
|
0.1
|
|
|||
|
Ending assets under management
|
|
$
|
489.5
|
|
|
$
|
431.5
|
|
|
$
|
389.1
|
|
|
Retail Customers:
|
|
|
|
|
|
|
||||||
|
Beginning assets under management
|
|
$
|
209.2
|
|
|
$
|
197.3
|
|
|
$
|
186.1
|
|
|
Net additions (withdrawals), excluding money market activity:
|
|
|
|
|
|
|
||||||
|
Third-party
|
|
4.1
|
|
|
0.4
|
|
|
0.8
|
|
|||
|
Third-party via affiliates(1)
|
|
(2.0
|
)
|
|
(0.5
|
)
|
|
9.2
|
|
|||
|
Total
|
|
2.1
|
|
|
(0.1
|
)
|
|
10.0
|
|
|||
|
Market appreciation (depreciation)(2)
|
|
34.6
|
|
|
9.1
|
|
|
1.4
|
|
|||
|
Other increases (decreases)(3)
|
|
(0.3
|
)
|
|
2.9
|
|
|
(0.2
|
)
|
|||
|
Ending assets under management
|
|
$
|
245.6
|
|
|
$
|
209.2
|
|
|
$
|
197.3
|
|
|
General Account:
|
|
|
|
|
|
|
||||||
|
Beginning assets under management
|
|
$
|
399.4
|
|
|
$
|
376.7
|
|
|
$
|
377.4
|
|
|
Net additions (withdrawals), excluding money market activity:
|
|
|
|
|
|
|
||||||
|
Third-party
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|||
|
Affiliated
|
|
3.9
|
|
|
8.9
|
|
|
(1.1
|
)
|
|||
|
Total
|
|
3.9
|
|
|
8.9
|
|
|
(1.1
|
)
|
|||
|
Market appreciation (depreciation)(2)
|
|
15.1
|
|
|
13.3
|
|
|
(1.5
|
)
|
|||
|
Other increases (decreases)(3)
|
|
1.8
|
|
|
0.5
|
|
|
1.9
|
|
|||
|
Ending assets under management
|
|
$
|
420.2
|
|
|
$
|
399.4
|
|
|
$
|
376.7
|
|
|
(1)
|
Represents assets that our Investment Management segment manages for the benefit of other reporting segments within the Company. Additions and withdrawals of these assets are attributable to third-party product inflows and outflows in other reporting segments.
|
|
(2)
|
Includes income reinvestment, where applicable.
|
|
(3)
|
Includes the effect of foreign exchange rate changes, net money market activity primarily related to cash collateral received or released in conjunction with our Annuities’ living benefits hedging program, and the impact of acquired business. The impact from foreign currency fluctuations, which primarily impact the general account, resulted in gains of $4.7 billion, gains of $2.7 billion and losses of $1.7 billion for the years ended
December 31, 2017
,
2016
and
2015
, respectively.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Operating results:
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Life Planner operations
|
|
$
|
10,644
|
|
|
$
|
9,986
|
|
|
$
|
9,172
|
|
|
Gibraltar Life and Other operations
|
|
10,916
|
|
|
11,023
|
|
|
10,192
|
|
|||
|
Total revenues
|
|
21,560
|
|
|
21,009
|
|
|
19,364
|
|
|||
|
Benefits and expenses:
|
|
|
|
|
|
|
||||||
|
Life Planner operations
|
|
9,151
|
|
|
8,447
|
|
|
7,587
|
|
|||
|
Gibraltar Life and Other operations
|
|
9,211
|
|
|
9,445
|
|
|
8,551
|
|
|||
|
Total benefits and expenses
|
|
18,362
|
|
|
17,892
|
|
|
16,138
|
|
|||
|
Adjusted operating income:
|
|
|
|
|
|
|
||||||
|
Life Planner operations
|
|
1,493
|
|
|
1,539
|
|
|
1,585
|
|
|||
|
Gibraltar Life and Other operations
|
|
1,705
|
|
|
1,578
|
|
|
1,641
|
|
|||
|
Total adjusted operating income
|
|
3,198
|
|
|
3,117
|
|
|
3,226
|
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
985
|
|
|
992
|
|
|
1,215
|
|
|||
|
Related charges
|
|
(18
|
)
|
|
(32
|
)
|
|
(60
|
)
|
|||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
|
218
|
|
|
4
|
|
|
57
|
|
|||
|
Change in experience-rated contractholder liabilities due to asset value changes
|
|
(218
|
)
|
|
(4
|
)
|
|
(57
|
)
|
|||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
(43
|
)
|
|
(47
|
)
|
|
8
|
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
4,122
|
|
|
$
|
4,030
|
|
|
$
|
4,389
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Annualized new business premiums:
|
|
|
|
|
|
|
||||||
|
On an actual exchange rate basis:
|
|
|
|
|
|
|
||||||
|
Life Planner operations(1)
|
|
$
|
1,391
|
|
|
$
|
1,276
|
|
|
$
|
1,117
|
|
|
Gibraltar Life
|
|
1,598
|
|
|
1,726
|
|
|
1,548
|
|
|||
|
Total
|
|
$
|
2,989
|
|
|
$
|
3,002
|
|
|
$
|
2,665
|
|
|
On a constant exchange rate basis:
|
|
|
|
|
|
|
||||||
|
Life Planner operations
|
|
$
|
1,374
|
|
|
$
|
1,263
|
|
|
$
|
1,147
|
|
|
Gibraltar Life
|
|
1,601
|
|
|
1,706
|
|
|
1,595
|
|
|||
|
Total
|
|
$
|
2,975
|
|
|
$
|
2,969
|
|
|
$
|
2,742
|
|
|
(1)
|
The amount for the year ended December 31, 2016 has been revised to correct the previously reported amount.
|
|
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||||||||
|
|
|
Life
|
|
Accident
&
Health
|
|
Retirement
(1)
|
|
Annuity
|
|
Total
|
|
Life
|
|
Accident
&
Health
|
|
Retirement
(1)
|
|
Annuity
|
|
Total
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
|
Life Planner
|
|
$
|
814
|
|
|
$
|
122
|
|
|
$
|
352
|
|
|
$
|
86
|
|
|
$
|
1,374
|
|
|
$
|
742
|
|
|
$
|
114
|
|
|
$
|
332
|
|
|
$
|
75
|
|
|
$
|
1,263
|
|
|
Gibraltar Life:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Life Consultants
|
|
367
|
|
|
50
|
|
|
113
|
|
|
211
|
|
|
741
|
|
|
352
|
|
|
52
|
|
|
117
|
|
|
212
|
|
|
733
|
|
||||||||||
|
Banks(2)
|
|
520
|
|
|
0
|
|
|
33
|
|
|
61
|
|
|
614
|
|
|
518
|
|
|
0
|
|
|
68
|
|
|
130
|
|
|
716
|
|
||||||||||
|
Independent Agency
|
|
138
|
|
|
19
|
|
|
66
|
|
|
23
|
|
|
246
|
|
|
128
|
|
|
23
|
|
|
71
|
|
|
35
|
|
|
257
|
|
||||||||||
|
Subtotal
|
|
1,025
|
|
|
69
|
|
|
212
|
|
|
295
|
|
|
1,601
|
|
|
998
|
|
|
75
|
|
|
256
|
|
|
377
|
|
|
1,706
|
|
||||||||||
|
Total
|
|
$
|
1,839
|
|
|
$
|
191
|
|
|
$
|
564
|
|
|
$
|
381
|
|
|
$
|
2,975
|
|
|
$
|
1,740
|
|
|
$
|
189
|
|
|
$
|
588
|
|
|
$
|
452
|
|
|
$
|
2,969
|
|
|
(1)
|
Includes retirement income, endowment and savings variable universal life.
|
|
(2)
|
Single pay life annualized new business premiums, which include 10% of first year premiums, and 3-year limited pay annualized new business premiums, which include 100% of new business premiums, represented 5% and 64%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the year ended December 31, 2017, and 9% and 53%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the year ended December 31, 2016.
|
|
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||||||||
|
|
|
Life
|
|
Accident
&
Health
|
|
Retirement
(1)
|
|
Annuity
|
|
Total
|
|
Life
|
|
Accident
&
Health
|
|
Retirement
(1)
|
|
Annuity
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||||
|
Life Planner
|
|
742
|
|
|
114
|
|
|
332
|
|
|
75
|
|
|
1,263
|
|
|
708
|
|
|
114
|
|
|
264
|
|
|
61
|
|
|
1,147
|
|
|
Gibraltar Life:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Life Consultants
|
|
352
|
|
|
52
|
|
|
117
|
|
|
212
|
|
|
733
|
|
|
331
|
|
|
58
|
|
|
126
|
|
|
140
|
|
|
655
|
|
|
Banks(2)
|
|
518
|
|
|
0
|
|
|
68
|
|
|
130
|
|
|
716
|
|
|
472
|
|
|
1
|
|
|
40
|
|
|
180
|
|
|
693
|
|
|
Independent Agency
|
|
128
|
|
|
23
|
|
|
71
|
|
|
35
|
|
|
257
|
|
|
98
|
|
|
22
|
|
|
69
|
|
|
58
|
|
|
247
|
|
|
Subtotal
|
|
998
|
|
|
75
|
|
|
256
|
|
|
377
|
|
|
1,706
|
|
|
901
|
|
|
81
|
|
|
235
|
|
|
378
|
|
|
1,595
|
|
|
Total
|
|
1,740
|
|
|
189
|
|
|
588
|
|
|
452
|
|
|
2,969
|
|
|
1,609
|
|
|
195
|
|
|
499
|
|
|
439
|
|
|
2,742
|
|
|
(1)
|
Includes retirement income, endowment and savings variable universal life.
|
|
(2)
|
Single pay life annualized new business premiums, which include 10% of first year premiums, and 3-year limited pay annualized new business premiums, which include 100% of new business premiums, represented 9% and 53%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the year ended December 31, 2016, and 5% and 51%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the year ended December 31, 2015.
|
|
|
|
As of December 31,
|
|||||||
|
|
|
2017
|
|
2016
|
|
2015
|
|||
|
Life Planners:
|
|
|
|
|
|
|
|||
|
Japan
|
|
3,941
|
|
|
3,824
|
|
|
3,528
|
|
|
All other countries
|
|
3,890
|
|
|
3,856
|
|
|
4,064
|
|
|
Gibraltar Life Consultants
|
|
8,326
|
|
|
8,884
|
|
|
8,805
|
|
|
Total
|
|
16,157
|
|
|
16,564
|
|
|
16,397
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Operating results:
|
|
|
|
|
|
|
||||||
|
Capital debt interest expense
|
|
$
|
(705
|
)
|
|
$
|
(686
|
)
|
|
$
|
(731
|
)
|
|
Investment income, net of operating debt interest expense
|
|
96
|
|
|
1
|
|
|
69
|
|
|||
|
Pension and employee benefits
|
|
157
|
|
|
103
|
|
|
173
|
|
|||
|
Other corporate activities(1)
|
|
(985
|
)
|
|
(999
|
)
|
|
(824
|
)
|
|||
|
Adjusted operating income
|
|
(1,437
|
)
|
|
(1,581
|
)
|
|
(1,313
|
)
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
(407
|
)
|
|
(1,797
|
)
|
|
(961
|
)
|
|||
|
Related charges
|
|
(26
|
)
|
|
(1
|
)
|
|
19
|
|
|||
|
Divested businesses
|
|
38
|
|
|
(84
|
)
|
|
(66
|
)
|
|||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
(19
|
)
|
|
(3
|
)
|
|
0
|
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
(1,851
|
)
|
|
$
|
(3,466
|
)
|
|
$
|
(2,321
|
)
|
|
(1)
|
Includes consolidating adjustments.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Long-Term Care
|
|
$
|
42
|
|
|
$
|
(74
|
)
|
|
$
|
(67
|
)
|
|
Other
|
|
(4
|
)
|
|
(10
|
)
|
|
1
|
|
|||
|
Total divested businesses income (loss) excluded from adjusted operating income
|
|
$
|
38
|
|
|
$
|
(84
|
)
|
|
$
|
(66
|
)
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions)
|
||||||||||
|
U.S. GAAP results:
|
|
|
|
|
|
||||||
|
Revenues
|
$
|
5,826
|
|
|
$
|
5,669
|
|
|
$
|
6,160
|
|
|
Benefits and expenses
|
5,781
|
|
|
5,801
|
|
|
6,102
|
|
|||
|
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
45
|
|
|
$
|
(132
|
)
|
|
$
|
58
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Expected federal income tax expense (benefit) at federal statutory rate
|
|
$
|
2,270
|
|
|
$
|
1,997
|
|
|
$
|
2,719
|
|
|
Non-taxable investment income
|
|
(369
|
)
|
|
(352
|
)
|
|
(341
|
)
|
|||
|
Foreign taxes at other than U.S. rate
|
|
(249
|
)
|
|
(172
|
)
|
|
(51
|
)
|
|||
|
Low-income housing and other tax credits
|
|
(126
|
)
|
|
(118
|
)
|
|
(116
|
)
|
|||
|
Changes in tax law
|
|
(2,858
|
)
|
|
0
|
|
|
(108
|
)
|
|||
|
Other
|
|
(106
|
)
|
|
(20
|
)
|
|
(31
|
)
|
|||
|
Reported income tax expense (benefit)
|
|
$
|
(1,438
|
)
|
|
$
|
1,335
|
|
|
$
|
2,072
|
|
|
Effective tax rate
|
|
(22.2
|
)%
|
|
23.4
|
%
|
|
26.7
|
%
|
|||
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Retirement Segment:
|
|
|
|
|
|
|
||||||
|
Investment gains (losses) on:
|
|
|
|
|
|
|
||||||
|
Trading account assets supporting insurance liabilities, net
|
|
$
|
118
|
|
|
$
|
(21
|
)
|
|
$
|
(581
|
)
|
|
Derivatives
|
|
(168
|
)
|
|
(10
|
)
|
|
138
|
|
|||
|
Commercial mortgages and other loans
|
|
(7
|
)
|
|
5
|
|
|
4
|
|
|||
|
Change in experience-rated contractholder liabilities due to asset value changes(1)(2)
|
|
67
|
|
|
25
|
|
|
490
|
|
|||
|
Net gains (losses)
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
51
|
|
|
International Insurance Segment:
|
|
|
|
|
|
|
||||||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
|
$
|
218
|
|
|
$
|
4
|
|
|
$
|
57
|
|
|
Change in experience-rated contractholder liabilities due to asset value changes
|
|
(218
|
)
|
|
(4
|
)
|
|
(57
|
)
|
|||
|
Net gains (losses)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Total:
|
|
|
|
|
|
|
||||||
|
Investment gains (losses) on:
|
|
|
|
|
|
|
||||||
|
Trading account assets supporting insurance liabilities, net
|
|
$
|
336
|
|
|
$
|
(17
|
)
|
|
$
|
(524
|
)
|
|
Derivatives
|
|
(168
|
)
|
|
(10
|
)
|
|
138
|
|
|||
|
Commercial mortgages and other loans
|
|
(7
|
)
|
|
5
|
|
|
4
|
|
|||
|
Change in experience-rated contractholder liabilities due to asset value changes(1)(2)
|
|
(151
|
)
|
|
21
|
|
|
433
|
|
|||
|
Net gains (losses)
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
51
|
|
|
(1)
|
Decreases to contractholder liabilities due to asset value changes are limited by certain floors and therefore do not reflect cumulative declines in recorded asset values of $18 million, $10 million and $15 million as of December 31,
2017
,
2016
and
2015
, respectively. We have recovered and expect to recover in future periods these declines in recorded asset values through subsequent increases in recorded asset values or reductions in crediting rates on contractholder liabilities.
|
|
(2)
|
Included in the amounts above related to the change in the liability to contractholders as a result of commercial mortgage and other loans are a decrease of $21 million, an increase of $4 million and a decrease of $64 million for the years ended December 31,
2017
,
2016
and
2015
, respectively. As prescribed by U.S. GAAP, changes in the fair value of commercial mortgage and other loans held for investment in our general account, other than when associated with impairments, are not recognized in income in the current period, while the impact of these changes in fair value are reflected as a change in the liability to fully participating contractholders in the current period.
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||||||||||
|
|
PFI excluding Closed Block Division
|
|
Closed Block
Division
|
|
PFI excluding Closed Block Division
|
|
Closed Block
Division
|
||||||||||||||||||||||||
|
|
Total at
Fair Value
|
|
Total
Level 3(1)
|
|
Total at
Fair Value
|
|
Total
Level 3(1)
|
|
Total at
Fair Value
|
|
Total
Level 3(1)
|
|
Total at
Fair Value
|
|
Total
Level 3(1)
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
|
Fixed maturities, available-for-sale
|
$
|
305,518
|
|
|
$
|
7,557
|
|
|
$
|
41,262
|
|
|
$
|
2,139
|
|
|
$
|
282,515
|
|
|
$
|
5,501
|
|
|
$
|
38,904
|
|
|
$
|
1,356
|
|
|
Trading account assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Fixed maturities
|
23,516
|
|
|
1,563
|
|
|
200
|
|
|
1
|
|
|
23,143
|
|
|
747
|
|
|
160
|
|
|
0
|
|
||||||||
|
Equity securities
|
2,659
|
|
|
443
|
|
|
139
|
|
|
66
|
|
|
2,267
|
|
|
429
|
|
|
124
|
|
|
58
|
|
||||||||
|
All other(2)
|
1,226
|
|
|
8
|
|
|
0
|
|
|
0
|
|
|
1,760
|
|
|
1
|
|
|
0
|
|
|
0
|
|
||||||||
|
Subtotal
|
27,401
|
|
|
2,014
|
|
|
339
|
|
|
67
|
|
|
27,170
|
|
|
1,177
|
|
|
284
|
|
|
58
|
|
||||||||
|
Equity securities, available-for-sale
|
3,834
|
|
|
273
|
|
|
2,340
|
|
|
17
|
|
|
7,176
|
|
|
253
|
|
|
2,572
|
|
|
12
|
|
||||||||
|
Commercial mortgage and other loans
|
593
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
519
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
|
Other long-term investments(3)
|
270
|
|
|
136
|
|
|
2
|
|
|
0
|
|
|
146
|
|
|
7
|
|
|
3
|
|
|
0
|
|
||||||||
|
Short-term investments
|
5,328
|
|
|
8
|
|
|
436
|
|
|
0
|
|
|
6,383
|
|
|
1
|
|
|
799
|
|
|
0
|
|
||||||||
|
Cash equivalents
|
7,721
|
|
|
0
|
|
|
577
|
|
|
0
|
|
|
7,108
|
|
|
0
|
|
|
1,198
|
|
|
0
|
|
||||||||
|
Other assets
|
14
|
|
|
13
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
|
Subtotal excluding separate account assets
|
350,679
|
|
|
10,001
|
|
|
44,956
|
|
|
2,223
|
|
|
331,017
|
|
|
6,939
|
|
|
43,760
|
|
|
1,426
|
|
||||||||
|
Separate account assets(3)
|
280,393
|
|
|
2,122
|
|
|
0
|
|
|
0
|
|
|
262,017
|
|
|
1,849
|
|
|
0
|
|
|
0
|
|
||||||||
|
Total assets
|
$
|
631,072
|
|
|
$
|
12,123
|
|
|
$
|
44,956
|
|
|
$
|
2,223
|
|
|
$
|
593,034
|
|
|
$
|
8,788
|
|
|
$
|
43,760
|
|
|
$
|
1,426
|
|
|
Future policy benefits
|
$
|
8,720
|
|
|
$
|
8,720
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
8,238
|
|
|
$
|
8,238
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other liabilities(2)
|
688
|
|
|
50
|
|
|
0
|
|
|
0
|
|
|
368
|
|
|
22
|
|
|
1
|
|
|
0
|
|
||||||||
|
Notes issued by consolidated variable interest entities (“VIEs”)
|
1,196
|
|
|
1,196
|
|
|
0
|
|
|
0
|
|
|
1,839
|
|
|
1,839
|
|
|
0
|
|
|
0
|
|
||||||||
|
Total liabilities
|
$
|
10,604
|
|
|
$
|
9,966
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
10,445
|
|
|
$
|
10,099
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
(1)
|
The amount of Level 3 assets taken as a percentage of total assets measured at fair value on a recurring basis for PFI excluding the Closed Block division and for the Closed Block division totaled
1.9%
and
4.9%
, respectively, as of
December 31, 2017
and
1.5%
and
3.3%
as of
December 31, 2016
.
|
|
(2)
|
“All other” and “Other liabilities” primarily include derivatives. The amounts classified as Level 3 exclude the impact of netting.
|
|
(3)
|
Prior period amounts are presented on a basis consistent with the current period presentation, reflecting the adoption of ASU 2015-07.
|
|
•
|
sale of investments;
|
|
•
|
maturities of foreign-denominated investments;
|
|
•
|
adjustments to the cost basis of investments for OTTI;
|
|
•
|
recognition of OTTI in earnings for foreign-denominated securities that are approaching maturity and are in an unrealized loss position due to foreign currency exchange rate movements;
|
|
•
|
net changes in the allowance for losses, certain restructurings and foreclosures on commercial mortgage and other loans; and
|
|
•
|
fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment.
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Realized investment gains (losses), net:
|
|
|
|
|
|
|
||||||
|
PFI excluding Closed Block division
|
|
$
|
(102
|
)
|
|
$
|
1,760
|
|
|
$
|
3,192
|
|
|
Closed Block division
|
|
534
|
|
|
434
|
|
|
833
|
|
|||
|
Consolidated realized investment gains (losses), net
|
|
$
|
432
|
|
|
$
|
2,194
|
|
|
$
|
4,025
|
|
|
PFI excluding Closed Block Division:
|
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net:
|
|
|
|
|
|
|
||||||
|
Fixed maturity securities
|
|
$
|
408
|
|
|
$
|
617
|
|
|
$
|
1,431
|
|
|
Equity securities
|
|
565
|
|
|
127
|
|
|
4
|
|
|||
|
Commercial mortgage and other loans
|
|
70
|
|
|
54
|
|
|
36
|
|
|||
|
Derivative instruments
|
|
(1,147
|
)
|
|
1,013
|
|
|
1,775
|
|
|||
|
Other
|
|
2
|
|
|
(51
|
)
|
|
(54
|
)
|
|||
|
Total
|
|
$
|
(102
|
)
|
|
$
|
1,760
|
|
|
$
|
3,192
|
|
|
Related adjustments
|
|
(500
|
)
|
|
(771
|
)
|
|
(934
|
)
|
|||
|
Realized investment gains (losses), net, and related adjustments
|
|
(602
|
)
|
|
989
|
|
|
2,258
|
|
|||
|
Related charges
|
|
544
|
|
|
(466
|
)
|
|
(679
|
)
|
|||
|
Realized investment gains (losses), net, and related charges and adjustments
|
|
$
|
(58
|
)
|
|
$
|
523
|
|
|
$
|
1,579
|
|
|
Closed Block Division:
|
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net:
|
|
|
|
|
|
|
||||||
|
Fixed maturity securities
|
|
$
|
173
|
|
|
$
|
49
|
|
|
$
|
203
|
|
|
Equity securities
|
|
501
|
|
|
249
|
|
|
447
|
|
|||
|
Commercial mortgage and other loans
|
|
0
|
|
|
1
|
|
|
1
|
|
|||
|
Derivative instruments
|
|
(128
|
)
|
|
162
|
|
|
195
|
|
|||
|
Other
|
|
(12
|
)
|
|
(27
|
)
|
|
(13
|
)
|
|||
|
Total
|
|
$
|
534
|
|
|
$
|
434
|
|
|
$
|
833
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Gross realized investment gains:
|
|
|
|
|
|
|
||||||
|
Gross gains on sales and maturities
|
|
$
|
1,227
|
|
|
$
|
1,229
|
|
|
$
|
1,809
|
|
|
Gross realized investment losses:
|
|
|
|
|
|
|
||||||
|
Net OTTI recognized in earnings(1)
|
|
(169
|
)
|
|
(144
|
)
|
|
(97
|
)
|
|||
|
Gross losses on sales and maturities
|
|
(642
|
)
|
|
(456
|
)
|
|
(273
|
)
|
|||
|
Credit-related losses on sales
|
|
(8
|
)
|
|
(12
|
)
|
|
(8
|
)
|
|||
|
Total gross realized investment losses
|
|
(819
|
)
|
|
(612
|
)
|
|
(378
|
)
|
|||
|
Realized investment gains (losses), net—Fixed Maturity Securities
|
|
$
|
408
|
|
|
$
|
617
|
|
|
$
|
1,431
|
|
|
Net gains (losses) on sales and maturities—Fixed Maturity Securities(2)
|
|
$
|
585
|
|
|
$
|
773
|
|
|
$
|
1,536
|
|
|
(1)
|
Excludes the portion of OTTI recorded in “Other comprehensive income (loss),” representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.
|
|
(2)
|
Amounts excludes OTTI and credit-related losses through sales of investments due to expected near-term credit conditions of an underlying issuer.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions)
|
||||||||||
|
Public fixed maturity securities
|
$
|
57
|
|
|
$
|
56
|
|
|
$
|
31
|
|
|
Private fixed maturity securities
|
112
|
|
|
88
|
|
|
66
|
|
|||
|
Total fixed maturity securities
|
169
|
|
|
144
|
|
|
97
|
|
|||
|
Equity securities
|
23
|
|
|
61
|
|
|
111
|
|
|||
|
Other invested assets(1)
|
19
|
|
|
57
|
|
|
121
|
|
|||
|
Total(2)
|
$
|
211
|
|
|
$
|
262
|
|
|
$
|
329
|
|
|
(1)
|
Primarily includes OTTI related to investments in joint ventures and limited partnerships.
|
|
(2)
|
Excludes amounts remaining in OCI from previously impaired investments, representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions)
|
||||||||||
|
Due to foreign exchange rate movements on securities approaching maturity
|
$
|
36
|
|
|
$
|
4
|
|
|
$
|
0
|
|
|
Due to securities actively marketed for sale
|
12
|
|
|
29
|
|
|
15
|
|
|||
|
Due to credit events or adverse conditions of the respective issuer(1)
|
121
|
|
|
111
|
|
|
82
|
|
|||
|
Total fixed maturity securities(2)
|
$
|
169
|
|
|
$
|
144
|
|
|
$
|
97
|
|
|
(1)
|
Represents circumstances where we believe credit events or other adverse conditions of the respective issuers have caused or will lead to a deficiency in the contractual cash flows related to the investment. The amount of the impairment recorded in earnings is the difference between the amortized cost of the debt security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment.
|
|
(2)
|
Excludes amounts remaining in OCI from previously impaired investments, representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.
|
|
•
|
hedging and otherwise managing the market risk characteristics of the major product liabilities and other obligations of the Company;
|
|
•
|
optimizing investment income yield within risk constraints over time; and
|
|
•
|
for certain portfolios, optimizing total return, including both investment income yield and capital appreciation, within risk constraints over time, while managing the market risk exposures associated with the corresponding product liabilities.
|
|
•
|
the investment of net operating cash flows, including new product premium inflows, and proceeds from investment sales, repayments and prepayments into investments with attractive risk-adjusted yields; and
|
|
•
|
the sale of lower-yielding investments, where appropriate, either to meet various cash flow needs or to manage the portfolio's risk exposure profile with respect to duration, credit, currency and other risk factors, while considering the impact on taxes and capital.
|
|
•
|
providing for the reasonable dividend expectations of the participating policyholders within the Closed Block division; and
|
|
•
|
optimizing total return, including both investment income yield and capital appreciation, within risk constraints, while managing the market risk exposures associated with the major products in the Closed Block division.
|
|
•
|
interest-crediting products for which the rates credited to customers are periodically adjusted to reflect market and competitive forces and actual investment experience, such as fixed annuities and universal life insurance;
|
|
•
|
participating individual and experience-rated group products in which customers participate in actual investment and business results through annual dividends, interest or return of premium; and
|
|
•
|
products with fixed or guaranteed terms, such as traditional whole life and endowment products, guaranteed investment contracts, funding agreements and payout annuities.
|
|
|
|
December 31, 2017
|
|||||||||||||
|
|
|
PFI Excluding
Closed Block Division
|
|
Closed Block
Division
|
|
Total
|
|||||||||
|
|
|
($ in millions)
|
|||||||||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
|||||||
|
Public, available-for-sale, at fair value
|
|
$
|
260,430
|
|
|
64.7
|
%
|
|
$
|
27,448
|
|
|
$
|
287,878
|
|
|
Public, held-to-maturity, at amortized cost
|
|
1,747
|
|
|
0.4
|
|
|
0
|
|
|
1,747
|
|
|||
|
Private, available-for-sale, at fair value
|
|
44,479
|
|
|
11.1
|
|
|
13,814
|
|
|
58,293
|
|
|||
|
Private, held-to-maturity, at amortized cost
|
|
302
|
|
|
0.1
|
|
|
0
|
|
|
302
|
|
|||
|
Trading account assets supporting insurance liabilities, at fair value
|
|
22,097
|
|
|
5.5
|
|
|
0
|
|
|
22,097
|
|
|||
|
Other trading account assets, at fair value
|
|
2,044
|
|
|
0.5
|
|
|
339
|
|
|
2,383
|
|
|||
|
Equity securities, available-for-sale, at fair value
|
|
3,826
|
|
|
1.0
|
|
|
2,340
|
|
|
6,166
|
|
|||
|
Commercial mortgage and other loans, at book value
|
|
46,394
|
|
|
11.5
|
|
|
9,017
|
|
|
55,411
|
|
|||
|
Policy loans, at outstanding balance
|
|
7,348
|
|
|
1.8
|
|
|
4,543
|
|
|
11,891
|
|
|||
|
Other long-term investments(1)
|
|
7,505
|
|
|
1.9
|
|
|
3,159
|
|
|
10,664
|
|
|||
|
Short-term investments
|
|
6,103
|
|
|
1.5
|
|
|
631
|
|
|
6,734
|
|
|||
|
Total general account investments
|
|
402,275
|
|
|
100.0
|
%
|
|
61,291
|
|
|
463,566
|
|
|||
|
Invested assets of other entities and operations(2)
|
|
6,305
|
|
|
|
|
0
|
|
|
6,305
|
|
||||
|
Total investments
|
|
$
|
408,580
|
|
|
|
|
|
$
|
61,291
|
|
|
$
|
469,871
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
December 31, 2016
|
|||||||||||||
|
|
|
PFI Excluding
Closed Block Division
|
|
Closed Block
Division
|
|
Total
|
|||||||||
|
|
|
($ in millions)
|
|||||||||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
|||||||
|
Public, available-for-sale, at fair value
|
|
$
|
243,201
|
|
|
64.2
|
%
|
|
$
|
24,917
|
|
|
$
|
268,118
|
|
|
Public, held-to-maturity, at amortized cost
|
|
1,772
|
|
|
0.5
|
|
|
0
|
|
|
1,772
|
|
|||
|
Private, available-for-sale, at fair value
|
|
39,074
|
|
|
10.3
|
|
|
13,987
|
|
|
53,061
|
|
|||
|
Private, held-to-maturity, at amortized cost
|
|
372
|
|
|
0.1
|
|
|
0
|
|
|
372
|
|
|||
|
Trading account assets supporting insurance liabilities, at fair value
|
|
21,840
|
|
|
5.8
|
|
|
0
|
|
|
21,840
|
|
|||
|
Other trading account assets, at fair value
|
|
1,521
|
|
|
0.4
|
|
|
284
|
|
|
1,805
|
|
|||
|
Equity securities, available-for-sale, at fair value
|
|
7,163
|
|
|
1.9
|
|
|
2,572
|
|
|
9,735
|
|
|||
|
Commercial mortgage and other loans, at book value
|
|
42,771
|
|
|
11.2
|
|
|
9,437
|
|
|
52,208
|
|
|||
|
Policy loans, at outstanding balance
|
|
7,095
|
|
|
1.9
|
|
|
4,660
|
|
|
11,755
|
|
|||
|
Other long-term investments(1)
|
|
7,231
|
|
|
1.9
|
|
|
3,020
|
|
|
10,251
|
|
|||
|
Short-term investments
|
|
6,657
|
|
|
1.8
|
|
|
837
|
|
|
7,494
|
|
|||
|
Total general account investments
|
|
378,697
|
|
|
100.0
|
%
|
|
59,714
|
|
|
438,411
|
|
|||
|
Invested assets of other entities and operations(2)
|
|
5,829
|
|
|
|
|
0
|
|
|
5,829
|
|
||||
|
Total investments
|
|
$
|
384,526
|
|
|
|
|
|
$
|
59,714
|
|
|
$
|
444,240
|
|
|
(1)
|
Other long-term investments consist of investments in joint ventures and limited partnerships, investment real estate held through direct ownership, certain derivatives and other miscellaneous investments. For additional information regarding these investments, see “—Other Long-Term Investments” below.
|
|
(2)
|
Includes invested assets of our investment management and derivative operations. Excludes assets of our investment management operations that are managed for third-parties and those assets classified as “Separate account assets” on our balance sheet. For additional information regarding these investments, see “—Invested Assets of Other Entities and Operations” below.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Fixed maturities:
|
|
|
|
|
||||
|
Public, available-for-sale, at fair value
|
|
$
|
128,332
|
|
|
$
|
123,285
|
|
|
Public, held-to-maturity, at amortized cost
|
|
1,747
|
|
|
1,772
|
|
||
|
Private, available-for-sale, at fair value
|
|
14,538
|
|
|
11,646
|
|
||
|
Private, held-to-maturity, at amortized cost
|
|
302
|
|
|
372
|
|
||
|
Trading account assets supporting insurance liabilities, at fair value
|
|
2,586
|
|
|
2,166
|
|
||
|
Other trading account assets, at fair value
|
|
492
|
|
|
434
|
|
||
|
Equity securities, available-for-sale, at fair value
|
|
1,916
|
|
|
2,654
|
|
||
|
Commercial mortgage and other loans, at book value
|
|
14,268
|
|
|
11,700
|
|
||
|
Policy loans, at outstanding balance
|
|
2,545
|
|
|
2,369
|
|
||
|
Other long-term investments(1)
|
|
2,021
|
|
|
1,186
|
|
||
|
Short-term investments
|
|
244
|
|
|
398
|
|
||
|
Total Japanese general account investments
|
|
$
|
168,991
|
|
|
$
|
157,982
|
|
|
(1)
|
Other long-term investments consist of investments in joint ventures and limited partnerships, investment real estate held through direct ownership, derivatives and other miscellaneous investments.
|
|
|
Year Ended December 31, 2017
|
|||||||||||||||||||||||||||
|
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(3)
|
|||||||||||||||||||
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
|
($ in millions)
|
|||||||||||||||||||||||||||
|
Fixed maturities
|
4.61
|
%
|
|
$
|
6,464
|
|
|
3.06
|
%
|
|
$
|
3,624
|
|
|
3.90
|
%
|
|
$
|
10,088
|
|
|
$
|
1,770
|
|
|
$
|
11,858
|
|
|
Trading account assets supporting insurance liabilities
|
3.61
|
|
|
695
|
|
|
1.73
|
|
|
41
|
|
|
3.40
|
|
|
736
|
|
|
0
|
|
|
736
|
|
|||||
|
Equity securities
|
7.26
|
|
|
247
|
|
|
5.66
|
|
|
79
|
|
|
6.80
|
|
|
326
|
|
|
50
|
|
|
376
|
|
|||||
|
Commercial mortgage and other loans
|
4.13
|
|
|
1,285
|
|
|
4.05
|
|
|
515
|
|
|
4.10
|
|
|
1,800
|
|
|
449
|
|
|
2,249
|
|
|||||
|
Policy loans
|
5.41
|
|
|
250
|
|
|
4.00
|
|
|
97
|
|
|
4.92
|
|
|
347
|
|
|
271
|
|
|
618
|
|
|||||
|
Short-term investments and cash equivalents
|
1.31
|
|
|
158
|
|
|
1.25
|
|
|
14
|
|
|
1.31
|
|
|
172
|
|
|
25
|
|
|
197
|
|
|||||
|
Other investments
|
7.64
|
|
|
498
|
|
|
6.03
|
|
|
132
|
|
|
7.24
|
|
|
630
|
|
|
265
|
|
|
895
|
|
|||||
|
Gross investment income
|
4.44
|
|
|
9,597
|
|
|
3.21
|
|
|
4,502
|
|
|
3.95
|
|
|
14,099
|
|
|
2,830
|
|
|
16,929
|
|
|||||
|
Investment expenses
|
(0.14
|
)
|
|
(306
|
)
|
|
(0.12
|
)
|
|
(184
|
)
|
|
(0.13
|
)
|
|
(490
|
)
|
|
(177
|
)
|
|
(667
|
)
|
|||||
|
Investment income after investment expenses
|
4.30
|
%
|
|
9,291
|
|
|
3.09
|
%
|
|
4,318
|
|
|
3.82
|
%
|
|
13,609
|
|
|
2,653
|
|
|
16,262
|
|
|||||
|
Investment results of other entities and operations(2)
|
|
|
173
|
|
|
|
|
0
|
|
|
|
|
173
|
|
|
0
|
|
|
173
|
|
||||||||
|
Total investment income
|
|
|
$
|
9,464
|
|
|
|
|
$
|
4,318
|
|
|
|
|
$
|
13,782
|
|
|
$
|
2,653
|
|
|
$
|
16,435
|
|
|||
|
|
Year Ended December 31, 2016
|
|||||||||||||||||||||||||||
|
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(3)
|
|||||||||||||||||||
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
|
($ in millions)
|
|||||||||||||||||||||||||||
|
Fixed maturities
|
4.63
|
%
|
|
$
|
6,043
|
|
|
3.14
|
%
|
|
$
|
3,472
|
|
|
3.95
|
%
|
|
$
|
9,515
|
|
|
$
|
1,696
|
|
|
$
|
11,211
|
|
|
Trading account assets supporting insurance liabilities
|
3.80
|
|
|
721
|
|
|
1.75
|
|
|
37
|
|
|
3.59
|
|
|
758
|
|
|
0
|
|
|
758
|
|
|||||
|
Equity securities
|
6.49
|
|
|
232
|
|
|
4.80
|
|
|
75
|
|
|
5.97
|
|
|
307
|
|
|
59
|
|
|
366
|
|
|||||
|
Commercial mortgage and other loans
|
4.35
|
|
|
1,306
|
|
|
4.23
|
|
|
445
|
|
|
4.32
|
|
|
1,751
|
|
|
476
|
|
|
2,227
|
|
|||||
|
Policy loans
|
5.49
|
|
|
252
|
|
|
4.05
|
|
|
95
|
|
|
5.00
|
|
|
347
|
|
|
280
|
|
|
627
|
|
|||||
|
Short-term investments and cash equivalents
|
0.67
|
|
|
113
|
|
|
0.78
|
|
|
9
|
|
|
0.68
|
|
|
122
|
|
|
20
|
|
|
142
|
|
|||||
|
Other investments
|
5.96
|
|
|
344
|
|
|
5.01
|
|
|
129
|
|
|
5.67
|
|
|
473
|
|
|
203
|
|
|
676
|
|
|||||
|
Gross investment income
|
4.31
|
|
|
9,011
|
|
|
3.26
|
|
|
4,262
|
|
|
3.90
|
|
|
13,273
|
|
|
2,734
|
|
|
16,007
|
|
|||||
|
Investment expenses
|
(0.14
|
)
|
|
(248
|
)
|
|
(0.12
|
)
|
|
(165
|
)
|
|
(0.13
|
)
|
|
(413
|
)
|
|
(156
|
)
|
|
(569
|
)
|
|||||
|
Investment income after investment expenses
|
4.17
|
%
|
|
8,763
|
|
|
3.14
|
%
|
|
4,097
|
|
|
3.77
|
%
|
|
12,860
|
|
|
2,578
|
|
|
15,438
|
|
|||||
|
Investment results of other entities and operations(2)
|
|
|
82
|
|
|
|
|
0
|
|
|
|
|
82
|
|
|
0
|
|
|
82
|
|
||||||||
|
Total investment income
|
|
|
$
|
8,845
|
|
|
|
|
$
|
4,097
|
|
|
|
|
$
|
12,942
|
|
|
$
|
2,578
|
|
|
$
|
15,520
|
|
|||
|
|
Year Ended December 31, 2015
|
|||||||||||||||||||||||||||
|
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(3)
|
|||||||||||||||||||
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
|
($ in millions)
|
|||||||||||||||||||||||||||
|
Fixed maturities
|
4.67
|
%
|
|
$
|
5,686
|
|
|
3.23
|
%
|
|
$
|
3,190
|
|
|
4.03
|
%
|
|
$
|
8,876
|
|
|
$
|
1,692
|
|
|
$
|
10,568
|
|
|
Trading account assets supporting insurance liabilities
|
3.79
|
|
|
688
|
|
|
1.66
|
|
|
32
|
|
|
3.59
|
|
|
720
|
|
|
0
|
|
|
720
|
|
|||||
|
Equity securities
|
6.07
|
|
|
197
|
|
|
4.77
|
|
|
69
|
|
|
5.67
|
|
|
266
|
|
|
70
|
|
|
336
|
|
|||||
|
Commercial mortgage and other loans
|
4.62
|
|
|
1,338
|
|
|
4.45
|
|
|
390
|
|
|
4.58
|
|
|
1,728
|
|
|
512
|
|
|
2,240
|
|
|||||
|
Policy loans
|
5.52
|
|
|
250
|
|
|
3.93
|
|
|
84
|
|
|
5.01
|
|
|
334
|
|
|
285
|
|
|
619
|
|
|||||
|
Short-term investments and cash equivalents
|
0.25
|
|
|
38
|
|
|
0.32
|
|
|
5
|
|
|
0.25
|
|
|
43
|
|
|
12
|
|
|
55
|
|
|||||
|
Other investments
|
6.17
|
|
|
356
|
|
|
5.32
|
|
|
133
|
|
|
5.91
|
|
|
489
|
|
|
222
|
|
|
711
|
|
|||||
|
Gross investment income
|
4.33
|
|
|
8,553
|
|
|
3.35
|
|
|
3,903
|
|
|
3.97
|
|
|
12,456
|
|
|
2,793
|
|
|
15,249
|
|
|||||
|
Investment expenses
|
(0.15
|
)
|
|
(239
|
)
|
|
(0.13
|
)
|
|
(155
|
)
|
|
(0.14
|
)
|
|
(394
|
)
|
|
(140
|
)
|
|
(534
|
)
|
|||||
|
Investment income after investment expenses
|
4.18
|
%
|
|
8,314
|
|
|
3.22
|
%
|
|
3,748
|
|
|
3.83
|
%
|
|
12,062
|
|
|
2,653
|
|
|
14,715
|
|
|||||
|
Investment results of other entities and operations(2)
|
|
|
114
|
|
|
|
|
0
|
|
|
|
|
114
|
|
|
0
|
|
|
114
|
|
||||||||
|
Total investment income
|
|
|
$
|
8,428
|
|
|
|
|
$
|
3,748
|
|
|
|
|
$
|
12,176
|
|
|
$
|
2,653
|
|
|
$
|
14,829
|
|
|||
|
(1)
|
Yields are based on quarterly average carrying values except for fixed maturities, equity securities and securities lending activity. Yields for fixed maturities are based on quarterly average amortized cost. Yields for equity securities are based on quarterly average cost. Yields for fixed maturities, short-term investments and cash equivalents are calculated net of liabilities and rebate expenses corresponding to securities lending activity. Yields exclude investment income on assets other than those included in invested assets.
|
|
(2)
|
Includes net investment income of our investment management operations and derivative operations.
|
|
(3)
|
The total yield was 3.97%, 3.92% and 3.98% for the years ended
December 31, 2017
,
2016
and
2015
, respectively.
|
|
|
|
December 31, 2017
|
|||||
|
|
|
Amortized
Cost
|
|
% of Total
|
|||
|
|
|
($ in millions)
|
|||||
|
Corporate & government securities:
|
|
|
|
|
|||
|
Maturing in 2018
|
|
$
|
6,845
|
|
|
2.5
|
%
|
|
Maturing in 2019
|
|
8,175
|
|
|
3.0
|
|
|
|
Maturing in 2020
|
|
10,106
|
|
|
3.7
|
|
|
|
Maturing in 2021
|
|
11,420
|
|
|
4.1
|
|
|
|
Maturing in 2022
|
|
11,352
|
|
|
4.1
|
|
|
|
Maturing in 2023
|
|
11,787
|
|
|
4.3
|
|
|
|
Maturing in 2024
|
|
12,195
|
|
|
4.4
|
|
|
|
Maturing in 2025
|
|
11,163
|
|
|
4.0
|
|
|
|
Maturing in 2026
|
|
11,558
|
|
|
4.2
|
|
|
|
Maturing in 2027
|
|
12,945
|
|
|
4.7
|
|
|
|
Maturing in 2028
|
|
5,730
|
|
|
2.1
|
|
|
|
Maturing in 2029 and beyond
|
|
141,010
|
|
|
51.2
|
|
|
|
Total corporate & government securities
|
|
254,286
|
|
|
92.3
|
|
|
|
Asset-backed securities
|
|
8,389
|
|
|
3.1
|
|
|
|
Commercial mortgage-backed securities
|
|
8,850
|
|
|
3.2
|
|
|
|
Residential mortgage-backed securities
|
|
3,801
|
|
|
1.4
|
|
|
|
Total fixed maturities
|
|
$
|
275,326
|
|
|
100.0
|
%
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Industry(1)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains(2)
|
|
Gross
Unrealized
Losses(2)
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains(2)
|
|
Gross
Unrealized
Losses(2)
|
|
Fair
Value
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
|
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Finance
|
$
|
25,906
|
|
|
$
|
1,646
|
|
|
$
|
84
|
|
|
$
|
27,468
|
|
|
$
|
24,324
|
|
|
$
|
1,260
|
|
|
$
|
322
|
|
|
$
|
25,262
|
|
|
Consumer non-cyclical
|
24,812
|
|
|
2,359
|
|
|
140
|
|
|
27,031
|
|
|
22,941
|
|
|
1,918
|
|
|
423
|
|
|
24,436
|
|
||||||||
|
Utility
|
22,265
|
|
|
2,196
|
|
|
118
|
|
|
24,343
|
|
|
19,618
|
|
|
1,556
|
|
|
385
|
|
|
20,789
|
|
||||||||
|
Capital goods
|
11,232
|
|
|
1,076
|
|
|
52
|
|
|
12,256
|
|
|
10,936
|
|
|
911
|
|
|
236
|
|
|
11,611
|
|
||||||||
|
Consumer cyclical
|
11,011
|
|
|
972
|
|
|
77
|
|
|
11,906
|
|
|
10,348
|
|
|
792
|
|
|
143
|
|
|
10,997
|
|
||||||||
|
Foreign agencies
|
5,619
|
|
|
996
|
|
|
17
|
|
|
6,598
|
|
|
5,423
|
|
|
1,035
|
|
|
41
|
|
|
6,417
|
|
||||||||
|
Energy
|
10,621
|
|
|
998
|
|
|
137
|
|
|
11,482
|
|
|
9,220
|
|
|
774
|
|
|
275
|
|
|
9,719
|
|
||||||||
|
Communications
|
6,266
|
|
|
782
|
|
|
77
|
|
|
6,971
|
|
|
6,227
|
|
|
667
|
|
|
121
|
|
|
6,773
|
|
||||||||
|
Basic industry
|
6,061
|
|
|
590
|
|
|
37
|
|
|
6,614
|
|
|
5,843
|
|
|
401
|
|
|
114
|
|
|
6,130
|
|
||||||||
|
Transportation
|
8,179
|
|
|
777
|
|
|
28
|
|
|
8,928
|
|
|
7,442
|
|
|
625
|
|
|
116
|
|
|
7,951
|
|
||||||||
|
Technology
|
4,373
|
|
|
318
|
|
|
33
|
|
|
4,658
|
|
|
3,775
|
|
|
251
|
|
|
66
|
|
|
3,960
|
|
||||||||
|
Industrial other
|
3,866
|
|
|
348
|
|
|
23
|
|
|
4,191
|
|
|
3,653
|
|
|
226
|
|
|
92
|
|
|
3,787
|
|
||||||||
|
Total corporate securities
|
140,211
|
|
|
13,058
|
|
|
823
|
|
|
152,446
|
|
|
129,750
|
|
|
10,416
|
|
|
2,334
|
|
|
137,832
|
|
||||||||
|
Foreign government(3)
|
88,539
|
|
|
15,848
|
|
|
291
|
|
|
104,096
|
|
|
80,309
|
|
|
16,967
|
|
|
344
|
|
|
96,932
|
|
||||||||
|
Residential mortgage-backed(4)
|
3,801
|
|
|
191
|
|
|
10
|
|
|
3,982
|
|
|
4,352
|
|
|
256
|
|
|
13
|
|
|
4,595
|
|
||||||||
|
Asset-backed
|
8,389
|
|
|
214
|
|
|
7
|
|
|
8,596
|
|
|
8,182
|
|
|
193
|
|
|
26
|
|
|
8,349
|
|
||||||||
|
Commercial mortgage-backed
|
8,850
|
|
|
188
|
|
|
64
|
|
|
8,974
|
|
|
8,883
|
|
|
195
|
|
|
86
|
|
|
8,992
|
|
||||||||
|
U.S. Government
|
16,591
|
|
|
3,005
|
|
|
306
|
|
|
19,290
|
|
|
17,090
|
|
|
2,725
|
|
|
924
|
|
|
18,891
|
|
||||||||
|
State & Municipal
|
8,945
|
|
|
1,016
|
|
|
6
|
|
|
9,955
|
|
|
8,648
|
|
|
642
|
|
|
82
|
|
|
9,208
|
|
||||||||
|
Total(5)
|
$
|
275,326
|
|
|
$
|
33,520
|
|
|
$
|
1,507
|
|
|
$
|
307,339
|
|
|
$
|
257,214
|
|
|
$
|
31,394
|
|
|
$
|
3,809
|
|
|
$
|
284,799
|
|
|
(1)
|
Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.
|
|
(2)
|
Includes
$381 million
of gross unrealized gains and less than
$1 million
of gross unrealized losses, as of
December 31, 2017
, compared to
$380 million
of gross unrealized gains and
$0 million
of gross unrealized losses, as of
December 31, 2016
, on securities classified as held-to-maturity.
|
|
(3)
|
As of
December 31, 2017
and
2016
, based on amortized cost,
75%
and
76%
, respectively, represent Japanese government bonds held by our Japanese insurance operations with no other individual country representing more than
11%
and
10%
of the balance, respectively.
|
|
(4)
|
As of
December 31, 2017
and
2016
, based on amortized cost, more than
99%
and
95%
were rated A or higher, respectively.
|
|
(5)
|
Excluded from the table above are securities held outside the general account in other entities and operations. For additional information regarding investments held outside the general account, see “—Invested Assets of Other Entities and Operations” below. Also excluded from the table above are fixed maturity securities classified as trading. See “—Trading Account Assets Supporting Insurance Liabilities” and “—Other Trading Account Assets” below for additional information.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
NAIC Designation(1)(2)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains(3)
|
|
Gross
Unrealized
Losses(3)(4)
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains(3)
|
|
Gross
Unrealized
Losses(3)(4)
|
|
Fair
Value
|
||||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||||||
|
1
|
|
$
|
207,791
|
|
|
$
|
27,550
|
|
|
$
|
925
|
|
|
$
|
234,416
|
|
|
$
|
195,279
|
|
|
$
|
26,886
|
|
|
$
|
2,425
|
|
|
$
|
219,740
|
|
|
2
|
|
50,751
|
|
|
4,560
|
|
|
335
|
|
|
54,976
|
|
|
49,286
|
|
|
3,728
|
|
|
1,081
|
|
|
51,933
|
|
||||||||
|
Subtotal High or Highest Quality Securities(5)(8)
|
|
258,542
|
|
|
32,110
|
|
|
1,260
|
|
|
289,392
|
|
|
244,565
|
|
|
30,614
|
|
|
3,506
|
|
|
271,673
|
|
||||||||
|
3
|
|
10,201
|
|
|
670
|
|
|
79
|
|
|
10,792
|
|
|
8,546
|
|
|
454
|
|
|
182
|
|
|
8,818
|
|
||||||||
|
4
|
|
4,681
|
|
|
501
|
|
|
105
|
|
|
5,077
|
|
|
2,878
|
|
|
200
|
|
|
82
|
|
|
2,996
|
|
||||||||
|
5
|
|
1,666
|
|
|
225
|
|
|
57
|
|
|
1,834
|
|
|
879
|
|
|
73
|
|
|
28
|
|
|
924
|
|
||||||||
|
6
|
|
236
|
|
|
14
|
|
|
6
|
|
|
244
|
|
|
346
|
|
|
53
|
|
|
11
|
|
|
388
|
|
||||||||
|
Subtotal Other Securities(6)(7)(8)
|
|
16,784
|
|
|
1,410
|
|
|
247
|
|
|
17,947
|
|
|
12,649
|
|
|
780
|
|
|
303
|
|
|
13,126
|
|
||||||||
|
Total fixed maturities
|
|
$
|
275,326
|
|
|
$
|
33,520
|
|
|
$
|
1,507
|
|
|
$
|
307,339
|
|
|
$
|
257,214
|
|
|
$
|
31,394
|
|
|
$
|
3,809
|
|
|
$
|
284,799
|
|
|
(1)
|
Reflects equivalent ratings for investments of the international insurance operations.
|
|
(2)
|
Includes, as of
December 31, 2017
and
2016
,
982
securities with amortized cost of
$6,022 million
(fair value,
$6,217 million
) and
918
securities with amortized cost of
$4,634 million
(fair value,
$4,759 million
), respectively, that have been categorized based on expected NAIC Designations pending receipt of SVO ratings.
|
|
(3)
|
Includes
$381 million
of gross unrealized gains and less than
$1 million
of gross unrealized losses, as of
December 31, 2017
, compared to
$380 million
of gross unrealized gains and
$0 million
of gross unrealized losses, as of
December 31, 2016
, on securities classified as held-to-maturity.
|
|
(4)
|
As of
December 31, 2017
, includes gross unrealized losses of
$156 million
on public fixed maturities and
$91 million
on private fixed maturities considered to be other than high or highest quality and, as of
December 31, 2016
, includes gross unrealized losses of
$149 million
on public fixed maturities and
$154 million
on private fixed maturities considered to be other than high or highest quality.
|
|
(5)
|
On an amortized cost basis, as of
December 31, 2017
, includes
$222,763 million
of public fixed maturities and
$35,779 million
of private fixed maturities and, as of
December 31, 2016
, includes
$211,753 million
of public fixed maturities and
$32,812 million
of private fixed maturities.
|
|
(6)
|
On an amortized cost basis, as of
December 31, 2017
, includes
$9,975 million
of public fixed maturities and
$6,809 million
of private fixed maturities and, as of
December 31, 2016
, includes
$7,170 million
of public fixed maturities and
$5,479 million
of private fixed maturities.
|
|
(7)
|
On an amortized cost basis, as of
December 31, 2017
, securities considered below investment grade based on lowest of external rating agency ratings, total
$17,910 million
, or approximately
7%
of the total fixed maturities, and include securities considered high or highest quality by the NAIC based on the rules described above.
|
|
(8)
|
On a fair value basis, as of December 31, 2017 there were approximately $165 million of high or highest quality securities and $2,829 million of other than high or highest quality securities representing investments in bonds that were received during the fourth quarter of 2017 when the Company exchanged shares in a mutual fund for its proportionate share of the underlying bonds in the fund.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
|
Asset-Backed
Securities(2)
|
|
Commercial Mortgage-Backed Securities(3)
|
|
Asset-Backed
Securities(2)
|
|
Commercial Mortgage-Backed Securities(3)
|
||||||||||||||||||||||||
|
Lowest Rating Agency Rating(1)
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
|
AAA
|
$
|
7,613
|
|
|
$
|
7,686
|
|
|
$
|
8,002
|
|
|
$
|
8,125
|
|
|
$
|
7,147
|
|
|
$
|
7,200
|
|
|
$
|
7,955
|
|
|
$
|
8,063
|
|
|
AA
|
419
|
|
|
442
|
|
|
816
|
|
|
818
|
|
|
463
|
|
473
|
|
877
|
|
880
|
||||||||||||
|
A
|
40
|
|
|
46
|
|
|
23
|
|
|
22
|
|
|
56
|
|
62
|
|
42
|
|
41
|
||||||||||||
|
BBB
|
42
|
|
|
43
|
|
|
9
|
|
|
9
|
|
|
58
|
|
58
|
|
9
|
|
8
|
||||||||||||
|
BB and below
|
275
|
|
|
379
|
|
|
0
|
|
|
0
|
|
|
458
|
|
556
|
|
0
|
|
0
|
||||||||||||
|
Total(4)
|
$
|
8,389
|
|
|
$
|
8,596
|
|
|
$
|
8,850
|
|
|
$
|
8,974
|
|
|
$
|
8,182
|
|
|
$
|
8,349
|
|
|
$
|
8,883
|
|
|
$
|
8,992
|
|
|
(1)
|
The table above provides ratings as assigned by nationally recognized rating agencies as of
December 31, 2017
, including Standard & Poor’s, Moody’s, Fitch and Morningstar.
|
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans and other asset types. As of
December 31, 2017
and
2016
, based on amortized cost,
79%
and
76%
, respectively, were collateralized loan obligations rated A or higher.
|
|
(3)
|
As of
December 31, 2017
and
2016
, based on amortized cost,
95%
and
93%
, respectively, were securities with vintages of 2013 or later.
|
|
(4)
|
Excludes securities held outside the general account in other entities and operations and securities classified as trading.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Short-term investments and cash equivalents
|
|
$
|
245
|
|
|
$
|
245
|
|
|
$
|
655
|
|
|
$
|
655
|
|
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate securities
|
|
13,816
|
|
|
14,073
|
|
|
13,903
|
|
|
13,997
|
|
||||
|
Commercial mortgage-backed securities
|
|
2,294
|
|
|
2,311
|
|
|
2,032
|
|
|
2,052
|
|
||||
|
Residential mortgage-backed securities
|
|
961
|
|
|
966
|
|
|
1,142
|
|
|
1,150
|
|
||||
|
Asset-backed securities
|
|
1,363
|
|
|
1,392
|
|
|
1,333
|
|
|
1,349
|
|
||||
|
Foreign government bonds
|
|
1,050
|
|
|
1,057
|
|
|
915
|
|
|
926
|
|
||||
|
U.S. government authorities and agencies and obligations of U.S. states
|
|
357
|
|
|
410
|
|
|
330
|
|
|
376
|
|
||||
|
Total fixed maturities(1)
|
|
19,841
|
|
|
20,209
|
|
|
19,655
|
|
|
19,850
|
|
||||
|
Equity securities
|
|
1,278
|
|
|
1,643
|
|
|
1,097
|
|
|
1,335
|
|
||||
|
Total trading account assets supporting insurance liabilities(2)
|
|
$
|
21,364
|
|
|
$
|
22,097
|
|
|
$
|
21,407
|
|
|
$
|
21,840
|
|
|
(1)
|
As a percentage of amortized cost,
92%
of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of both
December 31, 2017
and
2016
.
|
|
(2)
|
As a percentage of amortized cost,
80%
of the portfolio consisted of public securities as of both
December 31, 2017
and
2016
.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Short-term investments and cash equivalents
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Fixed maturities(1)
|
|
1,568
|
|
|
1,589
|
|
|
1,201
|
|
|
1,058
|
|
||||
|
Equity securities(2)
|
|
395
|
|
|
455
|
|
|
412
|
|
|
462
|
|
||||
|
Total other trading account assets
|
|
$
|
1,963
|
|
|
$
|
2,044
|
|
|
$
|
1,614
|
|
|
$
|
1,521
|
|
|
(1)
|
As a percentage of amortized cost,
91%
and
89%
of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of
December 31, 2017
and
2016
, respectively.
|
|
(2)
|
Included in equity securities are perpetual preferred stock securities that have characteristics of both debt and equity securities.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
(in millions)
|
||||||
|
Commercial mortgage and agricultural property loans
|
|
$
|
45,623
|
|
|
$
|
41,964
|
|
|
Uncollateralized loans
|
|
661
|
|
|
636
|
|
||
|
Residential property loans
|
|
196
|
|
|
252
|
|
||
|
Other collateralized loans
|
|
5
|
|
|
9
|
|
||
|
Total recorded investment gross of allowance(1)
|
|
46,485
|
|
|
42,861
|
|
||
|
Valuation allowance
|
|
(91
|
)
|
|
(90
|
)
|
||
|
Total net commercial mortgage and other loans(2)
|
|
$
|
46,394
|
|
|
$
|
42,771
|
|
|
(1)
|
As a percentage of recorded investment gross of allowance, more than
99%
of these assets were current as of both
December 31, 2017
and
2016
.
|
|
(2)
|
Excluded from the table above are commercial mortgage and other loans held outside the general account in other entities and operations. For additional information regarding commercial mortgage and other loans held outside the general account, see “—Invested Assets of Other Entities and Operations” below.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
|
|
|
Gross
Carrying
Value
|
|
% of
Total
|
|
Gross
Carrying
Value
|
|
% of
Total
|
||||||
|
|
|
($ in millions)
|
||||||||||||
|
Commercial mortgage and agricultural property loans by region:
|
|
|
|
|
|
|
|
|
||||||
|
U.S. Regions(1):
|
|
|
|
|
|
|
|
|
||||||
|
Pacific
|
|
$
|
14,965
|
|
|
32.8
|
%
|
|
$
|
13,817
|
|
|
32.9
|
%
|
|
South Atlantic
|
|
8,666
|
|
|
19.0
|
|
|
8,066
|
|
|
19.2
|
|
||
|
Middle Atlantic
|
|
5,776
|
|
|
12.7
|
|
|
5,476
|
|
|
13.1
|
|
||
|
East North Central
|
|
2,440
|
|
|
5.3
|
|
|
2,341
|
|
|
5.6
|
|
||
|
West South Central
|
|
4,671
|
|
|
10.2
|
|
|
4,506
|
|
|
10.7
|
|
||
|
Mountain
|
|
2,027
|
|
|
4.5
|
|
|
1,796
|
|
|
4.3
|
|
||
|
New England
|
|
1,774
|
|
|
3.9
|
|
|
1,774
|
|
|
4.2
|
|
||
|
West North Central
|
|
641
|
|
|
1.4
|
|
|
621
|
|
|
1.5
|
|
||
|
East South Central
|
|
612
|
|
|
1.3
|
|
|
595
|
|
|
1.4
|
|
||
|
Subtotal-U.S.
|
|
41,572
|
|
|
91.1
|
|
|
38,992
|
|
|
92.9
|
|
||
|
Europe
|
|
2,528
|
|
|
5.5
|
|
|
1,725
|
|
|
4.1
|
|
||
|
Asia
|
|
619
|
|
|
1.4
|
|
|
504
|
|
|
1.2
|
|
||
|
Other
|
|
904
|
|
|
2.0
|
|
|
743
|
|
|
1.8
|
|
||
|
Total commercial mortgage and agricultural property loans
|
|
$
|
45,623
|
|
|
100.0
|
%
|
|
$
|
41,964
|
|
|
100.0
|
%
|
|
(1)
|
Regions as defined by the United States Census Bureau.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
|
|
|
Gross
Carrying
Value
|
|
% of
Total
|
|
Gross
Carrying
Value
|
|
% of
Total
|
||||||
|
|
|
($ in millions)
|
||||||||||||
|
Commercial mortgage and agricultural property loans by property type:
|
|
|
|
|
|
|
|
|
||||||
|
Industrial
|
|
$
|
8,444
|
|
|
18.5
|
%
|
|
$
|
6,899
|
|
|
16.5
|
%
|
|
Retail
|
|
6,595
|
|
|
14.5
|
|
|
6,562
|
|
|
15.6
|
|
||
|
Office
|
|
10,020
|
|
|
22.0
|
|
|
9,619
|
|
|
22.9
|
|
||
|
Apartments/Multi-Family
|
|
12,993
|
|
|
28.5
|
|
|
11,488
|
|
|
27.4
|
|
||
|
Other
|
|
3,336
|
|
|
7.3
|
|
|
3,368
|
|
|
8.0
|
|
||
|
Agricultural properties
|
|
2,526
|
|
|
5.5
|
|
|
2,279
|
|
|
5.4
|
|
||
|
Hospitality
|
|
1,709
|
|
|
3.7
|
|
|
1,749
|
|
|
4.2
|
|
||
|
Total commercial mortgage and agricultural property loans
|
|
$
|
45,623
|
|
|
100.0
|
%
|
|
$
|
41,964
|
|
|
100.0
|
%
|
|
|
|
December 31, 2017
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
||||||||||||||
|
|
|
>
1.2x
|
|
1.0x
to
< 1.2x
|
|
< 1.0x
|
|
Total
Commercial Mortgage and Agricultural Property
Loans
|
||||||||
|
Loan-to-Value Ratio
|
|
(in millions)
|
||||||||||||||
|
0%-59.99%
|
|
$
|
26,217
|
|
|
$
|
672
|
|
|
$
|
204
|
|
|
$
|
27,093
|
|
|
60%-69.99%
|
|
11,882
|
|
|
488
|
|
|
112
|
|
|
12,482
|
|
||||
|
70%-79.99%
|
|
5,436
|
|
|
410
|
|
|
29
|
|
|
5,875
|
|
||||
|
80% or greater
|
|
73
|
|
|
43
|
|
|
57
|
|
|
173
|
|
||||
|
Total commercial mortgage and agricultural property loans
|
|
$
|
43,608
|
|
|
$
|
1,613
|
|
|
$
|
402
|
|
|
$
|
45,623
|
|
|
|
|
December 31, 2017
|
|||||
|
|
|
Gross
Carrying
Value
|
|
% of
Total
|
|||
|
Year of Origination
|
|
($ in millions)
|
|||||
|
2017
|
|
$
|
8,091
|
|
|
17.7
|
%
|
|
2016
|
|
7,301
|
|
|
16.0
|
|
|
|
2015
|
|
7,400
|
|
|
16.2
|
|
|
|
2014
|
|
6,742
|
|
|
14.8
|
|
|
|
2013
|
|
6,662
|
|
|
14.6
|
|
|
|
2012
|
|
3,487
|
|
|
7.6
|
|
|
|
2011
|
|
2,676
|
|
|
5.9
|
|
|
|
2010 & Prior
|
|
3,264
|
|
|
7.2
|
|
|
|
Total commercial mortgage and agricultural property loans
|
|
$
|
45,623
|
|
|
100.0
|
%
|
|
|
|
December 31, 2017
|
|||||
|
|
|
Gross
Carrying Value
|
|
% of Total
|
|||
|
|
|
($ in millions)
|
|||||
|
Vintage
|
|
|
|
|
|||
|
Maturing in 2018
|
|
$
|
1,762
|
|
|
3.8
|
%
|
|
Maturing in 2019
|
|
2,859
|
|
|
6.2
|
|
|
|
Maturing in 2020
|
|
3,996
|
|
|
8.6
|
|
|
|
Maturing in 2021
|
|
3,785
|
|
|
8.1
|
|
|
|
Maturing in 2022
|
|
3,895
|
|
|
8.4
|
|
|
|
Maturing in 2023
|
|
2,928
|
|
|
6.3
|
|
|
|
Maturing in 2024
|
|
4,868
|
|
|
10.5
|
|
|
|
Maturing in 2025
|
|
4,625
|
|
|
9.9
|
|
|
|
Maturing in 2026
|
|
4,402
|
|
|
9.5
|
|
|
|
Maturing in 2027
|
|
4,299
|
|
|
9.2
|
|
|
|
Maturing in 2028
|
|
2,206
|
|
|
4.7
|
|
|
|
Maturing in 2029 and beyond
|
|
6,860
|
|
|
14.8
|
|
|
|
Total commercial mortgage and other loans
|
|
$
|
46,485
|
|
|
100.0
|
%
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
(in millions)
|
||||||
|
Allowance, beginning of year
|
|
$
|
90
|
|
|
$
|
95
|
|
|
Addition to (release of) allowance for losses
|
|
1
|
|
|
(6
|
)
|
||
|
Charge-offs, net of recoveries
|
|
0
|
|
|
0
|
|
||
|
Change in foreign exchange
|
|
0
|
|
|
1
|
|
||
|
Allowance, end of period
|
|
$
|
91
|
|
|
$
|
90
|
|
|
Loan-specific reserve
|
|
$
|
5
|
|
|
$
|
6
|
|
|
Portfolio reserve
|
|
$
|
86
|
|
|
$
|
84
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||||||
|
Mutual funds(1)
|
|
$
|
762
|
|
|
$
|
156
|
|
|
$
|
0
|
|
|
$
|
918
|
|
|
$
|
3,193
|
|
|
$
|
545
|
|
|
$
|
2
|
|
|
$
|
3,736
|
|
|
Other common stocks
|
|
1,841
|
|
|
1,076
|
|
|
20
|
|
|
2,897
|
|
|
2,207
|
|
|
1,229
|
|
|
16
|
|
|
3,420
|
|
||||||||
|
Non-redeemable preferred stocks
|
|
11
|
|
|
1
|
|
|
1
|
|
|
11
|
|
|
9
|
|
|
0
|
|
|
2
|
|
|
7
|
|
||||||||
|
Equity securities, available-for-sale, at fair value(2)
|
|
$
|
2,614
|
|
|
$
|
1,233
|
|
|
$
|
21
|
|
|
$
|
3,826
|
|
|
$
|
5,409
|
|
|
$
|
1,774
|
|
|
$
|
20
|
|
|
$
|
7,163
|
|
|
(1)
|
As of December 31, 2016, includes cost of $2.6 billion (fair value, $3.1 billion) of shares in a mutual fund that invests primarily in high yield bonds. During the fourth quarter of 2017, the Company exchanged shares in this fund with a fair value of approximately $3 billion for its proportionate share of the underlying bonds in the fund. These bonds are reported within “Fixed maturities, available-for-sale, at fair value” as of December 31, 2017.
|
|
(2)
|
Amounts presented exclude investments in private equity and hedge funds and other investments which are reported in “Other long-term investments.”
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
(in millions)
|
||||||
|
Joint ventures and limited partnerships:
|
|
|
|
|
||||
|
Private equity
|
|
$
|
2,798
|
|
|
$
|
2,619
|
|
|
Hedge funds
|
|
1,761
|
|
|
1,708
|
|
||
|
Real estate-related
|
|
331
|
|
|
451
|
|
||
|
Real estate held through direct ownership(1)
|
|
1,875
|
|
|
1,677
|
|
||
|
Other(2)
|
|
740
|
|
|
776
|
|
||
|
Total other long-term investments
|
|
$
|
7,505
|
|
|
$
|
7,231
|
|
|
(1)
|
As of
December 31, 2017
and
2016
, real estate held through direct ownership had mortgage debt of
$799 million
and
$659 million
, respectively.
|
|
(2)
|
Primarily includes leveraged leases, member and activity stock held in the Federal Home Loan Banks of New York and Boston and certain derivatives. For additional information regarding our holdings in the Federal Home Loan Banks of New York and Boston, see Note 14 to the Consolidated Financial Statements.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
(in millions)
|
||||||
|
Fixed maturities:
|
|
|
|
|
||||
|
Public, available-for-sale, at fair value
|
|
$
|
608
|
|
|
$
|
237
|
|
|
Private, available-for-sale, at fair value
|
|
1
|
|
|
3
|
|
||
|
Other trading account assets, at fair value
|
|
3,369
|
|
|
3,959
|
|
||
|
Equity securities, available-for-sale, at fair value
|
|
8
|
|
|
13
|
|
||
|
Commercial mortgage and other loans, at book value(1)
|
|
634
|
|
|
571
|
|
||
|
Other long-term investments
|
|
1,644
|
|
|
1,032
|
|
||
|
Short-term investments
|
|
41
|
|
|
14
|
|
||
|
Total investments
|
|
$
|
6,305
|
|
|
$
|
5,829
|
|
|
(1)
|
Book value is generally based on unpaid principal balance, net of any allowance for losses, or at fair value, when the fair value option has been elected.
|
|
•
|
We repurchased $1.25 billion of shares of our Common Stock and declared aggregate Common Stock dividends of $1.3 billion;
|
|
•
|
We issued $750 million of junior subordinated notes to be utilized for general corporate purposes, which may include refinancing of our $600 million aggregate principal amount of 8.875% fixed-to-floating rate junior subordinated notes and portions of our medium-term notes maturing through 2018;
|
|
•
|
We completed a debt exchange offer, pursuant to which we issued $1.9 billion in principal amount of senior notes in exchange for $1.5 billion in principal amount of outstanding medium-term notes;
|
|
•
|
We redeemed $1.0 billion of debt previously issued through our captive financing facilities supporting Regulation XXX and Guideline AXXX non-economic reserves; and
|
|
•
|
We obtained additional financing for Guideline AXXX reserves by entering into a new captive financing facility for $1.0 billion, of which $560 million was outstanding as of December 31, 2017.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Equity(1)
|
|
$
|
36,995
|
|
|
$
|
31,242
|
|
|
Junior subordinated debt (including hybrid securities)
|
|
6,622
|
|
|
5,817
|
|
||
|
Other capital debt
|
|
5,402
|
|
|
5,822
|
|
||
|
Total capital
|
|
$
|
49,019
|
|
|
$
|
42,881
|
|
|
(1)
|
Amounts attributable to Prudential Financial, excluding AOCI.
|
|
|
Ratio
|
|
|
Prudential Insurance(1)
|
457
|
%
|
|
PALAC
|
867
|
%
|
|
Composite Major U.S. Insurance Subsidiaries(2)
|
527
|
%
|
|
(1)
|
Includes PRIAC, Pruco Life, PLNJ (which is a subsidiary of Pruco Life) and PLIC.
|
|
(2)
|
Includes Prudential Insurance and its subsidiaries, as noted above, and PALAC. Composite RBC is not reported to regulators and is based on the summation of total adjusted capital and risk charges for the included companies as determined under statutory accounting and RBC guidance to calculate a composite numerator and denominator, respectively, for purposes of calculating the composite ratio.
|
|
|
Ratio
|
|
|
Prudential of Japan consolidated(1)
|
893
|
%
|
|
Gibraltar Life consolidated(2)
|
935
|
%
|
|
(1)
|
Includes Prudential Trust Co., Ltd., a subsidiary of Prudential of Japan.
|
|
(2)
|
Includes PGFL, a subsidiary of Gibraltar Life.
|
|
|
|
Dividend Amount
|
|
Shares Repurchased
|
|||||||||||
|
Quarterly period ended:
|
|
Per Share
|
|
Aggregate
|
|
Shares
|
|
Total Cost
|
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
(in millions, except per share data)
|
|||||||||||||
|
December 31, 2017
|
|
$
|
0.75
|
|
|
$
|
321
|
|
|
2.8
|
|
|
$
|
313
|
|
|
September 30, 2017
|
|
$
|
0.75
|
|
|
$
|
324
|
|
|
2.9
|
|
|
$
|
312
|
|
|
June 30, 2017
|
|
$
|
0.75
|
|
|
$
|
328
|
|
|
2.9
|
|
|
$
|
313
|
|
|
March 31, 2017
|
|
$
|
0.75
|
|
|
$
|
327
|
|
|
2.9
|
|
|
$
|
312
|
|
|
|
|
Dividend Amount
|
|
Shares Repurchased
|
|||||||||||
|
Year ended:
|
|
Per Share
|
|
Aggregate
|
|
Shares
|
|
Total Cost
|
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
(in millions, except per share data)
|
|||||||||||||
|
December 31, 2016
|
|
$
|
2.80
|
|
|
$
|
1,245
|
|
|
25.1
|
|
|
$
|
2,000
|
|
|
December 31, 2015
|
|
$
|
2.44
|
|
|
$
|
1,115
|
|
|
12.1
|
|
|
$
|
1,000
|
|
|
December 31, 2014
|
|
$
|
2.17
|
|
|
$
|
1,005
|
|
|
11.6
|
|
|
$
|
1,000
|
|
|
December 31, 2013
|
|
$
|
1.73
|
|
|
$
|
810
|
|
|
10.0
|
|
|
$
|
750
|
|
|
|
|
Year Ended December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Sources:
|
|
|
|
|
||||
|
Dividends and/or returns of capital from subsidiaries(1)
|
|
$
|
3,124
|
|
|
$
|
3,843
|
|
|
Proceeds from the issuance of junior subordinated debt
|
|
743
|
|
|
0
|
|
||
|
Proceeds from stock-based compensation and exercise of stock options
|
|
491
|
|
|
625
|
|
||
|
Interest income from subsidiaries on intercompany agreements, net of interest paid
|
|
230
|
|
|
214
|
|
||
|
Net income tax receipts
|
|
213
|
|
|
544
|
|
||
|
Net receipts under intercompany loan agreements(2)
|
|
190
|
|
|
43
|
|
||
|
Net distributions from subsidiaries associated with the Variable Annuities Recapture(3)
|
|
0
|
|
|
1,042
|
|
||
|
Total sources
|
|
4,991
|
|
|
6,311
|
|
||
|
Uses:
|
|
|
|
|
||||
|
Common Stock dividends(4)
|
|
$
|
1,296
|
|
|
$
|
1,300
|
|
|
Share repurchases
|
|
1,250
|
|
|
2,000
|
|
||
|
Capital contributions to subsidiaries(5)
|
|
1,135
|
|
|
939
|
|
||
|
Interest paid on external debt
|
|
907
|
|
|
902
|
|
||
|
Maturities of long-term external debt
|
|
480
|
|
|
750
|
|
||
|
Repurchase of medium-term notes
|
|
0
|
|
|
500
|
|
||
|
Class B Stock repurchase settlement
|
|
0
|
|
|
119
|
|
||
|
Other, net
|
|
100
|
|
|
310
|
|
||
|
Total uses
|
|
5,168
|
|
|
6,820
|
|
||
|
Net increase (decrease) in highly liquid assets
|
|
$
|
(177
|
)
|
|
$
|
(509
|
)
|
|
(1)
|
See “Item 15—Schedule II—Notes to Condensed Financial Information of Registrant—Dividends and Returns of Capital” for dividends and returns of capital by company. Amounts above exclude dividends and returns of capital associated with the Variable Annuities Recapture.
|
|
(2)
|
2017
includes net receipts from subsidiaries of $1,323 million from international subsidiaries offset by net borrowing of $500 million by Prudential Universal Reinsurance Company, $350 million by Prudential Arizona Reinsurance Universal Company, $274 million by Investment Management subsidiaries, and $9 million by other subsidiaries
.
2016
includes net receipts from subsidiaries of $378 million from Pruco Life, $116 million from PLNJ, net proceeds of $644 million from the issuance of notes to international insurance subsidiaries
,
offset by net borrowing of $600 million by Prudential Universal Reinsurance Company, $490 million by Investment Management subsidiaries and $5 million by other subsidiaries
.
Amounts above exclude receipts associated with the Variable Annuities Recapture.
|
|
(3)
|
Effective April 1, 2016, we recaptured the risks related to our variable annuities living benefit riders and certain retirement products that were previously reinsured to a captive reinsurance company. These risks were recaptured by the insurance entities that issued the base contracts, thereby allowing us to manage the capital and liquidity risks of these products more efficiently by aggregating both the risks and the assets supporting these risks within these insurance entities. This series of transactions is collectively referred to as the “Variable Annuities Recapture.”
|
|
(4)
|
Includes cash payments made on dividends declared in prior periods.
|
|
(5)
|
2017
includes capital contributions of $965 million to international insurance subsidiaries, $149 million to Prudential Insurance, and $21 million to Investment Management subsidiaries.
2016
includes capital contributions of $824 million to international insurance subsidiaries, $36 million to Pruco Re, $74 million to Investment Management subsidiaries, and $5 million to other subsidiaries. Amounts above exclude capital contributions associated with the Variable Annuities Recapture.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in billions)
|
||||||
|
Prudential Insurance
|
|
$
|
197.9
|
|
|
$
|
190.5
|
|
|
PLIC
|
|
53.2
|
|
|
53.7
|
|
||
|
Pruco Life
|
|
38.7
|
|
|
35.4
|
|
||
|
PRIAC
|
|
26.4
|
|
|
26.4
|
|
||
|
PALAC
|
|
14.0
|
|
|
13.4
|
|
||
|
Other(1)
|
|
(87.3
|
)
|
|
(83.2
|
)
|
||
|
Total future policy benefits and policyholders’ account balances(2)
|
|
$
|
242.9
|
|
|
$
|
236.2
|
|
|
(1)
|
Includes the impact of intercompany eliminations.
|
|
(2)
|
Amounts are reflected gross of affiliated reinsurance recoverables.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in billions)
|
||||||
|
Prudential of Japan(1)
|
|
$
|
47.1
|
|
|
$
|
42.0
|
|
|
Gibraltar Life(2)
|
|
99.6
|
|
|
95.2
|
|
||
|
All other international insurance subsidiaries(3)
|
|
15.9
|
|
|
12.7
|
|
||
|
Total future policy benefits and policyholders’ account balances(4)
|
|
$
|
162.6
|
|
|
$
|
149.9
|
|
|
(1)
|
As of
December 31, 2017
and
2016
, $11.8 billion and $10.3 billion, respectively, of the insurance-related liabilities for Prudential of Japan are associated with U.S. dollar-denominated products that are coinsured to our domestic insurance operations and supported by U.S. dollar-denominated assets.
|
|
(2)
|
Includes PGFL.
|
|
(3)
|
Represents our international insurance operations, excluding Japan.
|
|
(4)
|
Amounts are reflected gross of affiliated reinsurance recoverables.
|
|
|
|
December 31, 2017
|
|
|
|
|
||||||||||||||||||||||
|
|
|
Prudential
Insurance
|
|
PLIC
|
|
PRIAC
|
|
PALAC
|
|
Pruco Life
|
|
Total
|
|
December 31, 2016
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
(in billions)
|
||||||||||||||||||||||||||
|
Cash and short-term investments
|
|
$
|
7.3
|
|
|
$
|
1.4
|
|
|
$
|
0.3
|
|
|
$
|
2.5
|
|
|
$
|
0.2
|
|
|
$
|
11.7
|
|
|
$
|
12.4
|
|
|
Fixed maturity investments(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
High or highest quality
|
|
104.7
|
|
|
36.2
|
|
|
19.6
|
|
|
9.8
|
|
|
4.8
|
|
|
175.1
|
|
|
164.7
|
|
|||||||
|
Other than high or highest quality
|
|
7.7
|
|
|
3.4
|
|
|
1.8
|
|
|
0.5
|
|
|
0.4
|
|
|
13.8
|
|
|
13.2
|
|
|||||||
|
Subtotal
|
|
112.4
|
|
|
39.6
|
|
|
21.4
|
|
|
10.3
|
|
|
5.2
|
|
|
188.9
|
|
|
177.9
|
|
|||||||
|
Public equity securities
|
|
0.3
|
|
|
2.5
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
2.8
|
|
|
3.0
|
|
|||||||
|
Total
|
|
$
|
120.0
|
|
|
$
|
43.5
|
|
|
$
|
21.7
|
|
|
$
|
12.8
|
|
|
$
|
5.4
|
|
|
$
|
203.4
|
|
|
$
|
193.3
|
|
|
(1)
|
Excludes fixed maturities designated as held-to-maturity. Classified by NAIC or equivalent rating.
|
|
|
|
December 31, 2017
|
|
|
||||||||||||||||
|
|
|
Prudential
of Japan
|
|
Gibraltar
Life(1)
|
|
All
Other(2)
|
|
Total
|
|
December 31, 2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in billions)
|
||||||||||||||||||
|
Cash and short-term investments
|
|
$
|
0.8
|
|
|
$
|
2.1
|
|
|
$
|
1.3
|
|
|
$
|
4.2
|
|
|
$
|
5.4
|
|
|
Fixed maturity investments(3):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
High or highest quality(4)
|
|
36.5
|
|
|
89.8
|
|
|
18.9
|
|
|
145.2
|
|
|
137.8
|
|
|||||
|
Other than high or highest quality
|
|
1.1
|
|
|
3.3
|
|
|
1.6
|
|
|
6.0
|
|
|
4.3
|
|
|||||
|
Subtotal
|
|
37.6
|
|
|
93.1
|
|
|
20.5
|
|
|
151.2
|
|
|
142.1
|
|
|||||
|
Public equity securities
|
|
1.9
|
|
|
1.7
|
|
|
0.9
|
|
|
4.5
|
|
|
4.8
|
|
|||||
|
Total
|
|
$
|
40.3
|
|
|
$
|
96.9
|
|
|
$
|
22.7
|
|
|
$
|
159.9
|
|
|
$
|
152.3
|
|
|
(1)
|
Includes PGFL.
|
|
(2)
|
Represents our international insurance operations, excluding Japan.
|
|
(3)
|
Excludes fixed maturities designated as held-to-maturity. Classified by NAIC or equivalent rating.
|
|
(4)
|
As of
December 31, 2017
, $104.2 billion, or 72%, were invested in government or government agency bonds.
|
|
•
|
Income Hedges—We hedge a portion of our prospective yen-based earnings streams by entering into external forward currency derivative contracts that effectively fix the currency exchange rates for that portion of earnings, thereby reducing volatility from foreign currency exchange rate movements. As of
December 31, 2017
, we have hedged 100%, 73% and 28% of expected yen-based earnings for 2018, 2019 and 2020, respectively.
|
|
•
|
Equity Hedges—We hold both internal and external hedges primarily to hedge our U.S. dollar-equivalent equity. These hedges also mitigate volatility in the solvency margins of yen-based subsidiaries resulting from changes in the market value of their U.S. dollar-denominated investments hedging our U.S. dollar-equivalent equity attributable to changes in the yen-U.S. dollar exchange rate.
|
|
|
|
Year ended December 31,
|
||||||
|
Cash Settlements:
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Income Hedges (External)(1)
|
|
$
|
(16
|
)
|
|
$
|
38
|
|
|
Equity Hedges:
|
|
|
|
|
||||
|
Internal(2)
|
|
54
|
|
|
(57
|
)
|
||
|
External
|
|
(192
|
)
|
|
652
|
|
||
|
Total Equity Hedges
|
|
$
|
(138
|
)
|
|
$
|
595
|
|
|
Total Cash Settlements
|
|
$
|
(154
|
)
|
|
$
|
633
|
|
|
|
|
As of December 31,
|
||||||
|
Assets (Liabilities):
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Income Hedges (External)(3)
|
|
$
|
(42
|
)
|
|
$
|
85
|
|
|
Equity Hedges:
|
|
|
|
|
||||
|
Internal(2)
|
|
623
|
|
|
802
|
|
||
|
External
|
|
303
|
|
|
32
|
|
||
|
Total Equity Hedges(4)
|
|
$
|
926
|
|
|
$
|
834
|
|
|
Total Assets (Liabilities)
|
|
$
|
884
|
|
|
$
|
919
|
|
|
(1)
|
Includes non-yen related cash settlements of $(14) million, primarily denominated in Brazilian real and Chilean peso, and $17 million, primarily denominated in Korean won, for the year ended
December 31, 2017
and
2016
, respectively.
|
|
(2)
|
Represents internal transactions between international-based and U.S.-based entities. Amounts noted are from the U.S.-based entities’ perspectives.
|
|
(3)
|
Includes non-yen related liabilities of $(65) million and assets of $41 million as of
December 31, 2017
and
2016
, respectively, both of which were primarily denominated in Korean won and Australian dollar.
|
|
(4)
|
As of
December 31, 2017
, approximately $322 million, $506 million and $98 million of the net market value is scheduled to settle in 2018, 2019 and thereafter, respectively. The net market value of the assets (liabilities) will vary with changing market conditions to the extent there are no corresponding offsetting positions.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
PFI
Excluding Closed Block Division |
|
Closed
Block Division |
|
Consolidated
|
|
PFI
Excluding Closed Block Division |
|
Closed
Block Division |
|
Consolidated
|
||||||||||||
|
|
($ in millions)
|
||||||||||||||||||||||
|
Securities sold under agreements to repurchase
|
$
|
4,960
|
|
|
$
|
3,440
|
|
|
$
|
8,400
|
|
|
$
|
4,906
|
|
|
$
|
2,700
|
|
|
$
|
7,606
|
|
|
Cash collateral for loaned securities
|
3,203
|
|
|
1,151
|
|
|
4,354
|
|
|
3,057
|
|
|
1,276
|
|
|
4,333
|
|
||||||
|
Securities sold but not yet purchased
|
3
|
|
|
0
|
|
|
3
|
|
|
2
|
|
|
0
|
|
|
2
|
|
||||||
|
Total(1)
|
$
|
8,166
|
|
|
$
|
4,591
|
|
|
$
|
12,757
|
|
|
$
|
7,965
|
|
|
$
|
3,976
|
|
|
$
|
11,941
|
|
|
Portion of above securities that may be returned to the Company overnight requiring immediate return of the cash collateral
|
$
|
3,838
|
|
|
$
|
1,393
|
|
|
$
|
5,231
|
|
|
$
|
3,583
|
|
|
$
|
1,631
|
|
|
$
|
5,214
|
|
|
Weighted average maturity, in days(2)
|
12
|
|
|
3
|
|
|
|
|
9
|
|
|
6
|
|
|
|
||||||||
|
(1)
|
The daily weighted average outstanding balance for the year ended
December 31, 2017
and
2016
was $8,279 million and $8,436 million, respectively, for PFI excluding the Closed Block division, and $4,894 million and $4,249 million, respectively, for the Closed Block division.
|
|
(2)
|
Excludes securities that may be returned to the Company overnight.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Prudential
Financial
|
|
Subsidiaries |
|
Consolidated
|
|
Prudential
Financial
|
|
Subsidiaries |
|
Consolidated
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
General obligation short-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial paper
|
$
|
50
|
|
|
$
|
500
|
|
|
$
|
550
|
|
|
$
|
65
|
|
|
$
|
525
|
|
|
$
|
590
|
|
|
Current portion of long-term debt
|
830
|
|
|
0
|
|
|
830
|
|
|
470
|
|
|
0
|
|
|
470
|
|
||||||
|
Subtotal
|
880
|
|
|
500
|
|
|
1,380
|
|
|
535
|
|
|
525
|
|
|
1,060
|
|
||||||
|
General obligation long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Senior debt
|
8,738
|
|
|
173
|
|
|
8,911
|
|
|
9,572
|
|
|
727
|
|
|
10,299
|
|
||||||
|
Junior subordinated debt
|
6,566
|
|
|
56
|
|
|
6,622
|
|
|
5,817
|
|
|
0
|
|
|
5,817
|
|
||||||
|
Surplus notes (1)
|
0
|
|
|
840
|
|
|
840
|
|
|
0
|
|
|
1,339
|
|
|
1,339
|
|
||||||
|
Subtotal
|
15,304
|
|
|
1,069
|
|
|
16,373
|
|
|
15,389
|
|
|
2,066
|
|
|
17,455
|
|
||||||
|
Total general obligations
|
16,184
|
|
|
1,569
|
|
|
17,753
|
|
|
15,924
|
|
|
2,591
|
|
|
18,515
|
|
||||||
|
Limited and non-recourse borrowings (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current portion of long-term debt
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
73
|
|
|
73
|
|
||||||
|
Long-term debt
|
0
|
|
|
799
|
|
|
799
|
|
|
0
|
|
|
586
|
|
|
586
|
|
||||||
|
Subtotal
|
0
|
|
|
799
|
|
|
799
|
|
|
0
|
|
|
659
|
|
|
659
|
|
||||||
|
Total borrowings
|
$
|
16,184
|
|
|
$
|
2,368
|
|
|
$
|
18,552
|
|
|
$
|
15,924
|
|
|
$
|
3,250
|
|
|
$
|
19,174
|
|
|
(1)
|
Amounts are net of assets under set-off arrangements of $7,287 million and $5,859 million as of December 31, 2017 and 2016, respectively.
|
|
(2)
|
Limited and non-recourse borrowing represents mortgage debt of our subsidiaries that has recourse only to real estate investment property.
|
|
|
|
Surplus Notes
|
|
Outstanding as of
December 31, 2017
|
|
|
|||||||
|
Credit-Linked Note Structures:
|
|
Original
Issue Dates
|
|
Maturity
Dates
|
|
|
Facility
Size
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
($ in millions)
|
|||||||||||
|
XXX
|
|
2011-2014
|
|
2021-2024
|
|
$
|
1,750
|
|
(1)
|
|
$
|
2,000
|
|
|
AXXX
|
|
2013
|
|
2033
|
|
2,877
|
|
|
|
3,500
|
|
||
|
XXX
|
|
2014-2017
|
|
2022-2034
|
|
2,200
|
|
(2)
|
|
2,200
|
|
||
|
XXX
|
|
2014-2017
|
|
2024-2037
|
|
2,100
|
|
|
|
2,400
|
|
||
|
AXXX
|
|
2017
|
|
2037
|
|
560
|
|
|
|
1,000
|
|
||
|
Total Credit-Linked Note Structures
|
|
|
|
|
|
$
|
9,487
|
|
|
|
$
|
11,100
|
|
|
(1)
|
Prudential Financial has agreed to reimburse any amounts paid under the credit-linked notes issued in this structure.
|
|
(2)
|
The $2.2 billion of surplus notes represents an intercompany transaction that eliminates upon consolidation. Prudential Financial has agreed to reimburse amounts paid under credit-linked notes issued in this structure up to $1.0 billion.
|
|
(1)
|
A.M. Best Company, which we refer to as A.M. Best, financial strength ratings for insurance companies range from “A++ (superior)” to “s (suspended).” A rating of A+ is the second highest of sixteen rating categories. A.M. Best long-term credit ratings range from “aaa (exceptional)” to “s (suspended).” A.M. Best short-term credit ratings range from “AMB-1+,” which represents the strongest ability to repay short-term debt obligations, to “s(suspended).”
|
|
(2)
|
Standard & Poor’s Rating Services, which we refer to as S&P, financial strength ratings for insurance companies range from “AAA (extremely strong)” to “D (default).” A rating of AA- is the fourth highest of twenty-three rating categories. S&P’s long-term issue credit ratings range from “AAA (extremely strong)” to “D (default).” S&P short-term ratings range from “A-1 (highest category)” to “D (default).”
|
|
(3)
|
Moody’s Investors Service, Inc., which we refer to as Moody’s, insurance financial strength ratings range from “Aaa (exceptional)” to “C (lowest).” A rating of A1 is the fifth highest of twenty-one rating categories. Numeric modifiers are used to refer to the ranking within the group—with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Moody’s credit ratings range from “Aaa (highest)” to “C (default)”. Moody’s short-term ratings range from “Prime-1 (P-1),” which represents a superior ability for repayment of senior short-term debt obligations, to “Prime-3 (P-3),” which represents an acceptable ability for repayment of such obligations. Issuers rated “Not Prime” do not fall within any of the Prime rating categories.
|
|
(4)
|
Fitch Ratings Inc., which we refer to as Fitch, financial strength ratings range from “AAA (exceptionally strong)” to “C (distressed).” A rating of AA- is the fourth highest of nineteen rating categories. Fitch long-term credit ratings range from “AAA (highest credit quality),” which denotes exceptionally strong capacity for timely payment of financial commitments, to “D (default).” Investment grade ratings range between “AAA” and “BBB.” Short-term ratings range from “F1+ (highest credit quality)” to “D (default).”
|
|
(5)
|
This rating for Prudential Life Insurance Company of Taiwan, Inc. was affirmed on November 14, 2017, by Taiwan Ratings Corporation, a partner of S&P.
|
|
|
|
Estimated Payments Due by Period
|
||||||||||||||||||
|
|
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
2023 and
thereafter
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
Short-term and long-term debt obligations(1)
|
|
$
|
38,552
|
|
|
$
|
2,330
|
|
|
$
|
4,719
|
|
|
$
|
2,166
|
|
|
$
|
29,337
|
|
|
Operating and capital lease obligations(2)
|
|
644
|
|
|
147
|
|
|
217
|
|
|
142
|
|
|
138
|
|
|||||
|
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Commitments to purchase or fund investments(3)
|
|
6,460
|
|
|
5,284
|
|
|
503
|
|
|
402
|
|
|
271
|
|
|||||
|
Commercial mortgage loan commitments(4)
|
|
2,772
|
|
|
2,669
|
|
|
103
|
|
|
0
|
|
|
0
|
|
|||||
|
Other liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance liabilities(5)
|
|
1,148,039
|
|
|
48,073
|
|
|
72,200
|
|
|
76,275
|
|
|
951,491
|
|
|||||
|
Other(6)
|
|
12,962
|
|
|
12,781
|
|
|
101
|
|
|
53
|
|
|
27
|
|
|||||
|
Total
|
|
$
|
1,209,429
|
|
|
$
|
71,284
|
|
|
$
|
77,843
|
|
|
$
|
79,038
|
|
|
$
|
981,264
|
|
|
(1)
|
The estimated payments due by period for long-term debt reflects the contractual maturities of principal, as disclosed in Note 14 to the Consolidated Financial Statements, as well as estimated future interest payments. The payment of principal and estimated future interest for short-term debt are reflected in estimated payments due in
2018
. The estimate for future interest payments includes the effect of derivatives that qualify for hedge accounting treatment. See Note 14 to the Consolidated Financial Statements for additional information concerning our short-term and long-term debt.
|
|
(2)
|
The estimated payments due by period for operating and capital leases reflect the future minimum lease payments under non-cancelable operating and capital leases, as disclosed in Note 23 to the Consolidated Financial Statements.
|
|
(3)
|
As discussed in Note 23 to the Consolidated Financial Statements, we have commitments to purchase or fund investments, some of which are contingent upon events or circumstances not under our control, including those at the discretion of our counterparties. The timing of the fulfillment of certain of these commitments cannot be estimated, therefore the settlements of these obligations are reflected in estimated payments due in less than one year. Commitments to purchase or fund investments include
$141 million
that we anticipate will ultimately be funded from our separate accounts.
|
|
(4)
|
As discussed in Note 23 to the Consolidated Financial Statements, loan commitments of our commercial mortgage operations, which are legally binding commitments to extend credit to a counterparty, have been reflected in the contractual obligations table above principally based on the expiration date of the commitment; however, it is possible these loan commitments could be funded prior to their expiration date. In certain circumstances the counterparty may also extend the date of the expiration in exchange for a fee.
|
|
(5)
|
The estimated cash flows due by period for insurance liabilities reflect future estimated cash payments to be made to policyholders and others for future policy benefits, policyholders’ account balances, policyholder’s dividends, reinsurance payables and separate account liabilities, net of premium receipts and reinsurance recoverables. These future estimated cash flows for current policies in force generally reflect our best estimate economic and actuarial assumptions. These cash flows are undiscounted with respect to interest. The sum of the cash flows shown for all years in the table of
$1,148 billion
exceeds the corresponding liability amounts of approximately
$722 billion
included in the Consolidated Financial Statements as of
December 31, 2017
. Separate account liabilities are legally insulated from general account obligations, and it is generally expected these liabilities will be fully funded by separate account assets and their related cash flows. We have made significant assumptions to determine the future estimated cash flows related to the underlying policies and contracts. Due to the significance of the assumptions used, actual cash flows will differ, possibly materially, from these estimates.
|
|
(6)
|
The estimated payments due by period for other liabilities includes securities sold under agreements to repurchase, cash collateral for loaned securities, liabilities for unrecognized tax benefits, bank customer liabilities, and other miscellaneous liabilities. Amounts presented in the table also exclude
$1,518 million
of notes issued by consolidated VIE’s which recourse for these obligations is limited to the assets of the respective VIE and do not have recourse to the general credit of the company.
|
|
•
|
Audit Committee: oversees insurance risk and operational risks, including model risk, as well as risks related to financial controls, legal, regulatory and compliance risks, and the overall risk management governance structure and risk management function.
|
|
•
|
Compensation Committee: oversees our compensation programs so that incentives are aligned with appropriate risk taking.
|
|
•
|
Corporate Governance and Business Ethics Committee: oversees our corporate governance procedures and practices, ethics and conflict of interest policies, political contributions, lobbying expenses and overall political strategy, as well as our strategy and reputation regarding environmental stewardship, sustainability and corporate social responsibility.
|
|
•
|
Finance Committee: oversees liquidity risk, including risks involving our capital and liquidity management, the incurrence and repayment of borrowings, the capital structure, the funding of benefit plans and statutory insurance reserves. The Finance Committee reviews and recommends for approval to the Board our capital plan. The Finance Committee also receives regular updates on the sources and uses of capital relative to plan, as well as on our Capital Protection Framework.
|
|
•
|
Investment Committee: oversees investment risk and market risk and the strength of the investment function. The Investment Committee approves investment and market risk limits based on asset class, issuer, credit quality and geography.
|
|
•
|
Risk Committee: oversees the governance of significant risks throughout the Company and the establishment and ongoing monitoring of our risk profile, risk capacity and risk appetite. The Risk Committee also serves to coordinate the risk oversight functions of the other committees of the Board.
|
|
•
|
Business Units: Each business area has a risk committee that meets periodically to allow senior leaders to discuss and evaluate current, new, and emerging operational risks in their own operations. Business units are required to develop and maintain documented operational risk inventories which facilitate the identification of current operational risk exposures. There is also an emerging risks process that identifies, assesses and monitors potential future risks which could significantly impact the business units or overall Company.
|
|
•
|
Corporate Functions: The corporate functions review the results of the business unit activities and examine risks from an enterprise view across businesses under normal and stressed conditions. As a result, the corporate functions, particularly ERM, use several processes and activities used to identify and assess the risks of the Company. Each corporate function also has its own risk committee.
|
|
•
|
Senior Management and the Board of Directors: Senior management plays a critical role in reviewing the risk profile of the Company, including by identifying impacts to the business strategy of new or changed risks, and risks in any new strategies under consideration. These risks are discussed with the ERC as appropriate, and with the Board, if significant. As discussed above, the Board of Directors oversees the Company’s risk profile and management’s processes for assessing and managing risk, both as a full Board and through its committees.
|
|
•
|
Measures of price sensitivity to market changes (e.g., interest rates, equity index prices, foreign exchange);
|
|
•
|
Asset/liability management;
|
|
•
|
Stress scenario testing;
|
|
•
|
Hedging programs; and
|
|
•
|
Risk management governance, including policies, limits, and a committee that oversees investment and market risk. For additional information regarding our overall risk management framework and governance structure, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” above.
|
|
•
|
Asset/Liability Management: Managing assets to liability-based measures. For example, investment policies identify target durations for assets based on liability characteristics and asset portfolios are managed to within ranges around them. This mitigates potential unanticipated economic losses from interest rate movements.
|
|
•
|
Hedging: Using derivatives to offset risk exposures. For example, for our variable annuities, potential living benefit claims resulting from more severe market conditions are hedged using derivative instruments.
|
|
•
|
Management of portfolio concentration risk. For example, ongoing monitoring and management at the enterprise level of key rate, currency and other concentration risks support diversification efforts to mitigate exposure to individual markets and sources of risk.
|
|
•
|
Net investment spread between the amounts that we are required to pay and the rate of return we are able to earn on investments for certain products supported by general account investments;
|
|
•
|
Asset-based fees earned on assets under management or contractholder account values;
|
|
•
|
Estimated total gross profits and the amortization of deferred policy acquisition and other costs;
|
|
•
|
Net exposure to the guarantees provided under certain products; and
|
|
•
|
Capital levels of our regulated entities.
|
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
|
|
Notional
|
|
Fair
Value
|
|
Hypothetical
Change in
Fair Value
|
|
Notional
|
|
Fair
Value
|
|
Hypothetical
Change in
Fair Value
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Financial assets with interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed maturities(1)
|
|
|
|
$
|
372,926
|
|
|
$
|
(36,554
|
)
|
|
|
|
$
|
347,246
|
|
|
$
|
(33,171
|
)
|
||||
|
Commercial mortgage and other loans
|
|
|
|
57,341
|
|
|
(2,832
|
)
|
|
|
|
54,283
|
|
|
(2,626
|
)
|
||||||||
|
Derivatives with interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Swaps
|
|
$
|
210,137
|
|
|
4,735
|
|
|
(3,824
|
)
|
|
$
|
209,406
|
|
|
7,097
|
|
|
(5,415
|
)
|
||||
|
Futures
|
|
24,502
|
|
|
24
|
|
|
(1,081
|
)
|
|
32,555
|
|
|
49
|
|
|
(995
|
)
|
||||||
|
Options
|
|
54,522
|
|
|
188
|
|
|
188
|
|
|
25,403
|
|
|
166
|
|
|
284
|
|
||||||
|
Forwards
|
|
25,948
|
|
|
(94
|
)
|
|
0
|
|
|
21,530
|
|
|
(519
|
)
|
|
(20
|
)
|
||||||
|
Synthetic GICs
|
|
77,290
|
|
|
(1
|
)
|
|
(1
|
)
|
|
77,197
|
|
|
5
|
|
|
(1
|
)
|
||||||
|
Variable annuity and other living benefit feature embedded derivatives(2)
|
|
|
|
(8,720
|
)
|
|
5,706
|
|
|
|
|
(8,238
|
)
|
|
5,386
|
|
||||||||
|
Financial liabilities with interest rate risk(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Short-term and long-term debt
|
|
|
|
(21,144
|
)
|
|
3,180
|
|
|
|
|
(21,079
|
)
|
|
3,049
|
|
||||||||
|
Policyholders’ account balances—investment contracts
|
|
|
|
(100,186
|
)
|
|
3,561
|
|
|
|
|
(100,045
|
)
|
|
3,570
|
|
||||||||
|
Net estimated potential loss
|
|
|
|
|
|
$
|
(31,657
|
)
|
|
|
|
|
|
$
|
(29,939
|
)
|
||||||||
|
(1)
|
Includes fixed maturities classified as “trading account assets supporting insurance liabilities” and other fixed maturities classified as trading securities under U.S. GAAP, but are held for “other than trading” activities in our segments that offer insurance, retirement and annuities products. Includes approximately
$370 billion
and
$345 billion
as of
December 31, 2017
and
2016
, respectively, of fixed maturities classified as “available-for-sale”, where unrealized gains and losses are recorded in AOCI.
|
|
(2)
|
Excludes any offsetting impact of derivative instruments purchased to hedge changes in the embedded derivatives. Amounts reported net of third-party reinsurance.
|
|
(3)
|
Excludes approximately
$306 billion
and
$286 billion
as of
December 31, 2017
and
2016
, respectively, of insurance reserve and deposit liabilities which are not considered financial liabilities. We believe that the interest rate sensitivities of these insurance liabilities would serve as an offset to the net interest rate risk of the financial assets and liabilities, including investment contracts.
|
|
•
|
Asset-based fees earned on assets under management or contractholder account value;
|
|
•
|
Estimated total gross profits and the amortization of deferred policy acquisition and other costs; and
|
|
•
|
Net exposure to the guarantees provided under certain products.
|
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
|
|
Notional
|
|
Fair
Value
|
|
Hypothetical
Change in
Fair Value
|
|
Notional
|
|
Fair
Value
|
|
Hypothetical
Change in
Fair Value
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Equity securities(1)
|
|
|
|
$
|
8,972
|
|
|
$
|
(897
|
)
|
|
|
|
$
|
12,139
|
|
|
$
|
(1,214
|
)
|
||||
|
Equity-based derivatives(2)
|
|
$
|
52,275
|
|
|
(128
|
)
|
|
1,373
|
|
|
$
|
31,558
|
|
|
(285
|
)
|
|
1,137
|
|
||||
|
Variable annuity and other living benefit feature embedded derivatives(2)(3)
|
|
|
|
(8,720
|
)
|
|
(1,423
|
)
|
|
|
|
(8,238
|
)
|
|
(1,116
|
)
|
||||||||
|
Net estimated potential loss
|
|
|
|
|
|
$
|
(947
|
)
|
|
|
|
|
|
$
|
(1,193
|
)
|
||||||||
|
(1)
|
Includes equity securities classified as “trading account assets supporting insurance liabilities” and other equity securities classified as trading securities under U.S. GAAP, but are held for “other than trading” activities in our segments that offer insurance, retirement and annuities products.
|
|
(2)
|
The notional and fair value of equity-based derivatives and the fair value of variable annuity and other living benefit feature embedded derivatives are also reflected in amounts under “Market Risk Related to Interest Rates” above, and are not cumulative.
|
|
(3)
|
Excludes any offsetting impact of derivative instruments purchased to hedge changes in the embedded derivatives. Amounts reported net of third-party reinsurance.
|
|
|
|
As of December 31, 2017
|
|
|
As of December 31, 2016
|
|||||||||||||
|
|
|
Fair
Value
|
|
Hypothetical
Change in
Fair Value
|
|
|
Fair
Value
|
|
Hypothetical
Change in
Fair Value
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in millions)
|
||||||||||||||||
|
Unhedged portion of equity investment in international subsidiaries and foreign currency denominated investments in domestic general account portfolio
|
|
$
|
6,345
|
|
|
$
|
(635
|
)
|
|
|
$
|
5,003
|
|
|
$
|
(500
|
)
|
|
|
|
Page
Number
|
|
|
|
|
|
2017
|
|
2016
|
||||
|
ASSETS
|
|
|
|
||||
|
Fixed maturities, available-for-sale, at fair value (amortized cost: 2017 – $312,385; 2016 – $292,581)(1)
|
$
|
346,780
|
|
|
$
|
321,419
|
|
|
Fixed maturities, held-to-maturity, at amortized cost (fair value: 2017 – $2,430; 2016 – $2,524)(1)
|
2,049
|
|
|
2,144
|
|
||
|
Trading account assets supporting insurance liabilities, at fair value(1)
|
22,097
|
|
|
21,840
|
|
||
|
Other trading account assets, at fair value(1)
|
5,752
|
|
|
5,764
|
|
||
|
Equity securities, available-for-sale, at fair value (cost: 2017 – $4,147; 2016 – $7,149)
|
6,174
|
|
|
9,748
|
|
||
|
Commercial mortgage and other loans (includes $593 and $519 measured at fair value under the fair value option as of December 31, 2017 and 2016, respectively)(1)
|
56,045
|
|
|
52,779
|
|
||
|
Policy loans
|
11,891
|
|
|
11,755
|
|
||
|
Other long-term investments (includes $1,945 and $1,556 measured at fair value under the fair value option as of December 31, 2017 and 2016, respectively)(1)
|
12,308
|
|
|
11,283
|
|
||
|
Short-term investments
|
6,775
|
|
|
7,508
|
|
||
|
Total investments
|
469,871
|
|
|
444,240
|
|
||
|
Cash and cash equivalents(1)
|
14,490
|
|
|
14,127
|
|
||
|
Accrued investment income(1)
|
3,325
|
|
|
3,204
|
|
||
|
Deferred policy acquisition costs
|
18,992
|
|
|
17,661
|
|
||
|
Value of business acquired
|
1,591
|
|
|
2,314
|
|
||
|
Other assets(1)
|
17,035
|
|
|
14,780
|
|
||
|
Separate account assets
|
306,617
|
|
|
287,636
|
|
||
|
TOTAL ASSETS
|
$
|
831,921
|
|
|
$
|
783,962
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
|
LIABILITIES
|
|
|
|
||||
|
Future policy benefits
|
$
|
257,317
|
|
|
$
|
240,908
|
|
|
Policyholders’ account balances
|
148,189
|
|
|
145,205
|
|
||
|
Policyholders’ dividends
|
6,411
|
|
|
5,711
|
|
||
|
Securities sold under agreements to repurchase
|
8,400
|
|
|
7,606
|
|
||
|
Cash collateral for loaned securities
|
4,354
|
|
|
4,333
|
|
||
|
Income taxes
|
9,600
|
|
|
10,412
|
|
||
|
Short-term debt
|
1,380
|
|
|
1,133
|
|
||
|
Long-term debt
|
17,172
|
|
|
18,041
|
|
||
|
Other liabilities(1)
|
16,619
|
|
|
14,739
|
|
||
|
Notes issued by consolidated variable interest entities (includes $1,196 and $1,839 measured at fair value under the fair value option as of December 31, 2017 and 2016, respectively)(1)
|
1,518
|
|
|
2,150
|
|
||
|
Separate account liabilities
|
306,617
|
|
|
287,636
|
|
||
|
Total liabilities
|
777,577
|
|
|
737,874
|
|
||
|
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 23)
|
|
|
|
||||
|
EQUITY
|
|
|
|
||||
|
Preferred Stock ($.01 par value; 10,000,000 shares authorized; none issued)
|
0
|
|
|
0
|
|
||
|
Common Stock ($.01 par value; 1,500,000,000 shares authorized; 660,111,339 shares issued as of both December 31, 2017 and 2016)
|
6
|
|
|
6
|
|
||
|
Additional paid-in capital
|
24,769
|
|
|
24,606
|
|
||
|
Common Stock held in treasury, at cost (237,559,118 and 230,537,166 shares as of December 31, 2017 and 2016, respectively)
|
(16,284
|
)
|
|
(15,316
|
)
|
||
|
Accumulated other comprehensive income (loss)
|
17,074
|
|
|
14,621
|
|
||
|
Retained earnings
|
28,504
|
|
|
21,946
|
|
||
|
Total Prudential Financial, Inc. equity
|
54,069
|
|
|
45,863
|
|
||
|
Noncontrolling interests
|
275
|
|
|
225
|
|
||
|
Total equity
|
54,344
|
|
|
46,088
|
|
||
|
TOTAL LIABILITIES AND EQUITY
|
$
|
831,921
|
|
|
$
|
783,962
|
|
|
(1)
|
See Note 5 for details of balances associated with variable interest entities.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
REVENUES
|
|
|
|
|
|
||||||
|
Premiums
|
$
|
32,091
|
|
|
$
|
30,964
|
|
|
$
|
28,521
|
|
|
Policy charges and fee income
|
5,303
|
|
|
5,906
|
|
|
5,972
|
|
|||
|
Net investment income
|
16,435
|
|
|
15,520
|
|
|
14,829
|
|
|||
|
Asset management and service fees
|
4,127
|
|
|
3,752
|
|
|
3,772
|
|
|||
|
Other income (loss)
|
1,301
|
|
|
443
|
|
|
0
|
|
|||
|
Realized investment gains (losses), net:
|
|
|
|
|
|
||||||
|
Other-than-temporary impairments on fixed maturity securities
|
(289
|
)
|
|
(269
|
)
|
|
(180
|
)
|
|||
|
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income
|
22
|
|
|
47
|
|
|
39
|
|
|||
|
Other realized investment gains (losses), net
|
699
|
|
|
2,416
|
|
|
4,166
|
|
|||
|
Total realized investment gains (losses), net
|
432
|
|
|
2,194
|
|
|
4,025
|
|
|||
|
Total revenues
|
59,689
|
|
|
58,779
|
|
|
57,119
|
|
|||
|
BENEFITS AND EXPENSES
|
|
|
|
|
|
||||||
|
Policyholders’ benefits
|
33,794
|
|
|
33,632
|
|
|
30,627
|
|
|||
|
Interest credited to policyholders’ account balances
|
3,822
|
|
|
3,761
|
|
|
3,479
|
|
|||
|
Dividends to policyholders
|
2,091
|
|
|
2,025
|
|
|
2,212
|
|
|||
|
Amortization of deferred policy acquisition costs
|
1,580
|
|
|
1,877
|
|
|
2,120
|
|
|||
|
General and administrative expenses
|
11,915
|
|
|
11,779
|
|
|
10,912
|
|
|||
|
Total benefits and expenses
|
53,202
|
|
|
53,074
|
|
|
49,350
|
|
|||
|
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURES
|
6,487
|
|
|
5,705
|
|
|
7,769
|
|
|||
|
Total income tax expense (benefit)
|
(1,438
|
)
|
|
1,335
|
|
|
2,072
|
|
|||
|
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURES
|
7,925
|
|
|
4,370
|
|
|
5,697
|
|
|||
|
Equity in earnings of operating joint ventures, net of taxes
|
49
|
|
|
49
|
|
|
15
|
|
|||
|
NET INCOME (LOSS)
|
7,974
|
|
|
4,419
|
|
|
5,712
|
|
|||
|
Less: Income (loss) attributable to noncontrolling interests
|
111
|
|
|
51
|
|
|
70
|
|
|||
|
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.
|
$
|
7,863
|
|
|
$
|
4,368
|
|
|
$
|
5,642
|
|
|
EARNINGS PER SHARE
|
|
|
|
|
|
||||||
|
Basic earnings per share-Common Stock:
|
|
|
|
|
|
||||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
18.19
|
|
|
$
|
9.85
|
|
|
$
|
12.37
|
|
|
Diluted earnings per share-Common Stock:
|
|
|
|
|
|
||||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
17.86
|
|
|
$
|
9.71
|
|
|
$
|
12.17
|
|
|
Dividends declared per share of Common Stock
|
$
|
3.00
|
|
|
$
|
2.80
|
|
|
$
|
2.44
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
NET INCOME (LOSS)
|
$
|
7,974
|
|
|
$
|
4,419
|
|
|
$
|
5,712
|
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustments for the period
|
751
|
|
|
256
|
|
|
(287
|
)
|
|||
|
Net unrealized investment gains (losses)
|
2,397
|
|
|
3,683
|
|
|
(5,486
|
)
|
|||
|
Defined benefit pension and postretirement unrecognized periodic benefit (cost)
|
71
|
|
|
(254
|
)
|
|
(264
|
)
|
|||
|
Total
|
3,219
|
|
|
3,685
|
|
|
(6,037
|
)
|
|||
|
Less: Income tax expense (benefit) related to other comprehensive income (loss)
|
784
|
|
|
1,305
|
|
|
(2,213
|
)
|
|||
|
Other comprehensive income (loss), net of taxes
|
2,435
|
|
|
2,380
|
|
|
(3,824
|
)
|
|||
|
Comprehensive income (loss)
|
10,409
|
|
|
6,799
|
|
|
1,888
|
|
|||
|
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
93
|
|
|
95
|
|
|
11
|
|
|||
|
Comprehensive income (loss) attributable to Prudential Financial, Inc.
|
$
|
10,316
|
|
|
$
|
6,704
|
|
|
$
|
1,877
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Common
Stock
Held In
Treasury
|
|
Class B
Stock
Held in
Treasury
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Prudential
Financial, Inc.
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||||||||
|
Balance, December 31, 2014
|
$
|
6
|
|
|
$
|
24,565
|
|
|
$
|
14,888
|
|
|
$
|
(13,088
|
)
|
|
$
|
(651
|
)
|
|
$
|
16,050
|
|
|
$
|
41,770
|
|
|
$
|
579
|
|
|
$
|
42,349
|
|
|
Common Stock acquired
|
|
|
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
(1,000
|
)
|
|
|
|
(1,000
|
)
|
|||||||||||||||
|
Class B Stock canceled
|
|
|
(167
|
)
|
|
(484
|
)
|
|
|
|
651
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|||||||||||||
|
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
28
|
|
||||||||||||||||
|
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(437
|
)
|
|
(437
|
)
|
||||||||||||||||
|
Consolidations/(deconsolidations) of noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(148
|
)
|
|
(148
|
)
|
||||||||||||||||
|
Stock-based compensation programs
|
|
|
84
|
|
|
|
|
274
|
|
|
|
|
|
|
358
|
|
|
|
|
358
|
|
||||||||||||||
|
Dividends declared on Common Stock
|
|
|
|
|
(1,115
|
)
|
|
|
|
|
|
|
|
(1,115
|
)
|
|
|
|
(1,115
|
)
|
|||||||||||||||
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Net income (loss)
|
|
|
|
|
5,642
|
|
|
|
|
|
|
|
|
5,642
|
|
|
70
|
|
|
5,712
|
|
||||||||||||||
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
(3,765
|
)
|
|
(3,765
|
)
|
|
(59
|
)
|
|
(3,824
|
)
|
||||||||||||||
|
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
1,877
|
|
|
11
|
|
|
1,888
|
|
|||||||||||||||
|
Balance, December 31, 2015
|
6
|
|
|
24,482
|
|
|
18,931
|
|
|
(13,814
|
)
|
|
0
|
|
|
12,285
|
|
|
41,890
|
|
|
33
|
|
|
41,923
|
|
|||||||||
|
Cumulative effect of adoption of accounting changes
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
11
|
|
|
(30
|
)
|
|
(19
|
)
|
||||||||||||||
|
Common Stock acquired
|
|
|
|
|
|
|
(2,000
|
)
|
|
|
|
|
|
(2,000
|
)
|
|
|
|
(2,000
|
)
|
|||||||||||||||
|
Class B Stock repurchase adjustment
|
|
|
|
|
(119
|
)
|
|
|
|
|
|
|
|
(119
|
)
|
|
|
|
(119
|
)
|
|||||||||||||||
|
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
7
|
|
||||||||||||||||
|
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(351
|
)
|
|
(351
|
)
|
||||||||||||||||
|
Consolidations/(deconsolidations) of noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
471
|
|
|
471
|
|
||||||||||||||||
|
Stock-based compensation programs
|
|
|
124
|
|
|
|
|
498
|
|
|
|
|
|
|
622
|
|
|
|
|
622
|
|
||||||||||||||
|
Dividends declared on Common Stock
|
|
|
|
|
(1,245
|
)
|
|
|
|
|
|
|
|
(1,245
|
)
|
|
|
|
(1,245
|
)
|
|||||||||||||||
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Net income (loss)
|
|
|
|
|
4,368
|
|
|
|
|
|
|
|
|
4,368
|
|
|
51
|
|
|
4,419
|
|
||||||||||||||
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
2,336
|
|
|
2,336
|
|
|
44
|
|
|
2,380
|
|
||||||||||||||
|
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
6,704
|
|
|
95
|
|
|
6,799
|
|
|||||||||||||||
|
Balance, December 31, 2016
|
6
|
|
|
24,606
|
|
|
21,946
|
|
|
(15,316
|
)
|
|
0
|
|
|
14,621
|
|
|
45,863
|
|
|
225
|
|
|
46,088
|
|
|||||||||
|
Cumulative effect of adoption of accounting changes
|
|
|
5
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
||||||||||||||
|
Common Stock acquired
|
|
|
|
|
|
|
(1,250
|
)
|
|
|
|
|
|
(1,250
|
)
|
|
|
|
(1,250
|
)
|
|||||||||||||||
|
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10
|
|
||||||||||||||||
|
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50
|
)
|
|
(50
|
)
|
||||||||||||||||
|
Consolidations/(deconsolidations) of noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
(3
|
)
|
||||||||||||||||
|
Stock-based compensation programs
|
|
|
158
|
|
|
|
|
282
|
|
|
|
|
|
|
440
|
|
|
|
|
440
|
|
||||||||||||||
|
Dividends declared on Common Stock
|
|
|
|
|
(1,300
|
)
|
|
|
|
|
|
|
|
(1,300
|
)
|
|
|
|
(1,300
|
)
|
|||||||||||||||
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Net income (loss)
|
|
|
|
|
7,863
|
|
|
|
|
|
|
|
|
7,863
|
|
|
111
|
|
|
7,974
|
|
||||||||||||||
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
2,453
|
|
|
2,453
|
|
|
(18
|
)
|
|
2,435
|
|
||||||||||||||
|
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
10,316
|
|
|
93
|
|
|
10,409
|
|
|||||||||||||||
|
Balance, December 31, 2017
|
$
|
6
|
|
|
$
|
24,769
|
|
|
$
|
28,504
|
|
|
$
|
(16,284
|
)
|
|
$
|
0
|
|
|
$
|
17,074
|
|
|
$
|
54,069
|
|
|
$
|
275
|
|
|
$
|
54,344
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
|
$
|
7,974
|
|
|
$
|
4,419
|
|
|
$
|
5,712
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
|
Realized investment (gains) losses, net
|
|
(432
|
)
|
|
(2,194
|
)
|
|
(4,025
|
)
|
|||
|
Policy charges and fee income
|
|
(2,476
|
)
|
|
(1,907
|
)
|
|
(1,883
|
)
|
|||
|
Interest credited to policyholders’ account balances
|
|
3,822
|
|
|
3,761
|
|
|
3,479
|
|
|||
|
Depreciation and amortization
|
|
222
|
|
|
318
|
|
|
113
|
|
|||
|
(Gains) losses on trading account assets supporting insurance liabilities, net
|
|
(336
|
)
|
|
17
|
|
|
524
|
|
|||
|
Change in:
|
|
|
|
|
|
|
||||||
|
Deferred policy acquisition costs
|
|
(1,240
|
)
|
|
(968
|
)
|
|
(533
|
)
|
|||
|
Future policy benefits and other insurance liabilities
|
|
10,940
|
|
|
10,584
|
|
|
8,311
|
|
|||
|
Income taxes
|
|
(1,619
|
)
|
|
618
|
|
|
1,217
|
|
|||
|
Derivatives, net
|
|
(2,268
|
)
|
|
1,067
|
|
|
1,305
|
|
|||
|
Other, net(1)
|
|
(1,142
|
)
|
|
(900
|
)
|
|
(278
|
)
|
|||
|
Cash flows from (used in) operating activities(1)
|
|
13,445
|
|
|
14,815
|
|
|
13,942
|
|
|||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
||||||
|
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
|
|
|
||||||
|
Fixed maturities, available-for-sale
|
|
58,244
|
|
|
49,713
|
|
|
47,080
|
|
|||
|
Fixed maturities, held-to-maturity
|
|
155
|
|
|
271
|
|
|
235
|
|
|||
|
Trading account assets supporting insurance liabilities and other trading account assets
|
|
40,728
|
|
|
34,139
|
|
|
14,313
|
|
|||
|
Equity securities, available-for-sale
|
|
4,550
|
|
|
3,502
|
|
|
4,577
|
|
|||
|
Commercial mortgage and other loans
|
|
6,076
|
|
|
6,342
|
|
|
5,464
|
|
|||
|
Policy loans
|
|
2,403
|
|
|
2,277
|
|
|
2,199
|
|
|||
|
Other long-term investments
|
|
1,337
|
|
|
1,145
|
|
|
1,276
|
|
|||
|
Short-term investments
|
|
29,225
|
|
|
43,700
|
|
|
77,021
|
|
|||
|
Payments for the purchase/origination of:
|
|
|
|
|
|
|
||||||
|
Fixed maturities, available-for-sale
|
|
(68,667
|
)
|
|
(66,857
|
)
|
|
(47,606
|
)
|
|||
|
Trading account assets supporting insurance liabilities and other trading account assets
|
|
(41,076
|
)
|
|
(36,532
|
)
|
|
(18,608
|
)
|
|||
|
Equity securities, available-for-sale
|
|
(2,875
|
)
|
|
(3,083
|
)
|
|
(4,055
|
)
|
|||
|
Commercial mortgage and other loans
|
|
(8,857
|
)
|
|
(8,548
|
)
|
|
(9,392
|
)
|
|||
|
Policy loans
|
|
(1,929
|
)
|
|
(1,882
|
)
|
|
(1,782
|
)
|
|||
|
Other long-term investments
|
|
(1,780
|
)
|
|
(1,923
|
)
|
|
(2,005
|
)
|
|||
|
Short-term investments
|
|
(28,301
|
)
|
|
(43,370
|
)
|
|
(76,622
|
)
|
|||
|
Acquisitions, net of cash acquired
|
|
(64
|
)
|
|
(532
|
)
|
|
0
|
|
|||
|
Derivatives, net
|
|
(391
|
)
|
|
314
|
|
|
53
|
|
|||
|
Other, net
|
|
(712
|
)
|
|
(227
|
)
|
|
106
|
|
|||
|
Cash flows from (used in) investing activities
|
|
(11,934
|
)
|
|
(21,551
|
)
|
|
(7,746
|
)
|
|||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
||||||
|
Policyholders’ account deposits
|
|
26,462
|
|
|
29,642
|
|
|
23,206
|
|
|||
|
Policyholders’ account withdrawals
|
|
(25,657
|
)
|
|
(24,143
|
)
|
|
(21,963
|
)
|
|||
|
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities
|
|
815
|
|
|
561
|
|
|
(2,270
|
)
|
|||
|
Cash dividends paid on Common Stock
|
|
(1,296
|
)
|
|
(1,300
|
)
|
|
(1,117
|
)
|
|||
|
Net change in financing arrangements (maturities 90 days or less)
|
|
38
|
|
|
292
|
|
|
68
|
|
|||
|
Common Stock acquired
|
|
(1,250
|
)
|
|
(2,000
|
)
|
|
(1,013
|
)
|
|||
|
Class B stock acquired
|
|
0
|
|
|
(119
|
)
|
|
(651
|
)
|
|||
|
Common Stock reissued for exercise of stock options
|
|
246
|
|
|
426
|
|
|
209
|
|
|||
|
Proceeds from the issuance of debt (maturities longer than 90 days)
|
|
1,225
|
|
|
2,742
|
|
|
5,166
|
|
|||
|
Repayments of debt (maturities longer than 90 days)
|
|
(1,827
|
)
|
|
(2,753
|
)
|
|
(4,957
|
)
|
|||
|
Excess tax benefits from share-based payment arrangements
|
|
0
|
|
|
21
|
|
|
19
|
|
|||
|
Other, net(1)
|
|
(14
|
)
|
|
(168
|
)
|
|
(268
|
)
|
|||
|
Cash flows from (used in) financing activities(1)
|
|
(1,258
|
)
|
|
3,201
|
|
|
(3,571
|
)
|
|||
|
Effect of foreign exchange rate changes on cash balances
|
|
110
|
|
|
50
|
|
|
69
|
|
|||
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
363
|
|
|
(3,485
|
)
|
|
2,694
|
|
|||
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
14,127
|
|
|
17,612
|
|
|
14,918
|
|
|||
|
CASH AND CASH EQUIVALENTS, END OF YEAR
|
|
$
|
14,490
|
|
|
$
|
14,127
|
|
|
$
|
17,612
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
||||||
|
Income taxes paid, net of refunds
|
|
$
|
185
|
|
|
$
|
770
|
|
|
$
|
1,083
|
|
|
Interest paid
|
|
$
|
1,248
|
|
|
$
|
1,257
|
|
|
$
|
1,324
|
|
|
NON-CASH TRANSACTIONS DURING THE YEAR
|
|
|
|
|
|
|
||||||
|
Treasury Stock shares issued for stock-based compensation programs
|
|
$
|
104
|
|
|
$
|
115
|
|
|
$
|
115
|
|
|
Significant Pension Risk Transfer transactions:
|
|
|
|
|
|
|
||||||
|
Assets received, excluding cash and cash equivalents
|
|
$
|
2,726
|
|
|
$
|
3,228
|
|
|
$
|
2,091
|
|
|
Liabilities assumed
|
|
6,155
|
|
|
5,003
|
|
|
3,739
|
|
|||
|
Net cash received
|
|
$
|
3,429
|
|
|
$
|
1,775
|
|
|
$
|
1,648
|
|
|
Acquisitions:
|
|
|
|
|
|
|
||||||
|
Assets acquired, excluding cash and cash equivalents
|
|
$
|
196
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Liabilities assumed
|
|
132
|
|
|
0
|
|
|
0
|
|
|||
|
Net cash paid on acquisition
|
|
$
|
64
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
(1)
|
Prior period amounts have been reclassified to conform to current period presentation.
|
|
1.
|
BUSINESS AND BASIS OF PRESENTATION
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS
|
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
|
|
|
|
|
|
|
|
|
ASU 2016-09
,
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payments Accounting
|
|
This ASU simplifies and improves employee share-based payment accounting. The areas updated include income tax consequences, a policy election related to forfeitures, classification of awards as either equity or liability, and classification of operating and financing activity on the statement of cash flows.
|
|
January 1, 2017 using various transition methods as prescribed by the ASU.
|
|
Adoption of the ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
|
|
|
|
|
|
|
|
|
ASU 2014-09
,
Revenue from Contracts with Customers (Topic 606)
|
|
The ASU is based on the core principle that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, and assets recognized from the costs to obtain or fulfill a contract with a customer. Revenue recognition for insurance contracts and financial instruments is explicitly scoped out of the standard.
|
|
January 1, 2018 using the modified retrospective method which will include a cumulative-effect adjustment on the balance sheet as of the beginning of the fiscal year of adoption.
|
|
Adoption of the ASU will not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
|
|
|
|
|
|
|
|
|
ASU 2016-01
,
Financial
Instruments -
Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Liabilities
|
|
The ASU revises an entity’s accounting related to the recognition and measurement of certain equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU requires equity investments, except for those accounted for using the equity method, to be measured at fair value with changes in fair value recognized in net income. The standard also amends certain disclosure requirements associated with the fair value of financial instruments.
|
|
January 1, 2018 using the modified retrospective method which will include a cumulative-effect adjustment to retained earnings.
|
|
Adoption of this guidance will result in 1) the reclassification of net unrealized gains on equity securities currently classified as available-for-sale from accumulated other comprehensive income to retained earnings and 2) adjustment of the basis of equity investments currently accounted for using the cost method to fair value with the embedded net unrealized gain included in retained earnings. The cumulative effect of adoption is expected to increase retained earnings by $900 million and total equity by $53 million after giving effect to offsetting items including those related to taxes and the policyholder dividend obligation in the Closed Block. See table below for the impact to the line items in the Consolidated Statements of Financial Position. There will be no impact to net income on the adoption date. Subsequent to the adoption date, the change in fair value of these equity investments will be reported in net income.
|
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
|
|
|
|
|
|
|
|
|
ASU 2016-02
,
Leases (Topic 842)
|
|
This ASU ensures that assets and liabilities from all outstanding lease contracts are recognized on the balance sheet (with limited exception). The ASU substantially changes a Lessee’s accounting for leases and requires the recording on balance sheet of a “right-of-use” asset and liability to make lease payments for most leases. A Lessee will continue to recognize expense in its income statement in a manner similar to the requirements under the current lease accounting standard. For Lessors, the standard modifies classification criteria and accounting for sales-type and direct financing leases and requires a Lessor to derecognize the carrying value of the leased asset that is considered to have been transferred to a Lessee and record a lease receivable and residual asset (“receivable and residual” approach). The standard also eliminates the real estate specific provisions of the current standard (i.e., sale-leaseback).
|
|
January 1, 2019 using the modified retrospective method (with early adoption permitted) which will include a cumulative-effect adjustment on the balance sheet as of the beginning of the fiscal year of adoption.
|
|
The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
ASU 2016-13
,
Financial Instruments - Credit Losses (Topic326):
Measurement of
Credit Losses on
Financial
Instruments
|
|
This ASU provides a new current expected credit loss model to account for credit losses on certain financial assets and off-balance sheet exposures (e.g., loans held for investment, debt securities held to maturity, reinsurance receivables, net investments in leases and loan commitments). The model requires an entity to estimate lifetime credit losses related to such financial assets and exposures based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The standard also modifies the current OTTI standard for available-for-sale debt securities to require the use of an allowance rather than a direct write down of the investment, and replaces the existing standard for purchased credit deteriorated loans and debt securities.
|
|
January 1, 2020 using the modified retrospective method which will include a cumulative-effect adjustment on the balance sheet as of the beginning of the fiscal year of adoption. However, prospective application is required for purchased credit deteriorated assets previously accounted for under ASU 310-30 and for debt securities for which an OTTI was recognized prior to the date of adoption. Early adoption is permitted beginning January 1, 2019.
|
|
The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
ASU 2016-15
,
Statement of Cash
Flows (Topic 230):
Classification of Certain Cash Receipts and Cash
Payments (a
Consensus of the
Emerging Issues
Task Force)
|
|
This ASU addresses diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard provides clarity on the treatment of eight specifically defined types of cash inflows and outflows.
|
|
January 1, 2018 using the retrospective method (with early adoption permitted provided that all amendments are adopted in the same period).
|
|
Adoption of the ASU will not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
|
|
|
|
|
|
|
|
|
ASU 2016-18
,
Statement of Cash Flows (Topic 230): Restricted Cash
|
|
In November 2016, the FASB issued this ASU to address diversity in practice from entities classifying and presenting transfers between cash and restricted cash as operating, investing, or financing activities, or as a combination of those activities in the Statement of Cash Flows. The ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the Statement of Cash Flows. As a result, transfers between such categories will no longer be presented in the Statement of Cash Flows.
|
|
January 1, 2018 using the retrospective method (with early adoption permitted).
|
|
Adoption of the ASU will not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
ASU 2017-04,
Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
|
|
This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test in current GAAP, which measures a goodwill impairment by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill. Under the ASU, a goodwill impairment should be recorded for the amount by which the carrying amount of a reporting unit exceeds its fair value (capped by the total amount of goodwill allocated to the reporting unit).
|
|
January 1, 2020 using the prospective method (with early adoption permitted).
|
|
The Company does not expect the adoption of the ASU to have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
ASU 2017-08
,
Receivables -Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization on Purchased Callable Debt Securities
|
|
This ASU requires certain premiums on callable debt securities to be amortized to the earliest call date.
|
|
January 1, 2019 using the modified retrospective method (with early adoption permitted) which will include a cumulative-effect adjustment on the balance sheet as of the beginning of the fiscal year of adoption.
|
|
The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
ASU 2017-12
,
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
|
|
This ASU makes targeted changes to the existing hedge accounting model to better portray the economics of an entity’s risk management activities and to simplify the use of hedge accounting.
|
|
January 1, 2019 using the modified retrospective method (with early adoption permitted) which will include a cumulative-effect adjustment on the balance sheet as of the beginning of the fiscal year of adoption.
|
|
The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
|
|
|
|
|
|
|
|
|
ASU 2018-02,
Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
|
In February 2018, this ASU was issued following the enactment of the Tax Act of 2017. This ASU allows an entity to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded effects resulting from the Tax Act of 2017.
|
|
January 1, 2019 with early adoption permitted. The ASU should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act of 2017 is recognized.
|
|
The Company is currently assessing the impact of the ASU on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
|
3.
|
ACQUISITIONS
|
|
4.
|
INVESTMENTS
|
|
|
December 31, 2017
|
||||||||||||||||||
|
|
Amortized
Cost or Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
OTTI
in AOCI(4)
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
22,837
|
|
|
$
|
3,647
|
|
|
$
|
346
|
|
|
$
|
26,138
|
|
|
$
|
0
|
|
|
Obligations of U.S. states and their political subdivisions
|
9,366
|
|
|
1,111
|
|
|
6
|
|
|
10,471
|
|
|
0
|
|
|||||
|
Foreign government bonds
|
88,062
|
|
|
15,650
|
|
|
293
|
|
|
103,419
|
|
|
0
|
|
|||||
|
U.S. corporate public securities
|
81,967
|
|
|
8,671
|
|
|
414
|
|
|
90,224
|
|
|
(10
|
)
|
|||||
|
U.S. corporate private securities(1)
|
31,852
|
|
|
2,051
|
|
|
169
|
|
|
33,734
|
|
|
(13
|
)
|
|||||
|
Foreign corporate public securities
|
26,389
|
|
|
3,118
|
|
|
99
|
|
|
29,408
|
|
|
(5
|
)
|
|||||
|
Foreign corporate private securities
|
23,322
|
|
|
1,242
|
|
|
337
|
|
|
24,227
|
|
|
0
|
|
|||||
|
Asset-backed securities(2)
|
11,965
|
|
|
278
|
|
|
10
|
|
|
12,233
|
|
|
(237
|
)
|
|||||
|
Commercial mortgage-backed securities
|
13,134
|
|
|
238
|
|
|
91
|
|
|
13,281
|
|
|
0
|
|
|||||
|
Residential mortgage-backed securities(3)
|
3,491
|
|
|
165
|
|
|
11
|
|
|
3,645
|
|
|
(2
|
)
|
|||||
|
Total fixed maturities, available-for-sale(1)
|
$
|
312,385
|
|
|
$
|
36,171
|
|
|
$
|
1,776
|
|
|
$
|
346,780
|
|
|
$
|
(267
|
)
|
|
Equity securities, available-for-sale
|
$
|
4,147
|
|
|
$
|
2,056
|
|
|
$
|
29
|
|
|
$
|
6,174
|
|
|
|
||
|
|
|
December 31, 2017
|
||||||||||||||
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
|
Foreign government bonds
|
|
$
|
865
|
|
|
$
|
265
|
|
|
$
|
0
|
|
|
$
|
1,130
|
|
|
Foreign corporate public securities
|
|
654
|
|
|
82
|
|
|
0
|
|
|
736
|
|
||||
|
Foreign corporate private securities(5)
|
|
84
|
|
|
2
|
|
|
0
|
|
|
86
|
|
||||
|
Commercial mortgage-backed securities
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Residential mortgage-backed securities(3)
|
|
446
|
|
|
32
|
|
|
0
|
|
|
478
|
|
||||
|
Total fixed maturities, held-to-maturity(5)
|
|
$
|
2,049
|
|
|
$
|
381
|
|
|
$
|
0
|
|
|
$
|
2,430
|
|
|
(1)
|
Excludes notes with amortized cost of
$2,660 million
(fair value,
$2,660 million
), which have been offset with the associated payables under a netting agreement.
|
|
(2)
|
Includes credit-tranched securities collateralized by loan obligations, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.
|
|
(3)
|
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
|
|
(4)
|
Represents the amount of unrealized losses remaining in AOCI, from the impairment measurement date. Amount excludes
$553 million
of net unrealized gains on impaired available-for-sale securities and
$2 million
of net unrealized gains on impaired held-to-maturity securities relating to changes in the value of such securities subsequent to the impairment measurement date.
|
|
(5)
|
Excludes notes with amortized cost of
$4,627 million
(fair value,
$4,913 million
), which have been offset with the associated payables under a netting agreement.
|
|
|
December 31, 2016
|
||||||||||||||||||
|
|
Amortized
Cost or Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
OTTI
in AOCI(4)
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
21,505
|
|
|
$
|
3,280
|
|
|
$
|
1,001
|
|
|
$
|
23,784
|
|
|
$
|
0
|
|
|
Obligations of U.S. states and their political subdivisions
|
9,060
|
|
|
716
|
|
|
84
|
|
|
9,692
|
|
|
0
|
|
|||||
|
Foreign government bonds
|
79,862
|
|
|
16,748
|
|
|
354
|
|
|
96,256
|
|
|
0
|
|
|||||
|
U.S. corporate public securities
|
76,383
|
|
|
6,460
|
|
|
1,232
|
|
|
81,611
|
|
|
(17
|
)
|
|||||
|
U.S. corporate private securities(1)
|
29,974
|
|
|
2,122
|
|
|
308
|
|
|
31,788
|
|
|
(22
|
)
|
|||||
|
Foreign corporate public securities
|
25,758
|
|
|
2,784
|
|
|
305
|
|
|
28,237
|
|
|
(6
|
)
|
|||||
|
Foreign corporate private securities
|
21,383
|
|
|
646
|
|
|
1,149
|
|
|
20,880
|
|
|
0
|
|
|||||
|
Asset-backed securities(2)
|
11,759
|
|
|
229
|
|
|
53
|
|
|
11,935
|
|
|
(288
|
)
|
|||||
|
Commercial mortgage-backed securities
|
12,589
|
|
|
240
|
|
|
125
|
|
|
12,704
|
|
|
(1
|
)
|
|||||
|
Residential mortgage-backed securities(3)
|
4,308
|
|
|
238
|
|
|
14
|
|
|
4,532
|
|
|
(3
|
)
|
|||||
|
Total fixed maturities, available-for-sale(1)
|
$
|
292,581
|
|
|
$
|
33,463
|
|
|
$
|
4,625
|
|
|
$
|
321,419
|
|
|
$
|
(337
|
)
|
|
Equity securities, available-for-sale
|
$
|
7,149
|
|
|
$
|
2,641
|
|
|
$
|
42
|
|
|
$
|
9,748
|
|
|
|
||
|
|
|
December 31, 2016
|
||||||||||||||
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
|
Foreign government bonds
|
|
$
|
839
|
|
|
$
|
262
|
|
|
$
|
0
|
|
|
$
|
1,101
|
|
|
Foreign corporate public securities
|
|
651
|
|
|
71
|
|
|
0
|
|
|
722
|
|
||||
|
Foreign corporate private securities(5)
|
|
81
|
|
|
4
|
|
|
0
|
|
|
85
|
|
||||
|
Commercial mortgage-backed securities
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Residential mortgage-backed securities(3)
|
|
573
|
|
|
43
|
|
|
0
|
|
|
616
|
|
||||
|
Total fixed maturities, held-to-maturity(5)
|
|
$
|
2,144
|
|
|
$
|
380
|
|
|
$
|
0
|
|
|
$
|
2,524
|
|
|
(1)
|
Excludes notes with amortized cost of
$1,456 million
(fair value,
$1,456 million
), which have been offset with the associated payables under a netting agreement.
|
|
(2)
|
Includes credit-tranched securities collateralized by loan obligations, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.
|
|
(3)
|
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
|
|
(4)
|
Represents the amount of unrealized losses remaining in AOCI, from the impairment measurement date. Amount excludes
$649 million
of net unrealized gains on impaired available-for-sale securities and
$1 million
of net unrealized gains on impaired held-to-maturity securities relating to changes in the value of such securities subsequent to the impairment measurement date.
|
|
(5)
|
Excludes notes with amortized cost of
$4,403 million
(fair value,
$4,403 million
), which have been offset with the associated payables under a netting agreement.
|
|
|
|
December 31, 2017
|
||||||||||||||||||||||
|
|
|
Less Than
Twelve Months |
|
Twelve Months
or More |
|
Total
|
||||||||||||||||||
|
|
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Fixed maturities(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
|
$
|
3,450
|
|
|
$
|
28
|
|
|
$
|
6,391
|
|
|
$
|
318
|
|
|
$
|
9,841
|
|
|
$
|
346
|
|
|
Obligations of U.S. states and their political subdivisions
|
|
44
|
|
|
0
|
|
|
287
|
|
|
6
|
|
|
331
|
|
|
6
|
|
||||||
|
Foreign government bonds
|
|
4,417
|
|
|
55
|
|
|
2,937
|
|
|
238
|
|
|
7,354
|
|
|
293
|
|
||||||
|
U.S. corporate public securities
|
|
7,914
|
|
|
110
|
|
|
6,831
|
|
|
304
|
|
|
14,745
|
|
|
414
|
|
||||||
|
U.S. corporate private securities
|
|
4,596
|
|
|
76
|
|
|
2,009
|
|
|
93
|
|
|
6,605
|
|
|
169
|
|
||||||
|
Foreign corporate public securities
|
|
2,260
|
|
|
21
|
|
|
1,678
|
|
|
78
|
|
|
3,938
|
|
|
99
|
|
||||||
|
Foreign corporate private securities
|
|
1,213
|
|
|
20
|
|
|
5,339
|
|
|
317
|
|
|
6,552
|
|
|
337
|
|
||||||
|
Asset-backed securities
|
|
564
|
|
|
2
|
|
|
366
|
|
|
8
|
|
|
930
|
|
|
10
|
|
||||||
|
Commercial mortgage-backed securities
|
|
2,593
|
|
|
17
|
|
|
2,212
|
|
|
74
|
|
|
4,805
|
|
|
91
|
|
||||||
|
Residential mortgage-backed securities
|
|
584
|
|
|
4
|
|
|
286
|
|
|
7
|
|
|
870
|
|
|
11
|
|
||||||
|
Total
|
|
$
|
27,635
|
|
|
$
|
333
|
|
|
$
|
28,336
|
|
|
$
|
1,443
|
|
|
$
|
55,971
|
|
|
$
|
1,776
|
|
|
Equity securities, available-for-sale
|
|
$
|
358
|
|
|
$
|
28
|
|
|
$
|
0
|
|
|
$
|
1
|
|
|
$
|
358
|
|
|
$
|
29
|
|
|
(1)
|
Includes
$12 million
of fair value and less than
$1 million
of gross unrealized losses, which are not reflected in AOCI, on securities classified as held-to-maturity, as of December 31,
2017
.
|
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
|
|
Less Than
Twelve Months |
|
Twelve Months
or More |
|
Total
|
||||||||||||||||||
|
|
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Fixed maturities(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
|
$
|
9,345
|
|
|
$
|
1,001
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9,345
|
|
|
$
|
1,001
|
|
|
Obligations of U.S. states and their political subdivisions
|
|
2,677
|
|
|
79
|
|
|
19
|
|
|
5
|
|
|
2,696
|
|
|
84
|
|
||||||
|
Foreign government bonds
|
|
6,076
|
|
|
325
|
|
|
310
|
|
|
29
|
|
|
6,386
|
|
|
354
|
|
||||||
|
U.S. corporate public securities
|
|
22,803
|
|
|
905
|
|
|
2,943
|
|
|
327
|
|
|
25,746
|
|
|
1,232
|
|
||||||
|
U.S. corporate private securities
|
|
7,797
|
|
|
228
|
|
|
1,296
|
|
|
80
|
|
|
9,093
|
|
|
308
|
|
||||||
|
Foreign corporate public securities
|
|
5,196
|
|
|
162
|
|
|
1,047
|
|
|
143
|
|
|
6,243
|
|
|
305
|
|
||||||
|
Foreign corporate private securities
|
|
6,557
|
|
|
350
|
|
|
4,916
|
|
|
799
|
|
|
11,473
|
|
|
1,149
|
|
||||||
|
Asset-backed securities
|
|
2,357
|
|
|
20
|
|
|
1,581
|
|
|
33
|
|
|
3,938
|
|
|
53
|
|
||||||
|
Commercial mortgage-backed securities
|
|
4,879
|
|
|
123
|
|
|
60
|
|
|
2
|
|
|
4,939
|
|
|
125
|
|
||||||
|
Residential mortgage-backed securities
|
|
926
|
|
|
12
|
|
|
78
|
|
|
2
|
|
|
1,004
|
|
|
14
|
|
||||||
|
Total
|
|
$
|
68,613
|
|
|
$
|
3,205
|
|
|
$
|
12,250
|
|
|
$
|
1,420
|
|
|
$
|
80,863
|
|
|
$
|
4,625
|
|
|
Equity securities, available-for-sale
|
|
$
|
637
|
|
|
$
|
41
|
|
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
649
|
|
|
$
|
42
|
|
|
(1)
|
Includes
$12 million
of fair value and less than
$1 million
of gross unrealized losses, which are not reflected in AOCI, on securities classified as held-to-maturity, as of December 31,
2016
.
|
|
|
|
December 31, 2017
|
||||||||||||||
|
|
|
Available-for-Sale
|
|
Held-to-Maturity
|
||||||||||||
|
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
|
Due in one year or less
|
|
$
|
8,244
|
|
|
$
|
8,711
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Due after one year through five years
|
|
47,967
|
|
|
51,936
|
|
|
176
|
|
|
183
|
|
||||
|
Due after five years through ten years
|
|
69,445
|
|
|
75,596
|
|
|
565
|
|
|
642
|
|
||||
|
Due after ten years(1)
|
|
158,139
|
|
|
181,378
|
|
|
862
|
|
|
1,127
|
|
||||
|
Asset-backed securities
|
|
11,965
|
|
|
12,233
|
|
|
0
|
|
|
0
|
|
||||
|
Commercial mortgage-backed securities
|
|
13,134
|
|
|
13,281
|
|
|
0
|
|
|
0
|
|
||||
|
Residential mortgage-backed securities
|
|
3,491
|
|
|
3,645
|
|
|
446
|
|
|
478
|
|
||||
|
Total
|
|
$
|
312,385
|
|
|
$
|
346,780
|
|
|
$
|
2,049
|
|
|
$
|
2,430
|
|
|
(1)
|
Excludes available-for-sale notes with amortized cost of
$2,660 million
(fair value,
$2,660 million
) and held-to-maturity notes with amortized cost of
$4,627 million
(fair value,
$4,913 million
), which have been offset with the associated payables under a netting agreement.
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Fixed maturities, available-for-sale:
|
|
|
||||||||||
|
Proceeds from sales(1)
|
|
$
|
34,002
|
|
|
$
|
29,878
|
|
|
$
|
27,679
|
|
|
Proceeds from maturities/prepayments
|
|
24,460
|
|
|
19,710
|
|
|
19,559
|
|
|||
|
Gross investment gains from sales and maturities
|
|
1,548
|
|
|
1,433
|
|
|
2,115
|
|
|||
|
Gross investment losses from sales and maturities
|
|
(700
|
)
|
|
(545
|
)
|
|
(340
|
)
|
|||
|
OTTI recognized in earnings(2)
|
|
(267
|
)
|
|
(222
|
)
|
|
(141
|
)
|
|||
|
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
||||||
|
Proceeds from maturities/prepayments(3)
|
|
$
|
153
|
|
|
$
|
272
|
|
|
$
|
235
|
|
|
Equity securities, available-for-sale:
|
|
|
|
|
|
|
||||||
|
Proceeds from sales(4)
|
|
$
|
4,552
|
|
|
$
|
3,504
|
|
|
$
|
4,589
|
|
|
Gross investment gains from sales
|
|
1,187
|
|
|
608
|
|
|
746
|
|
|||
|
Gross investment losses from sales
|
|
(94
|
)
|
|
(158
|
)
|
|
(169
|
)
|
|||
|
OTTI recognized in earnings
|
|
(27
|
)
|
|
(74
|
)
|
|
(126
|
)
|
|||
|
(1)
|
Includes
$218 million
,
$(125) million
and
$158 million
of non-cash related proceeds for the years ended December 31,
2017
,
2016
and
2015
, respectively.
|
|
(2)
|
Excludes the portion of OTTI recorded in “Other comprehensive income (loss)” (“OCI”), representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.
|
|
(3)
|
Includes
$(2) million
,
$1 million
and less than
$1 million
of non-cash related proceeds for the years ended December 31,
2017
,
2016
and
2015
, respectively.
|
|
(4)
|
Includes
$2 million
,
$2 million
and
$12 million
of non-cash related proceeds for the years ended December 31,
2017
,
2016
and
2015
, respectively.
|
|
|
|
Years Ended December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Balance, beginning of period
|
|
$
|
359
|
|
|
$
|
532
|
|
|
New credit loss impairments
|
|
10
|
|
|
41
|
|
||
|
Additional credit loss impairments on securities previously impaired
|
|
11
|
|
|
1
|
|
||
|
Increases due to the passage of time on previously recorded credit losses
|
|
15
|
|
|
24
|
|
||
|
Reductions for securities which matured, paid down, prepaid or were sold during the period
|
|
(58
|
)
|
|
(229
|
)
|
||
|
Reductions for securities impaired to fair value during the period(1)
|
|
(13
|
)
|
|
(2
|
)
|
||
|
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected
|
|
(5
|
)
|
|
(8
|
)
|
||
|
Balance, end of period
|
|
$
|
319
|
|
|
$
|
359
|
|
|
(1)
|
Represents circumstances where the Company determined in the current period that it intends to sell the security or it is more likely than not that it will be required to sell the security before recovery of the security’s amortized cost.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Short-term investments and cash equivalents
|
|
$
|
245
|
|
|
$
|
245
|
|
|
$
|
655
|
|
|
$
|
655
|
|
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate securities
|
|
13,816
|
|
|
14,073
|
|
|
13,903
|
|
|
13,997
|
|
||||
|
Commercial mortgage-backed securities
|
|
2,294
|
|
|
2,311
|
|
|
2,032
|
|
|
2,052
|
|
||||
|
Residential mortgage-backed securities(1)
|
|
961
|
|
|
966
|
|
|
1,142
|
|
|
1,150
|
|
||||
|
Asset-backed securities(2)
|
|
1,363
|
|
|
1,392
|
|
|
1,333
|
|
|
1,349
|
|
||||
|
Foreign government bonds
|
|
1,050
|
|
|
1,057
|
|
|
915
|
|
|
926
|
|
||||
|
U.S. government authorities and agencies and obligations of U.S. states
|
|
357
|
|
|
410
|
|
|
330
|
|
|
376
|
|
||||
|
Total fixed maturities
|
|
19,841
|
|
|
20,209
|
|
|
19,655
|
|
|
19,850
|
|
||||
|
Equity securities
|
|
1,278
|
|
|
1,643
|
|
|
1,097
|
|
|
1,335
|
|
||||
|
Total trading account assets supporting insurance liabilities
|
|
$
|
21,364
|
|
|
$
|
22,097
|
|
|
$
|
21,407
|
|
|
$
|
21,840
|
|
|
(1)
|
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
|
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans and other asset types.
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
|
Amortized
Cost or Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Short-term investments and cash equivalents
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
Fixed maturities
|
|
3,509
|
|
|
3,507
|
|
|
3,634
|
|
|
3,453
|
|
||||
|
Equity securities
|
|
1,007
|
|
|
1,155
|
|
|
985
|
|
|
1,056
|
|
||||
|
Other
|
|
6
|
|
|
7
|
|
|
4
|
|
|
5
|
|
||||
|
Subtotal
|
|
$
|
4,547
|
|
|
4,694
|
|
|
$
|
4,649
|
|
|
4,540
|
|
||
|
Derivative instruments
|
|
|
|
1,058
|
|
|
|
|
1,224
|
|
||||||
|
Total other trading account assets
|
|
|
|
$
|
5,752
|
|
|
|
|
$
|
5,764
|
|
||||
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Investments in Japanese government and government agency securities:
|
|
|
|
|
|
|
|
|
||||||||
|
Fixed maturities, available-for-sale
|
|
$
|
64,628
|
|
|
$
|
76,311
|
|
|
$
|
60,240
|
|
|
$
|
73,051
|
|
|
Fixed maturities, held-to-maturity
|
|
844
|
|
|
1,103
|
|
|
818
|
|
|
1,075
|
|
||||
|
Trading account assets supporting insurance liabilities
|
|
657
|
|
|
667
|
|
|
537
|
|
|
550
|
|
||||
|
Other trading account assets
|
|
23
|
|
|
23
|
|
|
16
|
|
|
16
|
|
||||
|
Total
|
|
$
|
66,152
|
|
|
$
|
78,104
|
|
|
$
|
61,611
|
|
|
$
|
74,692
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Investments in South Korean government and government agency securities:
|
|
|
|
|
|
|
|
|
||||||||
|
Fixed maturities, available-for-sale
|
|
$
|
9,425
|
|
|
$
|
10,989
|
|
|
$
|
7,581
|
|
|
$
|
9,435
|
|
|
Fixed maturities, held-to-maturity
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Trading account assets supporting insurance liabilities
|
|
15
|
|
|
15
|
|
|
44
|
|
|
44
|
|
||||
|
Other trading account assets
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Total
|
|
$
|
9,440
|
|
|
$
|
11,004
|
|
|
$
|
7,625
|
|
|
$
|
9,479
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
|
|
|
Amount
(in millions)
|
|
% of
Total
|
|
Amount
(in millions)
|
|
% of
Total
|
||||||
|
Commercial mortgage and agricultural property loans by property type:
|
|
|
|
|
|
|
|
|
||||||
|
Office
|
|
$
|
12,670
|
|
|
22.9
|
%
|
|
$
|
12,424
|
|
|
23.9
|
%
|
|
Retail
|
|
8,543
|
|
|
15.5
|
|
|
8,555
|
|
|
16.5
|
|
||
|
Apartments/Multi-Family
|
|
15,465
|
|
|
28.0
|
|
|
13,733
|
|
|
26.4
|
|
||
|
Industrial
|
|
9,451
|
|
|
17.1
|
|
|
8,075
|
|
|
15.5
|
|
||
|
Hospitality
|
|
2,067
|
|
|
3.7
|
|
|
2,274
|
|
|
4.4
|
|
||
|
Other
|
|
3,888
|
|
|
7.0
|
|
|
3,966
|
|
|
7.6
|
|
||
|
Total commercial mortgage loans
|
|
52,084
|
|
|
94.2
|
|
|
49,027
|
|
|
94.3
|
|
||
|
Agricultural property loans
|
|
3,203
|
|
|
5.8
|
|
|
2,958
|
|
|
5.7
|
|
||
|
Total commercial mortgage and agricultural property loans by property type
|
|
55,287
|
|
|
100.0
|
%
|
|
51,985
|
|
|
100.0
|
%
|
||
|
Valuation allowance
|
|
(100
|
)
|
|
|
|
(98
|
)
|
|
|
||||
|
Total net commercial mortgage and agricultural property loans by property type
|
|
55,187
|
|
|
|
|
51,887
|
|
|
|
||||
|
Other loans:
|
|
|
|
|
|
|
|
|
||||||
|
Uncollateralized loans
|
|
663
|
|
|
|
|
638
|
|
|
|
||||
|
Residential property loans
|
|
196
|
|
|
|
|
252
|
|
|
|
||||
|
Other collateralized loans
|
|
5
|
|
|
|
|
10
|
|
|
|
||||
|
Total other loans
|
|
864
|
|
|
|
|
900
|
|
|
|
||||
|
Valuation allowance
|
|
(6
|
)
|
|
|
|
(8
|
)
|
|
|
||||
|
Total net other loans
|
|
858
|
|
|
|
|
892
|
|
|
|
||||
|
Total commercial mortgage and other loans(1)
|
|
$
|
56,045
|
|
|
|
|
$
|
52,779
|
|
|
|
||
|
(1)
|
Includes loans held for sale which are carried at fair value and are collateralized primarily by apartment complexes. As of December 31,
2017
and
2016
, the net carrying value of these loans was
$593 million
and
$519 million
, respectively.
|
|
|
|
December 31, 2017
|
||||||||||||||||||||||
|
|
|
Commercial
Mortgage
Loans
|
|
Agricultural
Property
Loans
|
|
Residential
Property
Loans
|
|
Other
Collateralized
Loans
|
|
Uncollateralized
Loans
|
|
Total
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Balance, beginning of year
|
|
$
|
96
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
0
|
|
|
$
|
6
|
|
|
$
|
106
|
|
|
Addition to (release of) allowance for losses
|
|
2
|
|
|
1
|
|
|
(1
|
)
|
|
0
|
|
|
(1
|
)
|
|
1
|
|
||||||
|
Charge-offs, net of recoveries
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
||||||
|
Change in foreign exchange
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Total ending balance
|
|
$
|
97
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
$
|
5
|
|
|
$
|
106
|
|
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
|
|
Commercial
Mortgage
Loans
|
|
Agricultural
Property
Loans
|
|
Residential
Property
Loans
|
|
Other
Collateralized
Loans
|
|
Uncollateralized
Loans
|
|
Total
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Balance, beginning of year
|
|
$
|
97
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
0
|
|
|
$
|
10
|
|
|
$
|
112
|
|
|
Addition to (release of) allowance for losses
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
|
0
|
|
|
(5
|
)
|
|
(6
|
)
|
||||||
|
Charge-offs, net of recoveries
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
||||||
|
Change in foreign exchange
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
1
|
|
||||||
|
Total ending balance
|
|
$
|
96
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
0
|
|
|
$
|
6
|
|
|
$
|
106
|
|
|
|
|
December 31, 2017
|
||||||||||||||||||||||
|
|
|
Commercial
Mortgage
Loans
|
|
Agricultural
Property
Loans
|
|
Residential
Property
Loans
|
|
Other
Collateralized
Loans
|
|
Uncollateralized
Loans
|
|
Total
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Allowance for credit losses:
|
|
|
||||||||||||||||||||||
|
Individually evaluated for impairment
|
|
$
|
7
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
Collectively evaluated for impairment
|
|
90
|
|
|
3
|
|
|
1
|
|
|
0
|
|
|
5
|
|
|
99
|
|
||||||
|
Total ending balance(1)
|
|
$
|
97
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
$
|
5
|
|
|
$
|
106
|
|
|
Recorded investment(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Individually evaluated for impairment
|
|
$
|
75
|
|
|
$
|
39
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2
|
|
|
$
|
116
|
|
|
Collectively evaluated for impairment
|
|
52,009
|
|
|
3,164
|
|
|
196
|
|
|
5
|
|
|
661
|
|
|
56,035
|
|
||||||
|
Total ending balance(1)
|
|
$
|
52,084
|
|
|
$
|
3,203
|
|
|
$
|
196
|
|
|
$
|
5
|
|
|
$
|
663
|
|
|
$
|
56,151
|
|
|
(1)
|
As of December 31,
2017
, there were no loans acquired with deteriorated credit quality.
|
|
(2)
|
Recorded investment reflects the carrying value gross of related allowance.
|
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
|
|
Commercial
Mortgage
Loans
|
|
Agricultural
Property
Loans
|
|
Residential
Property
Loans
|
|
Other
Collateralized
Loans
|
|
Uncollateralized
Loans
|
|
Total
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Allowance for credit losses:
|
|
|
||||||||||||||||||||||
|
Individually evaluated for impairment
|
|
$
|
6
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6
|
|
|
Collectively evaluated for impairment
|
|
90
|
|
|
2
|
|
|
2
|
|
|
0
|
|
|
6
|
|
|
100
|
|
||||||
|
Total ending balance(1)
|
|
$
|
96
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
0
|
|
|
$
|
6
|
|
|
$
|
106
|
|
|
Recorded investment(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Individually evaluated for impairment
|
|
$
|
116
|
|
|
$
|
30
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2
|
|
|
$
|
148
|
|
|
Collectively evaluated for impairment
|
|
48,911
|
|
|
2,928
|
|
|
252
|
|
|
10
|
|
|
636
|
|
|
52,737
|
|
||||||
|
Total ending balance(1)
|
|
$
|
49,027
|
|
|
$
|
2,958
|
|
|
$
|
252
|
|
|
$
|
10
|
|
|
$
|
638
|
|
|
$
|
52,885
|
|
|
(1)
|
As of December 31,
2016
, there were no loans acquired with deteriorated credit quality.
|
|
(2)
|
Recorded investment reflects the carrying value gross of related allowance.
|
|
Commercial mortgage loans
|
|
|
||||||||||||||
|
|
|
December 31, 2017
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
|
|
||||||||||||
|
|
|
>
1.2X
|
|
1.0X to <1.2X
|
|
< 1.0X
|
|
Total
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Loan-to-Value Ratio:
|
|
|
||||||||||||||
|
0%-59.99%
|
|
$
|
30,082
|
|
|
$
|
639
|
|
|
$
|
251
|
|
|
$
|
30,972
|
|
|
60%-69.99%
|
|
13,658
|
|
|
530
|
|
|
121
|
|
|
14,309
|
|
||||
|
70%-79.99%
|
|
5,994
|
|
|
514
|
|
|
29
|
|
|
6,537
|
|
||||
|
80% or greater
|
|
93
|
|
|
54
|
|
|
119
|
|
|
266
|
|
||||
|
Total commercial mortgage loans
|
|
$
|
49,827
|
|
|
$
|
1,737
|
|
|
$
|
520
|
|
|
$
|
52,084
|
|
|
Agricultural property loans
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
December 31, 2017
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
|
|
||||||||||||
|
|
|
>
1.2X
|
|
1.0X to <1.2X
|
|
< 1.0X
|
|
Total
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Loan-to-Value Ratio:
|
|
|
||||||||||||||
|
0%-59.99%
|
|
$
|
2,988
|
|
|
$
|
170
|
|
|
$
|
5
|
|
|
$
|
3,163
|
|
|
60%-69.99%
|
|
40
|
|
|
0
|
|
|
0
|
|
|
40
|
|
||||
|
70%-79.99%
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
80% or greater
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Total agricultural property loans
|
|
$
|
3,028
|
|
|
$
|
170
|
|
|
$
|
5
|
|
|
$
|
3,203
|
|
|
Total commercial mortgage and agricultural property loans
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
December 31, 2017
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
|
|
||||||||||||
|
|
|
>
1.2X
|
|
1.0X to <1.2X
|
|
< 1.0X
|
|
Total
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Loan-to-Value Ratio:
|
|
|
||||||||||||||
|
0%-59.99%
|
|
$
|
33,070
|
|
|
$
|
809
|
|
|
$
|
256
|
|
|
$
|
34,135
|
|
|
60%-69.99%
|
|
13,698
|
|
|
530
|
|
|
121
|
|
|
14,349
|
|
||||
|
70%-79.99%
|
|
5,994
|
|
|
514
|
|
|
29
|
|
|
6,537
|
|
||||
|
80% or greater
|
|
93
|
|
|
54
|
|
|
119
|
|
|
266
|
|
||||
|
Total commercial mortgage and agricultural property loans
|
|
$
|
52,855
|
|
|
$
|
1,907
|
|
|
$
|
525
|
|
|
$
|
55,287
|
|
|
Commercial mortgage loans
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
December 31, 2016
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
|
|
||||||||||||
|
|
|
>
1.2X
|
|
1.0X to <1.2X
|
|
< 1.0X
|
|
Total
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Loan-to-Value Ratio:
|
|
|
||||||||||||||
|
0%-59.99%
|
|
$
|
28,131
|
|
|
$
|
446
|
|
|
$
|
626
|
|
|
$
|
29,203
|
|
|
60%-69.99%
|
|
12,608
|
|
|
401
|
|
|
115
|
|
|
13,124
|
|
||||
|
70%-79.99%
|
|
5,383
|
|
|
694
|
|
|
56
|
|
|
6,133
|
|
||||
|
80% or greater
|
|
373
|
|
|
62
|
|
|
132
|
|
|
567
|
|
||||
|
Total commercial mortgage loans
|
|
$
|
46,495
|
|
|
$
|
1,603
|
|
|
$
|
929
|
|
|
$
|
49,027
|
|
|
Agricultural property loans
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
December 31, 2016
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
|
|
||||||||||||
|
|
|
>
1.2X
|
|
1.0X to <1.2X
|
|
< 1.0X
|
|
Total
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Loan-to-Value Ratio:
|
|
|
||||||||||||||
|
0%-59.99%
|
|
$
|
2,803
|
|
|
$
|
114
|
|
|
$
|
17
|
|
|
$
|
2,934
|
|
|
60%-69.99%
|
|
24
|
|
|
0
|
|
|
0
|
|
|
24
|
|
||||
|
70%-79.99%
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
80% or greater
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Total agricultural property loans
|
|
$
|
2,827
|
|
|
$
|
114
|
|
|
$
|
17
|
|
|
$
|
2,958
|
|
|
Total commercial mortgage and agricultural property loans
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
December 31, 2016
|
||||||||||||||
|
|
|
Debt Service Coverage Ratio
|
|
|
||||||||||||
|
|
|
>
1.2X
|
|
1.0X to <1.2X
|
|
< 1.0X
|
|
Total
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Loan-to-Value Ratio:
|
|
|
||||||||||||||
|
0%-59.99%
|
|
$
|
30,934
|
|
|
$
|
560
|
|
|
$
|
643
|
|
|
$
|
32,137
|
|
|
60%-69.99%
|
|
12,632
|
|
|
401
|
|
|
115
|
|
|
13,148
|
|
||||
|
70%-79.99%
|
|
5,383
|
|
|
694
|
|
|
56
|
|
|
6,133
|
|
||||
|
80% or greater
|
|
373
|
|
|
62
|
|
|
132
|
|
|
567
|
|
||||
|
Total commercial mortgage and agricultural property loans
|
|
$
|
49,322
|
|
|
$
|
1,717
|
|
|
$
|
946
|
|
|
$
|
51,985
|
|
|
|
|
December 31, 2017
|
||||||||||||||||||||||||||
|
|
|
Current
|
|
30-59 Days
Past Due
|
|
60-89 Days
Past Due
|
|
90 Days or More Past Due(1)
|
|
Total Past
Due
|
|
Total
Loans
|
|
Non-Accrual
Status(2)
|
||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||
|
Commercial mortgage loans
|
|
$
|
52,084
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
52,084
|
|
|
$
|
71
|
|
|
Agricultural property loans
|
|
3,201
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
2
|
|
|
3,203
|
|
|
23
|
|
|||||||
|
Residential property loans
|
|
191
|
|
|
3
|
|
|
0
|
|
|
2
|
|
|
5
|
|
|
196
|
|
|
2
|
|
|||||||
|
Other collateralized loans
|
|
5
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
5
|
|
|
0
|
|
|||||||
|
Uncollateralized loans
|
|
663
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
663
|
|
|
0
|
|
|||||||
|
Total
|
|
$
|
56,144
|
|
|
$
|
3
|
|
|
$
|
0
|
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
56,151
|
|
|
$
|
96
|
|
|
(1)
|
As of
December 31, 2017
, there were no loans in this category accruing interest.
|
|
(2)
|
For additional information regarding the Company’s policies for accruing interest on loans, see Note 2.
|
|
|
|
December 31, 2016
|
||||||||||||||||||||||||||
|
|
|
Current
|
|
30-59 Days
Past Due
|
|
60-89 Days
Past Due
|
|
90 Days or More Past Due(1)
|
|
Total Past
Due
|
|
Total
Loans
|
|
Non-Accrual
Status(2)
|
||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||
|
Commercial mortgage loans
|
|
$
|
49,006
|
|
|
$
|
21
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
21
|
|
|
$
|
49,027
|
|
|
$
|
49
|
|
|
Agricultural property loans
|
|
2,956
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
2
|
|
|
2,958
|
|
|
2
|
|
|||||||
|
Residential property loans
|
|
241
|
|
|
7
|
|
|
1
|
|
|
3
|
|
|
11
|
|
|
252
|
|
|
3
|
|
|||||||
|
Other collateralized loans
|
|
10
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10
|
|
|
0
|
|
|||||||
|
Uncollateralized loans
|
|
638
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
638
|
|
|
0
|
|
|||||||
|
Total
|
|
$
|
52,851
|
|
|
$
|
28
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
34
|
|
|
$
|
52,885
|
|
|
$
|
54
|
|
|
(1)
|
As of
December 31, 2016
, there were no loans in this category accruing interest.
|
|
(2)
|
For additional information regarding the Company’s policies for accruing interest on loans, see Note 2.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Joint ventures and limited partnerships:
|
|
|
|
|
||||
|
Private equity
|
|
$
|
4,280
|
|
|
$
|
4,059
|
|
|
Hedge funds
|
|
3,222
|
|
|
2,660
|
|
||
|
Real estate-related
|
|
1,218
|
|
|
1,291
|
|
||
|
Total joint ventures and limited partnerships
|
|
8,720
|
|
|
8,010
|
|
||
|
Real estate held through direct ownership(1)
|
|
2,409
|
|
|
2,195
|
|
||
|
Other(2)
|
|
1,179
|
|
|
1,078
|
|
||
|
Total other long-term investments
|
|
$
|
12,308
|
|
|
$
|
11,283
|
|
|
(1)
|
As of December 31,
2017
and
2016
, real estate held through direct ownership had mortgage debt of
$799 million
and
$659 million
, respectively.
|
|
(2)
|
Primarily includes strategic investments made by investment management operations, leveraged leases, member and activity stock held in the Federal Home Loan Banks of New York and Boston and certain derivatives. For additional information regarding the Company’s holdings in the Federal Home Loan Banks of New York and Boston, see Note 14.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
STATEMENTS OF FINANCIAL POSITION
|
|
|
|
|
||||
|
Total assets(1)
|
|
$
|
62,292
|
|
|
$
|
59,897
|
|
|
Total liabilities(2)
|
|
$
|
15,225
|
|
|
$
|
14,787
|
|
|
Partners’ capital
|
|
47,067
|
|
|
45,110
|
|
||
|
Total liabilities and partners’ capital
|
|
$
|
62,292
|
|
|
$
|
59,897
|
|
|
Total liabilities and partners’ capital included above
|
|
$
|
5,515
|
|
|
$
|
5,135
|
|
|
Equity in limited partnership interests not included above
|
|
696
|
|
|
592
|
|
||
|
Carrying value
|
|
$
|
6,211
|
|
|
$
|
5,727
|
|
|
(1)
|
Assets consist primarily of investments in real estate, investments in securities and other miscellaneous assets.
|
|
(2)
|
Liabilities consist primarily of third-party-borrowed funds, securities repurchase agreements and other miscellaneous liabilities.
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions)
|
||||||||||
|
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
||||||
|
Total revenue(1)
|
|
$
|
6,392
|
|
|
$
|
5,360
|
|
|
$
|
4,356
|
|
|
Total expenses(2)
|
|
(2,300
|
)
|
|
(1,995
|
)
|
|
(1,803
|
)
|
|||
|
Net earnings (losses)
|
|
$
|
4,092
|
|
|
$
|
3,365
|
|
|
$
|
2,553
|
|
|
Equity in net earnings (losses) included above
|
|
$
|
409
|
|
|
$
|
247
|
|
|
$
|
216
|
|
|
Equity in net earnings (losses) of limited partnership interests not included above
|
|
123
|
|
|
103
|
|
|
32
|
|
|||
|
Total equity in net earnings (losses)
|
|
$
|
532
|
|
|
$
|
350
|
|
|
$
|
248
|
|
|
(1)
|
Revenue consists of income from investments in real estate, investments in securities and other income.
|
|
(2)
|
Expenses consist primarily of interest expense, investment management fees, salary expenses and other expenses.
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Fixed maturities, available-for-sale(1)
|
|
$
|
11,482
|
|
|
$
|
10,920
|
|
|
$
|
10,347
|
|
|
Fixed maturities, held-to-maturity(1)
|
|
215
|
|
|
208
|
|
|
202
|
|
|||
|
Equity securities, available-for-sale
|
|
377
|
|
|
366
|
|
|
337
|
|
|||
|
Trading account assets
|
|
920
|
|
|
986
|
|
|
1,205
|
|
|||
|
Commercial mortgage and other loans
|
|
2,267
|
|
|
2,243
|
|
|
2,255
|
|
|||
|
Policy loans
|
|
617
|
|
|
627
|
|
|
619
|
|
|||
|
Short-term investments and cash equivalents
|
|
203
|
|
|
145
|
|
|
56
|
|
|||
|
Other long-term investments
|
|
1,117
|
|
|
731
|
|
|
717
|
|
|||
|
Gross investment income
|
|
17,198
|
|
|
16,226
|
|
|
15,738
|
|
|||
|
Less: investment expenses
|
|
(763
|
)
|
|
(706
|
)
|
|
(909
|
)
|
|||
|
Net investment income
|
|
$
|
16,435
|
|
|
$
|
15,520
|
|
|
$
|
14,829
|
|
|
(1)
|
Includes income on credit-linked notes which are reported on the same financial statement line items as related surplus notes, as conditions are met for right to offset.
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Fixed maturities
|
|
$
|
581
|
|
|
$
|
666
|
|
|
$
|
1,634
|
|
|
Equity securities
|
|
1,066
|
|
|
376
|
|
|
451
|
|
|||
|
Commercial mortgage and other loans
|
|
70
|
|
|
55
|
|
|
37
|
|
|||
|
Investment real estate
|
|
12
|
|
|
15
|
|
|
40
|
|
|||
|
Joint ventures and limited partnerships
|
|
(23
|
)
|
|
(94
|
)
|
|
(122
|
)
|
|||
|
Derivatives(1)
|
|
(1,275
|
)
|
|
1,175
|
|
|
1,970
|
|
|||
|
Other
|
|
1
|
|
|
1
|
|
|
15
|
|
|||
|
Realized investment gains (losses), net
|
|
$
|
432
|
|
|
$
|
2,194
|
|
|
$
|
4,025
|
|
|
(1)
|
Includes the hedged items offset in qualifying fair value hedge accounting relationships.
|
|
|
|
December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Fixed maturity securities, available-for-sale—with OTTI
|
|
$
|
286
|
|
|
$
|
312
|
|
|
$
|
234
|
|
|
Fixed maturity securities, available-for-sale—all other
|
|
34,109
|
|
|
28,526
|
|
|
24,673
|
|
|||
|
Equity securities, available-for-sale
|
|
2,027
|
|
|
2,599
|
|
|
2,427
|
|
|||
|
Derivatives designated as cash flow hedges(1)
|
|
(39
|
)
|
|
1,316
|
|
|
1,165
|
|
|||
|
Other investments(2)
|
|
15
|
|
|
(21
|
)
|
|
(25
|
)
|
|||
|
Net unrealized gains (losses) on investments
|
|
$
|
36,398
|
|
|
$
|
32,732
|
|
|
$
|
28,474
|
|
|
(1)
|
See Note 21 for more information on cash flow hedges.
|
|
(2)
|
As of December 31,
2017
, there were
no
net unrealized losses on held-to-maturity securities that were previously transferred from available-for-sale. Includes net unrealized gains on certain joint ventures that are strategic in nature and are included in “Other assets.”
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Remaining Contractual Maturities of the Agreements
|
|
|
|
Remaining Contractual Maturities of the Agreements
|
|
|
||||||||||||||||
|
|
Overnight & Continuous
|
|
Up to 30 Days
|
|
Total
|
|
Overnight & Continuous
|
|
Up to 30 Days
|
|
Total
|
||||||||||||
|
|
(in millions)
|
|
(in millions)
|
||||||||||||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
911
|
|
|
$
|
7,349
|
|
|
$
|
8,260
|
|
|
$
|
950
|
|
|
$
|
6,417
|
|
|
$
|
7,367
|
|
|
U.S. corporate public securities
|
1
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Foreign corporate public securities
|
0
|
|
|
0
|
|
|
0
|
|
|
6
|
|
|
0
|
|
|
6
|
|
||||||
|
Residential mortgage-backed securities
|
0
|
|
|
139
|
|
|
139
|
|
|
0
|
|
|
233
|
|
|
233
|
|
||||||
|
Equity securities
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Total securities sold under agreements to
repurchase(1)
|
$
|
912
|
|
|
$
|
7,488
|
|
|
$
|
8,400
|
|
|
$
|
956
|
|
|
$
|
6,650
|
|
|
$
|
7,606
|
|
|
(1)
|
The Company did not have agreements with remaining contractual maturities of thirty days or greater, as of the dates indicated.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Remaining Contractual Maturities of the Agreements
|
|
|
|
Remaining Contractual Maturities of the Agreements
|
|
|
||||||||||||||||
|
|
Overnight & Continuous
|
|
Up to 30 Days
|
|
Total
|
|
Overnight & Continuous
|
|
Up to 30 Days
|
|
Total
|
||||||||||||
|
|
(in millions)
|
|
(in millions)
|
||||||||||||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
87
|
|
|
$
|
35
|
|
|
$
|
122
|
|
|
$
|
9
|
|
|
$
|
0
|
|
|
$
|
9
|
|
|
Obligations of U.S. states and their political subdivisions
|
103
|
|
|
0
|
|
|
103
|
|
|
18
|
|
|
0
|
|
|
18
|
|
||||||
|
Foreign government bonds
|
335
|
|
|
0
|
|
|
335
|
|
|
279
|
|
|
0
|
|
|
279
|
|
||||||
|
U.S. corporate public securities
|
2,961
|
|
|
0
|
|
|
2,961
|
|
|
2,731
|
|
|
0
|
|
|
2,731
|
|
||||||
|
Foreign corporate public securities
|
655
|
|
|
0
|
|
|
655
|
|
|
786
|
|
|
0
|
|
|
786
|
|
||||||
|
Residential mortgage-backed securities
|
0
|
|
|
0
|
|
|
0
|
|
|
55
|
|
|
74
|
|
|
129
|
|
||||||
|
Equity securities
|
178
|
|
|
0
|
|
|
178
|
|
|
381
|
|
|
0
|
|
|
381
|
|
||||||
|
Total cash collateral for loaned securities(1)
|
$
|
4,319
|
|
|
$
|
35
|
|
|
$
|
4,354
|
|
|
$
|
4,259
|
|
|
$
|
74
|
|
|
$
|
4,333
|
|
|
(1)
|
The Company did not have agreements with remaining contractual maturities of thirty days or greater, as of the dates indicated.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Fixed maturities
|
|
$
|
13,303
|
|
|
$
|
11,393
|
|
|
Trading account assets supporting insurance liabilities
|
|
369
|
|
|
477
|
|
||
|
Other trading account assets
|
|
1
|
|
|
2
|
|
||
|
Separate account assets
|
|
2,992
|
|
|
3,386
|
|
||
|
Equity securities
|
|
171
|
|
|
368
|
|
||
|
Total securities pledged
|
|
$
|
16,836
|
|
|
$
|
15,626
|
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
(in millions)
|
||||||
|
Securities sold under agreements to repurchase
|
|
$
|
8,400
|
|
|
$
|
7,606
|
|
|
Cash collateral for loaned securities
|
|
4,354
|
|
|
4,333
|
|
||
|
Separate account liabilities
|
|
3,064
|
|
|
3,462
|
|
||
|
Policyholders’ account balances(1)
|
|
436
|
|
|
1,001
|
|
||
|
Total liabilities supported by the pledged collateral
|
|
$
|
16,254
|
|
|
$
|
16,402
|
|
|
(1)
|
Represents amounts supporting outstanding funding agreements.
|
|
5.
|
VARIABLE INTEREST ENTITIES
|
|
|
|
Consolidated VIEs for
Which the Company is the
Investment Manager(1)
|
|
Other Consolidated VIEs
|
||||||||||||
|
|
|
December 31,
|
|
December 31,
|
||||||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Fixed maturities, available-for-sale
|
|
$
|
69
|
|
|
$
|
65
|
|
|
$
|
275
|
|
|
$
|
269
|
|
|
Fixed maturities, held-to-maturity
|
|
83
|
|
|
81
|
|
|
810
|
|
|
783
|
|
||||
|
Trading account assets supporting insurance liabilities
|
|
0
|
|
|
0
|
|
|
9
|
|
|
9
|
|
||||
|
Other trading account assets
|
|
1,652
|
|
|
2,140
|
|
|
0
|
|
|
0
|
|
||||
|
Commercial mortgage and other loans
|
|
617
|
|
|
503
|
|
|
0
|
|
|
0
|
|
||||
|
Other long-term investments
|
|
1,389
|
|
|
1,083
|
|
|
97
|
|
|
114
|
|
||||
|
Cash and cash equivalents
|
|
164
|
|
|
618
|
|
|
0
|
|
|
1
|
|
||||
|
Accrued investment income
|
|
7
|
|
|
10
|
|
|
4
|
|
|
4
|
|
||||
|
Other assets
|
|
440
|
|
|
424
|
|
|
150
|
|
|
1
|
|
||||
|
Total assets of consolidated VIEs
|
|
$
|
4,421
|
|
|
$
|
4,924
|
|
|
$
|
1,345
|
|
|
$
|
1,181
|
|
|
Notes issued by consolidated VIEs(2)
|
|
$
|
1,518
|
|
|
$
|
2,150
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other liabilities
|
|
433
|
|
|
611
|
|
|
0
|
|
|
7
|
|
||||
|
Total liabilities of consolidated VIEs
|
|
$
|
1,951
|
|
|
$
|
2,761
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
(1)
|
Total assets of consolidated VIEs reflect
$1,716 million
and
$1,386 million
as of December 31, 2017 and 2016, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.
|
|
(2)
|
Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company.
As of
December 31, 2017
and December 31, 2016, the maturities of these obligations were greater than
five
years.
|
|
6.
|
DEFERRED POLICY ACQUISITION COSTS
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
|
Balance, beginning of year
|
$
|
17,661
|
|
|
$
|
16,718
|
|
|
$
|
15,971
|
|
|
Capitalization of commissions, sales and issue expenses
|
2,820
|
|
|
2,845
|
|
|
2,653
|
|
|||
|
Amortization—Impact of assumption and experience unlocking and true-ups
|
247
|
|
|
445
|
|
|
280
|
|
|||
|
Amortization—All other
|
(1,827
|
)
|
|
(2,322
|
)
|
|
(2,400
|
)
|
|||
|
Change in unrealized investment gains and losses
|
(190
|
)
|
|
(199
|
)
|
|
477
|
|
|||
|
Foreign currency translation and other
|
281
|
|
|
174
|
|
|
(263
|
)
|
|||
|
Balance, end of year
|
$
|
18,992
|
|
|
$
|
17,661
|
|
|
$
|
16,718
|
|
|
7.
|
INVESTMENTS IN OPERATING JOINT VENTURES
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Investment in operating joint ventures
|
|
$
|
1,483
|
|
|
$
|
994
|
|
|
$
|
341
|
|
|
Dividends received from operating joint ventures
|
|
$
|
63
|
|
|
$
|
60
|
|
|
$
|
27
|
|
|
After-tax equity in earnings of operating joint ventures
|
|
$
|
49
|
|
|
$
|
49
|
|
|
$
|
15
|
|
|
8.
|
VALUE OF BUSINESS ACQUIRED
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
|
Balance, beginning of year
|
$
|
2,314
|
|
|
$
|
2,828
|
|
|
$
|
2,836
|
|
|
Amortization—Impact of assumption and experience unlocking and true-ups
|
(56
|
)
|
|
(246
|
)
|
|
128
|
|
|||
|
Amortization—All other
|
(311
|
)
|
|
(351
|
)
|
|
(385
|
)
|
|||
|
Change in unrealized investment gains and losses
|
(456
|
)
|
|
(112
|
)
|
|
214
|
|
|||
|
Interest
|
75
|
|
|
81
|
|
|
86
|
|
|||
|
Foreign currency translation
|
25
|
|
|
114
|
|
|
(57
|
)
|
|||
|
Other
|
0
|
|
|
0
|
|
|
6
|
|
|||
|
Balance, end of year
|
$
|
1,591
|
|
|
$
|
2,314
|
|
|
$
|
2,828
|
|
|
|
VOBA
Balance
|
|
Weighted Average Remaining Expected Life In Years
|
||
|
|
($ in millions)
|
|
|
||
|
CIGNA
|
$
|
223
|
|
|
12
|
|
Prudential Annuities Holding Co.
|
$
|
38
|
|
|
5
|
|
Gibraltar Life
|
$
|
1,178
|
|
|
9
|
|
Aoba Life
|
$
|
0
|
|
|
7
|
|
The Hartford Life Business
|
$
|
145
|
|
|
9
|
|
Gibraltar BSN Life Berhad
|
$
|
7
|
|
|
8
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
CIGNA
|
|
|
6.40%
|
|
|
|
6.40%
|
|
|
|
6.40%
|
|
Prudential Annuities Holding Co.
|
|
|
5.96%
|
|
|
|
6.00%
|
|
|
|
6.05%
|
|
Gibraltar Life
|
1.28%
|
to
|
2.87%
|
|
1.28%
|
to
|
2.87%
|
|
1.28%
|
to
|
2.87%
|
|
Aoba Life
|
|
|
2.60%
|
|
|
|
2.60%
|
|
|
|
2.60%
|
|
The Hartford Life Business
|
3.00%
|
to
|
6.17%
|
|
3.00%
|
to
|
6.17%
|
|
3.00%
|
to
|
6.17%
|
|
Gibraltar BSN Life Berhad
|
4.07%
|
to
|
5.51%
|
|
4.07%
|
to
|
5.51%
|
|
4.07%
|
to
|
5.51%
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Estimated future VOBA amortization
|
$
|
204
|
|
|
$
|
182
|
|
|
$
|
164
|
|
|
$
|
152
|
|
|
$
|
138
|
|
|
9.
|
GOODWILL AND OTHER INTANGIBLES
|
|
|
Retirement
|
|
Investment
Management
|
|
International
Insurance
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Balance at December 31, 2014:
|
|
|
|
|
|
|
|
||||||||
|
Gross Goodwill
|
$
|
444
|
|
|
$
|
235
|
|
|
$
|
152
|
|
|
$
|
831
|
|
|
Accumulated Impairment Losses
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net Goodwill
|
444
|
|
|
235
|
|
|
152
|
|
|
831
|
|
||||
|
2015 Activity:
|
|
|
|
|
|
|
|
||||||||
|
Acquisitions
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Other(1)
|
0
|
|
|
(4
|
)
|
|
(3
|
)
|
|
(7
|
)
|
||||
|
Balance at December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
|
Gross Goodwill
|
444
|
|
|
231
|
|
|
149
|
|
|
824
|
|
||||
|
Accumulated Impairment Losses
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net Goodwill
|
444
|
|
|
231
|
|
|
149
|
|
|
824
|
|
||||
|
2016 Activity:
|
|
|
|
|
|
|
|
||||||||
|
Acquisitions
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Other(1)
|
0
|
|
|
(1
|
)
|
|
10
|
|
|
9
|
|
||||
|
Balance at December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
|
Gross Goodwill
|
444
|
|
|
230
|
|
|
159
|
|
|
833
|
|
||||
|
Accumulated Impairment Losses
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net Goodwill
|
444
|
|
|
230
|
|
|
159
|
|
|
833
|
|
||||
|
2017 Activity:
|
|
|
|
|
|
|
|
||||||||
|
Acquisitions
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Other(1)
|
0
|
|
|
5
|
|
|
5
|
|
|
10
|
|
||||
|
Balance at December 31, 2017:
|
|
|
|
|
|
|
|
||||||||
|
Gross Goodwill
|
444
|
|
|
235
|
|
|
164
|
|
|
843
|
|
||||
|
Accumulated Impairment Losses
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net Goodwill
|
$
|
444
|
|
|
$
|
235
|
|
|
$
|
164
|
|
|
$
|
843
|
|
|
(1)
|
Represents foreign currency translation.
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
Subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Mortgage servicing rights
|
$
|
623
|
|
|
$
|
(382
|
)
|
|
$
|
241
|
|
|
$
|
548
|
|
|
$
|
(341
|
)
|
|
$
|
207
|
|
|
Customer relationships
|
174
|
|
|
(116
|
)
|
|
58
|
|
|
243
|
|
|
(179
|
)
|
|
64
|
|
||||||
|
Other
|
149
|
|
|
(109
|
)
|
|
40
|
|
|
138
|
|
|
(102
|
)
|
|
36
|
|
||||||
|
Not subject to amortization
|
3
|
|
|
N/A
|
|
|
3
|
|
|
3
|
|
|
N/A
|
|
|
3
|
|
||||||
|
Total
|
|
|
|
|
$
|
342
|
|
|
|
|
|
|
$
|
310
|
|
||||||||
|
10.
|
POLICYHOLDERS’ LIABILITIES
|
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
|
Life insurance
|
$
|
172,586
|
|
|
$
|
161,406
|
|
|
Individual and group annuities and supplementary contracts
|
67,090
|
|
|
63,486
|
|
||
|
Other contract liabilities
|
14,849
|
|
|
13,173
|
|
||
|
Subtotal future policy benefits excluding unpaid claims and claim settlement expenses
|
254,525
|
|
|
238,065
|
|
||
|
Unpaid claims and claim settlement expenses
|
2,792
|
|
|
2,843
|
|
||
|
Total future policy benefits
|
$
|
257,317
|
|
|
$
|
240,908
|
|
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
|
Individual annuities
|
$
|
41,449
|
|
|
$
|
40,338
|
|
|
Group annuities
|
28,152
|
|
|
28,350
|
|
||
|
Guaranteed investment contracts and guaranteed interest accounts
|
14,002
|
|
|
14,528
|
|
||
|
Funding agreements
|
4,631
|
|
|
4,794
|
|
||
|
Interest-sensitive life contracts
|
36,879
|
|
|
34,452
|
|
||
|
Dividend accumulation and other
|
23,076
|
|
|
22,743
|
|
||
|
Total policyholders’ account balances
|
$
|
148,189
|
|
|
$
|
145,205
|
|
|
11.
|
CERTAIN LONG-DURATION CONTRACTS WITH GUARANTEES
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
In the Event
of Death
|
|
At Annuitization /
Accumulation(1)
|
|
In the Event
of Death
|
|
At Annuitization /
Accumulation(1)
|
||||||||
|
|
($ in millions)
|
||||||||||||||
|
Annuity Contracts
|
|
|
|
|
|
|
|
||||||||
|
Return of net deposits
|
|
|
|
|
|
|
|
||||||||
|
Account value
|
$
|
129,231
|
|
|
$
|
100
|
|
|
$
|
119,433
|
|
|
$
|
152
|
|
|
Net amount at risk
|
$
|
288
|
|
|
$
|
0
|
|
|
$
|
493
|
|
|
$
|
0
|
|
|
Average attained age of contractholders
|
66 years
|
|
|
66 years
|
|
|
65 years
|
|
|
66 years
|
|
||||
|
Minimum return or contract value
|
|
|
|
|
|
|
|
||||||||
|
Account value
|
$
|
35,431
|
|
|
$
|
146,319
|
|
|
$
|
33,843
|
|
|
$
|
135,462
|
|
|
Net amount at risk
|
$
|
2,611
|
|
|
$
|
3,762
|
|
|
$
|
3,714
|
|
|
$
|
5,788
|
|
|
Average attained age of contractholders
|
68 years
|
|
|
66 years
|
|
|
67 years
|
|
|
65 years
|
|
||||
|
Average period remaining until earliest expected annuitization
|
N/A
|
|
|
0.24 years
|
|
|
N/A
|
|
|
0.27 years
|
|
||||
|
(1)
|
Includes income and withdrawal benefits.
|
|
|
GMDB
|
|
GMIB
|
|
GMAB/GMWB/GMIWB
|
||||||||||
|
|
Variable Life,
Variable Universal Life
and Universal Life
|
|
Annuity
|
|
Annuity
|
|
Annuity
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Balance at December 31, 2014
|
$
|
2,850
|
|
|
$
|
642
|
|
|
$
|
467
|
|
|
$
|
8,182
|
|
|
Incurred guarantee benefits(1)(3)
|
517
|
|
|
167
|
|
|
(40
|
)
|
|
252
|
|
||||
|
Paid guarantee benefits and other
|
(22
|
)
|
|
(85
|
)
|
|
(16
|
)
|
|
0
|
|
||||
|
Change in unrealized investment gains and losses(3)
|
(193
|
)
|
|
(10
|
)
|
|
41
|
|
|
0
|
|
||||
|
Other(2)(3)
|
(2
|
)
|
|
0
|
|
|
(12
|
)
|
|
(1
|
)
|
||||
|
Balance at December 31, 2015
|
3,150
|
|
|
714
|
|
|
440
|
|
|
8,433
|
|
||||
|
Incurred guarantee benefits(1)(3)
|
927
|
|
|
98
|
|
|
(18
|
)
|
|
(194
|
)
|
||||
|
Paid guarantee benefits
|
(36
|
)
|
|
(91
|
)
|
|
(15
|
)
|
|
0
|
|
||||
|
Change in unrealized investment gains and losses(3)
|
102
|
|
|
0
|
|
|
49
|
|
|
0
|
|
||||
|
Other(2)(3)
|
0
|
|
|
0
|
|
|
18
|
|
|
(1
|
)
|
||||
|
Balance at December 31, 2016
|
4,143
|
|
|
721
|
|
|
474
|
|
|
8,238
|
|
||||
|
Incurred guarantee benefits(1)
|
685
|
|
|
37
|
|
|
(20
|
)
|
|
479
|
|
||||
|
Paid guarantee benefits
|
(15
|
)
|
|
(74
|
)
|
|
(15
|
)
|
|
0
|
|
||||
|
Change in unrealized investment gains and losses
|
290
|
|
|
13
|
|
|
(30
|
)
|
|
0
|
|
||||
|
Other(2)
|
7
|
|
|
0
|
|
|
10
|
|
|
4
|
|
||||
|
Balance at December 31, 2017
|
$
|
5,110
|
|
|
$
|
697
|
|
|
$
|
419
|
|
|
$
|
8,721
|
|
|
(1)
|
Incurred guarantee benefits include the portion of assessments established as additions to reserves as well as changes in estimates affecting the reserves. Also includes changes in the fair value of features considered to be derivatives.
|
|
(2)
|
Other primarily represents foreign currency translation.
|
|
(3)
|
Prior period amounts are presented on a basis consistent with the current period presentation.
|
|
|
Sales Inducements
|
||
|
|
(in millions)
|
||
|
Balance at December 31, 2014
|
$
|
1,514
|
|
|
Capitalization
|
8
|
|
|
|
Amortization—Impact of assumption and experience unlocking and true-ups
|
43
|
|
|
|
Amortization—All other
|
(392
|
)
|
|
|
Change in unrealized investment gains and losses
|
16
|
|
|
|
Balance at December 31, 2015
|
1,189
|
|
|
|
Capitalization
|
47
|
|
|
|
Amortization—Impact of assumption and experience unlocking and true-ups
|
118
|
|
|
|
Amortization—All other
|
(231
|
)
|
|
|
Change in unrealized investment gains and losses
|
4
|
|
|
|
Balance at December 31, 2016
|
1,127
|
|
|
|
Capitalization
|
2
|
|
|
|
Amortization—Impact of assumption and experience unlocking and true-ups
|
157
|
|
|
|
Amortization—All other
|
(105
|
)
|
|
|
Change in unrealized investment gains and losses
|
(13
|
)
|
|
|
Balance at December 31, 2017
|
$
|
1,168
|
|
|
12.
|
CLOSED BLOCK
|
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Closed Block liabilities
|
|
|
|
|
||||
|
Future policy benefits
|
|
$
|
48,870
|
|
|
$
|
49,281
|
|
|
Policyholders’ dividends payable
|
|
829
|
|
|
932
|
|
||
|
Policyholders’ dividend obligation
|
|
5,446
|
|
|
4,658
|
|
||
|
Policyholders’ account balances
|
|
5,146
|
|
|
5,204
|
|
||
|
Other Closed Block liabilities
|
|
5,070
|
|
|
4,262
|
|
||
|
Total Closed Block liabilities
|
|
65,361
|
|
|
64,337
|
|
||
|
Closed Block assets
|
|
|
|
|
||||
|
Fixed maturities, available-for-sale, at fair value
|
|
41,043
|
|
|
38,696
|
|
||
|
Other trading account assets, at fair value
|
|
339
|
|
|
283
|
|
||
|
Equity securities, available-for-sale, at fair value
|
|
2,340
|
|
|
2,572
|
|
||
|
Commercial mortgage and other loans
|
|
9,017
|
|
|
9,437
|
|
||
|
Policy loans
|
|
4,543
|
|
|
4,660
|
|
||
|
Other long-term investments
|
|
3,159
|
|
|
3,020
|
|
||
|
Short-term investments
|
|
632
|
|
|
837
|
|
||
|
Total investments
|
|
61,073
|
|
|
59,505
|
|
||
|
Cash and cash equivalents
|
|
789
|
|
|
1,310
|
|
||
|
Accrued investment income
|
|
474
|
|
|
491
|
|
||
|
Other Closed Block assets
|
|
249
|
|
|
206
|
|
||
|
Total Closed Block assets
|
|
62,585
|
|
|
61,512
|
|
||
|
Excess of reported Closed Block liabilities over Closed Block assets
|
|
2,776
|
|
|
2,825
|
|
||
|
Portion of above representing accumulated other comprehensive income:
|
|
|
|
|
||||
|
Net unrealized investment gains (losses)
|
|
3,627
|
|
|
2,990
|
|
||
|
Allocated to policyholder dividend obligation
|
|
(3,656
|
)
|
|
(3,011
|
)
|
||
|
Future earnings to be recognized from Closed Block assets and Closed Block liabilities
|
|
$
|
2,747
|
|
|
$
|
2,804
|
|
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Balance, January 1
|
|
$
|
4,658
|
|
|
$
|
4,509
|
|
|
Impact from earnings allocable to policyholder dividend obligation
|
|
142
|
|
|
(48
|
)
|
||
|
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation
|
|
646
|
|
|
197
|
|
||
|
Balance, December 31
|
|
$
|
5,446
|
|
|
$
|
4,658
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Revenues
|
|
|
|
|
|
|
||||||
|
Premiums
|
|
$
|
2,524
|
|
|
$
|
2,619
|
|
|
$
|
2,668
|
|
|
Net investment income
|
|
2,669
|
|
|
2,597
|
|
|
2,709
|
|
|||
|
Realized investment gains (losses), net
|
|
534
|
|
|
433
|
|
|
834
|
|
|||
|
Other income (loss)
|
|
113
|
|
|
36
|
|
|
23
|
|
|||
|
Total Closed Block revenues
|
|
5,840
|
|
|
5,685
|
|
|
6,234
|
|
|||
|
Benefits and Expenses
|
|
|
|
|
|
|
||||||
|
Policyholders’ benefits
|
|
3,220
|
|
|
3,283
|
|
|
3,366
|
|
|||
|
Interest credited to policyholders’ account balances
|
|
133
|
|
|
132
|
|
|
135
|
|
|||
|
Dividends to policyholders
|
|
2,007
|
|
|
1,941
|
|
|
2,130
|
|
|||
|
General and administrative expenses
|
|
382
|
|
|
402
|
|
|
423
|
|
|||
|
Total Closed Block benefits and expenses
|
|
5,742
|
|
|
5,758
|
|
|
6,054
|
|
|||
|
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes
|
|
98
|
|
|
(73
|
)
|
|
180
|
|
|||
|
Income tax expense (benefit)
|
|
43
|
|
|
(120
|
)
|
|
136
|
|
|||
|
Closed Block revenues, net of Closed Block benefits and expenses and income taxes
|
|
$
|
55
|
|
|
$
|
47
|
|
|
$
|
44
|
|
|
13.
|
REINSURANCE
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
|
Direct premiums
|
$
|
31,797
|
|
|
$
|
30,654
|
|
|
$
|
27,996
|
|
|
Reinsurance assumed
|
2,105
|
|
|
2,073
|
|
|
2,147
|
|
|||
|
Reinsurance ceded
|
(1,811
|
)
|
|
(1,763
|
)
|
|
(1,622
|
)
|
|||
|
Premiums
|
$
|
32,091
|
|
|
$
|
30,964
|
|
|
$
|
28,521
|
|
|
|
|
|
|
|
|
||||||
|
Direct policy charges and fee income
|
$
|
4,541
|
|
|
$
|
5,031
|
|
|
$
|
5,127
|
|
|
Reinsurance assumed
|
1,176
|
|
|
1,243
|
|
|
1,179
|
|
|||
|
Reinsurance ceded
|
(414
|
)
|
|
(368
|
)
|
|
(334
|
)
|
|||
|
Policy charges and fee income
|
$
|
5,303
|
|
|
$
|
5,906
|
|
|
$
|
5,972
|
|
|
|
|
|
|
|
|
||||||
|
Direct policyholders’ benefits
|
$
|
33,261
|
|
|
$
|
32,957
|
|
|
$
|
29,242
|
|
|
Reinsurance assumed
|
3,230
|
|
|
3,110
|
|
|
3,107
|
|
|||
|
Reinsurance ceded
|
(2,697
|
)
|
|
(2,435
|
)
|
|
(1,722
|
)
|
|||
|
Policyholders’ benefits
|
$
|
33,794
|
|
|
$
|
33,632
|
|
|
$
|
30,627
|
|
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
|
Individual and group annuities(1)
|
$
|
698
|
|
|
$
|
658
|
|
|
Life insurance(2)
|
4,290
|
|
|
3,388
|
|
||
|
Other reinsurance
|
171
|
|
|
165
|
|
||
|
Total reinsurance recoverables
|
$
|
5,159
|
|
|
$
|
4,211
|
|
|
(1)
|
Primarily represents reinsurance recoverables established under the reinsurance arrangements associated with the acquisition of the retirement business of CIGNA. The Company has recorded reinsurance recoverables related to the acquisition of the retirement business of CIGNA of
$682 million
and
$656 million
at December 31,
2017
and
2016
, respectively. Also included is
$13 million
and
$0 million
of reinsurance recoverables at December 31,
2017
and
2016
, respectively, established under the reinsurance agreement with Union Hamilton related to the ceding of certain embedded derivative liabilities associated with the Company’s guaranteed benefits.
|
|
(2)
|
Includes
$2,145 million
and
$2,049 million
of reinsurance recoverables established at December 31,
2017
and
2016
, respectively, under the reinsurance arrangements associated with the acquisition of the Hartford Life Business. The Company has also recorded reinsurance payables related to the Hartford Life Business acquisition of
$1,301 million
and
$1,205 million
at December 31,
2017
and
2016
, respectively.
|
|
14.
|
SHORT-TERM AND LONG-TERM DEBT
|
|
|
2017
|
|
2016
|
||||
|
|
($ in millions)
|
||||||
|
Commercial paper:
|
|
|
|
||||
|
Prudential Financial
|
$
|
50
|
|
|
$
|
65
|
|
|
Prudential Funding, LLC
|
500
|
|
|
525
|
|
||
|
Subtotal commercial paper
|
550
|
|
|
590
|
|
||
|
Current portion of long-term debt
|
830
|
|
|
543
|
|
||
|
Total short-term debt(1)
|
$
|
1,380
|
|
|
$
|
1,133
|
|
|
Supplemental short-term debt information:
|
|
|
|
||||
|
Portion of commercial paper borrowings due overnight
|
$
|
277
|
|
|
$
|
292
|
|
|
Daily average commercial paper outstanding
|
$
|
1,110
|
|
|
$
|
1,020
|
|
|
Weighted average maturity of outstanding commercial paper, in days
|
22
|
|
|
21
|
|
||
|
Weighted average interest rate on outstanding short-term debt(2)
|
0.99
|
%
|
|
0.43
|
%
|
||
|
(1)
|
Includes Prudential Financial debt of
$880 million
and
$535 million
at December 31,
2017
and
2016
, respectively.
|
|
(2)
|
Excludes the current portion of long-term debt.
|
|
Borrower
|
Original
Term
|
|
Expiration
Date
|
|
Capacity
|
|
Amount Outstanding
|
||||
|
|
|
|
|
|
(in millions)
|
||||||
|
Prudential Financial and Prudential Funding
|
5 years
|
|
Jul 2022
|
|
$
|
4,000
|
|
|
$
|
0
|
|
|
Prudential Holdings of Japan, Inc.
|
3 years
|
|
Sep 2019
|
|
¥
|
100,000
|
|
|
¥
|
0
|
|
|
|
Maturity
Dates
|
|
Rate(1)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
|||||||||
|
|
|
|
|
|
($ in millions)
|
||||||
|
Fixed-rate notes:
|
|
|
|
|
|
|
|
||||
|
Surplus notes
|
2019-2025
|
|
5.36%-8.30%
|
|
$
|
840
|
|
|
$
|
840
|
|
|
Surplus notes subject to set-off arrangements
|
2021-2037
|
|
3.52%-5.26%
|
|
5,187
|
|
|
4,403
|
|
||
|
Senior notes
|
2018-2049
|
|
2.30%-11.31%
|
|
8,882
|
|
|
9,236
|
|
||
|
Mortgage debt(2)
|
2019-2027
|
|
0.89%-3.85%
|
|
226
|
|
|
177
|
|
||
|
Floating-rate notes:
|
|
|
|
|
|
|
|
||||
|
Surplus notes
|
|
|
-
|
|
0
|
|
|
499
|
|
||
|
Surplus notes subject to set-off arrangements
|
2024-2037
|
|
2.25%-2.74%
|
|
2,100
|
|
|
1,456
|
|
||
|
Senior notes(3)
|
2020
|
|
1.69%-5.49%
|
|
29
|
|
|
1,063
|
|
||
|
Mortgage debt(4)
|
2019-2025
|
|
0.26%-4.07%
|
|
573
|
|
|
409
|
|
||
|
Junior subordinated notes(5)
|
2042-2068
|
|
4.50%-8.88%
|
|
6,622
|
|
|
5,817
|
|
||
|
Subtotal
|
|
|
|
|
24,459
|
|
|
23,900
|
|
||
|
Less: assets under set-off arrangements(6)
|
|
|
|
|
7,287
|
|
|
5,859
|
|
||
|
Total long-term debt(7)
|
|
|
|
|
$
|
17,172
|
|
|
$
|
18,041
|
|
|
(1)
|
Ranges of interest rates are for the year ended December 31,
2017
.
|
|
(2)
|
Includes
$107 million
and $
82 million
of debt denominated in foreign currency at December 31,
2017
and
2016
, respectively.
|
|
(3)
|
Includes
$0 million
and
$55 million
of debt denominated in foreign currency at December 31, 2017 and 2016, respectively.
|
|
(4)
|
Includes
$245 million
and $
221 million
of debt denominated in foreign currency at December 31,
2017
and
2016
, respectively.
|
|
(5)
|
Includes Prudential Financial debt of
$6,566 million
and subsidiary debt of
$56 million
denominated in foreign currency at December 31, 2017.
|
|
(6)
|
Assets under set-off arrangements represent a reduction in the amount of surplus notes included in long-term debt, resulting from an arrangement where valid rights of set-off exist and it is the intent of both parties to settle on a net basis under legally enforceable arrangements. These assets include available-for-sale securities that are valued at market.
|
|
(7)
|
Includes Prudential Financial debt of
$15,304 million
and
$15,389 million
at December 31,
2017
and
2016
, respectively.
|
|
|
Calendar Year
|
|
|
||||||||||||||||||||
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 and
thereafter
|
|
Total
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
Long-term debt
|
$
|
1,713
|
|
|
$
|
1,298
|
|
|
$
|
564
|
|
|
$
|
73
|
|
|
$
|
13,524
|
|
|
$
|
17,172
|
|
|
Issue Date
|
Principal
Amount
|
|
Initial
Interest
Rate
|
|
Investor
Type
|
|
Optional
Redemption
Date
(1)
|
|
Interest Rate
Subsequent to Optional
Redemption Date
|
|
Scheduled
Maturity Date
|
|
Final
Maturity Date
|
|||
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
June 2008
|
$
|
600
|
|
|
8.88
|
%
|
|
Institutional
|
|
6/15/2018
|
|
LIBOR + 5.00%
|
|
6/15/2038
|
|
6/15/2068
|
|
August 2012
|
$
|
1,000
|
|
|
5.88
|
%
|
|
Institutional
|
|
9/15/2022
|
|
LIBOR + 4.18%
|
|
n/a
|
|
9/15/2042
|
|
November 2012
|
$
|
1,500
|
|
|
5.63
|
%
|
|
Institutional
|
|
6/15/2023
|
|
LIBOR + 3.92%
|
|
n/a
|
|
6/15/2043
|
|
December 2012
|
$
|
575
|
|
|
5.75
|
%
|
|
Retail
|
|
12/4/2017
|
|
5.75%
|
|
n/a
|
|
12/15/2052
|
|
March 2013
|
$
|
710
|
|
|
5.70
|
%
|
|
Retail
|
|
3/15/2018
|
|
5.70%
|
|
n/a
|
|
3/15/2053
|
|
March 2013
|
$
|
500
|
|
|
5.20
|
%
|
|
Institutional
|
|
3/15/2024
|
|
LIBOR + 3.04%
|
|
n/a
|
|
3/15/2044
|
|
May 2015
|
$
|
1,000
|
|
|
5.38
|
%
|
|
Institutional
|
|
5/15/2025
|
|
LIBOR + 3.03%
|
|
n/a
|
|
3/15/2045
|
|
September 2017
|
$
|
750
|
|
|
4.50
|
%
|
|
Institutional
|
|
9/15/2027
|
|
LIBOR + 2.38%
|
|
n/a
|
|
9/15/2047
|
|
(1)
|
Represents the initial date on which the notes can be redeemed at par solely at the option of the Company, in the case of the
8.88%
notes subject to compliance with a replacement capital covenant.
|
|
15.
|
EQUITY
|
|
|
|
Common Stock
|
|||||||
|
|
|
Issued
|
|
Held In
Treasury
|
|
Outstanding
|
|||
|
|
|
||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
(in millions)
|
|||||||
|
Balance, December 31, 2014
|
|
660.1
|
|
|
205.3
|
|
|
454.8
|
|
|
Common Stock issued
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
Common Stock acquired
|
|
0.0
|
|
|
12.1
|
|
|
(12.1
|
)
|
|
Stock-based compensation programs(1)
|
|
0.0
|
|
|
(4.4
|
)
|
|
4.4
|
|
|
Balance, December 31, 2015
|
|
660.1
|
|
|
213.0
|
|
|
447.1
|
|
|
Common Stock issued
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
Common Stock acquired
|
|
0.0
|
|
|
25.1
|
|
|
(25.1
|
)
|
|
Stock-based compensation programs(1)
|
|
0.0
|
|
|
(7.6
|
)
|
|
7.6
|
|
|
Balance, December 31, 2016
|
|
660.1
|
|
|
230.5
|
|
|
429.6
|
|
|
Common Stock issued
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
Common Stock acquired
|
|
0.0
|
|
|
11.5
|
|
|
(11.5
|
)
|
|
Stock-based compensation programs(1)
|
|
0.0
|
|
|
(4.5
|
)
|
|
4.5
|
|
|
Balance, December 31, 2017
|
|
660.1
|
|
|
237.5
|
|
|
422.6
|
|
|
(1)
|
Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.
|
|
|
Accumulated Other Comprehensive Income (Loss)
Attributable to Prudential Financial, Inc.
|
||||||||||||||
|
|
Foreign
Currency
Translation
Adjustment
|
|
Net Unrealized
Investment
Gains
(Losses)(1)
|
|
Pension and
Postretirement
Unrecognized Net
Periodic Benefit (Cost)
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Balance, December 31, 2014
|
$
|
(975
|
)
|
|
$
|
19,251
|
|
|
$
|
(2,226
|
)
|
|
$
|
16,050
|
|
|
Change in OCI before reclassifications
|
(245
|
)
|
|
(3,161
|
)
|
|
(457
|
)
|
|
(3,863
|
)
|
||||
|
Amounts reclassified from AOCI
|
17
|
|
|
(2,325
|
)
|
|
193
|
|
|
(2,115
|
)
|
||||
|
Income tax benefit (expense)
|
116
|
|
|
2,008
|
|
|
89
|
|
|
2,213
|
|
||||
|
Balance, December 31, 2015
|
(1,087
|
)
|
|
15,773
|
|
|
(2,401
|
)
|
|
12,285
|
|
||||
|
Change in OCI before reclassifications
|
199
|
|
|
5,176
|
|
|
(468
|
)
|
|
4,907
|
|
||||
|
Amounts reclassified from AOCI
|
13
|
|
|
(1,493
|
)
|
|
214
|
|
|
(1,266
|
)
|
||||
|
Income tax benefit (expense)
|
(98
|
)
|
|
(1,285
|
)
|
|
78
|
|
|
(1,305
|
)
|
||||
|
Balance, December 31, 2016
|
(973
|
)
|
|
18,171
|
|
|
(2,577
|
)
|
|
14,621
|
|
||||
|
Change in OCI before reclassifications
|
768
|
|
|
4,026
|
|
|
(153
|
)
|
|
4,641
|
|
||||
|
Amounts reclassified from AOCI
|
1
|
|
|
(1,629
|
)
|
|
224
|
|
|
(1,404
|
)
|
||||
|
Income tax benefit (expense)
|
(65
|
)
|
|
(600
|
)
|
|
(119
|
)
|
|
(784
|
)
|
||||
|
Balance, December 31, 2017
|
$
|
(269
|
)
|
|
$
|
19,968
|
|
|
$
|
(2,625
|
)
|
|
$
|
17,074
|
|
|
(1)
|
Includes cash flow hedges of
$(39) million
,
$1,316 million
and
$1,165 million
as of December 31,
2017
,
2016
, and
2015
, respectively.
|
|
|
Years Ended December 31,
|
|
Affected line item in Consolidated
Statements of Operations
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
|||||||
|
|
(in millions)
|
|
|
||||||||||
|
Amounts reclassified from AOCI(1)(2):
|
|
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustment:
|
|
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustment
|
$
|
(3
|
)
|
|
$
|
(13
|
)
|
|
$
|
(8
|
)
|
|
Realized investment gains (losses), net
|
|
Foreign currency translation adjustment
|
2
|
|
|
0
|
|
|
(9
|
)
|
|
Other income
|
|||
|
Total foreign currency translation adjustment
|
(1
|
)
|
|
(13
|
)
|
|
(17
|
)
|
|
|
|||
|
Net unrealized investment gains (losses):
|
|
|
|
|
|
|
|
||||||
|
Cash flow hedges—Interest Rate
|
(2
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
(3)
|
|||
|
Cash flow hedges—Currency/Interest rate
|
(16
|
)
|
|
456
|
|
|
247
|
|
|
(3)
|
|||
|
Net unrealized investment gains (losses) on available-for-sale securities
|
1,647
|
|
|
1,042
|
|
|
2,085
|
|
|
|
|||
|
Total net unrealized investment gains (losses)
|
1,629
|
|
|
1,493
|
|
|
2,325
|
|
|
(4)
|
|||
|
Amortization of defined benefit items:
|
|
|
|
|
|
|
|
||||||
|
Prior service cost
|
3
|
|
|
8
|
|
|
13
|
|
|
(5)
|
|||
|
Actuarial gain (loss)
|
(227
|
)
|
|
(222
|
)
|
|
(206
|
)
|
|
(5)
|
|||
|
Total amortization of defined benefit items
|
(224
|
)
|
|
(214
|
)
|
|
(193
|
)
|
|
|
|||
|
Total reclassifications for the period
|
$
|
1,404
|
|
|
$
|
1,266
|
|
|
$
|
2,115
|
|
|
|
|
(1)
|
All amounts are shown before tax.
|
|
(2)
|
Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.
|
|
(3)
|
See Note 21 for additional information on cash flow hedges.
|
|
(4)
|
See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.
|
|
(5)
|
See Note 18 for information on employee benefit plans.
|
|
|
Net Unrealized
Gains (Losses)
on Investments
|
|
DAC, DSI, VOBA and Reinsurance Recoverables
|
|
Future Policy
Benefits, Policyholders’
Account
Balances and Reinsurance Payables
|
|
Policyholders’
Dividends
|
|
Deferred
Income
Tax
(Liability)
Benefit
|
|
Accumulated Other Comprehensive Income (Loss)
Related To Net
Unrealized
Investment
Gains (Losses)
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
Balance, December 31, 2014
|
$
|
349
|
|
|
$
|
(6
|
)
|
|
$
|
3
|
|
|
$
|
(32
|
)
|
|
$
|
(110
|
)
|
|
$
|
204
|
|
|
Net investment gains (losses) on investments arising during the period
|
(3
|
)
|
|
|
|
|
|
|
|
1
|
|
|
(2
|
)
|
|||||||||
|
Reclassification adjustment for (gains) losses included in net income
|
(97
|
)
|
|
|
|
|
|
|
|
35
|
|
|
(62
|
)
|
|||||||||
|
Reclassification adjustment for OTTI losses excluded from net income(1)
|
(15
|
)
|
|
|
|
|
|
|
|
5
|
|
|
(10
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on DAC, DSI and VOBA
|
|
|
12
|
|
|
|
|
|
|
(4
|
)
|
|
8
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on future policy benefits and policyholders’ account balances
|
|
|
|
|
11
|
|
|
|
|
(4
|
)
|
|
7
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
1
|
|
|
0
|
|
|
1
|
|
|||||||||
|
Balance, December 31, 2015
|
234
|
|
|
6
|
|
|
14
|
|
|
(31
|
)
|
|
(77
|
)
|
|
146
|
|
||||||
|
Net investment gains (losses) on investments arising during the period
|
93
|
|
|
|
|
|
|
|
|
(31
|
)
|
|
62
|
|
|||||||||
|
Reclassification adjustment for (gains) losses included in net income
|
1
|
|
|
|
|
|
|
|
|
0
|
|
|
1
|
|
|||||||||
|
Reclassification adjustment for OTTI losses excluded from net income(1)
|
(16
|
)
|
|
|
|
|
|
|
|
5
|
|
|
(11
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on DAC, DSI and VOBA
|
|
|
(11
|
)
|
|
|
|
|
|
3
|
|
|
(8
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on future policy benefits and policyholders’ account balances
|
|
|
|
|
(20
|
)
|
|
|
|
(3
|
)
|
|
(23
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
(16
|
)
|
|
6
|
|
|
(10
|
)
|
|||||||||
|
Balance, December 31, 2016
|
$
|
312
|
|
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
$
|
(47
|
)
|
|
$
|
(97
|
)
|
|
$
|
157
|
|
|
Net investment gains (losses) on investments arising during the period
|
79
|
|
|
|
|
|
|
|
|
(22
|
)
|
|
57
|
|
|||||||||
|
Reclassification adjustment for (gains) losses included in net income
|
(85
|
)
|
|
|
|
|
|
|
|
23
|
|
|
(62
|
)
|
|||||||||
|
Reclassification adjustment for OTTI losses excluded from net income(1)
|
(20
|
)
|
|
|
|
|
|
|
|
5
|
|
|
(15
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables
|
|
|
3
|
|
|
|
|
|
|
(1
|
)
|
|
2
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables
|
|
|
|
|
9
|
|
|
|
|
(2
|
)
|
|
7
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
1
|
|
|
0
|
|
|
1
|
|
|||||||||
|
Balance, December 31, 2017
|
$
|
286
|
|
|
$
|
(2
|
)
|
|
$
|
3
|
|
|
$
|
(46
|
)
|
|
$
|
(94
|
)
|
|
$
|
147
|
|
|
(1)
|
Represents “transfers in” related to the portion of OTTI losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss.
|
|
|
Net Unrealized
Gains (Losses) on Investments(1) |
|
DAC, DSI, VOBA and Reinsurance Recoverables
|
|
Future Policy
Benefits, Policyholders’
Account
Balances and Reinsurance Payables
|
|
Policyholders’
Dividends |
|
Deferred
Income Tax (Liability) Benefit |
|
Accumulated Other Comprehensive Income (Loss)
Related To Net Unrealized Investment Gains (Losses) |
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
Balance, December 31, 2014
|
$
|
36,764
|
|
|
$
|
(1,455
|
)
|
|
$
|
(1,282
|
)
|
|
$
|
(5,036
|
)
|
|
$
|
(9,944
|
)
|
|
$
|
19,047
|
|
|
Net investment gains (losses) on investments arising during the period
|
(6,311
|
)
|
|
|
|
|
|
|
|
2,268
|
|
|
(4,043
|
)
|
|||||||||
|
Reclassification adjustment for (gains) losses included in net income
|
(2,228
|
)
|
|
|
|
|
|
|
|
801
|
|
|
(1,427
|
)
|
|||||||||
|
Reclassification adjustment for OTTI losses excluded from net income(2)
|
15
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
10
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on DAC, DSI and VOBA
|
|
|
695
|
|
|
|
|
|
|
(240
|
)
|
|
455
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on future policy benefits and policyholders’ account balances
|
|
|
|
|
200
|
|
|
|
|
(67
|
)
|
|
133
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
2,234
|
|
|
(782
|
)
|
|
1,452
|
|
|||||||||
|
Balance, December 31, 2015
|
28,240
|
|
|
(760
|
)
|
|
(1,082
|
)
|
|
(2,802
|
)
|
|
(7,969
|
)
|
|
15,627
|
|
||||||
|
Net investment gains (losses) on investments arising during the period
|
5,658
|
|
|
|
|
|
|
|
|
(1,910
|
)
|
|
3,748
|
|
|||||||||
|
Reclassification adjustment for (gains) losses included in net income
|
(1,494
|
)
|
|
|
|
|
|
|
|
504
|
|
|
(990
|
)
|
|||||||||
|
Reclassification adjustment for OTTI losses excluded from net income(2)
|
16
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
11
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on DAC, DSI and VOBA
|
|
|
(296
|
)
|
|
|
|
|
|
93
|
|
|
(203
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on future policy benefits and policyholders’ account balances
|
|
|
|
|
(54
|
)
|
|
|
|
(9
|
)
|
|
(63
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
(178
|
)
|
|
62
|
|
|
(116
|
)
|
|||||||||
|
Balance, December 31, 2016
|
32,420
|
|
|
(1,056
|
)
|
|
(1,136
|
)
|
|
(2,980
|
)
|
|
(9,234
|
)
|
|
18,014
|
|
||||||
|
Net investment gains (losses) on investments arising during the period
|
5,216
|
|
|
|
|
|
|
|
|
(1,425
|
)
|
|
3,791
|
|
|||||||||
|
Reclassification adjustment for (gains) losses included in net income
|
(1,544
|
)
|
|
|
|
|
|
|
|
421
|
|
|
(1,123
|
)
|
|||||||||
|
Reclassification adjustment for OTTI losses excluded from net income(2)
|
20
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
15
|
|
|||||||||
|
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables
|
|
|
(524
|
)
|
|
|
|
|
|
191
|
|
|
(333
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables
|
|
|
|
|
(107
|
)
|
|
|
|
25
|
|
|
(82
|
)
|
|||||||||
|
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
(651
|
)
|
|
190
|
|
|
(461
|
)
|
|||||||||
|
Balance, December 31, 2017
|
$
|
36,112
|
|
|
$
|
(1,580
|
)
|
|
$
|
(1,243
|
)
|
|
$
|
(3,631
|
)
|
|
$
|
(9,837
|
)
|
|
$
|
19,821
|
|
|
(1)
|
Includes cash flow hedges. See Note 21 for information on cash flow hedges.
|
|
(2)
|
Represents “transfers out” related to the portion of OTTI losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss.
|
|
16.
|
EARNINGS PER SHARE
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||||||||||||||
|
|
|
Income
|
|
Weighted
Average
Shares
|
|
Per Share
Amount
|
|
Income
|
|
Weighted
Average
Shares
|
|
Per Share
Amount
|
|
Income
|
|
Weighted
Average
Shares
|
|
Per Share
Amount
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
(in millions, except per share amounts)
|
|||||||||||||||||||||||||||||||
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (loss)
|
|
$
|
7,974
|
|
|
|
|
|
|
$
|
4,419
|
|
|
|
|
|
|
$
|
5,712
|
|
|
|
|
|
|||||||||
|
Less: Income (loss) attributable to noncontrolling interests
|
|
111
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
70
|
|
|
|
|
|
||||||||||||
|
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards
|
|
95
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
55
|
|
|
|
|
|
||||||||||||
|
Net income (loss) attributable to Prudential Financial available to holders of Common Stock
|
|
$
|
7,768
|
|
|
427.0
|
|
|
$
|
18.19
|
|
|
$
|
4,318
|
|
|
438.2
|
|
|
$
|
9.85
|
|
|
$
|
5,587
|
|
|
451.7
|
|
|
$
|
12.37
|
|
|
Effect of dilutive securities and compensation programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic
|
|
$
|
95
|
|
|
|
|
|
|
$
|
50
|
|
|
|
|
|
|
$
|
55
|
|
|
|
|
|
|||||||||
|
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted
|
|
94
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
54
|
|
|
|
|
|
||||||||||||
|
Stock options
|
|
|
|
2.1
|
|
|
|
|
|
|
1.8
|
|
|
|
|
|
|
2.3
|
|
|
|
||||||||||||
|
Deferred and long-term compensation programs
|
|
|
|
1.1
|
|
|
|
|
|
|
0.9
|
|
|
|
|
|
|
0.9
|
|
|
|
||||||||||||
|
Exchangeable Surplus Notes
|
|
17
|
|
|
5.8
|
|
|
|
|
17
|
|
|
5.7
|
|
|
|
|
17
|
|
|
5.5
|
|
|
|
|||||||||
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (loss) attributable to Prudential Financial available to holders of Common Stock
|
|
$
|
7,786
|
|
|
436.0
|
|
|
$
|
17.86
|
|
|
$
|
4,336
|
|
|
446.6
|
|
|
$
|
9.71
|
|
|
$
|
5,605
|
|
|
460.4
|
|
|
$
|
12.17
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
|
Shares
|
|
Exercise
Price Per
Share
|
|
Shares
|
|
Exercise
Price Per
Share
|
|
Shares
|
|
Exercise
Price Per
Share
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
(in millions, except per share amounts, based on
weighted average)
|
|||||||||||||||||||
|
Antidilutive stock options based on application of the treasury stock method
|
|
0.3
|
|
|
$
|
110.18
|
|
|
2.7
|
|
|
$
|
83.97
|
|
|
2.4
|
|
|
$
|
87.97
|
|
|
Antidilutive stock options due to net loss available to holders of Common Stock
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
||||||
|
Antidilutive shares based on application of the treasury stock method
|
|
0.1
|
|
|
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
||||||
|
Antidilutive shares due to net loss available to holders of Common Stock
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
||||||
|
Total antidilutive stock options and shares
|
|
0.4
|
|
|
|
|
2.7
|
|
|
|
|
2.4
|
|
|
|
||||||
|
17.
|
SHARE-BASED PAYMENTS
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||
|
Expected volatility
|
|
35.29
|
%
|
|
38.36
|
%
|
|
34.67
|
%
|
|
Expected dividend yield
|
|
2.84
|
%
|
|
3.92
|
%
|
|
3.00
|
%
|
|
Expected term
|
|
5.60 years
|
|
|
5.61 years
|
|
|
5.57 years
|
|
|
Risk-free interest rate
|
|
2.06
|
%
|
|
1.25
|
%
|
|
1.61
|
%
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
|
|
|
Total
Compensation Cost
Recognized
|
|
Income Tax
Benefit
|
|
Total
Compensation Cost
Recognized
|
|
Income Tax
Benefit
|
|
Total
Compensation Cost
Recognized
|
|
Income Tax
Benefit
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Employee stock options
|
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
19
|
|
|
$
|
7
|
|
|
$
|
21
|
|
|
$
|
8
|
|
|
Employee restricted stock units
|
|
142
|
|
|
51
|
|
|
126
|
|
|
47
|
|
|
111
|
|
|
42
|
|
||||||
|
Employee performance shares and performance units
|
|
109
|
|
|
41
|
|
|
57
|
|
|
21
|
|
|
32
|
|
|
12
|
|
||||||
|
Total
|
|
$
|
263
|
|
|
$
|
97
|
|
|
$
|
202
|
|
|
$
|
75
|
|
|
$
|
164
|
|
|
$
|
62
|
|
|
|
|
Employee Stock Options
|
|||||
|
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|||
|
Outstanding at December 31, 2016
|
|
6,738,802
|
|
|
$
|
63.53
|
|
|
Granted
|
|
410,501
|
|
|
110.15
|
|
|
|
Exercised
|
|
(2,385,170
|
)
|
|
63.80
|
|
|
|
Forfeited
|
|
(28,910
|
)
|
|
69.23
|
|
|
|
Expired
|
|
(5,821
|
)
|
|
83.29
|
|
|
|
Outstanding at December 31, 2017
|
|
4,729,402
|
|
|
$
|
67.38
|
|
|
Exercisable at December 31, 2017
|
|
3,248,670
|
|
|
$
|
61.91
|
|
|
|
|
December 31, 2017
|
||||
|
|
|
Employee Stock Options
|
||||
|
|
|
Weighted Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
||
|
|
|
(in years)
|
|
(in millions)
|
||
|
Outstanding
|
|
5.56
|
|
$
|
225
|
|
|
Exercisable
|
|
4.51
|
|
$
|
172
|
|
|
|
|
Restricted
Stock
Units
|
|
Weighted
Average Grant
Date Fair Value
|
|
Performance
Share and
Performance
Unit Awards(1)
|
|
Weighted
Average Grant
Date Fair Value
|
||||||
|
Restricted at December 31, 2016(2)
|
|
4,979,707
|
|
|
$
|
73.77
|
|
|
1,663,673
|
|
|
$
|
104.06
|
|
|
Granted(2)
|
|
1,540,848
|
|
|
110.39
|
|
|
601,179
|
|
|
114.98
|
|
||
|
Forfeited
|
|
(125,209
|
)
|
|
83.34
|
|
|
(9,610
|
)
|
|
109.21
|
|
||
|
Performance adjustment(3)
|
|
|
|
|
|
105,829
|
|
|
110.45
|
|
||||
|
Released
|
|
(1,253,305
|
)
|
|
84.08
|
|
|
(540,739
|
)
|
|
110.45
|
|
||
|
Restricted at December 31, 2017(2)
|
|
5,142,041
|
|
|
$
|
82.00
|
|
|
1,820,332
|
|
|
$
|
114.98
|
|
|
(1)
|
Performance share and performance unit awards reflect the target units awarded, reduced for forfeitures and releases to date. The actual number of units to be awarded at the end of each performance period will range between
0%
and
125%
of the target number of units granted, based upon a measure of the reported performance for the Company relative to stated goals.
|
|
(2)
|
For performance share and performance unit awards, the grant date is the same as the date the grant vests. The features of the grant are such that a mutual understanding of the key terms and conditions of the award between the employee and employer have not been reached until the grant is vested. Consequently, the weighted average grant date fair value as of December 31,
2017
and December 31,
2016
is the closing stock price of Prudential Financial’s common stock on those dates.
|
|
(3)
|
Represents the difference between the target units granted and the actual units awarded based upon the attainment of performance goals for the Company.
|
|
18.
|
EMPLOYEE BENEFIT PLANS
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Change in benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
|
Benefit obligation at the beginning of period
|
|
$
|
(12,917
|
)
|
|
$
|
(12,221
|
)
|
|
$
|
(2,084
|
)
|
|
$
|
(2,159
|
)
|
|
Service cost
|
|
(284
|
)
|
|
(253
|
)
|
|
(20
|
)
|
|
(19
|
)
|
||||
|
Interest cost
|
|
(476
|
)
|
|
(498
|
)
|
|
(82
|
)
|
|
(91
|
)
|
||||
|
Plan participants’ contributions
|
|
0
|
|
|
0
|
|
|
(30
|
)
|
|
(31
|
)
|
||||
|
Medicare Part D subsidy receipts
|
|
0
|
|
|
0
|
|
|
(9
|
)
|
|
(10
|
)
|
||||
|
Amendments
|
|
0
|
|
|
(3
|
)
|
|
(9
|
)
|
|
0
|
|
||||
|
Actuarial gains (losses), net
|
|
(871
|
)
|
|
(602
|
)
|
|
69
|
|
|
46
|
|
||||
|
Settlements
|
|
57
|
|
|
24
|
|
|
0
|
|
|
0
|
|
||||
|
Special termination benefits
|
|
(4
|
)
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
||||
|
Benefits paid
|
|
723
|
|
|
681
|
|
|
172
|
|
|
181
|
|
||||
|
Foreign currency changes and other
|
|
(66
|
)
|
|
(43
|
)
|
|
(3
|
)
|
|
(1
|
)
|
||||
|
Benefit obligation at end of period
|
|
$
|
(13,838
|
)
|
|
$
|
(12,917
|
)
|
|
$
|
(1,996
|
)
|
|
$
|
(2,084
|
)
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
|
Fair value of plan assets at beginning of period
|
|
$
|
12,861
|
|
|
$
|
12,541
|
|
|
$
|
1,531
|
|
|
$
|
1,584
|
|
|
Actual return on plan assets
|
|
1,329
|
|
|
883
|
|
|
212
|
|
|
82
|
|
||||
|
Employer contributions
|
|
202
|
|
|
187
|
|
|
14
|
|
|
15
|
|
||||
|
Plan participants’ contributions
|
|
0
|
|
|
0
|
|
|
30
|
|
|
31
|
|
||||
|
Disbursement for settlements
|
|
(57
|
)
|
|
(24
|
)
|
|
0
|
|
|
0
|
|
||||
|
Benefits paid
|
|
(723
|
)
|
|
(681
|
)
|
|
(172
|
)
|
|
(181
|
)
|
||||
|
Foreign currency changes and other
|
|
43
|
|
|
(45
|
)
|
|
0
|
|
|
0
|
|
||||
|
Fair value of plan assets at end of period
|
|
$
|
13,655
|
|
|
$
|
12,861
|
|
|
$
|
1,615
|
|
|
$
|
1,531
|
|
|
Funded status at end of period
|
|
$
|
(183
|
)
|
|
$
|
(56
|
)
|
|
$
|
(381
|
)
|
|
$
|
(553
|
)
|
|
Amounts recognized in the Statements of Financial Position
|
|
|
|
|
|
|
|
|
||||||||
|
Prepaid benefit cost
|
|
$
|
2,645
|
|
|
$
|
2,538
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Accrued benefit liability
|
|
(2,828
|
)
|
|
(2,594
|
)
|
|
(381
|
)
|
|
(553
|
)
|
||||
|
Net amount recognized
|
|
$
|
(183
|
)
|
|
$
|
(56
|
)
|
|
$
|
(381
|
)
|
|
$
|
(553
|
)
|
|
Items recorded in “Accumulated other comprehensive income (loss)” not yet recognized as a component of net periodic (benefit) cost:
|
|
|
|
|
|
|
|
|
||||||||
|
Transition obligation
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Prior service cost
|
|
(22
|
)
|
|
(25
|
)
|
|
10
|
|
|
1
|
|
||||
|
Net actuarial loss
|
|
3,611
|
|
|
3,481
|
|
|
344
|
|
|
557
|
|
||||
|
Net amount not recognized
|
|
$
|
3,589
|
|
|
$
|
3,456
|
|
|
$
|
354
|
|
|
$
|
558
|
|
|
Accumulated benefit obligation
|
|
$
|
(13,190
|
)
|
|
$
|
(12,300
|
)
|
|
$
|
(1,995
|
)
|
|
$
|
(2,084
|
)
|
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Projected benefit obligation
|
|
$
|
2,875
|
|
|
$
|
2,638
|
|
|
Fair value of plan assets
|
|
$
|
47
|
|
|
$
|
44
|
|
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Accumulated benefit obligation
|
|
$
|
2,655
|
|
|
$
|
2,426
|
|
|
Fair value of plan assets
|
|
$
|
0
|
|
|
$
|
4
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement
Benefits
|
||||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Service cost
|
|
$
|
284
|
|
|
$
|
253
|
|
|
$
|
244
|
|
|
$
|
20
|
|
|
$
|
19
|
|
|
$
|
20
|
|
|
Interest cost
|
|
476
|
|
|
498
|
|
|
469
|
|
|
82
|
|
|
91
|
|
|
86
|
|
||||||
|
Expected return on plan assets
|
|
(781
|
)
|
|
(754
|
)
|
|
(775
|
)
|
|
(102
|
)
|
|
(105
|
)
|
|
(115
|
)
|
||||||
|
Amortization of transition obligation
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Amortization of prior service cost
|
|
(3
|
)
|
|
(6
|
)
|
|
(8
|
)
|
|
0
|
|
|
(2
|
)
|
|
(5
|
)
|
||||||
|
Amortization of actuarial (gain) loss, net
|
|
191
|
|
|
181
|
|
|
168
|
|
|
36
|
|
|
41
|
|
|
38
|
|
||||||
|
Settlements
|
|
13
|
|
|
7
|
|
|
5
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Special termination benefits(1)
|
|
4
|
|
|
2
|
|
|
4
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Net periodic (benefit) cost
|
|
$
|
184
|
|
|
$
|
181
|
|
|
$
|
107
|
|
|
$
|
36
|
|
|
$
|
44
|
|
|
$
|
24
|
|
|
(1)
|
Certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination.
|
|
|
|
Pension Benefits
|
|
Other Postretirement
Benefits
|
||||||||||||||||||||
|
|
|
Transition
Obligation
|
|
Prior
Service
Cost
|
|
Net
Actuarial
(Gain) Loss
|
|
Transition
Obligation
|
|
Prior
Service
Cost
|
|
Net
Actuarial
(Gain) Loss
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||
|
Balance, December 31, 2014
|
|
$
|
0
|
|
|
$
|
(42
|
)
|
|
$
|
2,946
|
|
|
$
|
0
|
|
|
$
|
(8
|
)
|
|
$
|
600
|
|
|
Amortization for the period
|
|
0
|
|
|
8
|
|
|
(168
|
)
|
|
0
|
|
|
5
|
|
|
(38
|
)
|
||||||
|
Deferrals for the period
|
|
0
|
|
|
0
|
|
|
405
|
|
|
0
|
|
|
2
|
|
|
63
|
|
||||||
|
Impact of foreign currency changes and other
|
|
0
|
|
|
1
|
|
|
(10
|
)
|
|
0
|
|
|
0
|
|
|
(4
|
)
|
||||||
|
Balance, December 31, 2015
|
|
0
|
|
|
(33
|
)
|
|
3,173
|
|
|
0
|
|
|
(1
|
)
|
|
621
|
|
||||||
|
Amortization for the period
|
|
0
|
|
|
6
|
|
|
(181
|
)
|
|
0
|
|
|
2
|
|
|
(41
|
)
|
||||||
|
Deferrals for the period
|
|
0
|
|
|
3
|
|
|
473
|
|
|
0
|
|
|
0
|
|
|
(23
|
)
|
||||||
|
Impact of foreign currency changes and other
|
|
0
|
|
|
(1
|
)
|
|
16
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Balance, December 31, 2016
|
|
0
|
|
|
(25
|
)
|
|
3,481
|
|
|
0
|
|
|
1
|
|
|
557
|
|
||||||
|
Amortization for the period
|
|
0
|
|
|
3
|
|
|
(191
|
)
|
|
0
|
|
|
0
|
|
|
(36
|
)
|
||||||
|
Deferrals for the period
|
|
0
|
|
|
0
|
|
|
323
|
|
|
0
|
|
|
9
|
|
|
(179
|
)
|
||||||
|
Impact of foreign currency changes and other
|
|
0
|
|
|
0
|
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
2
|
|
||||||
|
Balance, December 31, 2017
|
|
$
|
0
|
|
|
$
|
(22
|
)
|
|
$
|
3,611
|
|
|
$
|
0
|
|
|
$
|
10
|
|
|
$
|
344
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Amortization of prior service cost
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
Amortization of actuarial (gain) loss, net
|
|
214
|
|
|
17
|
|
||
|
Total
|
|
$
|
210
|
|
|
$
|
18
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
Weighted average assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Discount rate (beginning of period)
|
|
4.15
|
%
|
|
4.50
|
%
|
|
4.10
|
%
|
|
4.05
|
%
|
|
4.35
|
%
|
|
3.95
|
%
|
|
Discount rate (end of period)
|
|
3.65
|
%
|
|
4.15
|
%
|
|
4.50
|
%
|
|
3.60
|
%
|
|
4.05
|
%
|
|
4.35
|
%
|
|
Rate of increase in compensation levels (beginning of period)
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Rate of increase in compensation levels (end of period)
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Expected return on plan assets (beginning of period)
|
|
6.25
|
%
|
|
6.25
|
%
|
|
6.25
|
%
|
|
7.00
|
%
|
|
7.00
|
%
|
|
7.00
|
%
|
|
Health care cost trend rates (beginning of period)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
6.60
|
%
|
|
7.00
|
%
|
|
6.66
|
%
|
|
Health care cost trend rates (end of period)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
6.20
|
%
|
|
6.60
|
%
|
|
7.00
|
%
|
|
For 2017, 2016 and 2015, the ultimate health care cost trend rate after gradual decrease until: 2021, 2021, 2019, (beginning of period)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
|
For 2017, 2016 and 2015, the ultimate health care cost trend rate after gradual decrease until: 2024, 2021, 2021 (end of period)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
|
|
|
Other Postretirement
Benefits
|
||
|
|
|
(in millions)
|
||
|
One percentage point increase
|
|
|
||
|
Increase in total service and interest costs
|
|
$
|
7
|
|
|
Increase in postretirement benefit obligation
|
|
130
|
|
|
|
|
|
|
||
|
One percentage point decrease
|
|
|
||
|
Decrease in total service and interest costs
|
|
$
|
5
|
|
|
Decrease in postretirement benefit obligation
|
|
98
|
|
|
|
|
|
Pension
|
|
Postretirement
|
||||||||
|
|
|
Minimum
|
|
Maximum
|
|
Minimum
|
|
Maximum
|
||||
|
Asset Category
|
|
|
|
|
|
|
|
|
||||
|
U.S. Equities
|
|
2
|
%
|
|
16
|
%
|
|
29
|
%
|
|
66
|
%
|
|
International Equities
|
|
2
|
%
|
|
17
|
%
|
|
2
|
%
|
|
24
|
%
|
|
Fixed Maturities
|
|
48
|
%
|
|
67
|
%
|
|
4
|
%
|
|
51
|
%
|
|
Short-term Investments
|
|
0
|
%
|
|
15
|
%
|
|
0
|
%
|
|
39
|
%
|
|
Real Estate
|
|
2
|
%
|
|
16
|
%
|
|
0
|
%
|
|
0
|
%
|
|
Other
|
|
0
|
%
|
|
17
|
%
|
|
0
|
%
|
|
0
|
%
|
|
|
|
As of December 31, 2017
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
NAV Practical Expedient
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
U.S. Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(1)
|
|
$
|
0
|
|
|
$
|
552
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
552
|
|
|
Common/collective trusts(1)
|
|
0
|
|
|
79
|
|
|
0
|
|
|
0
|
|
|
79
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
631
|
|
|||||||||
|
International Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(2)
|
|
0
|
|
|
365
|
|
|
0
|
|
|
0
|
|
|
365
|
|
|||||
|
Common/collective trusts(3)
|
|
0
|
|
|
315
|
|
|
0
|
|
|
0
|
|
|
315
|
|
|||||
|
United Kingdom insurance pooled funds(4)
|
|
0
|
|
|
56
|
|
|
0
|
|
|
0
|
|
|
56
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
736
|
|
|||||||||
|
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(5)
|
|
0
|
|
|
1,319
|
|
|
38
|
|
|
0
|
|
|
1,357
|
|
|||||
|
Common/collective trusts(6)
|
|
0
|
|
|
509
|
|
|
0
|
|
|
0
|
|
|
509
|
|
|||||
|
U.S. government securities (federal):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Mortgage-backed
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||
|
Other U.S. government securities
|
|
0
|
|
|
1,402
|
|
|
0
|
|
|
0
|
|
|
1,402
|
|
|||||
|
U.S. government securities (state & other)
|
|
0
|
|
|
556
|
|
|
0
|
|
|
0
|
|
|
556
|
|
|||||
|
Non-U.S. government securities
|
|
0
|
|
|
10
|
|
|
0
|
|
|
0
|
|
|
10
|
|
|||||
|
United Kingdom insurance pooled funds(7)
|
|
0
|
|
|
324
|
|
|
0
|
|
|
0
|
|
|
324
|
|
|||||
|
Corporate Debt:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Corporate bonds(8)
|
|
0
|
|
|
3,621
|
|
|
1
|
|
|
0
|
|
|
3,622
|
|
|||||
|
Asset-backed
|
|
0
|
|
|
5
|
|
|
0
|
|
|
0
|
|
|
5
|
|
|||||
|
Collateralized Mortgage Obligations(9)
|
|
0
|
|
|
492
|
|
|
0
|
|
|
0
|
|
|
492
|
|
|||||
|
Interest rate swaps (Notional amount: $1,498)
|
|
0
|
|
|
12
|
|
|
0
|
|
|
0
|
|
|
12
|
|
|||||
|
Guaranteed investment contract
|
|
0
|
|
|
47
|
|
|
0
|
|
|
0
|
|
|
47
|
|
|||||
|
Other(10)
|
|
578
|
|
|
1
|
|
|
39
|
|
|
0
|
|
|
618
|
|
|||||
|
Unrealized gain (loss) on investment of securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
lending collateral(11)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
8,955
|
|
|||||||||
|
Short-term Investments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts
|
|
0
|
|
|
56
|
|
|
0
|
|
|
0
|
|
|
56
|
|
|||||
|
United Kingdom insurance pooled funds
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
57
|
|
|||||||||
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(12)
|
|
0
|
|
|
0
|
|
|
714
|
|
|
0
|
|
|
714
|
|
|||||
|
Partnerships
|
|
0
|
|
|
0
|
|
|
0
|
|
|
435
|
|
|
435
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
1,149
|
|
|||||||||
|
Other:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Partnerships
|
|
0
|
|
|
0
|
|
|
0
|
|
|
706
|
|
|
706
|
|
|||||
|
Hedge funds
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1,421
|
|
|
1,421
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
2,127
|
|
|||||||||
|
Total
|
|
$
|
578
|
|
|
$
|
9,723
|
|
|
$
|
792
|
|
|
$
|
2,562
|
|
|
$
|
13,655
|
|
|
|
|
As of December 31, 2016
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
NAV Practical Expedient
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
U.S. Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(1)
|
|
$
|
0
|
|
|
$
|
472
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
472
|
|
|
Common/collective trusts(1)
|
|
0
|
|
|
66
|
|
|
0
|
|
|
0
|
|
|
66
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
538
|
|
|||||||||
|
International Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(2)
|
|
0
|
|
|
269
|
|
|
0
|
|
|
0
|
|
|
269
|
|
|||||
|
Common/collective trusts(3)
|
|
0
|
|
|
219
|
|
|
0
|
|
|
0
|
|
|
219
|
|
|||||
|
United Kingdom insurance pooled funds(4)
|
|
0
|
|
|
49
|
|
|
0
|
|
|
0
|
|
|
49
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
537
|
|
|||||||||
|
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(5)
|
|
0
|
|
|
1,247
|
|
|
36
|
|
|
0
|
|
|
1,283
|
|
|||||
|
Common/collective trusts(6)
|
|
0
|
|
|
441
|
|
|
0
|
|
|
0
|
|
|
441
|
|
|||||
|
U.S. government securities (federal):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Mortgage-backed
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||
|
Other U.S. government securities
|
|
0
|
|
|
993
|
|
|
0
|
|
|
0
|
|
|
993
|
|
|||||
|
U.S. government securities (state & other)
|
|
0
|
|
|
521
|
|
|
0
|
|
|
0
|
|
|
521
|
|
|||||
|
Non-U.S. government securities
|
|
0
|
|
|
14
|
|
|
0
|
|
|
0
|
|
|
14
|
|
|||||
|
United Kingdom insurance pooled funds(7)
|
|
0
|
|
|
305
|
|
|
0
|
|
|
0
|
|
|
305
|
|
|||||
|
Corporate Debt:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Corporate bonds(8)
|
|
0
|
|
|
4,039
|
|
|
0
|
|
|
0
|
|
|
4,039
|
|
|||||
|
Asset-backed
|
|
0
|
|
|
7
|
|
|
0
|
|
|
0
|
|
|
7
|
|
|||||
|
Collateralized Mortgage Obligations(9)
|
|
0
|
|
|
506
|
|
|
0
|
|
|
0
|
|
|
506
|
|
|||||
|
Interest rate swaps (Notional amount: $2,595)
|
|
0
|
|
|
9
|
|
|
0
|
|
|
0
|
|
|
9
|
|
|||||
|
Guaranteed investment contract
|
|
0
|
|
|
39
|
|
|
0
|
|
|
0
|
|
|
39
|
|
|||||
|
Other(10)
|
|
533
|
|
|
7
|
|
|
49
|
|
|
0
|
|
|
589
|
|
|||||
|
Unrealized gain (loss) on investment of securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
lending collateral(11)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
8,747
|
|
|||||||||
|
Short-term Investments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts
|
|
0
|
|
|
55
|
|
|
0
|
|
|
0
|
|
|
55
|
|
|||||
|
United Kingdom insurance pooled funds
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
56
|
|
|||||||||
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Pooled separate accounts(12)
|
|
0
|
|
|
0
|
|
|
666
|
|
|
0
|
|
|
666
|
|
|||||
|
Partnerships
|
|
0
|
|
|
0
|
|
|
0
|
|
|
371
|
|
|
371
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
1,037
|
|
|||||||||
|
Other:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Partnerships
|
|
0
|
|
|
0
|
|
|
0
|
|
|
551
|
|
|
551
|
|
|||||
|
Hedge funds
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1,395
|
|
|
1,395
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
1,946
|
|
|||||||||
|
Total
|
|
$
|
533
|
|
|
$
|
9,260
|
|
|
$
|
751
|
|
|
$
|
2,317
|
|
|
$
|
12,861
|
|
|
(1)
|
These categories invest in U.S. equity funds whose objective is to track or outperform various indexes.
|
|
(2)
|
This category invests in a large cap international equity funds whose objective is to track an index.
|
|
(3)
|
This category invests in international equity funds, primarily large cap, whose objective is to outperform various indexes. This category also includes a global equity fund, primarily focused on new market leaders with sustainable competitive advantage.
|
|
(4)
|
This category invests in an international equity fund whose objective is to track an index.
|
|
(5)
|
This category invests in bond funds, primarily highly rated private placement securities.
|
|
(6)
|
This category invests in bond funds, primarily highly rated public securities whose objective is to outperform an index.
|
|
(7)
|
This category invests in bond funds, primarily highly rated corporate securities.
|
|
(8)
|
This category invests in highly rated corporate securities.
|
|
(9)
|
This category invests in highly rated Collateralized Mortgage Obligations.
|
|
(10)
|
Primarily cash and cash equivalents, short-term investments, payables and receivables, and open future contract positions (including fixed income collateral).
|
|
(11)
|
The contractual net value of the investment of securities lending collateral invested primarily in short-term bond funds is
$411 million
and
$627 million
and the liability for securities lending collateral is
$411 million
and
$627 million
for the years ended December 31, 2017 and 2016, respectively.
|
|
(12)
|
This category invests in commercial real estate and real estate securities funds, whose objective is to outperform an index.
|
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
|
Fixed
Maturities–
Pooled
Separate
Accounts
|
|
Fixed
Maturities–
Corporate Debt–
Corporate Bonds
|
|
Fixed
Maturities–
Other
|
|
Real Estate–
Pooled
Separate
Accounts
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Fair Value, beginning of period
|
|
$
|
36
|
|
|
$
|
0
|
|
|
$
|
49
|
|
|
$
|
666
|
|
|
Actual Return on Assets:
|
|
|
|
|
|
|
|
|
||||||||
|
Relating to assets still held at the reporting date
|
|
2
|
|
|
0
|
|
|
0
|
|
|
50
|
|
||||
|
Relating to assets sold during the period
|
|
0
|
|
|
0
|
|
|
0
|
|
|
6
|
|
||||
|
Purchases, sales and settlements
|
|
0
|
|
|
0
|
|
|
(10
|
)
|
|
(8
|
)
|
||||
|
Transfers in and/or out of Level 3
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
||||
|
Fair Value, end of period
|
|
$
|
38
|
|
|
$
|
1
|
|
|
$
|
39
|
|
|
$
|
714
|
|
|
|
|
Year Ended December 31, 2016
|
||||||||||
|
|
|
Fixed
Maturities–
Pooled
Separate
Accounts
|
|
Fixed
Maturities–
Other
|
|
Real Estate–
Pooled
Separate
Accounts
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Fair Value, beginning of period
|
|
$
|
35
|
|
|
$
|
93
|
|
|
$
|
607
|
|
|
Actual Return on Assets:
|
|
|
|
|
|
|
||||||
|
Relating to assets still held at the reporting date
|
|
1
|
|
|
0
|
|
|
61
|
|
|||
|
Relating to assets sold during the period
|
|
0
|
|
|
0
|
|
|
6
|
|
|||
|
Purchases, sales and settlements
|
|
0
|
|
|
(44
|
)
|
|
(8
|
)
|
|||
|
Transfers in and/or out of Level 3
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
Fair Value, end of period
|
|
$
|
36
|
|
|
$
|
49
|
|
|
$
|
666
|
|
|
|
|
As of December 31, 2017
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
NAV Practical Expedient
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
U.S. Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Variable Life Insurance Policies(1)
|
|
$
|
0
|
|
|
$
|
605
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
605
|
|
|
Common trusts(2)
|
|
0
|
|
|
182
|
|
|
0
|
|
|
0
|
|
|
182
|
|
|||||
|
Equities
|
|
0
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
789
|
|
|||||||||
|
International Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Variable Life Insurance Policies(3)
|
|
0
|
|
|
106
|
|
|
0
|
|
|
0
|
|
|
106
|
|
|||||
|
Common trusts(4)
|
|
0
|
|
|
110
|
|
|
0
|
|
|
0
|
|
|
110
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
216
|
|
|||||||||
|
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Variable Life Insurance Policies(5)
|
|
0
|
|
|
163
|
|
|
0
|
|
|
0
|
|
|
163
|
|
|||||
|
Common trusts(5)
|
|
0
|
|
|
52
|
|
|
0
|
|
|
0
|
|
|
52
|
|
|||||
|
U.S. government securities (federal):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other U.S. government securities
|
|
0
|
|
|
87
|
|
|
0
|
|
|
0
|
|
|
87
|
|
|||||
|
Non-U.S. government securities
|
|
0
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|||||
|
Corporate Debt:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Corporate bonds(6)
|
|
0
|
|
|
151
|
|
|
0
|
|
|
0
|
|
|
151
|
|
|||||
|
Asset-backed
|
|
0
|
|
|
28
|
|
|
0
|
|
|
0
|
|
|
28
|
|
|||||
|
Collateralized Mortgage Obligations(7)
|
|
0
|
|
|
27
|
|
|
2
|
|
|
0
|
|
|
29
|
|
|||||
|
Collateralized Loan Obligations(8)
|
|
0
|
|
|
28
|
|
|
2
|
|
|
0
|
|
|
30
|
|
|||||
|
Other(9)
|
|
6
|
|
|
0
|
|
|
5
|
|
|
0
|
|
|
11
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
553
|
|
|||||||||
|
Short-term Investments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Registered investment companies
|
|
57
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
57
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
57
|
|
|||||||||
|
Total
|
|
$
|
63
|
|
|
$
|
1,543
|
|
|
$
|
9
|
|
|
$
|
0
|
|
|
$
|
1,615
|
|
|
|
|
As of December 31, 2016
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
NAV Practical Expedient
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
U.S. Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Variable Life Insurance Policies(1)
|
|
$
|
0
|
|
|
$
|
506
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
506
|
|
|
Common trusts(2)
|
|
0
|
|
|
170
|
|
|
0
|
|
|
0
|
|
|
170
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
676
|
|
|||||||||
|
International Equities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Variable Life Insurance Policies(3)
|
|
0
|
|
|
90
|
|
|
0
|
|
|
0
|
|
|
90
|
|
|||||
|
Common trusts(4)
|
|
0
|
|
|
96
|
|
|
0
|
|
|
0
|
|
|
96
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
186
|
|
|||||||||
|
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Variable Life Insurance Policies(5)
|
|
0
|
|
|
157
|
|
|
0
|
|
|
0
|
|
|
157
|
|
|||||
|
Common trusts(5)
|
|
0
|
|
|
59
|
|
|
0
|
|
|
0
|
|
|
59
|
|
|||||
|
U.S. government securities (federal):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other U.S. government securities
|
|
0
|
|
|
78
|
|
|
0
|
|
|
0
|
|
|
78
|
|
|||||
|
Non-U.S. government securities
|
|
0
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|||||
|
Corporate Debt:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Corporate bonds(6)
|
|
0
|
|
|
176
|
|
|
0
|
|
|
0
|
|
|
176
|
|
|||||
|
Asset-backed
|
|
0
|
|
|
48
|
|
|
1
|
|
|
0
|
|
|
49
|
|
|||||
|
Collateralized Mortgage Obligations(7)
|
|
0
|
|
|
22
|
|
|
5
|
|
|
0
|
|
|
27
|
|
|||||
|
Interest rate swaps (Notional amount: $271)
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||
|
Other(9)
|
|
1
|
|
|
0
|
|
|
5
|
|
|
0
|
|
|
6
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
555
|
|
|||||||||
|
Short-term Investments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Registered investment companies
|
|
114
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
114
|
|
|||||
|
Subtotal
|
|
|
|
|
|
|
|
|
|
114
|
|
|||||||||
|
Total
|
|
$
|
115
|
|
|
$
|
1,405
|
|
|
$
|
11
|
|
|
$
|
0
|
|
|
$
|
1,531
|
|
|
(1)
|
This category invests in U.S. equity funds, primarily large cap equities whose objective is to track an index via pooled separate accounts and registered investment companies.
|
|
(2)
|
This category invests in U.S. equity funds, primarily large cap equities.
|
|
(3)
|
This category invests in international equity funds, primarily large cap international equities whose objective is to track an index.
|
|
(4)
|
This category fund invests in large cap international equity fund whose objective is to outperform an index.
|
|
(5)
|
This category invests in U.S. government and corporate bond funds.
|
|
(6)
|
This category invests in highly rated corporate bonds.
|
|
(7)
|
This category invests in highly rated Collateralized Mortgage Obligations.
|
|
(8)
|
This category invests in highly rated Collateralized Loan Obligations.
|
|
(9)
|
Cash and cash equivalents, short-term investments, payables and receivables and open future contract positions (including fixed income collateral).
|
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
|
Fixed
Maturities–
Corporate Debt–
Asset-backed
|
|
Fixed
Maturities–
Corporate Debt–
Collateralized Mortgage Obligations
|
|
Fixed
Maturities–
Corporate Debt–
Collateralized Loan Obligations
|
|
Fixed
Maturities–
Other
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
|
Fair Value, beginning of period
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
0
|
|
|
$
|
5
|
|
|
Actual Return on Assets:
|
|
|
|
|
|
|
|
|
||||||||
|
Relating to assets still held at the reporting date
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Relating to assets sold during the period
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Purchases, sales and settlements
|
|
0
|
|
|
(3
|
)
|
|
2
|
|
|
0
|
|
||||
|
Transfers in and/or out of Level 3(1)
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Fair Value, end of period
|
|
$
|
0
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
5
|
|
|
|
|
Year Ended December 31, 2016
|
||||||||||
|
|
|
Fixed
Maturities–
Corporate Debt–
Asset-backed
|
|
Fixed
Maturities–
Corporate Debt–
Collateralized Mortgage Obligations
|
|
Fixed
Maturities–
Other
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Fair Value, beginning of period
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3
|
|
|
Actual Return on Assets:
|
|
|
|
|
|
|
||||||
|
Relating to assets still held at the reporting date
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
Relating to assets sold during the period
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
Purchases, sales and settlements
|
|
1
|
|
|
5
|
|
|
2
|
|
|||
|
Transfers in and/or out of Level 3
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
Fair Value, end of period
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
(1)
|
The transfers from level 3 to level 2 are due to the availability of external pricing sources.
|
|
|
|
Pension
Percentage of Plan Assets
|
|
Postretirement
Percentage of Plan Assets
|
||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
|
Asset Category
|
|
|
|
|
|
|
|
|
||||
|
U.S. Equities
|
|
5
|
%
|
|
4
|
%
|
|
49
|
%
|
|
44
|
%
|
|
International Equities
|
|
5
|
|
|
4
|
|
|
13
|
|
|
12
|
|
|
Fixed Maturities
|
|
66
|
|
|
68
|
|
|
34
|
|
|
36
|
|
|
Short-term Investments
|
|
0
|
|
|
0
|
|
|
4
|
|
|
8
|
|
|
Real Estate
|
|
8
|
|
|
8
|
|
|
0
|
|
|
0
|
|
|
Other
|
|
16
|
|
|
16
|
|
|
0
|
|
|
0
|
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
Pension Benefit
Payments
|
|
Other
Postretirement
Benefit Payments
|
|
Other
Postretirement
Benefits–
Medicare Part
D Subsidy
Receipts
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
2018
|
|
$
|
789
|
|
|
$
|
149
|
|
|
$
|
10
|
|
|
2019
|
|
849
|
|
|
152
|
|
|
10
|
|
|||
|
2020
|
|
803
|
|
|
154
|
|
|
10
|
|
|||
|
2021
|
|
827
|
|
|
155
|
|
|
11
|
|
|||
|
2022
|
|
866
|
|
|
155
|
|
|
11
|
|
|||
|
2023-2027
|
|
4,534
|
|
|
766
|
|
|
59
|
|
|||
|
Total
|
|
$
|
8,668
|
|
|
$
|
1,531
|
|
|
$
|
111
|
|
|
19.
|
INCOME TAXES
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Current tax expense (benefit):
|
|
|
|
|
|
|
||||||
|
U.S.
|
|
$
|
(47
|
)
|
|
$
|
31
|
|
|
$
|
738
|
|
|
State and local
|
|
11
|
|
|
9
|
|
|
3
|
|
|||
|
Foreign
|
|
594
|
|
|
595
|
|
|
622
|
|
|||
|
Total current tax expense (benefit)
|
|
558
|
|
|
635
|
|
|
1,363
|
|
|||
|
Deferred tax expense (benefit):
|
|
|
|
|
|
|
||||||
|
U.S.
|
|
(2,552
|
)
|
|
132
|
|
|
585
|
|
|||
|
State and local
|
|
0
|
|
|
5
|
|
|
4
|
|
|||
|
Foreign
|
|
556
|
|
|
563
|
|
|
120
|
|
|||
|
Total deferred tax expense (benefit)
|
|
(1,996
|
)
|
|
700
|
|
|
709
|
|
|||
|
Total income tax expense (benefit) on income (loss) before equity in earnings of operating joint ventures
|
|
(1,438
|
)
|
|
1,335
|
|
|
2,072
|
|
|||
|
Income tax expense (benefit) on equity in earnings of operating joint ventures
|
|
33
|
|
|
11
|
|
|
(1
|
)
|
|||
|
Income tax expense (benefit) on discontinued operations
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
Income tax expense (benefit) reported in equity related to:
|
|
|
|
|
|
|
||||||
|
Other comprehensive income
|
|
784
|
|
|
1,305
|
|
|
(2,213
|
)
|
|||
|
Stock-based compensation programs
|
|
(2
|
)
|
|
(30
|
)
|
|
(22
|
)
|
|||
|
Total income taxes
|
|
$
|
(623
|
)
|
|
$
|
2,621
|
|
|
$
|
(164
|
)
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Expected federal income tax expense (benefit)
|
|
$
|
2,270
|
|
|
$
|
1,997
|
|
|
$
|
2,719
|
|
|
Non-taxable investment income
|
|
(369
|
)
|
|
(352
|
)
|
|
(341
|
)
|
|||
|
Foreign taxes at other than U.S. rate
|
|
(249
|
)
|
|
(172
|
)
|
|
(51
|
)
|
|||
|
Low-income housing and other tax credits
|
|
(126
|
)
|
|
(118
|
)
|
|
(116
|
)
|
|||
|
Changes in tax law
|
|
(2,858
|
)
|
|
0
|
|
|
(108
|
)
|
|||
|
Other
|
|
(106
|
)
|
|
(20
|
)
|
|
(31
|
)
|
|||
|
Reported income tax expense (benefit)
|
|
$
|
(1,438
|
)
|
|
$
|
1,335
|
|
|
$
|
2,072
|
|
|
Effective tax rate
|
|
(22.2
|
)%
|
|
23.4
|
%
|
|
26.7
|
%
|
|||
|
•
|
$1,592 million
tax benefit from the reduction in net deferred tax liabilities to reflect the reduction in the U.S. tax rate from
35%
to
21%
; and
|
|
•
|
$1,785 million
tax benefit from the adoption of a modified territorial international tax system which required the Company to eliminate net deferred tax liabilities related to undistributed foreign earnings and to adjust certain international net deferred tax liabilities from
35%
down to their lower local rates.
|
|
•
|
$497 million
tax expense related to the one-time toll tax on the undistributed, non-previously taxed post-1986 foreign earnings as part of the transition to the territorial system.
|
|
|
|
As of December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Deferred tax assets:
|
|
|
|
|
||||
|
Insurance reserves
|
|
$
|
821
|
|
|
$
|
1,856
|
|
|
Policyholders’ dividends
|
|
1,262
|
|
|
1,849
|
|
||
|
Net operating and capital loss carryforwards
|
|
281
|
|
|
190
|
|
||
|
Employee benefits
|
|
635
|
|
|
789
|
|
||
|
Investments
|
|
862
|
|
|
1,166
|
|
||
|
Deferred tax assets before valuation allowance
|
|
3,861
|
|
|
5,850
|
|
||
|
Valuation allowance
|
|
(214
|
)
|
|
(163
|
)
|
||
|
Deferred tax assets after valuation allowance
|
|
3,647
|
|
|
5,687
|
|
||
|
Deferred tax liabilities:
|
|
|
|
|
||||
|
Net unrealized investment gains
|
|
9,062
|
|
|
10,551
|
|
||
|
Deferred policy acquisition costs
|
|
3,625
|
|
|
4,443
|
|
||
|
Unremitted foreign earnings
|
|
119
|
|
|
380
|
|
||
|
Value of business acquired
|
|
414
|
|
|
715
|
|
||
|
Other
|
|
41
|
|
|
393
|
|
||
|
Deferred tax liabilities
|
|
13,261
|
|
|
16,482
|
|
||
|
Net deferred tax liability
|
|
$
|
(9,614
|
)
|
|
$
|
(10,795
|
)
|
|
|
|
As of December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Valuation allowance related to state and local deferred tax assets
|
|
$
|
196
|
|
|
$
|
138
|
|
|
Valuation allowance related to foreign operations deferred tax assets
|
|
18
|
|
|
25
|
|
||
|
Total valuation allowance
|
|
$
|
214
|
|
|
$
|
163
|
|
|
|
|
As of December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Federal net operating and capital loss carryforwards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
State net operating and capital loss carryforwards(1)
|
|
$
|
5,806
|
|
|
$
|
4,201
|
|
|
Foreign operating loss carryforwards(2)
|
|
$
|
58
|
|
|
$
|
45
|
|
|
Alternative minimum tax credits(3)
|
|
$
|
0
|
|
|
$
|
66
|
|
|
(1)
|
Expires between 2018 and 2037.
|
|
(2)
|
$16 million
expires between 2020 and 2035 and
$42 million
has an unlimited carryforward.
|
|
(3)
|
Effective in 2018, the alternative minimum tax is repealed for corporations.
|
|
Unremitted earnings
are
indefinitely reinvested
|
Unremitted earnings
are not
indefinitely reinvested
|
|
All operations in Korea and Luxembourg, and its insurance operations in Chile, China, Italy, Poland and Taiwan
|
Insurance operations in Indonesia and Ghana, and non-insurance operations in China, Italy and Taiwan
|
|
|
|
At December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Undistributed earnings of foreign subsidiaries (assuming indefinite reinvestment for all tax purposes)(1)
|
|
N/A
|
|
|
$
|
4,231
|
|
|
$
|
3,215
|
|
|
|
Undistributed earnings of foreign subsidiaries (assuming indefinite reinvestment only for Withholding Taxes)
|
|
$
|
2,603
|
|
|
N/A
|
|
|
N/A
|
|
||
|
(1)
|
Consistent with the Tax Act of 2017, the Company provides U.S. income tax for all unremitted earnings of the Company’s foreign affiliates as of December 31, 2017.
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Balance at January 1,
|
|
$
|
26
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
Increases in unrecognized tax benefits—prior years
|
|
11
|
|
|
10
|
|
|
0
|
|
|||
|
(Decreases) in unrecognized tax benefits—prior years
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|||
|
Increases in unrecognized tax benefits—current year
|
|
14
|
|
|
10
|
|
|
0
|
|
|||
|
(Decreases) in unrecognized tax benefits—current year
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
Settlements with taxing authorities
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|||
|
Balance at December 31,
|
|
$
|
45
|
|
|
$
|
26
|
|
|
$
|
6
|
|
|
Unrecognized tax benefits that, if recognized, would favorably impact the effective rate
|
|
$
|
45
|
|
|
$
|
26
|
|
|
$
|
6
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Interest and penalties recognized in the Consolidated Statements of Operations
|
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
$
|
0
|
|
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Interest and penalties recognized in liabilities in the Consolidated Statements of Financial Position
|
|
$
|
1
|
|
|
$
|
5
|
|
|
Major Tax Jurisdiction
|
|
Open Tax Years
|
|
United States
|
|
2014-2016
|
|
Japan
|
|
Fiscal years ended March 31, 2013-2017
|
|
Korea
|
|
Fiscal year ended March 31, 2013, the periods ended December 31, 2013-2016
|
|
20.
|
FAIR VALUE OF ASSETS AND LIABILITIES
|
|
|
As of December 31, 2017
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
0
|
|
|
$
|
26,086
|
|
|
$
|
52
|
|
|
$
|
|
$
|
26,138
|
|
||
|
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
10,466
|
|
|
5
|
|
|
|
|
10,471
|
|
||||||
|
Foreign government bonds
|
0
|
|
|
103,271
|
|
|
148
|
|
|
|
|
103,419
|
|
||||||
|
U.S. corporate public securities
|
0
|
|
|
90,115
|
|
|
109
|
|
|
|
|
90,224
|
|
||||||
|
U.S. corporate private securities(2)
|
0
|
|
|
31,845
|
|
|
1,889
|
|
|
|
|
33,734
|
|
||||||
|
Foreign corporate public securities
|
0
|
|
|
29,329
|
|
|
79
|
|
|
|
|
29,408
|
|
||||||
|
Foreign corporate private securities
|
0
|
|
|
23,528
|
|
|
699
|
|
|
|
|
24,227
|
|
||||||
|
Asset-backed securities(3)
|
0
|
|
|
5,629
|
|
|
6,604
|
|
|
|
|
12,233
|
|
||||||
|
Commercial mortgage-backed securities
|
0
|
|
|
13,268
|
|
|
13
|
|
|
|
|
13,281
|
|
||||||
|
Residential mortgage-backed securities
|
0
|
|
|
3,547
|
|
|
98
|
|
|
|
|
3,645
|
|
||||||
|
Subtotal
|
0
|
|
|
337,084
|
|
|
9,696
|
|
|
|
|
346,780
|
|
||||||
|
Trading account assets:(4)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
0
|
|
|
328
|
|
|
0
|
|
|
|
|
328
|
|
||||||
|
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
208
|
|
|
0
|
|
|
|
|
208
|
|
||||||
|
Foreign government bonds
|
0
|
|
|
857
|
|
|
223
|
|
|
|
|
1,080
|
|
||||||
|
Corporate securities
|
0
|
|
|
16,712
|
|
|
552
|
|
|
|
|
17,264
|
|
||||||
|
Asset-backed securities(3)
|
0
|
|
|
697
|
|
|
788
|
|
|
|
|
1,485
|
|
||||||
|
Commercial mortgage-backed securities
|
0
|
|
|
2,321
|
|
|
0
|
|
|
|
|
2,321
|
|
||||||
|
Residential mortgage-backed securities
|
0
|
|
|
1,029
|
|
|
1
|
|
|
|
|
1,030
|
|
||||||
|
Equity securities
|
2,015
|
|
|
274
|
|
|
509
|
|
|
|
|
2,798
|
|
||||||
|
All other(5)
|
56
|
|
|
10,763
|
|
|
8
|
|
|
(9,601
|
)
|
|
1,226
|
|
|||||
|
Subtotal
|
2,071
|
|
|
33,189
|
|
|
2,081
|
|
|
(9,601
|
)
|
|
27,740
|
|
|||||
|
Equity securities, available-for-sale
|
5,344
|
|
|
540
|
|
|
290
|
|
|
|
|
6,174
|
|
||||||
|
Commercial mortgage and other loans
|
0
|
|
|
593
|
|
|
0
|
|
|
|
|
593
|
|
||||||
|
Other long-term investments(6)
|
24
|
|
|
111
|
|
|
136
|
|
|
1
|
|
|
272
|
|
|||||
|
Short-term investments
|
3,906
|
|
|
1,850
|
|
|
8
|
|
|
|
|
5,764
|
|
||||||
|
Cash equivalents
|
1,900
|
|
|
6,398
|
|
|
0
|
|
|
|
|
8,298
|
|
||||||
|
Other assets
|
0
|
|
|
1
|
|
|
13
|
|
|
|
|
14
|
|
||||||
|
Separate account assets(7)(8)
|
45,397
|
|
|
232,874
|
|
|
2,122
|
|
|
|
|
280,393
|
|
||||||
|
Total assets
|
$
|
58,642
|
|
|
$
|
612,640
|
|
|
$
|
14,346
|
|
|
$
|
(9,600
|
)
|
|
$
|
676,028
|
|
|
Future policy benefits(9)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
8,720
|
|
|
$
|
|
$
|
8,720
|
|
||
|
Other liabilities
|
4
|
|
|
5,946
|
|
|
50
|
|
|
(5,312
|
)
|
|
688
|
|
|||||
|
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
1,196
|
|
|
|
|
1,196
|
|
||||||
|
Total liabilities
|
$
|
4
|
|
|
$
|
5,946
|
|
|
$
|
9,966
|
|
|
$
|
(5,312
|
)
|
|
$
|
10,604
|
|
|
|
As of December 31, 2016
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
0
|
|
|
$
|
23,784
|
|
|
$
|
0
|
|
|
$
|
|
$
|
23,784
|
|
||
|
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
9,687
|
|
|
5
|
|
|
|
|
9,692
|
|
||||||
|
Foreign government bonds
|
0
|
|
|
96,132
|
|
|
124
|
|
|
|
|
96,256
|
|
||||||
|
U.S. corporate public securities
|
0
|
|
|
81,350
|
|
|
261
|
|
|
|
|
81,611
|
|
||||||
|
U.S. corporate private securities(2)
|
0
|
|
|
30,434
|
|
|
1,354
|
|
|
|
|
31,788
|
|
||||||
|
Foreign corporate public securities
|
0
|
|
|
28,166
|
|
|
71
|
|
|
|
|
28,237
|
|
||||||
|
Foreign corporate private securities
|
0
|
|
|
20,393
|
|
|
487
|
|
|
|
|
20,880
|
|
||||||
|
Asset-backed securities(3)
|
0
|
|
|
7,591
|
|
|
4,344
|
|
|
|
|
11,935
|
|
||||||
|
Commercial mortgage-backed securities
|
0
|
|
|
12,690
|
|
|
14
|
|
|
|
|
12,704
|
|
||||||
|
Residential mortgage-backed securities
|
0
|
|
|
4,335
|
|
|
197
|
|
|
|
|
4,532
|
|
||||||
|
Subtotal
|
0
|
|
|
314,562
|
|
|
6,857
|
|
|
|
|
321,419
|
|
||||||
|
Trading account assets:(4)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
0
|
|
|
301
|
|
|
0
|
|
|
|
|
301
|
|
||||||
|
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
194
|
|
|
0
|
|
|
|
|
194
|
|
||||||
|
Foreign government bonds
|
0
|
|
|
714
|
|
|
227
|
|
|
|
|
941
|
|
||||||
|
Corporate securities
|
0
|
|
|
16,992
|
|
|
188
|
|
|
|
|
17,180
|
|
||||||
|
Asset-backed securities(3)
|
0
|
|
|
1,086
|
|
|
329
|
|
|
|
|
1,415
|
|
||||||
|
Commercial mortgage-backed securities
|
0
|
|
|
2,061
|
|
|
1
|
|
|
|
|
2,062
|
|
||||||
|
Residential mortgage-backed securities
|
0
|
|
|
1,208
|
|
|
2
|
|
|
|
|
1,210
|
|
||||||
|
Equity securities
|
1,690
|
|
|
214
|
|
|
487
|
|
|
|
|
2,391
|
|
||||||
|
All other(5)
|
208
|
|
|
13,259
|
|
|
1
|
|
|
(11,708
|
)
|
|
1,760
|
|
|||||
|
Subtotal
|
1,898
|
|
|
36,029
|
|
|
1,235
|
|
|
(11,708
|
)
|
|
27,454
|
|
|||||
|
Equity securities, available-for-sale
|
6,033
|
|
|
3,450
|
|
|
265
|
|
|
|
|
9,748
|
|
||||||
|
Commercial mortgage and other loans
|
0
|
|
|
519
|
|
|
0
|
|
|
|
|
519
|
|
||||||
|
Other long-term investments(6)
|
44
|
|
|
106
|
|
|
7
|
|
|
(8
|
)
|
|
149
|
|
|||||
|
Short-term investments
|
5,623
|
|
|
1,558
|
|
|
1
|
|
|
|
|
7,182
|
|
||||||
|
Cash equivalents
|
3,885
|
|
|
4,421
|
|
|
0
|
|
|
|
|
8,306
|
|
||||||
|
Other assets
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
|
Separate account assets(7)(8)
|
38,915
|
|
|
221,253
|
|
|
1,849
|
|
|
|
|
262,017
|
|
||||||
|
Total assets
|
$
|
56,398
|
|
|
$
|
581,898
|
|
|
$
|
10,214
|
|
|
$
|
(11,716
|
)
|
|
$
|
636,794
|
|
|
Future policy benefits(9)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
8,238
|
|
|
$
|
|
$
|
8,238
|
|
||
|
Other liabilities
|
8
|
|
|
6,284
|
|
|
22
|
|
|
(5,945
|
)
|
|
369
|
|
|||||
|
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
1,839
|
|
|
|
|
1,839
|
|
||||||
|
Total liabilities
|
$
|
8
|
|
|
$
|
6,284
|
|
|
$
|
10,099
|
|
|
$
|
(5,945
|
)
|
|
$
|
10,446
|
|
|
(1)
|
“Netting” amounts represent cash collateral of
$4,288 million
and
$5,771 million
as of
December 31, 2017
and
2016
, respectively, and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting arrangements.
|
|
(2)
|
Excludes notes with both fair value and carrying amount of
$2,660 million
and
$1,456 million
, as of
December 31, 2017
and
2016
, respectively, which have been offset with the associated payables under a netting agreement.
|
|
(3)
|
Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.
|
|
(4)
|
Includes “Trading account assets supporting insurance liabilities” and “Other trading account assets.”
|
|
(5)
|
Level 1 represents cash equivalents and short term investments. All other amounts primarily represent derivative assets.
|
|
(6)
|
Other long-term investments excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at NAV per share (or its equivalent) as a practical expedient. At
December 31, 2017
and
2016
, the fair values of such investments were
$1,969 million
and
$1,579 million
respectively.
|
|
(7)
|
Separate account assets included in the fair value hierarchy exclude investments in entities that calculate net asset value per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets, for which fair value is measured at NAV per share (or its equivalent). At
December 31, 2017
and
2016
, the fair value of such investments was
$26,224 million
and
$25,619 million
, respectively.
|
|
(8)
|
Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Consolidated Statements of Financial Position.
|
|
(9)
|
As of
December 31, 2017
, the net embedded derivative liability position of
$8.7 billion
includes
$0.9 billion
of embedded derivatives in an asset position and
$9.6 billion
of embedded derivatives in a liability position. As of
December 31, 2016
, the net embedded derivative liability position of
$8.2 billion
includes
$1.2 billion
of embedded derivatives in an asset position and
$9.4 billion
of embedded derivatives in a liability position.
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
|
Transferred from Level 1 to Level 2
|
$
|
111
|
|
|
$
|
86
|
|
|
Transferred from Level 2 to Level 1
|
$
|
207
|
|
|
$
|
40
|
|
|
|
|
As of December 31, 2017
|
||||||||||||||||
|
|
|
Fair Value
|
|
Valuation
Techniques
|
|
Unobservable Inputs
|
|
Minimum
|
|
Maximum
|
|
Weighted
Average
|
|
Impact of
Increase in
Input on
Fair
Value(1)
|
||||
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate securities(2)
|
|
$
|
1,352
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
0.65%
|
—
|
|
22%
|
|
7.20
|
%
|
|
Decrease
|
|
|
|
|
|
Market comparables
|
|
EBITDA multiples(3)
|
|
7.4X
|
—
|
|
7.4X
|
|
7.4X
|
|
Increase
|
|||
|
|
|
|
|
Liquidation
|
|
Liquidation value
|
|
13.10%
|
—
|
|
25.00%
|
|
14.68
|
%
|
|
Increase
|
||
|
Separate account assets-commercial mortgage loans(4)
|
|
$
|
821
|
|
|
Discounted cash flow
|
|
Spread
|
|
1.08%
|
—
|
|
2.78%
|
|
1.20
|
%
|
|
Decrease
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Future policy benefits(5)
|
|
$
|
8,720
|
|
|
Discounted cash flow
|
|
Lapse rate(6)
|
|
1%
|
—
|
|
12%
|
|
|
|
Decrease
|
|
|
|
|
|
|
|
|
Spread over LIBOR(7)
|
|
0.12%
|
—
|
|
1.10%
|
|
|
|
Decrease
|
|||
|
|
|
|
|
|
|
Utilization rate(8)
|
|
52%
|
—
|
|
97%
|
|
|
|
Increase
|
|||
|
|
|
|
|
|
|
Withdrawal rate
|
|
See table footnote (9) below.
|
||||||||||
|
|
|
|
|
|
|
Mortality rate(10)
|
|
0%
|
—
|
|
14%
|
|
|
|
Decrease
|
|||
|
|
|
|
|
|
|
Equity volatility curve
|
|
13%
|
—
|
|
24%
|
|
|
|
Increase
|
|||
|
|
|
As of December 31, 2016
|
|||||||||||||||
|
|
|
Fair Value
|
|
Valuation
Techniques
|
|
Unobservable Inputs
|
|
Minimum
|
|
Maximum
|
|
Weighted
Average
|
|
Impact of
Increase in
Input on
Fair
Value(1)
|
|||
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Corporate securities(2)
|
|
$
|
1,848
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
0.70%
|
—
|
|
20%
|
|
7.12%
|
|
Decrease
|
|
|
|
|
|
Market comparables
|
|
EBITDA multiples(3)
|
|
4.0X
|
—
|
|
4.0X
|
|
4.0X
|
|
Increase
|
||
|
|
|
|
|
Liquidation
|
|
Liquidation value
|
|
15.19%
|
—
|
|
98.68%
|
|
91.72%
|
|
Increase
|
||
|
Separate account assets-commercial mortgage loans(4)
|
|
$
|
971
|
|
|
Discounted cash flow
|
|
Spread
|
|
1.19%
|
—
|
|
2.90%
|
|
1.37%
|
|
Decrease
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Future policy benefits(5)
|
|
$
|
8,238
|
|
|
Discounted cash flow
|
|
Lapse rate(6)
|
|
0%
|
—
|
|
13%
|
|
|
|
Decrease
|
|
|
|
|
|
|
|
Spread over LIBOR(7)
|
|
0.25%
|
—
|
|
1.50%
|
|
|
|
Decrease
|
||
|
|
|
|
|
|
|
Utilization rate(8)
|
|
52%
|
—
|
|
96%
|
|
|
|
Increase
|
||
|
|
|
|
|
|
|
Withdrawal rate
|
|
See table footnote (9) below.
|
|||||||||
|
|
|
|
|
|
|
Mortality rate(10)
|
|
0%
|
—
|
|
14%
|
|
|
|
Decrease
|
||
|
|
|
|
|
|
|
Equity volatility curve
|
|
16%
|
—
|
|
25%
|
|
|
|
Increase
|
||
|
(1)
|
Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.
|
|
(2)
|
Includes assets classified as fixed maturities available-for-sale, trading account assets supporting insurance liabilities and other trading account assets.
|
|
(3)
|
Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.
|
|
(4)
|
Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Consolidated Statements of Operations.
|
|
(5)
|
Future policy benefits primarily represent general account liabilities for the living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.
|
|
(6)
|
Lapse rates are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply.
|
|
(7)
|
The spread over LIBOR swap curve represents the premium added to the risk-free discount rate (i.e., LIBOR) to reflect our estimates of rates that a market participant would use to value the living benefit contracts in both the accumulation and payout phases. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because both funding agreements and living benefit contracts are insurance liabilities and are therefore senior to debt.
|
|
(8)
|
The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status, and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.
|
|
(9)
|
The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of
December 31, 2017
and
2016
, the minimum withdrawal rate assumption is
78%
and the maximum withdrawal rate assumption may be greater than
100%
. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.
|
|
(10)
|
Range reflects the mortality rate for the vast majority of business with living benefits, with policyholders ranging from
35
to
90
years old. While the majority of living benefits have a minimum age requirement, certain benefits do not have an age restriction. This results in contractholders for certain benefits with mortality rates approaching
0%
. Based on historical experience, the Company applies a set of age and duration specific mortality rate adjustments compared to standard industry tables. A mortality improvement assumption is also incorporated into the overall mortality table.
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
|
Fixed Maturities Available-For-Sale
|
||||||||||||||||||
|
|
U.S.
Government
|
|
U.S.
States
|
|
Foreign
Government
|
|
Corporate Securities(1)
|
|
Structured Securities(2)
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fair Value, beginning of period
|
$
|
0
|
|
|
$
|
5
|
|
|
$
|
124
|
|
|
$
|
2,173
|
|
|
$
|
4,555
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
0
|
|
|
0
|
|
|
0
|
|
|
(93
|
)
|
|
70
|
|
|||||
|
Included in other comprehensive income (loss)
|
0
|
|
|
0
|
|
|
(1
|
)
|
|
(22
|
)
|
|
11
|
|
|||||
|
Net investment income
|
0
|
|
|
0
|
|
|
0
|
|
|
19
|
|
|
7
|
|
|||||
|
Purchases
|
42
|
|
|
7
|
|
|
0
|
|
|
525
|
|
|
4,967
|
|
|||||
|
Sales
|
0
|
|
|
0
|
|
|
0
|
|
|
(173
|
)
|
|
(645
|
)
|
|||||
|
Issuances
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Settlements
|
0
|
|
|
0
|
|
|
0
|
|
|
(781
|
)
|
|
(2,756
|
)
|
|||||
|
Foreign currency translation
|
0
|
|
|
0
|
|
|
3
|
|
|
7
|
|
|
38
|
|
|||||
|
Other(4)
|
10
|
|
|
0
|
|
|
0
|
|
|
(55
|
)
|
|
(2
|
)
|
|||||
|
Transfers into Level 3(5)
|
0
|
|
|
0
|
|
|
39
|
|
|
1,498
|
|
|
3,933
|
|
|||||
|
Transfers out of Level 3(5)
|
0
|
|
|
(7
|
)
|
|
(17
|
)
|
|
(322
|
)
|
|
(3,463
|
)
|
|||||
|
Fair Value, end of period
|
$
|
52
|
|
|
$
|
5
|
|
|
$
|
148
|
|
|
$
|
2,776
|
|
|
$
|
6,715
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(154
|
)
|
|
$
|
0
|
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
|
Trading Account Assets
|
||||||||||||||||||
|
|
Foreign
Government
|
|
Corporate Securities
|
|
Structured Securities(2)
|
|
Equity
|
|
All
Other
Activity
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fair Value, beginning of period
|
$
|
227
|
|
|
$
|
188
|
|
|
$
|
332
|
|
|
$
|
487
|
|
|
$
|
1
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Other income
|
(5
|
)
|
|
(32
|
)
|
|
0
|
|
|
25
|
|
|
0
|
|
|||||
|
Net investment income
|
5
|
|
|
3
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|||||
|
Purchases
|
0
|
|
|
154
|
|
|
656
|
|
|
28
|
|
|
46
|
|
|||||
|
Sales
|
0
|
|
|
(7
|
)
|
|
(25
|
)
|
|
(17
|
)
|
|
0
|
|
|||||
|
Issuances
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Settlements
|
(4
|
)
|
|
(119
|
)
|
|
(355
|
)
|
|
(47
|
)
|
|
(39
|
)
|
|||||
|
Foreign currency translation
|
0
|
|
|
0
|
|
|
5
|
|
|
6
|
|
|
0
|
|
|||||
|
Other(4)
|
0
|
|
|
0
|
|
|
1
|
|
|
29
|
|
|
0
|
|
|||||
|
Transfers into Level 3(5)
|
0
|
|
|
383
|
|
|
602
|
|
|
31
|
|
|
0
|
|
|||||
|
Transfers out of Level 3(5)
|
0
|
|
|
(18
|
)
|
|
(428
|
)
|
|
(33
|
)
|
|
0
|
|
|||||
|
Fair Value, end of period
|
$
|
223
|
|
|
$
|
552
|
|
|
$
|
789
|
|
|
$
|
509
|
|
|
$
|
8
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other income
|
$
|
(5
|
)
|
|
$
|
(33
|
)
|
|
$
|
3
|
|
|
$
|
38
|
|
|
$
|
0
|
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
|
Equity
Securities
Available-
For-Sale
|
|
Other
Long-term
Investments
|
|
Short-term
Investments
|
|
Cash Equivalents
|
|
Other
Assets
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fair Value, beginning of period
|
$
|
265
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
2
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
(20
|
)
|
|||||
|
Included in other comprehensive income (loss)
|
17
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Net investment income
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
0
|
|
|||||
|
Purchases
|
33
|
|
|
0
|
|
|
30
|
|
|
93
|
|
|
33
|
|
|||||
|
Sales
|
(35
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Issuances
|
0
|
|
|
39
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Settlements
|
0
|
|
|
(1
|
)
|
|
(23
|
)
|
|
(99
|
)
|
|
0
|
|
|||||
|
Foreign currency translation
|
3
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Other(4)
|
(1
|
)
|
|
77
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|||||
|
Transfers into Level 3(5)
|
7
|
|
|
14
|
|
|
1
|
|
|
4
|
|
|
0
|
|
|||||
|
Transfers out of Level 3(5)
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Fair Value, end of period
|
$
|
290
|
|
|
$
|
136
|
|
|
$
|
8
|
|
|
$
|
0
|
|
|
$
|
13
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
$
|
(4
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(21
|
)
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
Separate
Account
Assets(3)
|
|
Future
Policy
Benefits
|
|
Other
Liabilities
|
|
Notes Issued
by Consolidated
VIEs
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Fair Value, beginning of period
|
$
|
1,849
|
|
|
$
|
(8,238
|
)
|
|
$
|
(22
|
)
|
|
$
|
(1,839
|
)
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
0
|
|
|
637
|
|
|
(37
|
)
|
|
(4
|
)
|
||||
|
Interest credited to policyholders’ account balances
|
81
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net investment income
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Purchases
|
1,122
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Sales
|
(98
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Issuances
|
0
|
|
|
(1,117
|
)
|
|
0
|
|
|
0
|
|
||||
|
Settlements
|
(725
|
)
|
|
0
|
|
|
4
|
|
|
0
|
|
||||
|
Foreign currency translation
|
0
|
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
||||
|
Other(4)
|
0
|
|
|
0
|
|
|
5
|
|
|
647
|
|
||||
|
Transfers into Level 3(5)
|
353
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Transfers out of Level 3(5)
|
(462
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Fair Value, end of period
|
$
|
2,122
|
|
|
$
|
(8,720
|
)
|
|
$
|
(50
|
)
|
|
$
|
(1,196
|
)
|
|
Unrealized gains (losses) for assets/liabilities still held(6):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
372
|
|
|
$
|
(37
|
)
|
|
$
|
(4
|
)
|
|
Interest credited to policyholders’ account balances
|
$
|
78
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
|
Fixed Maturities Available-For-Sale
|
||||||||||||||
|
|
U.S.
States
|
|
Foreign
Government
|
|
Corporate Securities(1)
|
|
Structured Securities(2)
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Fair Value, beginning of period
|
$
|
6
|
|
|
$
|
123
|
|
|
$
|
1,222
|
|
|
$
|
4,269
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
0
|
|
|
0
|
|
|
(131
|
)
|
|
10
|
|
||||
|
Included in other comprehensive income (loss)
|
0
|
|
|
(3
|
)
|
|
76
|
|
|
(23
|
)
|
||||
|
Net investment income
|
0
|
|
|
0
|
|
|
11
|
|
|
13
|
|
||||
|
Purchases
|
0
|
|
|
0
|
|
|
318
|
|
|
3,582
|
|
||||
|
Sales
|
0
|
|
|
0
|
|
|
(18
|
)
|
|
(444
|
)
|
||||
|
Issuances
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Settlements
|
(1
|
)
|
|
0
|
|
|
(323
|
)
|
|
(700
|
)
|
||||
|
Foreign currency translation
|
0
|
|
|
3
|
|
|
5
|
|
|
35
|
|
||||
|
Other(4)
|
0
|
|
|
0
|
|
|
0
|
|
|
159
|
|
||||
|
Transfers into Level 3(5)
|
0
|
|
|
1
|
|
|
1,486
|
|
|
1,787
|
|
||||
|
Transfers out of Level 3(5)
|
0
|
|
|
0
|
|
|
(473
|
)
|
|
(4,133
|
)
|
||||
|
Fair Value, end of period
|
$
|
5
|
|
|
$
|
124
|
|
|
$
|
2,173
|
|
|
$
|
4,555
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(110
|
)
|
|
$
|
0
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
|
Trading Account Assets
|
||||||||||||||||||
|
|
Foreign
Government |
|
Corporate Securities
|
|
Structured Securities(2)
|
|
Equity
|
|
All
Other
Activity
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Fair Value, beginning of period
|
$
|
34
|
|
|
$
|
203
|
|
|
$
|
603
|
|
|
$
|
589
|
|
|
$
|
5
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Other income
|
(5
|
)
|
|
(9
|
)
|
|
(12
|
)
|
|
8
|
|
|
1
|
|
|||||
|
Net investment income
|
1
|
|
|
2
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|||||
|
Purchases
|
201
|
|
|
11
|
|
|
185
|
|
|
20
|
|
|
0
|
|
|||||
|
Sales
|
0
|
|
|
(3
|
)
|
|
(49
|
)
|
|
(65
|
)
|
|
0
|
|
|||||
|
Issuances
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Settlements
|
(4
|
)
|
|
(41
|
)
|
|
(122
|
)
|
|
(108
|
)
|
|
0
|
|
|||||
|
Foreign currency translation
|
0
|
|
|
0
|
|
|
(2
|
)
|
|
31
|
|
|
0
|
|
|||||
|
Other(4)
|
0
|
|
|
(15
|
)
|
|
141
|
|
|
14
|
|
|
(5
|
)
|
|||||
|
Transfers into Level 3(5)
|
0
|
|
|
151
|
|
|
252
|
|
|
28
|
|
|
0
|
|
|||||
|
Transfers out of Level 3(5)
|
0
|
|
|
(111
|
)
|
|
(666
|
)
|
|
(30
|
)
|
|
0
|
|
|||||
|
Fair Value, end of period
|
$
|
227
|
|
|
$
|
188
|
|
|
$
|
332
|
|
|
$
|
487
|
|
|
$
|
1
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other income
|
$
|
(5
|
)
|
|
$
|
(10
|
)
|
|
$
|
(4
|
)
|
|
$
|
3
|
|
|
$
|
1
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
|
Equity
Securities
Available-
For-Sale
|
|
Other
Long-term
Investments
|
|
Short-term
Investments
|
|
Other
Assets
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Fair Value, beginning of period
|
$
|
266
|
|
|
$
|
49
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
52
|
|
|
(1
|
)
|
|
0
|
|
|
(30
|
)
|
||||
|
Other income
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Included in other comprehensive income (loss)
|
(75
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net investment income
|
0
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
||||
|
Purchases
|
99
|
|
|
1
|
|
|
1
|
|
|
23
|
|
||||
|
Sales
|
(79
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Issuances
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Settlements
|
(13
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Foreign currency translation
|
13
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Other(4)
|
0
|
|
|
(33
|
)
|
|
0
|
|
|
0
|
|
||||
|
Transfers into Level 3(5)
|
9
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Transfers out of Level 3(5)
|
(7
|
)
|
|
(8
|
)
|
|
0
|
|
|
0
|
|
||||
|
Fair Value, end of period
|
$
|
265
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
(1
|
)
|
|
$
|
0
|
|
|
$
|
(30
|
)
|
|
Other income
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
|
Separate
Account
Assets(3)
|
|
Future
Policy
Benefits
|
|
Other
Liabilities
|
|
Notes
Issued by
Consolidated
VIEs
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Fair Value, beginning of period
|
$
|
1,995
|
|
|
$
|
(8,434
|
)
|
|
$
|
(2
|
)
|
|
$
|
(8,597
|
)
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
1
|
|
|
1,252
|
|
|
(8
|
)
|
|
(23
|
)
|
||||
|
Other income
|
0
|
|
|
0
|
|
|
0
|
|
|
(14
|
)
|
||||
|
Interest credited to policyholders’ account balances
|
22
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Net investment income
|
17
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Purchases
|
555
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Sales
|
(141
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Issuances
|
0
|
|
|
(1,056
|
)
|
|
0
|
|
|
(2,187
|
)
|
||||
|
Settlements
|
(485
|
)
|
|
0
|
|
|
(6
|
)
|
|
697
|
|
||||
|
Foreign currency translation
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Other(4)
|
0
|
|
|
0
|
|
|
(6
|
)
|
|
8,285
|
|
||||
|
Transfers into Level 3(5)
|
344
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Transfers out of Level 3(5)
|
(459
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
Fair Value, end of period
|
$
|
1,849
|
|
|
$
|
(8,238
|
)
|
|
$
|
(22
|
)
|
|
$
|
(1,839
|
)
|
|
Unrealized gains (losses) for assets/liabilities still held(6):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
1,046
|
|
|
$
|
(9
|
)
|
|
$
|
(23
|
)
|
|
Other income
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(14
|
)
|
|
Interest credited to policyholders’ account balances
|
$
|
3
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Year Ended December 31, 2015
|
||||||||||
|
|
Fixed Maturities Available-For-Sale
|
||||||||||
|
|
Foreign
Government
|
|
Corporate Securities(1)
|
|
Structured Securities(2)
|
||||||
|
|
(in millions)
|
||||||||||
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
||||||
|
Included in earnings:
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
(95
|
)
|
|
$
|
41
|
|
|
Included in other comprehensive income (loss)
|
$
|
(3
|
)
|
|
$
|
7
|
|
|
$
|
(40
|
)
|
|
Net investment income
|
$
|
0
|
|
|
$
|
17
|
|
|
$
|
20
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
||||||
|
Included in earnings:
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
(87
|
)
|
|
$
|
4
|
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Trading Account Assets
|
||||||||||||||
|
|
Corporate Securities
|
|
Structured Securities(2)
|
|
Equity
|
|
All
Other
Activity
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other income
|
$
|
(28
|
)
|
|
$
|
(7
|
)
|
|
$
|
(15
|
)
|
|
$
|
(1
|
)
|
|
Net investment income
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Unrealized gains (losses) for assets still held(6):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other income
|
$
|
9
|
|
|
$
|
(7
|
)
|
|
$
|
6
|
|
|
$
|
(1
|
)
|
|
|
Year Ended December 31, 2015
|
||||||||||
|
|
Equity
Securities
Available-
For-Sale
|
|
Other
Long-term
Investments
|
|
Other
Assets |
||||||
|
|
(in millions)
|
||||||||||
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
||||||
|
Included in earnings:
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net
|
$
|
15
|
|
|
$
|
21
|
|
|
$
|
0
|
|
|
Included in other comprehensive income (loss)
|
$
|
1
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Net investment income
|
$
|
0
|
|
|
$
|
(1
|
)
|
|
$
|
0
|
|
|
Unrealized gains (losses) for assets/liabilities still held(6):
|
|
|
|
|
|
||||||
|
Included in earnings:
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net
|
$
|
(3
|
)
|
|
$
|
19
|
|
|
$
|
2
|
|
|
|
Year Ended December 31, 2015
|
||||||||||||||
|
|
Separate
Account
Assets(3)
|
|
Future
Policy
Benefits
|
|
Other
Liabilities
|
|
Notes
Issued by
Consolidated
VIEs
|
||||||||
|
|
(in millions)
|
||||||||||||||
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
717
|
|
|
$
|
1
|
|
|
$
|
287
|
|
|
Other income
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
146
|
|
|
Interest credited to policyholders’ account balances
|
$
|
(38
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Net investment income
|
$
|
24
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Unrealized gains (losses) for assets/liabilities still held(6):
|
|
|
|
|
|
|
|
||||||||
|
Included in earnings:
|
|
|
|
|
|
|
|
||||||||
|
Realized investment gains (losses), net
|
$
|
0
|
|
|
$
|
485
|
|
|
$
|
1
|
|
|
$
|
287
|
|
|
Other income
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
146
|
|
|
Interest credited to policyholders’ account balances
|
$
|
318
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
(1)
|
Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities. Prior period amounts were aggregated to conform to current period presentation.
|
|
(2)
|
Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities. Prior period information has been revised to conform to current period presentation.
|
|
(3)
|
Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Consolidated Statements of Financial Position.
|
|
(4)
|
Other, for the period ended
December 31, 2017
primarily represents deconsolidations of certain previously consolidated collateralized loan obligations and reclassifications of certain assets between reporting categories. Other, for the period ended
December 31, 2016
primarily represents deconsolidations of certain previously consolidated collateralized loan obligations.
|
|
(5)
|
Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfers occur for any such assets still held at the end of the quarter.
|
|
(6)
|
Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.
|
|
|
|
As of December 31, 2017
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest Rate
|
|
$
|
25
|
|
|
$
|
8,399
|
|
|
$
|
0
|
|
|
$
|
|
$
|
8,424
|
|
||
|
Currency
|
|
0
|
|
|
165
|
|
|
0
|
|
|
|
|
165
|
|
||||||
|
Credit
|
|
0
|
|
|
21
|
|
|
0
|
|
|
|
|
21
|
|
||||||
|
Currency/Interest Rate
|
|
0
|
|
|
1,588
|
|
|
0
|
|
|
|
|
1,588
|
|
||||||
|
Equity
|
|
2
|
|
|
595
|
|
|
10
|
|
|
|
|
607
|
|
||||||
|
Commodity
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
|
Netting(1)
|
|
|
|
|
|
|
|
(9,600
|
)
|
|
(9,600
|
)
|
||||||||
|
Total derivative assets
|
|
$
|
27
|
|
|
$
|
10,768
|
|
|
$
|
10
|
|
|
$
|
(9,600
|
)
|
|
$
|
1,205
|
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest Rate
|
|
$
|
1
|
|
|
$
|
3,800
|
|
|
$
|
3
|
|
|
$
|
|
$
|
3,804
|
|
||
|
Currency
|
|
0
|
|
|
262
|
|
|
0
|
|
|
|
|
262
|
|
||||||
|
Credit
|
|
0
|
|
|
5
|
|
|
0
|
|
|
|
|
5
|
|
||||||
|
Currency/Interest Rate
|
|
0
|
|
|
1,149
|
|
|
0
|
|
|
|
|
1,149
|
|
||||||
|
Equity
|
|
2
|
|
|
733
|
|
|
0
|
|
|
|
|
735
|
|
||||||
|
Commodity
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
|
Netting(1)
|
|
|
|
|
|
|
|
(5,312
|
)
|
|
(5,312
|
)
|
||||||||
|
Total derivative liabilities
|
|
$
|
3
|
|
|
$
|
5,949
|
|
|
$
|
3
|
|
|
$
|
(5,312
|
)
|
|
$
|
643
|
|
|
|
|
As of December 31, 2016
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest Rate
|
|
$
|
55
|
|
|
$
|
9,269
|
|
|
$
|
6
|
|
|
$
|
|
$
|
9,330
|
|
||
|
Currency
|
|
0
|
|
|
375
|
|
|
0
|
|
|
|
|
375
|
|
||||||
|
Credit
|
|
0
|
|
|
1
|
|
|
0
|
|
|
|
|
1
|
|
||||||
|
Currency/Interest Rate
|
|
0
|
|
|
3,174
|
|
|
0
|
|
|
|
|
3,174
|
|
||||||
|
Equity
|
|
0
|
|
|
203
|
|
|
0
|
|
|
|
|
203
|
|
||||||
|
Commodity
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
|
Netting(1)
|
|
|
|
|
|
|
|
(11,716
|
)
|
|
(11,716
|
)
|
||||||||
|
Total derivative assets
|
|
$
|
55
|
|
|
$
|
13,022
|
|
|
$
|
6
|
|
|
$
|
(11,716
|
)
|
|
$
|
1,367
|
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest Rate
|
|
$
|
1
|
|
|
$
|
4,515
|
|
|
$
|
2
|
|
|
$
|
|
$
|
4,518
|
|
||
|
Currency
|
|
0
|
|
|
893
|
|
|
0
|
|
|
|
|
893
|
|
||||||
|
Credit
|
|
0
|
|
|
25
|
|
|
0
|
|
|
|
|
25
|
|
||||||
|
Currency/Interest Rate
|
|
0
|
|
|
365
|
|
|
0
|
|
|
|
|
365
|
|
||||||
|
Equity
|
|
6
|
|
|
483
|
|
|
0
|
|
|
|
|
489
|
|
||||||
|
Commodity
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
|
Netting(1)
|
|
|
|
|
|
|
|
(5,945
|
)
|
|
(5,945
|
)
|
||||||||
|
Total derivative liabilities
|
|
$
|
7
|
|
|
$
|
6,281
|
|
|
$
|
2
|
|
|
$
|
(5,945
|
)
|
|
$
|
345
|
|
|
(1)
|
“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty.
|
|
|
|
Year Ended December 31, 2017
|
||||||
|
|
|
Net Derivative–
Equity
|
|
Net Derivative–
Interest Rate
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Fair Value, beginning of period
|
|
$
|
0
|
|
|
$
|
4
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
||||
|
Included in earnings:
|
|
|
|
|
||||
|
Realized investment gains (losses), net
|
|
0
|
|
|
(7
|
)
|
||
|
Other income
|
|
0
|
|
|
0
|
|
||
|
Purchases
|
|
0
|
|
|
0
|
|
||
|
Sales
|
|
0
|
|
|
0
|
|
||
|
Issuances
|
|
0
|
|
|
0
|
|
||
|
Settlements
|
|
0
|
|
|
0
|
|
||
|
Foreign currency translation
|
|
0
|
|
|
0
|
|
||
|
Other(1)
|
|
10
|
|
|
0
|
|
||
|
Transfers into Level 3(3)
|
|
0
|
|
|
0
|
|
||
|
Transfers out of Level 3(3)
|
|
0
|
|
|
0
|
|
||
|
Fair Value, end of period
|
|
$
|
10
|
|
|
$
|
(3
|
)
|
|
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period:
|
|
|
|
|
||||
|
Included in earnings:
|
|
|
|
|
||||
|
Realized investment gains (losses), net
|
|
$
|
0
|
|
|
$
|
(7
|
)
|
|
Other income
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
Year Ended December 31, 2016
|
||||||
|
|
|
Net Derivative–
Equity
|
|
Net Derivative–
Interest Rate
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Fair Value, beginning of period
|
|
$
|
32
|
|
|
$
|
5
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
||||
|
Included in earnings:
|
|
|
|
|
||||
|
Realized investment gains (losses), net
|
|
0
|
|
|
(1
|
)
|
||
|
Other income
|
|
0
|
|
|
0
|
|
||
|
Purchases
|
|
0
|
|
|
0
|
|
||
|
Sales
|
|
0
|
|
|
0
|
|
||
|
Issuances
|
|
0
|
|
|
0
|
|
||
|
Settlements
|
|
0
|
|
|
0
|
|
||
|
Other(2)
|
|
(32
|
)
|
|
0
|
|
||
|
Transfers into Level 3(3)
|
|
0
|
|
|
0
|
|
||
|
Transfers out of Level 3(3)
|
|
0
|
|
|
0
|
|
||
|
Fair Value, end of period
|
|
$
|
0
|
|
|
$
|
4
|
|
|
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period:
|
|
|
|
|
||||
|
Included in earnings:
|
|
|
|
|
||||
|
Realized investment gains (losses), net
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Other income
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
Year Ended December 31, 2015
|
||||||
|
|
|
Net Derivative–
Equity
|
|
Net Derivative–
Interest Rate
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Fair Value, beginning of period
|
|
$
|
6
|
|
|
$
|
3
|
|
|
Total gains (losses) (realized/unrealized):
|
|
|
|
|
||||
|
Included in earnings:
|
|
|
|
|
||||
|
Realized investment gains (losses), net
|
|
20
|
|
|
2
|
|
||
|
Other income
|
|
0
|
|
|
0
|
|
||
|
Purchases
|
|
9
|
|
|
0
|
|
||
|
Sales
|
|
(2
|
)
|
|
0
|
|
||
|
Issuances
|
|
0
|
|
|
0
|
|
||
|
Settlements
|
|
0
|
|
|
0
|
|
||
|
Other
|
|
0
|
|
|
0
|
|
||
|
Transfers into Level 3(3)
|
|
0
|
|
|
0
|
|
||
|
Transfers out of Level 3(3)
|
|
(1
|
)
|
|
0
|
|
||
|
Fair Value, end of period
|
|
$
|
32
|
|
|
$
|
5
|
|
|
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period:
|
|
|
|
|
||||
|
Included in earnings:
|
|
|
|
|
||||
|
Realized investment gains (losses), net
|
|
$
|
20
|
|
|
$
|
2
|
|
|
Other income
|
|
$
|
0
|
|
|
$
|
0
|
|
|
(1)
|
Relates to warrants received in an asset restructuring that resulted in reclassification of reporting category.
|
|
(2)
|
Relates to private warrants reclassified from derivatives to trading securities.
|
|
(3)
|
Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfer occurs.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
|
Commercial mortgage loans(1):
|
|
|
|
|
|
||||||
|
Carrying value after measurement as of period end
|
$
|
64
|
|
|
$
|
47
|
|
|
$
|
0
|
|
|
Realized investment gains (losses) net
|
$
|
(2
|
)
|
|
$
|
(5
|
)
|
|
$
|
0
|
|
|
Mortgage servicing rights(2):
|
|
|
|
|
|
||||||
|
Carrying value after measurement as of period end
|
$
|
60
|
|
|
$
|
84
|
|
|
$
|
90
|
|
|
Realized investment gains (losses) net
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
$
|
(7
|
)
|
|
Cost method investments(3):
|
|
|
|
|
|
||||||
|
Carrying value after measurement as of period end
|
$
|
150
|
|
|
$
|
284
|
|
|
$
|
239
|
|
|
Realized investment gains (losses) net
|
$
|
(29
|
)
|
|
$
|
(85
|
)
|
|
$
|
(123
|
)
|
|
(1)
|
Commercial mortgage loans are valued based on discounted cash flows utilizing market rates or the fair value of the underlying real estate collateral.
|
|
(2)
|
Mortgage servicing rights are valued using a discounted cash flow model. The model incorporates assumptions for servicing revenues, which are adjusted for expected prepayments, delinquency rates, escrow deposit income and estimated loan servicing expenses. The discount rates incorporated into the model are determined based on the estimated returns a market participant would require for this business plus a liquidity and risk premium. This estimate includes available relevant data from any active market sales of mortgage servicing rights.
|
|
(3)
|
For cost method impairments, the methodologies utilized are primarily discounted cash flow and, where appropriate, valuations provided by the general partners taking into consideration investment-related expenses.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(in millions)
|
||||||||||
|
Commercial mortgage and other loans:
|
|
|
|
|
|
||||||
|
Interest income
|
$
|
13
|
|
|
$
|
10
|
|
|
$
|
11
|
|
|
Notes issued by consolidated VIEs:
|
|
|
|
|
|
||||||
|
Interest expense
|
$
|
75
|
|
|
$
|
120
|
|
|
$
|
351
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
|
Commercial mortgage and other loans(1):
|
|
|
|
||||
|
Fair value as of period end
|
$
|
593
|
|
|
$
|
519
|
|
|
Aggregate contractual principal as of period end
|
$
|
582
|
|
|
$
|
508
|
|
|
Other long-term investments:
|
|
|
|
||||
|
Fair value as of period end
|
$
|
1,945
|
|
|
$
|
1,556
|
|
|
Notes issued by consolidated VIEs:
|
|
|
|
||||
|
Fair value as of period end
|
$
|
1,196
|
|
|
$
|
1,839
|
|
|
Aggregate contractual principal as of period end
|
$
|
1,233
|
|
|
$
|
1,886
|
|
|
(1)
|
As of
December 31, 2017
, for loans for which the fair value option has been elected, there were
no
loans in non-accrual status and
none
of the loans were more than 90 days past due and still accruing.
|
|
|
December 31, 2017(1)
|
||||||||||||||||||
|
|
Fair Value
|
|
Carrying
Amount(2)
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Total
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities, held-to-maturity(3)
|
$
|
0
|
|
|
$
|
1,484
|
|
|
$
|
946
|
|
|
$
|
2,430
|
|
|
$
|
2,049
|
|
|
Trading account assets
|
58
|
|
|
51
|
|
|
0
|
|
|
109
|
|
|
109
|
|
|||||
|
Commercial mortgage and other loans
|
0
|
|
|
129
|
|
|
56,619
|
|
|
56,748
|
|
|
55,452
|
|
|||||
|
Policy loans
|
1
|
|
|
0
|
|
|
11,890
|
|
|
11,891
|
|
|
11,891
|
|
|||||
|
Short-term investments
|
989
|
|
|
22
|
|
|
0
|
|
|
1,011
|
|
|
1,011
|
|
|||||
|
Cash and cash equivalents
|
5,997
|
|
|
195
|
|
|
0
|
|
|
6,192
|
|
|
6,192
|
|
|||||
|
Accrued investment income
|
0
|
|
|
3,325
|
|
|
0
|
|
|
3,325
|
|
|
3,325
|
|
|||||
|
Other assets
|
45
|
|
|
2,385
|
|
|
685
|
|
|
3,115
|
|
|
3,115
|
|
|||||
|
Total assets
|
$
|
7,090
|
|
|
$
|
7,591
|
|
|
$
|
70,140
|
|
|
$
|
84,821
|
|
|
$
|
83,144
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Policyholders’ account balances—investment contracts
|
$
|
0
|
|
|
$
|
33,045
|
|
|
$
|
67,141
|
|
|
$
|
100,186
|
|
|
$
|
99,948
|
|
|
Securities sold under agreements to repurchase
|
0
|
|
|
8,400
|
|
|
0
|
|
|
8,400
|
|
|
8,400
|
|
|||||
|
Cash collateral for loaned securities
|
0
|
|
|
4,354
|
|
|
0
|
|
|
4,354
|
|
|
4,354
|
|
|||||
|
Short-term debt
|
0
|
|
|
1,384
|
|
|
0
|
|
|
1,384
|
|
|
1,380
|
|
|||||
|
Long-term debt(4)
|
1,296
|
|
|
16,369
|
|
|
2,095
|
|
|
19,760
|
|
|
17,172
|
|
|||||
|
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
322
|
|
|
322
|
|
|
322
|
|
|||||
|
Other liabilities
|
0
|
|
|
6,002
|
|
|
715
|
|
|
6,717
|
|
|
6,717
|
|
|||||
|
Separate account liabilities—investment contracts
|
0
|
|
|
71,336
|
|
|
30,490
|
|
|
101,826
|
|
|
101,826
|
|
|||||
|
Total liabilities
|
$
|
1,296
|
|
|
$
|
140,890
|
|
|
$
|
100,763
|
|
|
$
|
242,949
|
|
|
$
|
240,119
|
|
|
|
December 31, 2016(1)
|
||||||||||||||||||
|
|
Fair Value
|
|
Carrying
Amount(2)
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Total
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities, held-to-maturity(3)
|
$
|
0
|
|
|
$
|
1,526
|
|
|
$
|
998
|
|
|
$
|
2,524
|
|
|
$
|
2,144
|
|
|
Trading account assets
|
0
|
|
|
150
|
|
|
0
|
|
|
150
|
|
|
150
|
|
|||||
|
Commercial mortgage and other loans
|
0
|
|
|
139
|
|
|
53,625
|
|
|
53,764
|
|
|
52,260
|
|
|||||
|
Policy loans
|
1
|
|
|
0
|
|
|
11,754
|
|
|
11,755
|
|
|
11,755
|
|
|||||
|
Short-term investments
|
0
|
|
|
326
|
|
|
0
|
|
|
326
|
|
|
326
|
|
|||||
|
Cash and cash equivalents
|
4,945
|
|
|
876
|
|
|
0
|
|
|
5,821
|
|
|
5,821
|
|
|||||
|
Accrued investment income
|
0
|
|
|
3,204
|
|
|
0
|
|
|
3,204
|
|
|
3,204
|
|
|||||
|
Other assets
|
54
|
|
|
1,976
|
|
|
658
|
|
|
2,688
|
|
|
2,688
|
|
|||||
|
Total assets
|
$
|
5,000
|
|
|
$
|
8,197
|
|
|
$
|
67,035
|
|
|
$
|
80,232
|
|
|
$
|
78,348
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Policyholders’ account balances—investment contracts
|
$
|
0
|
|
|
$
|
41,653
|
|
|
$
|
58,392
|
|
|
$
|
100,045
|
|
|
$
|
99,719
|
|
|
Securities sold under agreements to repurchase
|
0
|
|
|
7,606
|
|
|
0
|
|
|
7,606
|
|
|
7,606
|
|
|||||
|
Cash collateral for loaned securities
|
0
|
|
|
4,333
|
|
|
0
|
|
|
4,333
|
|
|
4,333
|
|
|||||
|
Short-term debt
|
0
|
|
|
1,077
|
|
|
73
|
|
|
1,150
|
|
|
1,133
|
|
|||||
|
Long-term debt(4)
|
1,267
|
|
|
15,705
|
|
|
2,957
|
|
|
19,929
|
|
|
18,041
|
|
|||||
|
Notes issued by consolidated VIEs(5)
|
0
|
|
|
0
|
|
|
311
|
|
|
311
|
|
|
311
|
|
|||||
|
Other liabilities
|
0
|
|
|
6,540
|
|
|
696
|
|
|
7,236
|
|
|
7,236
|
|
|||||
|
Separate account liabilities—investment contracts
|
0
|
|
|
71,010
|
|
|
27,578
|
|
|
98,588
|
|
|
98,588
|
|
|||||
|
Total liabilities
|
$
|
1,267
|
|
|
$
|
147,924
|
|
|
$
|
90,007
|
|
|
$
|
239,198
|
|
|
$
|
236,967
|
|
|
(1)
|
Other long-term investments excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at NAV per share (or its equivalent) as a practical expedient. At
December 31, 2017
and
2016
, the fair values of these cost method investments were
$1,795 million
and
$1,514 million
, respectively. The carrying value of these investments were
$1,571 million
and
$1,478 million
as of
December 31, 2017
and
2016
, respectively.
|
|
(2)
|
Carrying values presented herein differ from those in the Company’s Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments. Financial statement captions excluded from the above table are not considered financial instruments.
|
|
(3)
|
As of
December 31, 2017
, excludes notes with fair value and carrying amount of
$4,913 million
and
$4,627 million
, respectively. As of
December 31, 2016
, excludes notes with both fair value and carrying amount of
$4,403 million
. These amounts have been offset with the associated payables under a netting agreement.
|
|
(4)
|
As of
December 31, 2017
, includes notes with fair value and carrying amount of
$7,577 million
and
$7,287 million
, respectively. As of
December 31, 2016
,
includes notes with both fair value and carrying amount of
$5,859 million
. These amounts have been offset with the associated receivables under a netting agreement.
|
|
(5)
|
The amount as of December 31, 2016 was added to the table to correct the previously reported amounts.
|
|
21.
|
DERIVATIVE INSTRUMENTS
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Primary Underlying/
Instrument Type
|
|
|
Gross Fair Value
|
|
|
|
Gross Fair Value
|
||||||||||||||||
|
Notional
|
|
Assets
|
|
Liabilities
|
|
Notional
|
|
Assets
|
|
Liabilities
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate Swaps
|
$
|
3,204
|
|
|
$
|
271
|
|
|
$
|
(88
|
)
|
|
$
|
1,117
|
|
|
$
|
17
|
|
|
$
|
(111
|
)
|
|
Foreign Currency
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign Currency Forwards
|
545
|
|
|
0
|
|
|
(8
|
)
|
|
167
|
|
|
3
|
|
|
(1
|
)
|
||||||
|
Currency/Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign Currency Swaps
|
17,732
|
|
|
766
|
|
|
(735
|
)
|
|
14,737
|
|
|
1,956
|
|
|
(54
|
)
|
||||||
|
Total Qualifying Hedges
|
$
|
21,481
|
|
|
$
|
1,037
|
|
|
$
|
(831
|
)
|
|
$
|
16,021
|
|
|
$
|
1,976
|
|
|
$
|
(166
|
)
|
|
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate Swaps
|
$
|
158,552
|
|
|
$
|
7,958
|
|
|
$
|
(3,509
|
)
|
|
$
|
162,131
|
|
|
$
|
8,969
|
|
|
$
|
(4,274
|
)
|
|
Interest Rate Futures
|
23,792
|
|
|
25
|
|
|
(1
|
)
|
|
31,183
|
|
|
55
|
|
|
(1
|
)
|
||||||
|
Interest Rate Options
|
18,456
|
|
|
167
|
|
|
(203
|
)
|
|
13,290
|
|
|
289
|
|
|
(132
|
)
|
||||||
|
Interest Rate Forwards
|
1,498
|
|
|
6
|
|
|
(2
|
)
|
|
321
|
|
|
0
|
|
|
(1
|
)
|
||||||
|
Foreign Currency
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign Currency Forwards
|
23,905
|
|
|
164
|
|
|
(254
|
)
|
|
21,042
|
|
|
372
|
|
|
(892
|
)
|
||||||
|
Foreign Currency Options
|
59
|
|
|
0
|
|
|
0
|
|
|
93
|
|
|
0
|
|
|
0
|
|
||||||
|
Currency/Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign Currency Swaps
|
13,777
|
|
|
822
|
|
|
(414
|
)
|
|
12,336
|
|
|
1,218
|
|
|
(311
|
)
|
||||||
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Credit Default Swaps
|
1,314
|
|
|
21
|
|
|
(5
|
)
|
|
918
|
|
|
1
|
|
|
(25
|
)
|
||||||
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Equity Futures
|
710
|
|
|
2
|
|
|
(2
|
)
|
|
1,371
|
|
|
0
|
|
|
(5
|
)
|
||||||
|
Equity Options
|
36,007
|
|
|
588
|
|
|
(364
|
)
|
|
12,020
|
|
|
102
|
|
|
(93
|
)
|
||||||
|
Total Return Swaps
|
15,558
|
|
|
17
|
|
|
(369
|
)
|
|
18,167
|
|
|
101
|
|
|
(390
|
)
|
||||||
|
Commodity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commodity Futures
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
||||||
|
Synthetic GICs
|
77,290
|
|
|
0
|
|
|
(1
|
)
|
|
77,197
|
|
|
5
|
|
|
0
|
|
||||||
|
Total Non-Qualifying Derivatives
|
$
|
370,918
|
|
|
$
|
9,770
|
|
|
$
|
(5,124
|
)
|
|
$
|
350,070
|
|
|
$
|
11,112
|
|
|
$
|
(6,124
|
)
|
|
Total Derivatives(1)
|
$
|
392,399
|
|
|
$
|
10,807
|
|
|
$
|
(5,955
|
)
|
|
$
|
366,091
|
|
|
$
|
13,088
|
|
|
$
|
(6,290
|
)
|
|
(1)
|
Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlyings. The fair value of these embedded derivatives was a net liability of
$8,748 million
and
$8,252 million
as of December 31,
2017
, and
2016
, respectively, primarily included in “Future policy benefits.”
|
|
|
|
December 31, 2017
|
||||||||||||||||||
|
|
|
Gross
Amounts of
Recognized
Financial
Instruments
|
|
Gross
Amounts
Offset in the
Statements of
Financial
Position
|
|
Net Amounts
Presented in
the Statements
of Financial
Position
|
|
Financial
Instruments/
Collateral(1)
|
|
Net
Amount
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
Offsetting of Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivatives(1)
|
|
$
|
10,710
|
|
|
$
|
(9,600
|
)
|
|
$
|
1,110
|
|
|
$
|
(625
|
)
|
|
$
|
485
|
|
|
Securities purchased under agreement to resell
|
|
240
|
|
|
0
|
|
|
240
|
|
|
(240
|
)
|
|
0
|
|
|||||
|
Total Assets
|
|
$
|
10,950
|
|
|
$
|
(9,600
|
)
|
|
$
|
1,350
|
|
|
$
|
(865
|
)
|
|
$
|
485
|
|
|
Offsetting of Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivatives(1)
|
|
$
|
5,948
|
|
|
$
|
(5,312
|
)
|
|
$
|
636
|
|
|
$
|
(588
|
)
|
|
$
|
48
|
|
|
Securities sold under agreement to repurchase
|
|
8,400
|
|
|
0
|
|
|
8,400
|
|
|
(8,400
|
)
|
|
0
|
|
|||||
|
Total Liabilities
|
|
$
|
14,348
|
|
|
$
|
(5,312
|
)
|
|
$
|
9,036
|
|
|
$
|
(8,988
|
)
|
|
$
|
48
|
|
|
|
|
December 31, 2016
|
||||||||||||||||||
|
|
|
Gross
Amounts of
Recognized
Financial
Instruments
|
|
Gross
Amounts
Offset in the
Statements of
Financial
Position
|
|
Net Amounts
Presented in
the Statements
of Financial
Position
|
|
Financial
Instruments/
Collateral(1)
|
|
Net
Amount
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in millions)
|
||||||||||||||||||
|
Offsetting of Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivatives(1)
|
|
$
|
12,987
|
|
|
$
|
(11,716
|
)
|
|
$
|
1,271
|
|
|
$
|
(399
|
)
|
|
$
|
872
|
|
|
Securities purchased under agreement to resell
|
|
1,016
|
|
|
0
|
|
|
1,016
|
|
|
(1,016
|
)
|
|
0
|
|
|||||
|
Total Assets
|
|
$
|
14,003
|
|
|
$
|
(11,716
|
)
|
|
$
|
2,287
|
|
|
$
|
(1,415
|
)
|
|
$
|
872
|
|
|
Offsetting of Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivatives(1)
|
|
$
|
6,281
|
|
|
$
|
(5,945
|
)
|
|
$
|
336
|
|
|
$
|
(299
|
)
|
|
$
|
37
|
|
|
Securities sold under agreement to repurchase
|
|
7,606
|
|
|
0
|
|
|
7,606
|
|
|
(7,606
|
)
|
|
0
|
|
|||||
|
Total Liabilities
|
|
$
|
13,887
|
|
|
$
|
(5,945
|
)
|
|
$
|
7,942
|
|
|
$
|
(7,905
|
)
|
|
$
|
37
|
|
|
(1)
|
Amounts exclude the excess of collateral received/pledged from/to the counterparty.
|
|
|
Year Ended December 31, 2017
|
|||||||||||||||||||||||
|
|
Realized
Investment
Gains
(Losses)
|
|
Net
Investment
Income
|
|
Other
Income
|
|
Interest
Expense
|
|
Interest
Credited
To Policyholders’
Account
Balances
|
|
AOCI(1)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
(in millions)
|
|||||||||||||||||||||||
|
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest Rate
|
$
|
16
|
|
|
$
|
(19
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(1
|
)
|
|
$
|
0
|
|
|
|
Currency
|
(6
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total fair value hedges
|
10
|
|
|
(19
|
)
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
|
0
|
|
|||||||
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
(3
|
)
|
|
0
|
|
|
7
|
|
|||||||
|
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(3
|
)
|
|||||||
|
Currency/Interest Rate
|
0
|
|
|
189
|
|
|
(303
|
)
|
|
0
|
|
|
0
|
|
|
(1,359
|
)
|
|||||||
|
Total cash flow hedges
|
0
|
|
|
189
|
|
|
(303
|
)
|
|
(3
|
)
|
|
0
|
|
|
(1,355
|
)
|
|||||||
|
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(9
|
)
|
|||||||
|
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total net investment hedges
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(9
|
)
|
|||||||
|
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest Rate
|
1,161
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Currency
|
(340
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Currency/Interest Rate
|
(250
|
)
|
|
0
|
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Credit
|
13
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Equity
|
(2,498
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Commodity
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Embedded Derivatives
|
644
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total non-qualifying hedges
|
(1,270
|
)
|
|
0
|
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total
|
$
|
(1,260
|
)
|
|
$
|
170
|
|
|
$
|
(308
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1,364
|
)
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||
|
|
Realized
Investment
Gains
(Losses)
|
|
Net
Investment
Income
|
|
Other
Income
|
|
Interest
Expense
|
|
Interest
Credited
To
Policyholders’
Account
Balances
|
|
AOCI(1)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
|
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate
|
$
|
26
|
|
|
$
|
(31
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Currency
|
21
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Total fair value hedges
|
47
|
|
|
(32
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
(5
|
)
|
|
0
|
|
|
(1
|
)
|
||||||
|
Currency/Interest Rate
|
0
|
|
|
123
|
|
|
269
|
|
|
0
|
|
|
0
|
|
|
152
|
|
||||||
|
Total cash flow hedges
|
0
|
|
|
123
|
|
|
269
|
|
|
(5
|
)
|
|
0
|
|
|
151
|
|
||||||
|
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Currency(2)
|
5
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(5
|
)
|
||||||
|
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Total net investment hedges
|
5
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(5
|
)
|
||||||
|
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest Rate
|
1,564
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Currency
|
463
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Currency/Interest Rate
|
10
|
|
|
0
|
|
|
3
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Credit
|
32
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Equity
|
(2,171
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Commodity
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Embedded Derivatives
|
1,260
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Total non-qualifying hedges
|
1,157
|
|
|
0
|
|
|
4
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
Total
|
$
|
1,209
|
|
|
$
|
91
|
|
|
$
|
273
|
|
|
$
|
(5
|
)
|
|
$
|
0
|
|
|
$
|
146
|
|
|
|
Year Ended December 31, 2015
|
|||||||||||||||||||||||
|
|
Realized
Investment
Gains (Losses)
|
|
Net
Investment
Income
|
|
Other
Income
|
|
Interest
Expense
|
|
Interest
Credited
To Policyholders’
Account
Balances
|
|
AOCI(1)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
(in millions)
|
|||||||||||||||||||||||
|
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest Rate
|
$
|
29
|
|
|
$
|
(44
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Currency
|
18
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total fair value hedges
|
47
|
|
|
(45
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
(7
|
)
|
|
0
|
|
|
2
|
|
|||||||
|
Currency/Interest Rate
|
0
|
|
|
75
|
|
|
146
|
|
|
0
|
|
|
0
|
|
|
957
|
|
|||||||
|
Total cash flow hedges
|
0
|
|
|
75
|
|
|
146
|
|
|
(7
|
)
|
|
0
|
|
|
959
|
|
|||||||
|
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
9
|
|
|||||||
|
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
31
|
|
|||||||
|
Total net investment hedges
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
40
|
|
|||||||
|
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Interest Rate
|
1,394
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Currency
|
(124
|
)
|
|
0
|
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Currency/Interest Rate
|
563
|
|
|
0
|
|
|
7
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Credit
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Equity
|
(591
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Commodity
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Embedded Derivatives
|
724
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total non-qualifying hedges
|
1,961
|
|
|
0
|
|
|
5
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total
|
$
|
2,008
|
|
|
$
|
30
|
|
|
$
|
151
|
|
|
$
|
(7
|
)
|
|
$
|
0
|
|
|
$
|
999
|
|
|
|
(1)
|
Amounts deferred in AOCI.
|
|
(2)
|
Relates to the sale of equity method investments.
|
|
|
(in millions)
|
||
|
Balance, December 31, 2014
|
$
|
206
|
|
|
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2015
|
1,199
|
|
|
|
Amount reclassified into current period earnings
|
(240
|
)
|
|
|
Balance, December 31, 2015
|
1,165
|
|
|
|
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2016
|
602
|
|
|
|
Amount reclassified into current period earnings
|
(451
|
)
|
|
|
Balance, December 31, 2016
|
1,316
|
|
|
|
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2017
|
(1,373
|
)
|
|
|
Amount reclassified into current period earnings
|
18
|
|
|
|
Balance, December 31, 2017
|
$
|
(39
|
)
|
|
22.
|
SEGMENT INFORMATION
|
|
•
|
realized investment gains (losses), net, and related adjustments and charges;
|
|
•
|
net investment gains (losses) on trading account assets supporting insurance liabilities and changes in experience-rated contractholder liabilities due to asset value changes;
|
|
•
|
divested businesses; and
|
|
•
|
equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests.
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Net gains (losses) from(1):
|
|
|
|
|
|
|
||||||
|
Terminated hedges of foreign currency earnings
|
|
$
|
(15
|
)
|
|
$
|
39
|
|
|
$
|
284
|
|
|
Current period yield adjustments
|
|
$
|
434
|
|
|
$
|
466
|
|
|
$
|
475
|
|
|
Principal source of earnings
|
|
$
|
(8
|
)
|
|
$
|
74
|
|
|
$
|
123
|
|
|
(1)
|
In addition to the items in the table above, “Realized investment gains (losses), net, and related charges and adjustments” also includes an adjustment to reflect “Realized investment gains (losses), net” related to divested businesses as results of “Divested businesses,” discussed below.
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Net gains (losses) from:
|
|
|
||||||||||
|
Other trading account assets
|
|
$
|
184
|
|
|
$
|
(95
|
)
|
|
$
|
(94
|
)
|
|
Foreign currency exchange movements
|
|
$
|
(135
|
)
|
|
$
|
(154
|
)
|
|
$
|
69
|
|
|
Other activities
|
|
$
|
(20
|
)
|
|
$
|
(18
|
)
|
|
$
|
9
|
|
|
•
|
The portion of the amortization of DAC, VOBA, unearned revenue reserves and DSI for certain products that is related to net realized investment gains (losses).
|
|
•
|
Policyholder dividends and interest credited to policyholders’ account balances that relate to certain life policies that pass back certain realized investment gains (losses) to the policyholder, and reserves for future policy benefits for certain policies that are affected by net realized investment gains (losses).
|
|
•
|
Market value adjustments paid or received upon a contractholder’s surrender of certain of the Company’s annuity products as these amounts mitigate the net realized investment gains or losses incurred upon the disposition of the underlying invested assets.
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Adjusted operating income before income taxes by segment:
|
|
|
|
|
|
|
||||||
|
Individual Annuities
|
|
$
|
2,198
|
|
|
$
|
1,765
|
|
|
$
|
1,797
|
|
|
Individual Life
|
|
(191
|
)
|
|
79
|
|
|
635
|
|
|||
|
Total U.S. Individual Solutions division(1)
|
|
2,007
|
|
|
1,844
|
|
|
2,432
|
|
|||
|
Retirement
|
|
1,244
|
|
|
1,012
|
|
|
931
|
|
|||
|
Group Insurance
|
|
253
|
|
|
220
|
|
|
176
|
|
|||
|
Total U.S. Workplace Solutions division(1)
|
|
1,497
|
|
|
1,232
|
|
|
1,107
|
|
|||
|
Investment Management
|
|
979
|
|
|
787
|
|
|
779
|
|
|||
|
Total Investment Management division(1)
|
|
979
|
|
|
787
|
|
|
779
|
|
|||
|
International Insurance
|
|
3,198
|
|
|
3,117
|
|
|
3,226
|
|
|||
|
Total International Insurance division
|
|
3,198
|
|
|
3,117
|
|
|
3,226
|
|
|||
|
Corporate and Other operations
|
|
(1,437
|
)
|
|
(1,581
|
)
|
|
(1,313
|
)
|
|||
|
Total Corporate and Other
|
|
(1,437
|
)
|
|
(1,581
|
)
|
|
(1,313
|
)
|
|||
|
Total segment adjusted operating income before income taxes
|
|
6,244
|
|
|
5,399
|
|
|
6,231
|
|
|||
|
Reconciling Items:
|
|
|
|
|
|
|
||||||
|
Realized investment gains (losses), net, and related adjustments
|
|
(602
|
)
|
|
989
|
|
|
2,258
|
|
|||
|
Charges related to realized investment gains (losses), net
|
|
544
|
|
|
(466
|
)
|
|
(679
|
)
|
|||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
|
336
|
|
|
(17
|
)
|
|
(524
|
)
|
|||
|
Change in experience-rated contractholder liabilities due to asset value changes
|
|
(151
|
)
|
|
21
|
|
|
433
|
|
|||
|
Divested businesses:
|
|
|
|
|
|
|
||||||
|
Closed Block division
|
|
45
|
|
|
(132
|
)
|
|
58
|
|
|||
|
Other divested businesses
|
|
38
|
|
|
(84
|
)
|
|
(66
|
)
|
|||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
33
|
|
|
(5
|
)
|
|
58
|
|
|||
|
Consolidated income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
6,487
|
|
|
$
|
5,705
|
|
|
$
|
7,769
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See Note 1 for additional information.
|
|
|
|
|
||||||
|
|
|
As of December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Total Assets:
|
|
|
|
|
||||
|
Individual Annuities
|
|
$
|
183,666
|
|
|
$
|
170,861
|
|
|
Individual Life
|
|
83,985
|
|
|
77,524
|
|
||
|
Total U.S. Individual Solutions division(1)
|
|
267,651
|
|
|
248,385
|
|
||
|
Retirement
|
|
183,629
|
|
|
173,509
|
|
||
|
Group Insurance
|
|
41,575
|
|
|
40,642
|
|
||
|
Total U.S. Workplace Solutions division(1)
|
|
225,204
|
|
|
214,151
|
|
||
|
Investment Management
|
|
49,944
|
|
|
49,255
|
|
||
|
Total Investment Management division(1)
|
|
49,944
|
|
|
49,255
|
|
||
|
International Insurance
|
|
211,432
|
|
|
197,119
|
|
||
|
Total International Insurance division
|
|
211,432
|
|
|
197,119
|
|
||
|
Corporate and Other operations
|
|
14,556
|
|
|
13,001
|
|
||
|
Total Corporate and Other
|
|
14,556
|
|
|
13,001
|
|
||
|
Closed Block
|
|
63,134
|
|
|
62,051
|
|
||
|
Total Closed Block division
|
|
63,134
|
|
|
62,051
|
|
||
|
Total per Consolidated Statements of Financial Position
|
|
$
|
831,921
|
|
|
$
|
783,962
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See Note 1 for additional information.
|
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||||||||||
|
|
|
Revenues
|
|
Net
Investment
Income
|
|
Policyholders’
Benefits
|
|
Interest
Credited to
Policyholders’
Account
Balances
|
|
Dividends to
Policyholders
|
|
Interest
Expense
|
|
Amortization
of DAC
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Individual Annuities
|
|
$
|
5,110
|
|
|
$
|
742
|
|
|
$
|
318
|
|
|
$
|
330
|
|
|
0
|
|
|
$
|
70
|
|
|
$
|
464
|
|
|
|
Individual Life
|
|
4,974
|
|
|
1,948
|
|
|
2,100
|
|
|
719
|
|
|
36
|
|
|
648
|
|
|
483
|
|
|||||||
|
Total U.S. Individual Solutions division
|
|
10,084
|
|
|
2,690
|
|
|
2,418
|
|
|
1,049
|
|
|
36
|
|
|
718
|
|
|
947
|
|
|||||||
|
Retirement
|
|
13,843
|
|
|
4,482
|
|
|
10,035
|
|
|
1,507
|
|
|
0
|
|
|
26
|
|
|
26
|
|
|||||||
|
Group Insurance
|
|
5,471
|
|
|
637
|
|
|
4,073
|
|
|
274
|
|
|
0
|
|
|
5
|
|
|
14
|
|
|||||||
|
Total U.S. Workplace Solutions division
|
|
19,314
|
|
|
5,119
|
|
|
14,108
|
|
|
1,781
|
|
|
0
|
|
|
31
|
|
|
40
|
|
|||||||
|
Investment Management
|
|
3,355
|
|
|
170
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
27
|
|
|
11
|
|
|||||||
|
Total Investment Management division
|
|
3,355
|
|
|
170
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
27
|
|
|
11
|
|
|||||||
|
International Insurance
|
|
21,560
|
|
|
5,027
|
|
|
13,440
|
|
|
899
|
|
|
48
|
|
|
13
|
|
|
1,138
|
|
|||||||
|
Total International Insurance division
|
|
21,560
|
|
|
5,027
|
|
|
13,440
|
|
|
899
|
|
|
48
|
|
|
13
|
|
|
1,138
|
|
|||||||
|
Corporate and Other operations
|
|
(667
|
)
|
|
493
|
|
|
21
|
|
|
0
|
|
|
0
|
|
|
533
|
|
|
(43
|
)
|
|||||||
|
Total Corporate and Other
|
|
(667
|
)
|
|
493
|
|
|
21
|
|
|
0
|
|
|
0
|
|
|
533
|
|
|
(43
|
)
|
|||||||
|
Total
|
|
53,646
|
|
|
13,499
|
|
|
29,987
|
|
|
3,729
|
|
|
84
|
|
|
1,322
|
|
|
2,093
|
|
|||||||
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Realized investment gains (losses), net, and related adjustments
|
|
(602
|
)
|
|
(38
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Charges related to realized investment gains (losses), net
|
|
(215
|
)
|
|
0
|
|
|
(69
|
)
|
|
(191
|
)
|
|
0
|
|
|
0
|
|
|
(550
|
)
|
|||||||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
|
336
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Change in experience-rated contractholder liabilities due to assets value changes
|
|
0
|
|
|
0
|
|
|
0
|
|
|
151
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Divested businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Closed Block division
|
|
5,826
|
|
|
2,653
|
|
|
3,219
|
|
|
133
|
|
|
2,007
|
|
|
1
|
|
|
37
|
|
|||||||
|
Other divested businesses
|
|
775
|
|
|
321
|
|
|
657
|
|
|
0
|
|
|
0
|
|
|
4
|
|
|
0
|
|
|||||||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
(77
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total per Consolidated Statements of Operations
|
|
$
|
59,689
|
|
|
$
|
16,435
|
|
|
$
|
33,794
|
|
|
$
|
3,822
|
|
|
$
|
2,091
|
|
|
$
|
1,327
|
|
|
$
|
1,580
|
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||
|
|
|
Revenues
|
|
Net
Investment
Income
|
|
Policyholders’
Benefits
|
|
Interest
Credited to
Policyholders’
Account
Balances
|
|
Dividends to
Policyholders
|
|
Interest
Expense
|
|
Amortization
of DAC
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Individual Annuities
|
|
$
|
4,666
|
|
|
$
|
698
|
|
|
$
|
306
|
|
|
$
|
362
|
|
|
0
|
|
|
$
|
71
|
|
|
$
|
484
|
|
|
|
Individual Life
|
|
5,355
|
|
|
1,822
|
|
|
2,750
|
|
|
680
|
|
|
35
|
|
|
583
|
|
|
115
|
|
|||||||
|
Total U.S. Individual Solutions division(1)
|
|
10,021
|
|
|
2,520
|
|
|
3,056
|
|
|
1,042
|
|
|
35
|
|
|
654
|
|
|
599
|
|
|||||||
|
Retirement
|
|
12,876
|
|
|
4,263
|
|
|
9,328
|
|
|
1,473
|
|
|
0
|
|
|
19
|
|
|
33
|
|
|||||||
|
Group Insurance
|
|
5,343
|
|
|
608
|
|
|
4,032
|
|
|
263
|
|
|
0
|
|
|
5
|
|
|
6
|
|
|||||||
|
Total U.S. Workplace Solutions division(1)
|
|
18,219
|
|
|
4,871
|
|
|
13,360
|
|
|
1,736
|
|
|
0
|
|
|
24
|
|
|
39
|
|
|||||||
|
Investment Management
|
|
2,961
|
|
|
80
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
15
|
|
|
15
|
|
|||||||
|
Total Investment Management division(1)
|
|
2,961
|
|
|
80
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
15
|
|
|
15
|
|
|||||||
|
International Insurance
|
|
21,009
|
|
|
4,759
|
|
|
13,183
|
|
|
920
|
|
|
49
|
|
|
8
|
|
|
1,068
|
|
|||||||
|
Total International Insurance division
|
|
21,009
|
|
|
4,759
|
|
|
13,183
|
|
|
920
|
|
|
49
|
|
|
8
|
|
|
1,068
|
|
|||||||
|
Corporate and Other operations
|
|
(636
|
)
|
|
465
|
|
|
26
|
|
|
0
|
|
|
0
|
|
|
614
|
|
|
(49
|
)
|
|||||||
|
Total Corporate and Other
|
|
(636
|
)
|
|
465
|
|
|
26
|
|
|
0
|
|
|
0
|
|
|
614
|
|
|
(49
|
)
|
|||||||
|
Total
|
|
51,574
|
|
|
12,695
|
|
|
29,625
|
|
|
3,698
|
|
|
84
|
|
|
1,315
|
|
|
1,672
|
|
|||||||
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Realized investment gains (losses), net, and related adjustments
|
|
989
|
|
|
(31
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Charges related to realized investment gains (losses), net
|
|
19
|
|
|
0
|
|
|
131
|
|
|
(50
|
)
|
|
0
|
|
|
0
|
|
|
168
|
|
|||||||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
|
(17
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Change in experience-rated contractholder liabilities due to assets value changes
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(21
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Divested businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Closed Block division
|
|
5,669
|
|
|
2,578
|
|
|
3,282
|
|
|
134
|
|
|
1,941
|
|
|
2
|
|
|
37
|
|
|||||||
|
Other divested businesses
|
|
602
|
|
|
278
|
|
|
594
|
|
|
0
|
|
|
0
|
|
|
3
|
|
|
0
|
|
|||||||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
(57
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total per Consolidated Statements of Operations
|
|
$
|
58,779
|
|
|
$
|
15,520
|
|
|
$
|
33,632
|
|
|
$
|
3,761
|
|
|
$
|
2,025
|
|
|
$
|
1,320
|
|
|
$
|
1,877
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See Note 1 for additional information.
|
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||||||||
|
|
|
Revenues
|
|
Net
Investment
Income
|
|
Policyholders’
Benefits
|
|
Interest
Credited to
Policyholders’
Account
Balances
|
|
Dividends to
Policyholders
|
|
Interest
Expense
|
|
Amortization
of DAC
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
(in millions)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Individual Annuities
|
|
$
|
4,695
|
|
|
$
|
603
|
|
|
$
|
314
|
|
|
$
|
363
|
|
|
$
|
0
|
|
|
$
|
69
|
|
|
$
|
465
|
|
|
Individual Life
|
|
5,233
|
|
|
1,669
|
|
|
2,245
|
|
|
644
|
|
|
33
|
|
|
550
|
|
|
133
|
|
|||||||
|
Total U.S. Individual Solutions division(1)
|
|
9,928
|
|
|
2,272
|
|
|
2,559
|
|
|
1,007
|
|
|
33
|
|
|
619
|
|
|
598
|
|
|||||||
|
Retirement
|
|
11,821
|
|
|
4,082
|
|
|
8,352
|
|
|
1,441
|
|
|
(2
|
)
|
|
25
|
|
|
66
|
|
|||||||
|
Group Insurance
|
|
5,143
|
|
|
586
|
|
|
3,868
|
|
|
257
|
|
|
0
|
|
|
8
|
|
|
6
|
|
|||||||
|
Total U.S. Workplace Solutions division(1)
|
|
16,964
|
|
|
4,668
|
|
|
12,220
|
|
|
1,698
|
|
|
(2
|
)
|
|
33
|
|
|
72
|
|
|||||||
|
Investment Management
|
|
2,944
|
|
|
111
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10
|
|
|
19
|
|
|||||||
|
Total Investment Management division(1)
|
|
2,944
|
|
|
111
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10
|
|
|
19
|
|
|||||||
|
International Insurance
|
|
19,364
|
|
|
4,357
|
|
|
11,821
|
|
|
880
|
|
|
51
|
|
|
5
|
|
|
989
|
|
|||||||
|
Total International Insurance division
|
|
19,364
|
|
|
4,357
|
|
|
11,821
|
|
|
880
|
|
|
51
|
|
|
5
|
|
|
989
|
|
|||||||
|
Corporate and Other operations
|
|
(570
|
)
|
|
550
|
|
|
16
|
|
|
0
|
|
|
0
|
|
|
635
|
|
|
(47
|
)
|
|||||||
|
Total Corporate and Other
|
|
(570
|
)
|
|
550
|
|
|
16
|
|
|
0
|
|
|
0
|
|
|
635
|
|
|
(47
|
)
|
|||||||
|
Total
|
|
48,630
|
|
|
11,958
|
|
|
26,616
|
|
|
3,585
|
|
|
82
|
|
|
1,302
|
|
|
1,631
|
|
|||||||
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Realized investment gains (losses), net, and related adjustments
|
|
2,258
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Charges related to realized investment gains (losses), net
|
|
(31
|
)
|
|
0
|
|
|
39
|
|
|
191
|
|
|
0
|
|
|
0
|
|
|
452
|
|
|||||||
|
Investment gains (losses) on trading account assets supporting insurance liabilities, net
|
|
(524
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Change in experience-rated contractholder liabilities due to assets value changes
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(433
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Divested businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Closed Block division
|
|
6,160
|
|
|
2,653
|
|
|
3,365
|
|
|
135
|
|
|
2,130
|
|
|
1
|
|
|
37
|
|
|||||||
|
Other divested businesses
|
|
638
|
|
|
217
|
|
|
607
|
|
|
1
|
|
|
0
|
|
|
3
|
|
|
0
|
|
|||||||
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
|
(12
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
|
Total per Consolidated Statements of Operations
|
|
$
|
57,119
|
|
|
$
|
14,829
|
|
|
$
|
30,627
|
|
|
$
|
3,479
|
|
|
$
|
2,212
|
|
|
$
|
1,306
|
|
|
$
|
2,120
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See Note 1 for additional information.
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Domestic operations
|
|
$
|
36,573
|
|
|
$
|
36,079
|
|
|
$
|
36,151
|
|
|
Foreign operations, total
|
|
$
|
23,116
|
|
|
$
|
22,700
|
|
|
$
|
20,968
|
|
|
Foreign operations, Japan
|
|
$
|
19,589
|
|
|
$
|
19,768
|
|
|
$
|
18,177
|
|
|
Foreign operations, Korea
|
|
$
|
1,567
|
|
|
$
|
1,439
|
|
|
$
|
1,462
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Investment Management segment intersegment revenues
|
|
$
|
717
|
|
|
$
|
682
|
|
|
$
|
682
|
|
|
23.
|
COMMITMENTS AND GUARANTEES, CONTINGENT LIABILITIES AND LITIGATION AND REGULATORY MATTERS
|
|
|
|
Operating and
Capital Leases(1)
|
|
Sub-lease
Income
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
2018
|
|
$
|
147
|
|
|
$
|
0
|
|
|
2019
|
|
123
|
|
|
0
|
|
||
|
2020
|
|
94
|
|
|
0
|
|
||
|
2021
|
|
80
|
|
|
0
|
|
||
|
2022
|
|
62
|
|
|
0
|
|
||
|
2023 and thereafter
|
|
138
|
|
|
0
|
|
||
|
Total
|
|
$
|
644
|
|
|
$
|
0
|
|
|
(1)
|
Future minimum lease payments under capital leases were $
20
million as of December 31,
2017
.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Total outstanding mortgage loan commitments
|
|
$
|
2,772
|
|
|
$
|
1,984
|
|
|
Portion of commitment where prearrangement to sell to investor exists
|
|
$
|
435
|
|
|
$
|
454
|
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Expected to be funded from the general account and other operations outside the separate accounts(1)
|
|
$
|
6,319
|
|
|
$
|
7,232
|
|
|
Expected to be funded from separate accounts(1)
|
|
$
|
141
|
|
|
$
|
470
|
|
|
(1)
|
The amounts at December 31, 2016 have been revised to correct the previously reported amounts.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Indemnification provided to certain securities lending clients
|
|
$
|
4,619
|
|
|
$
|
5,352
|
|
|
Fair value of related collateral associated with above indemnifications
|
|
$
|
4,722
|
|
|
$
|
5,465
|
|
|
Accrued liability associated with guarantee
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Guaranteed value of third parties’ assets
|
|
$
|
77,290
|
|
|
$
|
77,197
|
|
|
Fair value of collateral supporting these assets
|
|
$
|
77,651
|
|
|
$
|
77,760
|
|
|
Asset (liability) associated with guarantee, carried at fair value
|
|
$
|
(1
|
)
|
|
$
|
5
|
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company
|
|
$
|
1,609
|
|
|
$
|
1,371
|
|
|
First-loss exposure portion of above
|
|
$
|
483
|
|
|
$
|
416
|
|
|
Accrued liability associated with guarantees
|
|
$
|
14
|
|
|
$
|
13
|
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Other guarantees where amount can be determined
|
|
$
|
31
|
|
|
$
|
58
|
|
|
Accrued liability for other guarantees and indemnifications
|
|
$
|
0
|
|
|
$
|
3
|
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||||
|
|
|
(in millions)
|
||||||
|
Other assets:
|
|
|
|
|
||||
|
Premium tax offset for future undiscounted assessments
|
|
$
|
64
|
|
|
$
|
78
|
|
|
Premium tax offset currently available for paid assessments
|
|
6
|
|
|
6
|
|
||
|
Total
|
|
$
|
70
|
|
|
$
|
84
|
|
|
Other liabilities:
|
|
|
|
|
||||
|
Insolvency assessments
|
|
$
|
39
|
|
|
$
|
52
|
|
|
24.
|
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in millions, except per share amounts)
|
||||||||||||||
|
2017
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues
|
|
$
|
13,670
|
|
|
$
|
13,441
|
|
|
$
|
16,313
|
|
|
$
|
16,265
|
|
|
Total benefits and expenses
|
|
11,928
|
|
|
12,833
|
|
|
13,292
|
|
|
15,149
|
|
||||
|
Net income (loss)
|
|
1,372
|
|
|
496
|
|
|
2,241
|
|
|
3,865
|
|
||||
|
Less: Income attributable to noncontrolling interests
|
|
3
|
|
|
5
|
|
|
3
|
|
|
100
|
|
||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
1,369
|
|
|
$
|
491
|
|
|
$
|
2,238
|
|
|
$
|
3,765
|
|
|
Basic earnings per share—Common Stock(1):
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
3.14
|
|
|
$
|
1.13
|
|
|
$
|
5.19
|
|
|
$
|
8.78
|
|
|
Diluted earnings per share—Common Stock(1):
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
3.09
|
|
|
$
|
1.12
|
|
|
$
|
5.09
|
|
|
$
|
8.61
|
|
|
2016
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues
|
|
$
|
14,329
|
|
|
$
|
14,439
|
|
|
$
|
16,961
|
|
|
$
|
13,050
|
|
|
Total benefits and expenses
|
|
12,597
|
|
|
13,098
|
|
|
14,646
|
|
|
12,733
|
|
||||
|
Net income (loss)
|
|
1,369
|
|
|
925
|
|
|
1,832
|
|
|
293
|
|
||||
|
Less: Income attributable to noncontrolling interests
|
|
33
|
|
|
4
|
|
|
5
|
|
|
9
|
|
||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
1,336
|
|
|
$
|
921
|
|
|
$
|
1,827
|
|
|
$
|
284
|
|
|
Basic earnings per share—Common Stock(1):
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
2.97
|
|
|
$
|
2.06
|
|
|
$
|
4.14
|
|
|
$
|
0.65
|
|
|
Diluted earnings per share—Common Stock(1):
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss) attributable to Prudential Financial, Inc.
|
|
$
|
2.93
|
|
|
$
|
2.04
|
|
|
$
|
4.07
|
|
|
$
|
0.65
|
|
|
(1)
|
Quarterly earnings per share amounts may not add to the full year amounts due to the averaging of shares.
|
|
25.
|
SUBSEQUENT EVENTS
|
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
|
Name
|
Age
|
|
Title
|
Other Public Directorships
|
|
|
John R. Strangfeld
|
64
|
|
|
Chairman, Chief Executive Officer and President
|
None
|
|
Mark B. Grier
|
65
|
|
|
Vice Chairman
|
None
|
|
Robert M. Falzon
|
58
|
|
|
Executive Vice President and Chief Financial Officer
|
None
|
|
Timothy P. Harris
|
57
|
|
|
Executive Vice President and General Counsel
|
None
|
|
Charles F. Lowrey
|
60
|
|
|
Executive Vice President and Chief Operating Officer, International Businesses
|
None
|
|
Stephen Pelletier
|
64
|
|
|
Executive Vice President and Chief Operating Officer, U.S. Businesses
|
None
|
|
Barbara G. Koster
|
63
|
|
|
Senior Vice President and Chief Information Officer
|
None
|
|
Candace J. Woods
|
57
|
|
|
Senior Vice President and Chief Actuary
|
None
|
|
Nicholas C. Silitch
|
56
|
|
|
Senior Vice President and Chief Risk Officer
|
None
|
|
Scott G. Sleyster
|
58
|
|
|
Senior Vice President and Chief Investment Officer
|
None
|
|
Lucien A. Alziari
|
58
|
|
|
Senior Vice President and Chief Human Resources Officer
|
None
|
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
||||
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in (a))
|
||||
|
Equity compensation plans approved by security holders—Omnibus Plan
|
10,938,453
|
|
(1)
|
|
$
|
67.39
|
|
(2)
|
|
23,092,637
|
|
|
Equity compensation plans approved by security holders—Director Plan
|
157,496
|
|
|
|
|
|
|
27,658
|
|
||
|
Equity compensation plans approved by security holders—PSPP(3)
|
|
|
|
|
|
|
13,665,498
|
|
|||
|
Total equity compensation plans approved by security holders
|
11,095,949
|
|
|
|
|
|
|
36,785,793
|
|
||
|
Equity compensation plans not approved by security holders
|
0
|
|
|
|
|
|
|
0
|
|
||
|
Grand Total
|
11,095,949
|
|
|
|
|
|
|
36,785,793
|
|
||
|
(1)
|
Represents 4,738,045 outstanding Options, 5,174,321 outstanding Restricted Units and 1,026,087 outstanding Performance Shares as of
December 31, 2017
under our Omnibus Plan. The number of Performance Shares represents the number of shares that would be received based on maximum performance, reduced for cancellations and releases through
December 31, 2017
. The actual number of shares the Compensation Committee will award at the end of each performance period will range between 0% and 125% of the target number of units granted, based upon a measure of the reported performance of the Company relative to stated goals. The outstanding Performance Units will be settled only in cash and do not reduce the number of shares authorized under the Omnibus Plan, and so they are not reflected in this table.
|
|
(2)
|
Represents the weighted average exercise price of the Options disclosed in column (a). The weighted average remaining contractual term of these Options is 5.55 years.
|
|
(3)
|
The Prudential Financial, Inc. Employee Stock Purchase Plan is a qualified Employee Stock Purchase Plan under Section 423 of the Code, pursuant to which up to 26,367,235 shares of Common Stock were authorized for issuance, all of which have been registered on Form S-8. Under the plan, employees may purchase shares based upon quarterly offering periods at an amount equal to the lesser of (1) 85% of the closing market price of the Common Stock on the first day of the quarterly offering period, or (2) 85% of the closing market price of the Common Stock on the last day of the quarterly offering period.
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
|
|
Page
Number
|
|
1.
|
||
|
2.
|
Financial Statement Schedules:
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
Any remaining schedules are omitted because they are inapplicable.
|
|
|
Type of Investment
|
|
Amortized Cost or Cost(1)
|
|
Fair
Value
|
|
Amount
Shown in the
Balance Sheet
|
||||||
|
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
||||||
|
Bonds:
|
|
|
|
|
|
|
||||||
|
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
|
$
|
22,837
|
|
|
$
|
26,138
|
|
|
$
|
26,138
|
|
|
Obligations of U.S. states and their political subdivisions
|
|
9,366
|
|
|
10,471
|
|
|
10,471
|
|
|||
|
Foreign governments
|
|
88,062
|
|
|
103,419
|
|
|
103,419
|
|
|||
|
Asset-backed securities
|
|
11,965
|
|
|
12,233
|
|
|
12,233
|
|
|||
|
Residential mortgage-backed securities
|
|
3,491
|
|
|
3,645
|
|
|
3,645
|
|
|||
|
Commercial mortgage-backed securities
|
|
13,134
|
|
|
13,281
|
|
|
13,281
|
|
|||
|
Public utilities
|
|
26,169
|
|
|
28,723
|
|
|
28,723
|
|
|||
|
Certificates of deposit
|
|
30
|
|
|
31
|
|
|
31
|
|
|||
|
All other corporate bonds
|
|
136,805
|
|
|
148,250
|
|
|
148,250
|
|
|||
|
Redeemable preferred stock
|
|
526
|
|
|
589
|
|
|
589
|
|
|||
|
Total fixed maturities, available-for-sale
|
|
$
|
312,385
|
|
|
$
|
346,780
|
|
|
$
|
346,780
|
|
|
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
||||||
|
Bonds:
|
|
|
|
|
|
|
||||||
|
Foreign governments
|
|
$
|
865
|
|
|
$
|
1,130
|
|
|
$
|
865
|
|
|
Residential mortgage-backed securities
|
|
446
|
|
|
478
|
|
|
446
|
|
|||
|
Commercial mortgage-backed securities
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
All other corporate bonds
|
|
738
|
|
|
822
|
|
|
738
|
|
|||
|
Total fixed maturities, held-to-maturity
|
|
$
|
2,049
|
|
|
$
|
2,430
|
|
|
$
|
2,049
|
|
|
Equity securities:
|
|
|
|
|
|
|
||||||
|
Common Stocks:
|
|
|
|
|
|
|
||||||
|
Public utilities
|
|
$
|
93
|
|
|
$
|
117
|
|
|
$
|
117
|
|
|
Banks, trust and insurance companies
|
|
929
|
|
|
1,428
|
|
|
1,428
|
|
|||
|
Industrial, miscellaneous and other
|
|
3,109
|
|
|
4,612
|
|
|
4,612
|
|
|||
|
Nonredeemable preferred stocks
|
|
16
|
|
|
17
|
|
|
17
|
|
|||
|
Total equity securities, available-for-sale
|
|
$
|
4,147
|
|
|
$
|
6,174
|
|
|
$
|
6,174
|
|
|
Trading account assets supporting insurance liabilities(2)(3)
|
|
$
|
22,097
|
|
|
|
|
$
|
22,097
|
|
||
|
Other trading account assets(2)
|
|
5,752
|
|
|
|
|
5,752
|
|
||||
|
Commercial mortgage and other loans(4)
|
|
56,045
|
|
|
|
|
56,045
|
|
||||
|
Policy loans
|
|
11,891
|
|
|
|
|
11,891
|
|
||||
|
Short-term investments
|
|
6,775
|
|
|
|
|
6,775
|
|
||||
|
Other long-term investments
|
|
12,308
|
|
|
|
|
12,308
|
|
||||
|
Total investments
|
|
$
|
433,449
|
|
|
|
|
$
|
469,871
|
|
||
|
(1)
|
Original cost of equities reduced by impairment and, as to fixed maturities, original cost reduced by repayments and impairments and adjusted for amortization of premiums and accretion of discounts.
|
|
(2)
|
At fair value.
|
|
(3)
|
See Note 4 to the Consolidated Financial Statements for the composition of the Company’s “Trading account assets supporting insurance liabilities, at fair value.”
|
|
(4)
|
At carrying value, net of allowance for losses. Includes commercial mortgage and agricultural properties loans and other collateralized loans of
$55,387 million
and uncollateralized loans of
$658 million
.
|
|
|
|
2017
|
|
2016
|
||||
|
ASSETS
|
|
|
|
|
||||
|
Investment contracts from subsidiaries
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Fixed maturities, available for sale, at fair value (amortized cost: 2017- $1,218; 2016- $1,105)
|
|
1,250
|
|
|
1,071
|
|
||
|
Other investments
|
|
2,330
|
|
|
3,215
|
|
||
|
Total investments
|
|
3,581
|
|
|
4,287
|
|
||
|
Cash and cash equivalents
|
|
1,665
|
|
|
1,116
|
|
||
|
Due from subsidiaries
|
|
1,500
|
|
|
1,836
|
|
||
|
Loans receivable from subsidiaries
|
|
7,846
|
|
|
6,719
|
|
||
|
Investment in subsidiaries
|
|
63,241
|
|
|
54,422
|
|
||
|
Property, plant and equipment
|
|
529
|
|
|
559
|
|
||
|
Other assets
|
|
562
|
|
|
384
|
|
||
|
TOTAL ASSETS
|
|
$
|
78,924
|
|
|
$
|
69,323
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
|
LIABILITIES
|
|
|
|
|
||||
|
Due to subsidiaries
|
|
$
|
2,205
|
|
|
$
|
2,585
|
|
|
Loans payable to subsidiaries
|
|
5,738
|
|
|
4,295
|
|
||
|
Short-term debt
|
|
880
|
|
|
535
|
|
||
|
Long-term debt
|
|
15,304
|
|
|
15,389
|
|
||
|
Income taxes payable
|
|
5
|
|
|
0
|
|
||
|
Other liabilities
|
|
723
|
|
|
656
|
|
||
|
Total liabilities
|
|
24,855
|
|
|
23,460
|
|
||
|
EQUITY
|
|
|
|
|
||||
|
Preferred Stock ($.01 par value; 10,000,000 shares authorized; none issued)
|
|
0
|
|
|
0
|
|
||
|
Common Stock ($.01 par value; 1,500,000,000 shares authorized; 660,111,339 shares issued as of both December 31, 2017 and 2016)
|
|
6
|
|
|
6
|
|
||
|
Additional paid-in capital
|
|
24,769
|
|
|
24,606
|
|
||
|
Common Stock held in treasury, at cost (237,559,118 and 230,537,166 shares as of December 31, 2017 and 2016, respectively)
|
|
(16,284
|
)
|
|
(15,316
|
)
|
||
|
Accumulated other comprehensive income (loss)
|
|
17,074
|
|
|
14,621
|
|
||
|
Retained earnings
|
|
28,504
|
|
|
21,946
|
|
||
|
Total equity
|
|
54,069
|
|
|
45,863
|
|
||
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
78,924
|
|
|
$
|
69,323
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
REVENUES
|
|
|
|
|
|
|
||||||
|
Net investment income
|
|
$
|
92
|
|
|
$
|
61
|
|
|
$
|
19
|
|
|
Realized investment gains (losses), net
|
|
(73
|
)
|
|
(126
|
)
|
|
(98
|
)
|
|||
|
Affiliated interest revenue
|
|
379
|
|
|
353
|
|
|
353
|
|
|||
|
Other income (loss)
|
|
(79
|
)
|
|
(2
|
)
|
|
28
|
|
|||
|
Total revenues
|
|
319
|
|
|
286
|
|
|
302
|
|
|||
|
EXPENSES
|
|
|
|
|
|
|
||||||
|
General and administrative expenses
|
|
126
|
|
|
101
|
|
|
170
|
|
|||
|
Interest expense
|
|
1,057
|
|
|
1,106
|
|
|
1,080
|
|
|||
|
Total expenses
|
|
1,183
|
|
|
1,207
|
|
|
1,250
|
|
|||
|
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES
|
|
(864
|
)
|
|
(921
|
)
|
|
(948
|
)
|
|||
|
Total income tax expense (benefit)
|
|
(397
|
)
|
|
(320
|
)
|
|
(396
|
)
|
|||
|
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES
|
|
(467
|
)
|
|
(601
|
)
|
|
(552
|
)
|
|||
|
Equity in earnings of subsidiaries
|
|
8,330
|
|
|
4,969
|
|
|
6,194
|
|
|||
|
NET INCOME (LOSS)
|
|
$
|
7,863
|
|
|
$
|
4,368
|
|
|
$
|
5,642
|
|
|
Other Comprehensive Income (loss)
|
|
2,453
|
|
|
2,336
|
|
|
(3,765
|
)
|
|||
|
TOTAL COMPREHENSIVE INCOME (LOSS)
|
|
$
|
10,316
|
|
|
$
|
6,704
|
|
|
$
|
1,877
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
|
$
|
7,863
|
|
|
$
|
4,368
|
|
|
$
|
5,642
|
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||||||
|
Equity in earnings of subsidiaries
|
|
(8,330
|
)
|
|
(4,969
|
)
|
|
(6,194
|
)
|
|||
|
Realized investment (gains) losses, net
|
|
73
|
|
|
126
|
|
|
98
|
|
|||
|
Dividends received from subsidiaries
|
|
1,975
|
|
|
2,828
|
|
|
4,557
|
|
|||
|
Property, plant and equipment
|
|
(1
|
)
|
|
(13
|
)
|
|
(579
|
)
|
|||
|
Change in:
|
|
|
|
|
|
|
||||||
|
Due to/from subsidiaries, net
|
|
213
|
|
|
(5,109
|
)
|
|
(493
|
)
|
|||
|
Other, operating(1)
|
|
(149
|
)
|
|
204
|
|
|
(333
|
)
|
|||
|
Cash flows from (used in) operating activities(1)
|
|
1,644
|
|
|
(2,565
|
)
|
|
2,698
|
|
|||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
||||||
|
Proceeds from the sale/maturity of:
|
|
|
|
|
|
|
||||||
|
Fixed maturities, available-for-sale
|
|
740
|
|
|
0
|
|
|
0
|
|
|||
|
Short-term investments
|
|
15,973
|
|
|
17,575
|
|
|
13,700
|
|
|||
|
Payments for the purchase of:
|
|
|
|
|
|
|
||||||
|
Fixed maturities, available for sale
|
|
(865
|
)
|
|
(1,106
|
)
|
|
0
|
|
|||
|
Short-term investments
|
|
(15,087
|
)
|
|
(19,111
|
)
|
|
(13,002
|
)
|
|||
|
Capital contributions to subsidiaries
|
|
(1,135
|
)
|
|
(2,018
|
)
|
|
(2,545
|
)
|
|||
|
Returns of capital contributions from subsidiaries
|
|
1,150
|
|
|
2,755
|
|
|
75
|
|
|||
|
Loans to subsidiaries, net of maturities
|
|
(1,127
|
)
|
|
(596
|
)
|
|
2,056
|
|
|||
|
Other, investing
|
|
61
|
|
|
1
|
|
|
244
|
|
|||
|
Cash flows from (used in) investing activities
|
|
(290
|
)
|
|
(2,500
|
)
|
|
528
|
|
|||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
||||||
|
Cash dividends paid on Common Stock
|
|
(1,296
|
)
|
|
(1,300
|
)
|
|
(1,117
|
)
|
|||
|
Common Stock acquired
|
|
(1,250
|
)
|
|
(2,000
|
)
|
|
(1,664
|
)
|
|||
|
Common Stock reissued for exercise of stock options
|
|
246
|
|
|
426
|
|
|
209
|
|
|||
|
Proceeds from the issuance of debt (maturities longer than 90 days)
|
|
742
|
|
|
30
|
|
|
1,332
|
|
|||
|
Repayments of debt (maturities longer than 90 days)
|
|
(480
|
)
|
|
(1,319
|
)
|
|
(2,404
|
)
|
|||
|
Repayments of loans from subsidiaries
|
|
(310
|
)
|
|
(390
|
)
|
|
(102
|
)
|
|||
|
Proceeds from loans payable to subsidiaries
|
|
1,627
|
|
|
1,405
|
|
|
1,316
|
|
|||
|
Net change in financing arrangements (maturities of 90 days or less)
|
|
(16
|
)
|
|
14
|
|
|
8
|
|
|||
|
Excess tax benefits from share-based payment arrangements
|
|
0
|
|
|
10
|
|
|
3
|
|
|||
|
Other, financing(1)
|
|
(68
|
)
|
|
(132
|
)
|
|
(62
|
)
|
|||
|
Cash flows from (used in) financing activities(1)
|
|
(805
|
)
|
|
(3,256
|
)
|
|
(2,481
|
)
|
|||
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
549
|
|
|
(8,321
|
)
|
|
745
|
|
|||
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
1,116
|
|
|
9,437
|
|
|
8,692
|
|
|||
|
CASH AND CASH EQUIVALENTS, END OF YEAR
|
|
$
|
1,665
|
|
|
$
|
1,116
|
|
|
$
|
9,437
|
|
|
|
|
|
|
|
|
|
||||||
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
||||||
|
Cash paid during the period for interest
|
|
$
|
1,019
|
|
|
$
|
1,002
|
|
|
$
|
1,048
|
|
|
Cash paid (refunds received) during the period for taxes
|
|
$
|
(213
|
)
|
|
$
|
(544
|
)
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
||||||
|
NON-CASH TRANSACTIONS DURING THE YEAR
|
|
|
|
|
|
|
||||||
|
Non-cash capital contributions to subsidiaries
|
|
$
|
(17
|
)
|
|
$
|
(4,158
|
)
|
|
$
|
1,453
|
|
|
Non-cash dividends/returns of capital from subsidiaries
|
|
$
|
0
|
|
|
$
|
4,142
|
|
|
$
|
1,335
|
|
|
Treasury Stock shares issued for stock-based compensation programs
|
|
$
|
104
|
|
|
$
|
115
|
|
|
$
|
115
|
|
|
(1)
|
Prior period amounts are presented on a basis consistent with current period presentation, reflecting the adoption of ASU 2016-09. See Note 2 to the Consolidated Financial Statements for additional information.
|
|
|
|
|
|
|
December 31,
|
||||||
|
|
Maturity
Dates
|
|
Rate(1)
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
($ in millions)
|
||||||
|
Short-term debt:
|
|
|
|
|
|
|
|
||||
|
Commercial paper(2)
|
|
|
|
|
$
|
50
|
|
|
$
|
65
|
|
|
Current portion of long-term debt
|
|
|
|
|
830
|
|
|
470
|
|
||
|
Total short-term debt
|
|
|
|
|
$
|
880
|
|
|
$
|
535
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
||||
|
Fixed rate senior notes
|
2019-2049
|
|
2.35%-7.38%
|
|
$
|
8,709
|
|
|
$
|
9,064
|
|
|
Floating rate senior notes
|
2020
|
|
3.46%-5.49%
|
|
29
|
|
|
508
|
|
||
|
Junior subordinated notes
|
2042-2068
|
|
4.50%-8.88%
|
|
6,566
|
|
|
5,817
|
|
||
|
Total long-term debt
|
|
|
|
|
$
|
15,304
|
|
|
$
|
15,389
|
|
|
(1)
|
Ranges of interest rates are for the year ended December 31,
2017
.
|
|
(2)
|
The weighted average interest rate on outstanding commercial paper was
1.15%
and
0.6%
at December 31,
2017
and
2016
, respectively.
|
|
|
Calendar Year
|
|
|
||||||||||||||||||||
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 and
thereafter
|
|
Total
|
||||||||||||
|
|
($ in millions)
|
||||||||||||||||||||||
|
Long-term debt
|
$
|
1,100
|
|
|
$
|
1,179
|
|
|
$
|
400
|
|
|
$
|
0
|
|
|
$
|
12,625
|
|
|
$
|
15,304
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(in millions)
|
||||||||||
|
Pruco Reinsurance
|
|
$
|
0
|
|
|
$
|
1,298
|
|
|
$
|
0
|
|
|
Prudential Annuities Holding Company
|
|
145
|
|
|
98
|
|
|
102
|
|
|||
|
International Insurance and Investments Holding Companies
|
|
546
|
|
|
1,171
|
|
|
1,818
|
|
|||
|
Prudential Insurance Company of America
|
|
1,000
|
|
|
900
|
|
|
1,950
|
|
|||
|
Prudential Investment Management
|
|
467
|
|
|
746
|
|
|
266
|
|
|||
|
Prudential Annuities Life Assurance Corporation
|
|
950
|
|
|
1,140
|
|
|
450
|
|
|||
|
Other Holding Companies
|
|
16
|
|
|
231
|
|
|
46
|
|
|||
|
Total
|
|
$
|
3,124
|
|
|
$
|
5,584
|
|
|
$
|
4,632
|
|
|
Segment
|
Deferred
Policy
Acquisition
Costs
|
|
Future
Policy
Benefits,
Losses,
Claims,
Expenses
|
|
Unearned
Premiums
|
|
Other
Policy Claims
and Benefits
Payable
|
|
Premiums,
Policy
Charges
and Fee
Income
|
|
Net
Investment
Income
|
|
Benefits,
Claims,
Losses
and
Settlement
Expenses
|
|
Amortization
of DAC
|
|
Other
Operating
Expenses
|
||||||||||||||||||
|
Individual Annuities
|
$
|
5,130
|
|
|
$
|
10,797
|
|
|
$
|
0
|
|
|
$
|
8,551
|
|
|
$
|
2,805
|
|
|
$
|
727
|
|
|
$
|
368
|
|
|
$
|
0
|
|
|
$
|
1,791
|
|
|
Individual Life
|
5,405
|
|
|
13,649
|
|
|
0
|
|
|
25,884
|
|
|
2,277
|
|
|
1,933
|
|
|
2,774
|
|
|
382
|
|
|
1,888
|
|
|||||||||
|
U.S. Individual Solutions Division
|
10,535
|
|
|
24,446
|
|
|
0
|
|
|
34,435
|
|
|
5,082
|
|
|
2,660
|
|
|
3,142
|
|
|
382
|
|
|
3,679
|
|
|||||||||
|
Retirement
|
146
|
|
|
59,330
|
|
|
0
|
|
|
49,269
|
|
|
8,517
|
|
|
4,536
|
|
|
11,576
|
|
|
16
|
|
|
1,031
|
|
|||||||||
|
Group Insurance
|
162
|
|
|
4,688
|
|
|
228
|
|
|
8,983
|
|
|
4,748
|
|
|
630
|
|
|
4,347
|
|
|
14
|
|
|
857
|
|
|||||||||
|
U.S. Workplace Solutions Division
|
308
|
|
|
64,018
|
|
|
228
|
|
|
58,252
|
|
|
13,265
|
|
|
5,166
|
|
|
15,923
|
|
|
30
|
|
|
1,888
|
|
|||||||||
|
Investment Management
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
170
|
|
|
0
|
|
|
11
|
|
|
2,239
|
|
|||||||||
|
Investment Management Division
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
170
|
|
|
0
|
|
|
11
|
|
|
2,239
|
|
|||||||||
|
International Insurance
|
8,214
|
|
|
114,437
|
|
|
78
|
|
|
50,483
|
|
|
16,190
|
|
|
5,005
|
|
|
14,604
|
|
|
1,138
|
|
|
2,838
|
|
|||||||||
|
International Insurance Division
|
8,214
|
|
|
114,437
|
|
|
78
|
|
|
50,483
|
|
|
16,190
|
|
|
5,005
|
|
|
14,604
|
|
|
1,138
|
|
|
2,838
|
|
|||||||||
|
Corporate and Other Operations
|
(364
|
)
|
|
5,240
|
|
|
0
|
|
|
9
|
|
|
331
|
|
|
781
|
|
|
679
|
|
|
(18
|
)
|
|
886
|
|
|||||||||
|
Total PFI excluding Closed Block Division
|
18,693
|
|
|
208,141
|
|
|
306
|
|
|
143,179
|
|
|
34,868
|
|
|
13,782
|
|
|
34,348
|
|
|
1,543
|
|
|
11,530
|
|
|||||||||
|
Closed Block Division
|
299
|
|
|
48,870
|
|
|
0
|
|
|
11,421
|
|
|
2,526
|
|
|
2,653
|
|
|
5,359
|
|
|
37
|
|
|
385
|
|
|||||||||
|
Total
|
$
|
18,992
|
|
|
$
|
257,011
|
|
|
$
|
306
|
|
|
$
|
154,600
|
|
|
$
|
37,394
|
|
|
$
|
16,435
|
|
|
$
|
39,707
|
|
|
$
|
1,580
|
|
|
$
|
11,915
|
|
|
Segment
|
Deferred
Policy
Acquisition
Costs
|
|
Future
Policy
Benefits,
Losses,
Claims
Expenses
|
|
Unearned
Premiums
|
|
Other Policy
Claims and
Benefits
Payable
|
|
Premiums,
Policy
Charges
and
Fee Income
|
|
Net
Investment
Income
|
|
Benefits,
Claims,
Losses
and
Settlement
Expenses
|
|
Amortization of
DAC
|
|
Other
Operating
Expenses
|
||||||||||||||||||
|
Individual Annuities
|
$
|
4,871
|
|
|
$
|
10,311
|
|
|
$
|
0
|
|
|
$
|
8,601
|
|
|
$
|
2,721
|
|
|
$
|
700
|
|
|
$
|
614
|
|
|
$
|
462
|
|
|
$
|
1,749
|
|
|
Individual Life
|
5,279
|
|
|
12,057
|
|
|
0
|
|
|
25,021
|
|
|
2,941
|
|
|
1,815
|
|
|
3,414
|
|
|
216
|
|
|
1,929
|
|
|||||||||
|
U.S. Individual Solutions Division(1)
|
10,150
|
|
|
22,368
|
|
|
0
|
|
|
33,622
|
|
|
5,662
|
|
|
2,515
|
|
|
4,028
|
|
|
678
|
|
|
3,678
|
|
|||||||||
|
Retirement
|
132
|
|
|
55,661
|
|
|
0
|
|
|
49,770
|
|
|
7,808
|
|
|
4,275
|
|
|
10,958
|
|
|
124
|
|
|
1,031
|
|
|||||||||
|
Group Insurance
|
175
|
|
|
4,710
|
|
|
220
|
|
|
8,858
|
|
|
4,649
|
|
|
610
|
|
|
4,302
|
|
|
6
|
|
|
822
|
|
|||||||||
|
U.S. Workplace Solutions Division(1)
|
307
|
|
|
60,371
|
|
|
220
|
|
|
58,628
|
|
|
12,457
|
|
|
4,885
|
|
|
15,260
|
|
|
130
|
|
|
1,853
|
|
|||||||||
|
Investment Management
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
80
|
|
|
0
|
|
|
15
|
|
|
2,095
|
|
|||||||||
|
Investment Management Division(1)
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
80
|
|
|
0
|
|
|
15
|
|
|
2,095
|
|
|||||||||
|
International Insurance
|
7,208
|
|
|
103,853
|
|
|
77
|
|
|
47,862
|
|
|
15,813
|
|
|
4,759
|
|
|
14,155
|
|
|
1,065
|
|
|
2,677
|
|
|||||||||
|
International Insurance Division
|
7,208
|
|
|
103,853
|
|
|
77
|
|
|
47,862
|
|
|
15,813
|
|
|
4,759
|
|
|
14,155
|
|
|
1,065
|
|
|
2,677
|
|
|||||||||
|
Corporate and Other Operations
|
(340
|
)
|
|
4,738
|
|
|
0
|
|
|
11
|
|
|
318
|
|
|
703
|
|
|
618
|
|
|
(48
|
)
|
|
1,069
|
|
|||||||||
|
Total PFI excluding Closed Block Division
|
17,325
|
|
|
191,330
|
|
|
297
|
|
|
140,123
|
|
|
34,250
|
|
|
12,942
|
|
|
34,061
|
|
|
1,840
|
|
|
11,372
|
|
|||||||||
|
Closed Block Division
|
336
|
|
|
49,281
|
|
|
0
|
|
|
10,793
|
|
|
2,620
|
|
|
2,578
|
|
|
5,357
|
|
|
37
|
|
|
407
|
|
|||||||||
|
Total
|
$
|
17,661
|
|
|
$
|
240,611
|
|
|
$
|
297
|
|
|
$
|
150,916
|
|
|
$
|
36,870
|
|
|
$
|
15,520
|
|
|
$
|
39,418
|
|
|
$
|
1,877
|
|
|
$
|
11,779
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See Note 1 to the Consolidated Financial Statements for additional information.
|
|
Segment
|
Deferred
Policy
Acquisition
Costs
|
|
Future
Policy
Benefits,
Losses,
Claims,
Expenses
|
|
Unearned
Premiums
|
|
Other
Policy Claims
and Benefits
Payable
|
|
Premiums,
Policy
Charges
and Fee
Income
|
|
Net
Investment
Income
|
|
Benefits,
Claims,
Losses
and
Settlement
Expenses
|
|
Amortization of
DAC
|
|
Other
Operating
Expenses
|
||||||||||||||||||
|
Individual Annuities
|
$
|
4,915
|
|
|
$
|
10,486
|
|
|
$
|
0
|
|
|
$
|
8,720
|
|
|
$
|
2,823
|
|
|
$
|
594
|
|
|
$
|
864
|
|
|
$
|
940
|
|
|
$
|
1,757
|
|
|
Individual Life
|
4,883
|
|
|
10,102
|
|
|
0
|
|
|
23,425
|
|
|
2,944
|
|
|
1,679
|
|
|
2,961
|
|
|
133
|
|
|
1,508
|
|
|||||||||
|
U.S. Individual Solutions Division(1)
|
9,798
|
|
|
20,588
|
|
|
0
|
|
|
32,145
|
|
|
5,767
|
|
|
2,273
|
|
|
3,825
|
|
|
1,073
|
|
|
3,265
|
|
|||||||||
|
Retirement
|
133
|
|
|
51,264
|
|
|
1,835
|
|
|
47,113
|
|
|
6,946
|
|
|
4,110
|
|
|
9,301
|
|
|
66
|
|
|
1,034
|
|
|||||||||
|
Group Insurance
|
181
|
|
|
4,745
|
|
|
206
|
|
|
8,569
|
|
|
4,468
|
|
|
573
|
|
|
4,129
|
|
|
6
|
|
|
837
|
|
|||||||||
|
U.S. Workplace Solutions Division(1)
|
314
|
|
|
56,009
|
|
|
2,041
|
|
|
55,682
|
|
|
11,414
|
|
|
4,683
|
|
|
13,430
|
|
|
72
|
|
|
1,871
|
|
|||||||||
|
Investment Management
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
111
|
|
|
0
|
|
|
19
|
|
|
2,076
|
|
|||||||||
|
Investment Management Division(1)
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
111
|
|
|
0
|
|
|
19
|
|
|
2,076
|
|
|||||||||
|
International Insurance
|
6,554
|
|
|
91,357
|
|
|
574
|
|
|
43,828
|
|
|
14,311
|
|
|
4,383
|
|
|
12,809
|
|
|
987
|
|
|
2,396
|
|
|||||||||
|
International Insurance Division
|
6,554
|
|
|
91,357
|
|
|
574
|
|
|
43,828
|
|
|
14,311
|
|
|
4,383
|
|
|
12,809
|
|
|
987
|
|
|
2,396
|
|
|||||||||
|
Corporate and Other Operations
|
(321
|
)
|
|
4,276
|
|
|
0
|
|
|
3
|
|
|
332
|
|
|
726
|
|
|
624
|
|
|
(68
|
)
|
|
869
|
|
|||||||||
|
Total PFI excluding Closed Block Division
|
16,345
|
|
|
172,230
|
|
|
2,615
|
|
|
131,658
|
|
|
31,824
|
|
|
12,176
|
|
|
30,688
|
|
|
2,083
|
|
|
10,477
|
|
|||||||||
|
Closed Block Division
|
373
|
|
|
49,539
|
|
|
0
|
|
|
10,704
|
|
|
2,669
|
|
|
2,653
|
|
|
5,630
|
|
|
37
|
|
|
435
|
|
|||||||||
|
Total
|
$
|
16,718
|
|
|
$
|
221,769
|
|
|
$
|
2,615
|
|
|
$
|
142,362
|
|
|
$
|
34,493
|
|
|
$
|
14,829
|
|
|
$
|
36,318
|
|
|
$
|
2,120
|
|
|
$
|
10,912
|
|
|
(1)
|
Prior period divisional subtotals are presented on a basis consistent with the Company’s new organizational structure. Individual segment results and consolidated totals remain unchanged. See Note 1 to the Consolidated Financial Statements for additional information.
|
|
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
|
|
Assumed
from
Other
Companies
|
|
Net
Amount
|
|
Percentage
of Amount
Assumed
to Net
|
|||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Life Insurance Face Amount In Force
|
|
$
|
3,733,997
|
|
|
$
|
767,499
|
|
|
$
|
207,083
|
|
|
$
|
3,173,581
|
|
|
6.5
|
%
|
|
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Life Insurance
|
|
$
|
29,035
|
|
|
$
|
1,761
|
|
|
$
|
2,105
|
|
|
$
|
29,379
|
|
|
7.2
|
%
|
|
Accident and Health Insurance
|
|
2,762
|
|
|
50
|
|
|
0
|
|
|
2,712
|
|
|
0.0
|
|
||||
|
Total Premiums
|
|
$
|
31,797
|
|
|
$
|
1,811
|
|
|
$
|
2,105
|
|
|
$
|
32,091
|
|
|
6.6
|
%
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Life Insurance Face Amount In Force
|
|
$
|
3,652,206
|
|
|
$
|
706,918
|
|
|
$
|
218,262
|
|
|
$
|
3,163,550
|
|
|
6.9
|
%
|
|
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Life Insurance
|
|
$
|
27,857
|
|
|
$
|
1,719
|
|
|
$
|
2,073
|
|
|
$
|
28,211
|
|
|
7.3
|
%
|
|
Accident and Health Insurance
|
|
2,797
|
|
|
44
|
|
|
0
|
|
|
2,753
|
|
|
0.0
|
|
||||
|
Total Premiums
|
|
$
|
30,654
|
|
|
$
|
1,763
|
|
|
$
|
2,073
|
|
|
$
|
30,964
|
|
|
6.7
|
%
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Life Insurance Face Amount In Force
|
|
$
|
3,457,711
|
|
|
$
|
642,525
|
|
|
$
|
235,418
|
|
|
$
|
3,050,604
|
|
|
7.7
|
%
|
|
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Life Insurance
|
|
$
|
25,346
|
|
|
$
|
1,573
|
|
|
$
|
2,147
|
|
|
$
|
25,920
|
|
|
8.3
|
%
|
|
Accident and Health Insurance
|
|
2,650
|
|
|
49
|
|
|
0
|
|
|
2,601
|
|
|
0.0
|
|
||||
|
Total Premiums
|
|
$
|
27,996
|
|
|
$
|
1,622
|
|
|
$
|
2,147
|
|
|
$
|
28,521
|
|
|
7.5
|
%
|
|
|
|
|
Additions
|
|
|
|
|
|
|
||||||||||||||
|
Description
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Other
|
|
Deductions
|
|
Effect of
Foreign
Exchange Rates
|
|
Balance
at End
of Period
|
||||||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowance for losses on commercial mortgage and other loans
|
$
|
106
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
(1)
|
$
|
0
|
|
|
$
|
106
|
|
|
Valuation allowance on deferred tax asset
|
163
|
|
|
66
|
|
|
29
|
|
|
45
|
|
|
1
|
|
|
214
|
|
||||||
|
|
$
|
269
|
|
|
$
|
66
|
|
|
$
|
29
|
|
|
$
|
45
|
|
|
$
|
1
|
|
|
$
|
320
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowance for losses on commercial mortgage and other loans
|
$
|
112
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
7
|
|
(1)
|
$
|
1
|
|
|
$
|
106
|
|
|
Valuation allowance on deferred tax asset
|
133
|
|
|
68
|
|
|
(1
|
)
|
|
36
|
|
|
(1
|
)
|
|
163
|
|
||||||
|
|
$
|
245
|
|
|
$
|
68
|
|
|
$
|
(1
|
)
|
|
$
|
43
|
|
|
$
|
0
|
|
|
$
|
269
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowance for losses on commercial mortgage and other loans
|
$
|
119
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
7
|
|
(1)
|
$
|
0
|
|
|
$
|
112
|
|
|
Valuation allowance on deferred tax asset
|
277
|
|
|
38
|
|
|
(3
|
)
|
|
178
|
|
|
(1
|
)
|
|
133
|
|
||||||
|
|
$
|
396
|
|
|
$
|
38
|
|
|
$
|
(3
|
)
|
|
$
|
185
|
|
|
$
|
(1
|
)
|
|
$
|
245
|
|
|
(1)
|
Represents net release of allowance for losses and charge-offs, net of recoveries.
|
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
Prudential Entities
|
||||
|
|
|
|
|
|
|
Company
|
Prudential Financial, Inc. and its subsidiaries
|
|
POB
|
Prudential of Brazil
|
|
Gibraltar Life
|
Gibraltar Life Insurance Company, Ltd.
|
|
PRIAC
|
Prudential Retirement Insurance and Annuity Company
|
|
PALAC
|
Prudential Annuities Life Assurance Corporation
|
|
Pruco Life
|
Pruco Life Insurance Company
|
|
PB&T
|
Prudential Bank & Trust, FSB
|
|
Pruco Re
|
Pruco Reinsurance, Ltd.
|
|
PFI
|
Prudential Financial, Inc. and its subsidiaries
|
|
Prudential
|
Prudential Financial, Inc. and its subsidiaries
|
|
PGFL
|
Prudential Gibraltar Financial Life Insurance Co., Ltd.
|
|
Prudential Financial
|
Prudential Financial, Inc.
|
|
PGIM
|
The Global Investment Management Businesses of Prudential Financial, Inc.
|
|
Prudential Funding
|
Prudential Funding, LLC
|
|
PHJ
|
Prudential Holdings of Japan, Inc.
|
|
Prudential Insurance
|
The Prudential Insurance Company of America
|
|
PLIC
|
Prudential Legacy Insurance Company of New Jersey
|
|
Prudential of Japan
|
The Prudential Life Insurance Company Ltd.
|
|
PLNJ
|
Pruco Life Insurance Company of New Jersey
|
|
Registrant
|
Prudential Financial, Inc.
|
|
Defined Terms
|
||||
|
|
|
|
|
|
|
AIG
|
American International Group
|
|
FSS
|
Financial Supervisory Service of Korea
|
|
Allstate
|
Allstate Corporation
|
|
Guideline AXXX
|
The Application of the Valuation of Life Insurance Policies Model Regulation
|
|
A.M. Best
|
A.M. Best Company
|
|
Hartford Financial
|
Hartford Financial Services Group, Inc.
|
|
AFP Habitat
|
Administradora de Fondos de Pensiones Habitat S.A.
|
|
Hartford Life Business
|
The Hartford Financial Services Group's individual life insurance business acquired by Prudential Financial
|
|
Board
|
Prudential Financial's Board of Directors
|
|
ICS
|
The IAIS’s Risk-based Global Insurance Capital Standard
|
|
CIO Organization
|
Chief Investment Officer Organization
|
|
Liberty Mutual
|
Liberty Mutual Group
|
|
Closed Block
|
Certain in force traditional domestic participating insurance and annuity products and corresponding assets that are used for the payment of benefits and policyholders' dividends on these products
|
|
Moody's
|
Moody's Investor Service, Inc.
|
|
ComFrame
|
The common framework for the supervision of Internationally Active Insurance Groups
|
|
Regulation XXX
|
Valuation of Life Insurance Policies Model Regulation
|
|
Council
|
Financial Stability Oversight Council
|
|
Rules
|
DOL Fiduciary Rules
|
|
Designated Financial Companies
|
Non-bank financial companies that are subject to stricter standards and supervision
|
|
S&P
|
Standard & Poor's Rating Services
|
|
Dodd-Frank
|
Dodd-Frank Wall Street Reform and Consumer Protection Act
|
|
SAB 118
|
Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act
|
|
Enterprise Group
|
Enterprise Group Limited and affiliates
|
|
Star and Edison Businesses
|
AIG Star Life Insurance Co., Ltd, AIG Edison Life Insurance Company, AIG
Financial Assurance Japan K.K. and AIG Edison Service Co., Ltd., collectively
|
|
Exchange Act
|
The Securities Exchange Act of 1934
|
|
Tax Act of 2017
|
The United States Tax Cuts and Jobs Act of 2017
|
|
Fitch
|
Fitch Ratings Inc.
|
|
Union Hamilton
|
Union Hamilton Reinsurance, Ltd.
|
|
Framework
|
Prudential's capital protection framework
|
|
U.S. GAAP
|
Accounting principles generally accepted in the United States of America
|
|
FRB
|
Board of Governors of the Federal Reserve System
|
|
Variable Annuities Recapture
|
A series of transactions that recaptured the risks related to variable annuities living benefits riders and certain retirement products that were previously reinsured to our captive reinsurance company
|
|
Acronyms
|
||||
|
|
|
|
|
|
|
AFE
|
Active Financing Exception
|
|
IAIS
|
International Association of Insurance Supervisors
|
|
AG 43
|
Actuarial Guideline No. 43
|
|
IASB
|
International Accounting Standards Board
|
|
AG 48
|
Actuarial Guideline No. 48
|
|
IFRS
|
International Financial Reporting Standards
|
|
ALM
|
Asset Liability Management
|
|
ILC
|
Inversiones La Construccion S.A.
|
|
AOCI
|
Accumulated Other Comprehensive Income
|
|
IRAs
|
Individual Retirement Accounts
|
|
ASU
|
Accounting Standards Updates
|
|
IRS
|
Internal Revenue Service
|
|
BCR
|
Basic Capital Requirement
|
|
LIBOR
|
London Inter-Bank Offered Rate
|
|
BEAT
|
Base Erosion and Anti-Abuse Tax
|
|
LPP
|
Legacy Protection Plus
|
|
BONYM
|
Bank of New York Mellon
|
|
LSAI
|
LeapFrog Strategic African Investments
|
|
bps
|
Basis Points
|
|
MD&A
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
CAPM
|
Capital Asset Pricing Model
|
|
MVA
|
Market Value Adjusted Investment Options
|
|
CFC
|
Capital and Finance Committee
|
|
NAIC
|
National Association of Insurance Commissioners
|
|
CFTC
|
Commodity Futures Trading Commission
|
|
NAV
|
Net Asset Value
|
|
CLOs
|
Collateralized Loan Obligations
|
|
NFA
|
National Futures Association
|
|
COLI
|
Corporate-Owned Life Insurance
|
|
NJDOBI
|
New Jersey Department of Banking and Insurance
|
|
COSO
|
Committee of Sponsoring Organizations of the Treadway Commission
|
|
NPR
|
Non-Performance Risk
|
|
DAC
|
Deferred Policy Acquisition Costs
|
|
NY DFS
|
New York State Department of Financial Services
|
|
DOL
|
U.S. Department of Labor
|
|
NYSE
|
New York Stock Exchange
|
|
DRD
|
Dividend Received Deduction
|
|
OCI
|
Other Comprehensive Income (Loss)
|
|
DSI
|
Deferred Sales Inducements
|
|
ORSA
|
Own Risk and Solvency Assessment
|
|
EBITDA
|
Earnings Before Interest, Taxes, Depreciation and Amortization
|
|
OTC
|
Over-The-Counter
|
|
EEA
|
European Economic Area
|
|
OTTI
|
Other-Than-Temporary Impairments
|
|
ERC
|
Enterprise Risk Committee
|
|
PCAOB
|
Public Company Accounting Oversight Board
|
|
ERISA
|
Employee Retirement Income Security Act
|
|
PDI
|
Prudential Defined Income Variable Annuity
|
|
ERM
|
Enterprise Risk Management
|
|
PFL
|
Profits Followed by Losses
|
|
FANIP
|
Funding Agreement Notes Issuance Program
|
|
PPC
|
Japan Policyholders Protection Corporation
|
|
FASB
|
Financial Accounting Standards Board
|
|
PPI
|
Prudential Premier® Investment Variable Annuity
|
|
FDIC
|
Federal Deposit Insurance Corporation
|
|
PSA
|
Pooling and Servicing Agreement
|
|
FHLBB
|
Federal Home Loan Bank of Boston
|
|
RAF
|
Risk Appetite Framework
|
|
FHLBNY
|
Federal Home Loan Bank of New York
|
|
RBC
|
Risk-Based Capital
|
|
FINRA
|
Financial Industry Regulatory Authority
|
|
RICO
|
Racketeer Influenced and Corrupt Organizations Act
|
|
FIO
|
Federal Insurance Office
|
|
RMBS
|
Residential Mortgage-Backed Securities
|
|
FSA
|
Financial Services Agency
|
|
SEC
|
Securities and Exchange Commission
|
|
FSB
|
Financial Stability Board
|
|
SMR
|
Solvency Margin Ratio
|
|
GICs
|
Guaranteed Investment Contracts
|
|
SOFR
|
Secured Overnight Funding Rate
|
|
GIFT
|
Guaranteed Income for Tomorrow
|
|
SSMDF
|
Social Security Master Death File
|
|
GILTI
|
Global Intangible Low-Taxed Income
|
|
SVO
|
Securities Valuation Office
|
|
GMAB
|
Guaranteed Minimum Accumulation Benefits
|
|
TAASIL
|
Trading Account Assets Supporting Insurance Liabilities
|
|
GMDB
|
Guaranteed Minimum Death Benefits
|
|
TAC
|
Total Adjusted Capital
|
|
GMIB
|
Guaranteed Minimum Income Benefits
|
|
TBA
|
To Be Announced
|
|
GMIWB
|
Guaranteed Minimum Income and Withdrawal Benefits
|
|
U.K.
|
The United Kingdom
|
|
GMWB
|
Guaranteed Minimum Withdrawal Benefits
|
|
URR
|
Unearned Revenue Reserve
|
|
G-SII
|
Global Systemically Important Insurer
|
|
U.S.
|
The United States of America
|
|
HDI
|
Highest Daily Lifetime Income
|
|
VIEs
|
Variable Interest Entities
|
|
HLA
|
Higher Loss Absorbency
|
|
VOBA
|
Value of Business Acquired
|
|
IAIG
|
Internationally Active Insurance Groups
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
4.2
|
|
Upon the request of the Securities and Exchange Commission, the Registrant will furnish copies of all instruments defining the rights of holders of long-term debt of the Registrant.
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
101.INS—XBRL
|
|
Instance Document.
|
|
|
|
|
|
101.SCH—XBRL
|
|
Taxonomy Extension Schema Document.
|
|
|
|
|
|
101.CAL—XBRL
|
|
Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
101.LAB—XBRL
|
|
Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
101.PRE—XBRL
|
|
Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
101.DEF—XBRL
|
|
Taxonomy Extension Definition Linkbase Document.
|
|
*
|
This exhibit is a management contract or compensatory plan or arrangement.
|
|
Prudential Financial, Inc.
|
||
|
|
|
|
|
By:
|
|
/
S
/ R
OBERT
M. F
ALZON
|
|
Name:
|
|
Robert M. Falzon
|
|
Title:
|
|
Executive Vice President
|
|
Name
|
|
Title
|
|
/
S
/ J
OHN
R. S
TRANGFELD
|
|
Chief Executive Officer,
|
|
John R. Strangfeld
|
|
President and Director
|
|
|
|
|
|
/
S
/ R
OBERT
M. F
ALZON
|
|
Executive Vice President and Chief Financial Officer
|
|
Robert M. Falzon
|
|
(Principal Financial Officer)
|
|
|
|
|
|
/
S
/ R
OBERT
D. A
XEL
|
|
Senior Vice President and
|
|
Robert D. Axel
|
|
Principal Accounting Officer
|
|
|
|
|
|
T
HOMAS
J. B
ALTIMORE
, J
R
.*
|
|
Director
|
|
Thomas J. Baltimore, Jr.
|
|
|
|
|
|
|
|
G
ILBERT
F. C
ASELLAS
*
|
|
Director
|
|
Gilbert F. Casellas
|
|
|
|
|
|
|
|
M
ARK
B. G
RIER
*
|
|
Director
|
|
Mark B. Grier
|
|
|
|
|
|
|
|
M
ARTINA
H
UND
-M
EJEAN
*
|
|
Director
|
|
Martina Hund-Mejean
|
|
|
|
|
|
|
|
K
ARL
J. K
RAPEK
*
|
|
Director
|
|
Karl J. Krapek
|
|
|
|
|
|
|
|
P
ETER
R. L
IGHTE
*
|
|
Director
|
|
Peter R. Lighte
|
|
|
|
|
|
|
|
G
EORGE
P
AZ
*
|
|
Director
|
|
George Paz
|
|
|
|
|
|
|
|
S
ANDRA
P
IANALTO
*
|
|
Director
|
|
Sandra Pianalto
|
|
|
|
|
|
|
|
C
HRISTINE
A. P
OON
*
|
|
Director
|
|
Christine A. Poon
|
|
|
|
|
|
|
|
D
OUGLAS
A. S
COVANNER
*
|
|
Director
|
|
Douglas A. Scovanner
|
|
|
|
|
|
|
|
M
ICHAEL
A. T
ODMAN
*
|
|
Director
|
|
Michael A. Todman
|
|
|
|
|
|
|
|
By:*
|
/
S
/ R
OBERT
M. F
ALZON
|
|
|
|
Attorney-in-fact
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income (loss) from continuing operations before income taxes(1)
|
|
$
|
6,454
|
|
|
$
|
5,710
|
|
|
$
|
7,711
|
|
|
$
|
1,715
|
|
|
$
|
(1,712
|
)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Undistributed income (loss) of investees accounted for under the equity method
|
|
275
|
|
|
12
|
|
|
(280
|
)
|
|
134
|
|
|
223
|
|
|||||
|
Interest capitalized
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
|
Adjusted earnings
|
|
6,179
|
|
|
5,698
|
|
|
7,991
|
|
|
1,581
|
|
|
(1,935
|
)
|
|||||
|
Add fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest credited to policyholders’ account balances
|
|
3,822
|
|
|
3,761
|
|
|
3,479
|
|
|
4,263
|
|
|
3,111
|
|
|||||
|
Gross interest expense(2)
|
|
1,334
|
|
|
1,324
|
|
|
1,328
|
|
|
1,934
|
|
|
1,419
|
|
|||||
|
Interest component of rental expense
|
|
86
|
|
|
84
|
|
|
77
|
|
|
75
|
|
|
85
|
|
|||||
|
Total fixed charges
|
|
5,242
|
|
|
5,169
|
|
|
4,884
|
|
|
6,272
|
|
|
4,615
|
|
|||||
|
Total earnings plus fixed charges
|
|
$
|
11,421
|
|
|
$
|
10,867
|
|
|
$
|
12,875
|
|
|
$
|
7,853
|
|
|
$
|
2,680
|
|
|
Ratio of earnings to fixed charges(3)
|
|
2.18
|
|
|
2.10
|
|
|
2.64
|
|
|
1.25
|
|
|
0.00
|
|
|||||
|
(1)
|
Excludes earnings attributable to noncontrolling interests.
|
|
(2)
|
Interest expense on short-term and long-term debt, including interest expense of securities businesses reported in “Net investment income” in the Consolidated Statements of Operations, capitalized interest and amortization of debt discounts and premiums. Interest expense does not include interest on liabilities recorded under the authoritative guidance on accounting for uncertainty in income taxes. The Company’s policy is to classify such interest in income tax provision in the consolidated statements of operations.
|
|
(3)
|
Due to the Company’s loss for the twelve months ended December 31, 2013, the ratio coverage was less than 1:1 and is therefore not presented. Additional earnings of $1,935 million would have been required for the twelve months ended December 31, 2013, to achieve a ratio of 1:1.
|
|
Subsidiary
|
Jurisdiction
|
|
210-220 E. 22nd Street SSGA Owner, LLC
|
Delaware
|
|
49-51 avenue George V Holdings SAS
|
France
|
|
49-51 avenue George V SCI
|
France
|
|
Adlerwerke CB Investment LLC
|
Delaware
|
|
Administradora de Fondos de Pensiones Habitat, S.A.
|
Chile
|
|
Administradora de Inversiones Previsionales SpA
|
Chile
|
|
AREF Cayman Co Ltd.
|
Cayman Islands
|
|
AREF GP Ltd.
|
Cayman Islands
|
|
Asia Property Fund III GP S.a.r.l.
|
Luxembourg
|
|
ASPF II - Feeder Fund GmbH
|
Germany
|
|
ASPF II - Verwaltungs - GmbH & Co. KG
|
Germany
|
|
ASPF II Beteiligungs GmbH & Co. KG
|
Germany
|
|
ASPF II Management GmbH
|
Germany
|
|
ASPF III (Scots) L.P.
|
Scotland
|
|
Asset Disposition Trust, 1995-2
|
New Jersey
|
|
AST Investment Services, Inc.
|
Connecticut
|
|
Banco Monex, S.A., Institución de Banca Múltiple, Monex Grupo Financiero, solely as trustee of F/2382
|
Mexico
|
|
Braeloch Holdings Inc.
|
Delaware
|
|
Braeloch Successor Corporation
|
Delaware
|
|
Broome Street Holdings, LLC
|
Delaware
|
|
BSC CP LP
|
Scotland
|
|
Campus Drive, LLC
|
Delaware
|
|
Capital Agricultural Property Services, Inc.
|
Delaware
|
|
CB German Retail LLC
|
Delaware
|
|
Chadwick Boulevard Investment Holdings Co., LLC
|
Delaware
|
|
Cibecue, LLC
|
Delaware
|
|
CLIS Co., Ltd.
|
Japan
|
|
Coconino, LLC
|
Delaware
|
|
Colico II, Inc.
|
Delaware
|
|
COLICO, INC.
|
Delaware
|
|
Columbus Drive Partners, L.P.
|
Delaware
|
|
Commerce Street Holdings, LLC
|
Delaware
|
|
Commerce Street Investments LLC
|
Delaware
|
|
Coolidge, LLC
|
Delaware
|
|
Coral Reef GP
|
Cayman Islands
|
|
Coral Reef Unit Trust
|
Cayman Islands
|
|
Coral Reef, L.P.
|
Cayman Islands
|
|
Cottage Street Investments LLC
|
Delaware
|
|
Cottage Street Orbit Acquisition, LLC
|
Delaware
|
|
DHFL Pramerica Asset Managers Private Limited
|
India
|
|
DHFL PRAMERICA LIFE INSURANCE COMPANY LIMITED
|
India
|
|
DHFL Pramerica Trustees Private Limited
|
India
|
|
Don Cesar Investor LLC
|
Delaware
|
|
Dryden Finance II, LLC
|
Delaware
|
|
E. 22nd Street SSGA Venture, LLC
|
Delaware
|
|
Edison Place Senior Note LLC
|
Delaware
|
|
Essex, LLC
|
Delaware
|
|
European Value Partners GP S.a.r.l.
|
Luxembourg
|
|
EuroPRISA Management Company S.A.
|
Luxembourg
|
|
Everbright Pramerica Fund Management Co., Ltd.
|
China
|
|
Flagstaff, LLC
|
Delaware
|
|
Flor-Ag Corporation
|
Florida
|
|
GA 1600 Commons LLC
|
Delaware
|
|
GA 333 Hennepin Investor LLC
|
Delaware
|
|
GA Belden LLC
|
Delaware
|
|
GA Collins LLC
|
Delaware
|
|
GA East 86 Street LLC
|
Delaware
|
|
GA JHCII LLC
|
Delaware
|
|
GA Manor at Harbour Island, LLC
|
Delaware
|
|
GA Metro LLC
|
Delaware
|
|
GA Mission LLC
|
Delaware
|
|
GA W Paces LLC
|
Delaware
|
|
GA/MDI 333 Hennepin Associates LLC
|
Delaware
|
|
GAP Advisors (Cayman), Ltd.
|
Cayman Islands
|
|
GAP-P Holdings (Cayman), Ltd.
|
Cayman Islands
|
|
GAP-P LT Holdings (Cayman), Ltd.
|
Cayman Islands
|
|
Gateway CDE LLC
|
Delaware
|
|
Gateway Holdings II, LLC
|
Delaware
|
|
Gateway Holdings, LLC
|
Delaware
|
|
German Retail Income CP LP
|
Scotland
|
|
GIBRALTAR BSN HOLDINGS SDN BHD
|
Malaysia
|
|
Gibraltar BSN Life Berhad
|
Malaysia
|
|
Gibraltar International Service LLC
|
Delaware
|
|
Gibraltar Universal Life Reinsurance Company
|
Arizona
|
|
Glenealy International Limited
|
British Virgin Islands
|
|
Global Portfolio Strategies, Inc.
|
Connecticut
|
|
Graham Resources, Inc.
|
Delaware
|
|
Graham Royalty, Ltd.
|
Louisiana
|
|
Greenlee, LLC
|
Delaware
|
|
Halsey Street Investments LLC
|
Delaware
|
|
Hirakata, LLC
|
Delaware
|
|
Impact Investments Bridges UK S.a.r.l
|
Luxembourg
|
|
Inversiones Previsionales Chile SpA
|
Chile
|
|
Inversiones Previsionales Dos SpA
|
Chile
|
|
Ironbound Fund LLC
|
Delaware
|
|
Jennison Associates LLC
|
Delaware
|
|
Kyarra S.a r.l.
|
Luxembourg
|
|
Kyoei Annuity Home Co. Ltd. (Kabushiki Kaisha Kyouei Nenkin Home)
|
Japan
|
|
Kyoei do Brasil Companhia de Seguros
|
Brazil
|
|
Lake Street Partners IV, L.P.
|
Delaware
|
|
Manor at Harbour Island, LLC
|
Delaware
|
|
Maricopa, LLC
|
Delaware
|
|
Market Street Holdings IV, LLC
|
Delaware
|
|
MC GA COLLINS HOLDINGS LLC
|
Delaware
|
|
MC GA COLLINS REALTY LLC
|
Delaware
|
|
MC Insurance Agency Services, LLC
|
California
|
|
Mulberry Street Holdings, LLC
|
Delaware
|
|
Mulberry Street Investment, L.P.
|
Delaware
|
|
Mulberry Street Partners, LLC
|
Delaware
|
|
Mullin TBG Insurance Agency Services, LLC
|
Delaware
|
|
New Savanna
|
Cayman Islands
|
|
Oki-ni, LLC
|
Delaware
|
|
Orchard Street Acres Inc.
|
Delaware
|
|
PAI Holly Hill Groves, LLC
|
Delaware
|
|
PAI Morgan Rose Ranch, LLC
|
Delaware
|
|
PCP V Cayman AIV GP, L.P.
|
Cayman Islands
|
|
PG Business Service Co., Ltd
|
Japan
|
|
PG Collection Service Co., Ltd.
|
Japan
|
|
PG Insurance Service Co., Ltd. (PG Insurance Service Kabushiki Kaisha)
|
Japan
|
|
PGA Asian Retail Limited
|
Bermuda
|
|
PGA European Limited
|
Bermuda
|
|
PGIM (Australia) Pty Ltd
|
Australia
|
|
PGIM (Hong Kong) Ltd.
|
Hong Kong
|
|
PGIM (Scots) Limited
|
Scotland
|
|
PGIM (Singapore) Pte. Ltd.
|
Singapore
|
|
PGIM Broad Market High Yield Bond Fund, L.P.
|
Delaware
|
|
PGIM Broad Market High Yield Bond Partners, LLC
|
Delaware
|
|
PGIM European Services Limited
|
England
|
|
PGIM Financial Limited
|
England
|
|
PGIM Foreign Investments, Inc.
|
Delaware
|
|
PGIM Fund Management Limited
|
England
|
|
PGIM Holding Company LLC
|
Delaware
|
|
PGIM Investments LLC
|
New York
|
|
PGIM Japan Co., Ltd.
|
Japan
|
|
PGIM Korea Inc.
|
Korea, Republic of
|
|
PGIM Limited
|
England
|
|
PGIM LTIF GP S.à.r.l.
|
Luxembourg
|
|
PGIM Management Partner Limited
|
United Kingdom
|
|
PGIM Real Estate (Japan) Ltd.
|
Japan
|
|
PGIM Real Estate Brazil Investimentos Imobiliarios Ltda.
|
Brazil
|
|
PGIM Real Estate Carry & Co-Invest GP S.á r.l.
|
Luxembourg
|
|
PGIM Real Estate Carry & Co-Invest GP, LLC
|
Delaware
|
|
PGIM Real Estate Carry & Co-Invest SCSp
|
Luxembourg
|
|
PGIM Real Estate Carry & Co-Invest, L.P.
|
Delaware
|
|
PGIM Real Estate CD S.a.r.l.
|
Luxembourg
|
|
PGIM Real Estate Co-Invest Holdings, LLC
|
Delaware
|
|
PGIM Real Estate Finance Holding Company
|
New Jersey
|
|
PGIM Real Estate Finance, LLC
|
Delaware
|
|
PGIM Real Estate France SAS
|
France
|
|
PGIM Real Estate Germany AG
|
Germany
|
|
PGIM Real Estate Inmuebles, S. de R.L. de C.V
|
Mexico
|
|
PGIM Real Estate Luxembourg S.A.
|
Luxembourg
|
|
PGIM Real Estate Management Luxembourg S.a.r.l.
|
Luxembourg
|
|
PGIM Real Estate Mexico S.C.
|
Mexico
|
|
PGIM Real Estate MVP Administradora IV, S. de R.L. de C.V.
|
Mexico
|
|
PGIM Real Estate MVP Inmuebles IV, S. de R.L. de C.V.
|
Mexico
|
|
PGIM Real Estate S. de R.L. de C.V.
|
Mexico
|
|
PGIM Real Estate U.S. Debt Fund GP, LLC
|
Delaware
|
|
PGIM REF Europe GP, LLP
|
England & Wales
|
|
PGIM REF Europe Member, LLC
|
Delaware
|
|
PGIM REF Europe, L.P.
|
England & Wales
|
|
PGIM Strategic Investments, Inc.
|
Delaware
|
|
PGIM USPF VI Manager, LLC
|
Delaware
|
|
PGIM Warehouse, Inc.
|
Delaware
|
|
PGIM, Inc.
|
New Jersey
|
|
PGLH of Delaware, Inc.
|
Delaware
|
|
PIFM Holdco, LLC
|
Delaware
|
|
PIM KF Blocker Holdings LLC
|
Delaware
|
|
PIM KF Blocker V Holdings LLC
|
Delaware
|
|
PIM USPF V Manager LLC
|
Delaware
|
|
PLA Administradora Industrial SRL
|
Mexico
|
|
PLA Administradora, LLC
|
Delaware
|
|
PLA Administradora, S. de R.L. de C.V.
|
Mexico
|
|
PLA Asesoria Profesional II, S. de R.L. de C.V.
|
Mexico
|
|
PLA Asesoria Profesional, S.de R.L. de C.V.
|
Mexico
|
|
PLA Co-Investor LLC
|
Delaware
|
|
PLA Mexico Industrial Manager I LLC
|
Delaware
|
|
PLA Mexico Industrial Manager II LLC
|
Delaware
|
|
PLA Residential Fund III Aggregating Manager, LLC
|
Delaware
|
|
PLA Residential Fund III Limited Manager, LLC
|
Delaware
|
|
PLA Residential Fund III Manager, LLC
|
Delaware
|
|
PLA Residential Fund IV Aggregating Manager, LLC
|
Delaware
|
|
PLA Residential Fund IV Manager, LLC
|
Delaware
|
|
PLA Retail Fund I Blue, LP
|
Delaware
|
|
PLA Retail Fund I Manager, LLC
|
Delaware
|
|
PLA Retail Fund I Red, LP
|
Delaware
|
|
PLA Retail Fund I, LP
|
Delaware
|
|
PLA Retail Fund II Aggregating Manager, LLC
|
Delaware
|
|
PLA Retail Fund II Manager, LLC
|
Delaware
|
|
PLA Retail Fund II U.S. Carry/Co-Invest, LP
|
Delaware
|
|
PLA Retail Fund II, LLC
|
Delaware
|
|
PLA Retail Fund II, LP
|
Delaware
|
|
PLA Services Manager Mexico, LLC
|
Delaware
|
|
PLNJ Realty Investments, LLC
|
Delaware
|
|
PMCF Holdings, LLC
|
Delaware
|
|
PMCF Properties, LLC
|
Delaware
|
|
PPPF General Partner LLP
|
England & Wales
|
|
PR GA SCP Apartments, LLC
|
Delaware
|
|
Pramerica (Hong Kong) Holdings Limited
|
Hong Kong
|
|
Pramerica (Luxembourg) CP GP S.a.r.l.
|
Luxembourg
|
|
Pramerica (Scots) CP GP LLP
|
Scotland
|
|
Pramerica Business Consulting (Shanghai) Company Limited
|
China
|
|
Pramerica Europrisa Feeder GP LLP
|
England & Wales
|
|
Pramerica EVP CP LP
|
Scotland
|
|
Pramerica Financial Asia Headquarters Pte. Ltd.
|
Singapore
|
|
Pramerica Financial Asia Limited
|
British Virgin Islands
|
|
Pramerica Fixed Income Funds Management Limited
|
Ireland
|
|
Pramerica Fosun Life Insurance Co., Ltd.
|
China
|
|
Pramerica General Partner LLP
|
England & Wales
|
|
Pramerica Holdings Ltd
|
England & Wales
|
|
Pramerica Life S.p.A.
|
Italy
|
|
Pramerica Marketing S.r.l.
|
Italy
|
|
Pramerica of Bermuda Life Assurance Company, Ltd.
|
Bermuda
|
|
Pramerica Pan European Real Estate (Scots) LP
|
Scotland
|
|
Pramerica PRECAP I GP LLP
|
England & Wales
|
|
Pramerica PRECAP II GP LLP
|
England & Wales
|
|
Pramerica PRECAP III GP LLP
|
England & Wales
|
|
Pramerica PRECAP IV GP LLP
|
England & Wales
|
|
Pramerica Property Partners Fund (Scotland) Limited Partnership
|
Scotland
|
|
Pramerica Property Partners Fund LLC
|
Delaware
|
|
Pramerica Real Estate Capital I (Scotland) Limited Partnership
|
Scotland
|
|
Pramerica Real Estate Capital I GP (Scots Feeder) LLP
|
Scotland
|
|
Pramerica Real Estate Capital II (Scots) Limited Partnership
|
Scotland
|
|
Pramerica Real Estate Capital III (Scots), Limited Partnership
|
Scotland
|
|
Pramerica Real Estate Capital IV (Scots) Limited Partnership
|
Scotland
|
|
Pramerica Real Estate Capital IV GP (Scots Feeder) LLP
|
Scotland
|
|
Pramerica Real Estate Capital IV GP Limited
|
England & Wales
|
|
Pramerica Real Estate Capital V (Netherlands) GP LLP
|
England & Wales
|
|
Pramerica Real Estate Capital V (Scots), Limited Partnership
|
Scotland
|
|
Pramerica Real Estate Capital VI (Scots) Limited Partnership
|
Scotland
|
|
Pramerica Systems Ireland Limited
|
Ireland
|
|
Pramerica Zycie Towarzystwo Ubezpieczen i Reasekuracji Spólka Akcyjna
|
Poland
|
|
PRECO ACCOUNT III LLC
|
Delaware
|
|
PRECO Account IV LLC
|
Delaware
|
|
PRECO ACCOUNT PARTNERSHIP III, LP
|
Delaware
|
|
PRECO Account Partnership IV LP
|
Delaware
|
|
Preco III (Scotland) Limited Partnership
|
Scotland
|
|
PRECO III GP Limited LLC
|
Delaware
|
|
PRECO III GP LLP
|
England & Wales
|
|
Preco IV (Scotland) Limited Partnership
|
Scotland
|
|
PREFG Hanwha Manager, LLC
|
Delaware
|
|
PREI Acquisition I, Inc.
|
Delaware
|
|
PREI Acquisition II, Inc.
|
Delaware
|
|
PREI Acquisition LLC
|
Delaware
|
|
PREI HYDG, LLC
|
Delaware
|
|
PREI International, Inc.
|
Delaware
|
|
PRIAC Property Acquisitions, LLC
|
Delaware
|
|
PRIAC Realty Investments, LLC
|
Delaware
|
|
PRICOA Capital Group Limited
|
England
|
|
PRICOA Management Partner Limited
|
England
|
|
PRISA Fund Manager LLC
|
Delaware
|
|
PRISA II Fund Manager LLC
|
Delaware
|
|
PRISA III Fund GP, LLC
|
Delaware
|
|
PRISA III Fund PIM, LLC
|
Delaware
|
|
Pru 101 Wood LLC
|
Delaware
|
|
PRU 3XSquare, LLC
|
Delaware
|
|
Pru Alpha Partners I, LLC
|
Delaware
|
|
Pru Fixed Income Emerging Markets Partners I LLC
|
Delaware
|
|
Pruco Assignment Corporation
|
Barbados
|
|
Pruco Life Insurance Company
|
Arizona
|
|
Pruco Life Insurance Company of New Jersey
|
New Jersey
|
|
Pruco Securities, LLC
|
New Jersey
|
|
PRUCO, LLC
|
New Jersey
|
|
Prudential 900 Aviation Boulevard, LLC
|
Delaware
|
|
Prudential Affordable Mortgage Company, LLC
|
Delaware
|
|
Prudential Agricultural Property Holding Company, LLC
|
Delaware
|
|
Prudential Annuities Distributors, Inc.
|
Delaware
|
|
Prudential Annuities Holding Company, Inc.
|
Delaware
|
|
Prudential Annuities Information Services & Technology Corporation
|
Delaware
|
|
Prudential Annuities Life Assurance Corporation
|
Arizona
|
|
Prudential Annuities, Inc.
|
Delaware
|
|
Prudential Arizona Reinsurance Captive Company
|
Arizona
|
|
Prudential Arizona Reinsurance Term Company
|
Arizona
|
|
Prudential Arizona Reinsurance Universal Company
|
Arizona
|
|
Prudential Asset Resources, Inc.
|
Delaware
|
|
Prudential Bank & Trust, FSB
|
United States
|
|
Prudential Capital and Investment Services, LLC
|
Delaware
|
|
Prudential Capital Energy Opportunity Fund, L.P.
|
Delaware
|
|
Prudential Capital Energy Partners Management Fund, L.P.
|
Delaware
|
|
Prudential Capital Energy Partners, L.P.
|
Delaware
|
|
Prudential Capital Group, L.P.
|
Delaware
|
|
Prudential Capital Partners Management Fund IV, L.P.
|
Delaware
|
|
Prudential Chile II SpA
|
Chile
|
|
Prudential Chile SpA
|
Chile
|
|
Prudential Commercial Property Holding Company, LLC
|
Delaware
|
|
Prudential Customer Solutions LLC
|
Delaware
|
|
Prudential do Brasil Seguros de Vida S.A.
|
Brazil
|
|
Prudential do Brasil Vida em Grupo S.A.
|
Brazil
|
|
Prudential Equity Group, LLC
|
Delaware
|
|
Prudential Financial Securities Investment Trust Enterprise
|
Taiwan Province of China
|
|
Prudential Fixed Income Global Liquidity Relative Value Partners, LLC
|
Delaware
|
|
Prudential Fixed Income U.S. Relative Value Partners, LLC
|
Delaware
|
|
Prudential Funding, LLC
|
New Jersey
|
|
Prudential General Services of Japan Y.K.
|
Japan
|
|
Prudential Gibraltar Agency Co., Ltd. (Prudential Gibraltar Agency Kabushiki Kaisha)
|
Japan
|
|
Prudential Global Funding LLC
|
Delaware
|
|
Prudential Holdings of Japan, Inc.
|
Japan
|
|
Prudential Home Building Investment Advisers, L.P.
|
New Jersey
|
|
Prudential Home Building Investors, Inc.
|
New Jersey
|
|
Prudential Huntoon Paige Associates, LLC
|
Delaware
|
|
Prudential HYDF Carry/Co-Invest, L.P.
|
Delaware
|
|
Prudential IBH Holdco, Inc.
|
Delaware
|
|
Prudential Impact Investments Mortgage Loans LLC
|
Delaware
|
|
Prudential Impact Investments Private Debt LLC
|
Delaware
|
|
Prudential Impact Investments Private Equity LLC
|
Delaware
|
|
Prudential Industrial Properties, LLC
|
Delaware
|
|
Prudential Insurance Agency, LLC
|
New Jersey
|
|
Prudential International Insurance Holdings, Ltd.
|
Delaware
|
|
Prudential International Insurance Service Company, L.L.C.
|
Delaware
|
|
Prudential International Investments Advisers, LLC
|
Delaware
|
|
Prudential International Investments Cayman
|
Cayman Islands
|
|
Prudential International Investments Corporation
|
Delaware
|
|
Prudential International Investments, LLC
|
Delaware
|
|
Prudential Investment Management Services LLC
|
Delaware
|
|
Prudential Japan Holdings, LLC
|
Delaware
|
|
Prudential Latin American Investments, Ltd.
|
Cayman Islands
|
|
Prudential Legacy Insurance Company of New Jersey
|
New Jersey
|
|
Prudential Life Insurance Company of Taiwan Inc.
|
Taiwan Province of China
|
|
Prudential Mortgage Asset Holdings 1 Japan Investment Business Limited Partnership
|
Japan
|
|
Prudential Mortgage Asset Holdings 2 Japan Investment Business Limited Partnership
|
Japan
|
|
Prudential Mortgage Capital Asset Holding Company, LLC
|
Delaware
|
|
Prudential Mortgage Capital Funding, LLC
|
Delaware
|
|
Prudential Mortgage Capital Holdings, LLC
|
Delaware
|
|
PRUDENTIAL MORTGAGE SKP MEMBER LLC
|
Delaware
|
|
PRUDENTIAL MORTGAGE SKP REIT LLC
|
Delaware
|
|
PRUDENTIAL MORTGAGE SKP VENTURE LLC
|
Delaware
|
|
Prudential Multifamily Mortgage, LLC
|
Delaware
|
|
Prudential Mutual Fund Services LLC
|
New York
|
|
Prudential Newark Realty, LLC
|
New Jersey
|
|
Prudential Private Placement Investors L.P.
|
Delaware
|
|
Prudential Private Placement Investors, Inc.
|
New Jersey
|
|
PRUDENTIAL REAL ESTATE COMPANIES ACCOUNT II LLC
|
Delaware
|
|
Prudential Real Estate Companies Account Partnership II, LP
|
Delaware
|
|
Prudential Real Estate Companies Fund II (LP) LLC
|
Delaware
|
|
Prudential Real Estate Companies Fund II LLC
|
Delaware
|
|
Prudential Real Estate Management Co., Ltd. (Prudential Real Estate Management Yugen Kaisha)
|
Japan
|
|
Prudential Realty Securities, Inc.
|
Delaware
|
|
Prudential Retirement Financial Services Holding LLC
|
Delaware
|
|
Prudential Retirement Holdings, LLC
|
Delaware
|
|
Prudential Retirement Insurance and Annuity Company
|
Connecticut
|
|
Prudential Retirement Strategic Investments, LLC
|
Delaware
|
|
Prudential Securities Secured Financing Corporation
|
Delaware
|
|
Prudential Securities Structured Assets, Inc.
|
Delaware
|
|
Prudential Seguros Mexico, S.A.
|
Mexico
|
|
Prudential Seguros, S.A.
|
Argentina
|
|
Prudential Servicios, S. de R.L. de C.V.
|
Mexico
|
|
Prudential Structured Settlement Company
|
Delaware
|
|
Prudential Systems Japan, Limited
|
Japan
|
|
Prudential Term Reinsurance Company
|
Arizona
|
|
Prudential Trust Co., Ltd.
|
Japan
|
|
Prudential Trust Company
|
Pennsylvania
|
|
Prudential U.S. Real Estate Debt Fund GP LLC
|
Delaware
|
|
Prudential Universal Reinsurance Company
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Arizona
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Prudential/TMW Real Estate Group LLC
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Delaware
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Pruservicos Participacoes Ltda.
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Brazil
|
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PT Asuransi Jiwa Mega Indonesia
|
Indonesia
|
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Quantitative Management Associates LLC
|
New Jersey
|
|
Quartzsite, LLC
|
Delaware
|
|
Residential Services Corporation of America LLC
|
Delaware
|
|
Rio CP LP
|
Scotland
|
|
Rock City MC, LLC
|
Delaware
|
|
Rock European Real Estate Holdings S.àr.l.
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Luxembourg
|
|
Rock George V S.à. r.l.
|
Luxembourg
|
|
Rock Global Real Estate LLC
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Delaware
|
|
Rock Hamburg North S.à r.l.
|
Luxembourg
|
|
Rock Harman House S.a.r.l.
|
Luxembourg
|
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Rock Kensington Limited
|
Guernsey
|
|
Rock Meguro LLC
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Delaware
|
|
Rock Oxford S.a r.l.
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Luxembourg
|
|
Rock Rhine S.à r.l.
|
Luxembourg
|
|
Rock Rossmarkt S.ar.l.
|
Luxembourg
|
|
Rock UK Real Estate Holdings S.àr.l.
|
Luxembourg
|
|
Rock UK Real Estate II S.a.r.l.
|
Luxembourg
|
|
Rockstone Co., Ltd.
|
Japan
|
|
Rosado Grande LLC
|
Delaware
|
|
Ross Avenue Energy Fund Holdings, LLC
|
Delaware
|
|
Ross Avenue Minerals 2012, LLC
|
Delaware
|
|
Sanei Collection Service Co., Ltd. (Kabushiki Kaisha Sanei Shuuno Service)
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Japan
|
|
Satsuki Co., Ltd. (Kabushiki Kaisha Satsuki)
|
Japan
|
|
SCP Apartments, LLC
|
Delaware
|
|
Securitized Asset Sales, Inc.
|
Delaware
|
|
Senior Housing Partners III, L.L.C.
|
Delaware
|
|
Senior Housing Partners III, L.P.
|
Delaware
|
|
Senior Housing Partners IV L.L.C.
|
Delaware
|
|
Senior Housing Partners V, LLC
|
Delaware
|
|
Senior Housing Partnership Fund IV L.L.C.
|
Delaware
|
|
Senior Housing Partnership Fund V, LLC
|
Delaware
|
|
SHP IV Carried Interest, LP
|
Delaware
|
|
SHP V Carried Interest, L.P.
|
Delaware
|
|
SMP Holdings, Inc.
|
Delaware
|
|
Sterling Private Placement Management LLP
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England & Wales
|
|
Stetson Street Partners, L.P.
|
Delaware
|
|
Strand Investments Limited
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Cayman Islands
|
|
SVIIT Holdings, Inc.
|
Delaware
|
|
TBG Insurance Services Corporation
|
Delaware
|
|
The Gibraltar Life Insurance Co., Ltd.
|
Japan
|
|
The Prudential Assigned Settlement Services Corp.
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New Jersey
|
|
The Prudential Brazilian Capital Fund LP
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Cayman Islands
|
|
The Prudential Gibraltar Financial Life Insurance Co., Ltd.
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Japan
|
|
The Prudential Home Mortgage Company, Inc.
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New Jersey
|
|
The Prudential Home Mortgage Securities Company, Inc.
|
Delaware
|
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The Prudential Insurance Company of America
|
New Jersey
|
|
The Prudential Life Insurance Company of Korea, Ltd.
|
Korea, Republic of
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|
The Prudential Life Insurance Company, Ltd.
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Japan
|
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The Prudential Real Estate Financial Services of America, Inc.
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California
|
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Thurloe Commercial Guernsey Limited
|
Guernsey
|
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Times Square Center Associates
|
New York
|
|
TMW ASPF I Verwaltungs GmbH & Co. KG
|
Germany
|
|
TMW ASPF Management GmbH
|
Germany
|
|
TMW Management, LLC
|
Georgia
|
|
TMW Real Estate Group, LLC
|
Delaware
|
|
TMW Realty Advisors, LLC
|
Georgia
|
|
TMW USPF III - Verwaltungs - GmbH & Co. KG
|
Germany
|
|
TMW USPF Verwaltungs GmbH
|
Germany
|
|
TRGOAG Company, Inc.
|
Delaware
|
|
UBI Pramerica SGR, S.p.A.
|
Italy
|
|
United States Property Fund VI GP S.à r.l.
|
Luxembourg
|
|
Universal Prudential Arizona Reinsurance Company
|
Arizona
|
|
USPF IV - Verwaltungs - GmbH & Co. KG
|
Germany
|
|
USPF V - Verwaltungs - GmbH & Co. KG
|
Germany
|
|
USPF V Carry LLC
|
Delaware
|
|
USPF V Co-Invest LLC
|
Delaware
|
|
USPF V Investment LP
|
Delaware
|
|
Vailsburg Fund LLC
|
Delaware
|
|
Vantage Casualty Insurance Company
|
Indiana
|
|
Wabash Avenue Holdings V, LLC
|
Delaware
|
|
Wabash Avenue Partners V, L.P.
|
Delaware
|
|
Yavapai LLC
|
Delaware
|
|
/s/ Thomas J. Baltimore, Jr.
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Thomas J. Baltimore, Jr.
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Director
|
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/s/ Gilbert F. Casellas
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|
Gilbert F. Casellas
|
|
Director
|
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/s/ Mark B. Grier
|
|
Mark B. Grier
|
|
Director
|
|
/s/ Martina Hund-Mejean
|
|
Martina Hund-Mejean
|
|
Director
|
|
/s/ Karl J. Krapek
|
|
Karl J. Krapek
|
|
Director
|
|
/s/ Peter R. Lighte
|
|
Peter R. Lighte
|
|
Director
|
|
/s/ George Paz
|
|
George Paz
|
|
Director
|
|
/s/ Sandra Pianalto
|
|
Sandra Pianalto
|
|
Director
|
|
/s/ Christine A. Poon
|
|
Christine A. Poon
|
|
Director
|
|
/s/ Douglas A. Scovanner
|
|
Douglas A. Scovanner
|
|
Director
|
|
/s/ Michael A. Todman
|
|
Michael A. Todman
|
|
Director
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Prudential Financial, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: February 16, 2018
|
/s/ John R. Strangfeld
|
|
|
John R. Strangfeld
Chief Executive Officer
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Prudential Financial, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: February 16, 2018
|
/s/ Robert M. Falzon
|
|
|
Robert M. Falzon
Chief Financial Officer
|
|
Date: February 16, 2018
|
/s/ John R. Strangfeld
|
|
|
Name: John R. Strangfeld
Title: Chief Executive Officer
|
|
Date: February 16, 2018
|
/s/ Robert M. Falzon
|
|
|
Name: Robert M. Falzon
Title: Chief Financial Officer
|