|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
New Jersey
|
22-3703799
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification Number)
|
Title of Each Class
|
Trading Symbols(s)
|
Name of Each Exchange on Which Registered
|
Common Stock, Par Value $.01
|
PRU
|
New York Stock Exchange
|
5.75% Junior Subordinated Notes
|
PJH
|
New York Stock Exchange
|
5.70% Junior Subordinated Notes
|
PRH
|
New York Stock Exchange
|
5.625% Junior Subordinated Notes
|
PRS
|
New York Stock Exchange
|
|
Large Accelerated Filer
|
x
|
|
Accelerated Filer
|
☐
|
|
Non-accelerated Filer
|
☐
|
|
Smaller Reporting Company
|
☐
|
|
|
|
|
Emerging Growth Company
|
☐
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Page
|
|
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Item 1.
|
|
|
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|
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Item 2.
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Item 3.
|
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Item 4.
|
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|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
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Item 6.
|
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|
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June 30,
2020 |
|
December 31,
2019 |
||||
ASSETS
|
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2020-$353,812; 2019-$346,574; 2020-net of $238 allowance for credit losses)(1)(3)
|
|
$
|
407,944
|
|
|
$
|
391,096
|
|
Fixed maturities, held-to-maturity, at amortized cost (2020-net of $9 allowance for credit losses; fair value: 2020-$2,231; 2019-$2,302)(1)(2)
|
|
1,875
|
|
|
1,933
|
|
||
Fixed maturities, trading, at fair value (amortized cost: 2020-$4,089; 2019-$3,917)(1)
|
|
3,933
|
|
|
3,884
|
|
||
Assets supporting experience-rated contractholder liabilities, at fair value(1)
|
|
23,245
|
|
|
21,597
|
|
||
Equity securities, at fair value (cost: 2020-$5,704; 2019-$5,560)(1)(3)
|
|
7,010
|
|
|
7,522
|
|
||
Commercial mortgage and other loans (net of $245 and $121 allowance for credit losses; includes $682 and $228 of loans measured at fair value under the fair value option at June 30, 2020 and December 31, 2019, respectively)(1)(2)(3)
|
|
63,469
|
|
|
63,559
|
|
||
Policy loans(3)
|
|
12,283
|
|
|
12,096
|
|
||
Other invested assets (2020-net of $2 allowance for credit losses; includes $6,280 and $5,646 of assets measured at fair value at June 30, 2020 and December 31, 2019, respectively)(1)(2)(3)
|
|
16,757
|
|
|
15,606
|
|
||
Short-term investments(3)
|
|
11,416
|
|
|
5,467
|
|
||
Total investments
|
|
547,932
|
|
|
522,760
|
|
||
Cash and cash equivalents(1)(3)
|
|
21,149
|
|
|
16,327
|
|
||
Accrued investment income(1)(3)
|
|
3,296
|
|
|
3,330
|
|
||
Deferred policy acquisition costs(2)(3)
|
|
19,667
|
|
|
19,912
|
|
||
Value of business acquired
|
|
1,040
|
|
|
1,110
|
|
||
Other assets (2020-net of $8 allowance for credit losses)(1)(2)(3)
|
|
21,301
|
|
|
20,832
|
|
||
Separate account assets(3)
|
|
301,002
|
|
|
312,281
|
|
||
TOTAL ASSETS
|
|
$
|
915,387
|
|
|
$
|
896,552
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
|
||||
Future policy benefits(3)
|
|
$
|
312,759
|
|
|
$
|
293,527
|
|
Policyholders’ account balances(3)
|
|
158,237
|
|
|
152,110
|
|
||
Policyholders’ dividends(2)(3)
|
|
8,623
|
|
|
6,988
|
|
||
Securities sold under agreements to repurchase
|
|
10,488
|
|
|
9,681
|
|
||
Cash collateral for loaned securities
|
|
3,447
|
|
|
4,213
|
|
||
Income taxes(2)(3)
|
|
13,261
|
|
|
11,378
|
|
||
Short-term debt
|
|
1,130
|
|
|
1,933
|
|
||
Long-term debt
|
|
20,162
|
|
|
18,646
|
|
||
Other liabilities (2020-net of $19 allowance for credit losses)(1)(2)(3)
|
|
18,573
|
|
|
20,802
|
|
||
Notes issued by consolidated variable interest entities (includes $741 and $800 measured at fair value under the fair value option at June 30, 2020 and December 31, 2019, respectively)(1)
|
|
1,197
|
|
|
1,274
|
|
||
Separate account liabilities(3)
|
|
301,002
|
|
|
312,281
|
|
||
Total liabilities
|
|
848,879
|
|
|
832,833
|
|
||
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 14)
|
|
|
|
|
||||
EQUITY
|
|
|
|
|
||||
Preferred Stock ($.01 par value; 10,000,000 shares authorized; none issued)
|
|
0
|
|
|
0
|
|
||
Common Stock ($.01 par value; 1,500,000,000 shares authorized; 666,305,189 shares issued as of both June 30, 2020 and December 31, 2019)
|
|
6
|
|
|
6
|
|
||
Additional paid-in capital
|
|
25,513
|
|
|
25,532
|
|
||
Common Stock held in treasury, at cost (271,694,260 and 267,472,781 shares at June 30, 2020 and December 31, 2019, respectively)
|
|
(19,785
|
)
|
|
(19,453
|
)
|
||
Accumulated other comprehensive income (loss)
|
|
30,837
|
|
|
24,039
|
|
||
Retained earnings
|
|
29,326
|
|
|
32,991
|
|
||
Total Prudential Financial, Inc. equity
|
|
65,897
|
|
|
63,115
|
|
||
Noncontrolling interests
|
|
611
|
|
|
604
|
|
||
Total equity
|
|
66,508
|
|
|
63,719
|
|
||
TOTAL LIABILITIES AND EQUITY
|
|
$
|
915,387
|
|
|
$
|
896,552
|
|
(1)
|
See Note 4 for details of balances associated with variable interest entities.
|
(2)
|
June 30, 2020 amounts include the impacts of the January 1, 2020 adoption of ASU 2016-13. See Note 2 for details.
|
(3)
|
June 30, 2020 amounts include assets and liabilities held for sale which aggregate to $20,835 million and $17,141 million, respectively, related to the pending sale of The Prudential Life Insurance Company of Korea, Ltd. See Note 1 for details of these balances.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Premiums
|
$
|
7,693
|
|
|
$
|
8,135
|
|
|
$
|
15,357
|
|
|
$
|
16,035
|
|
Policy charges and fee income
|
1,523
|
|
|
1,473
|
|
|
3,012
|
|
|
2,944
|
|
||||
Net investment income
|
4,186
|
|
|
4,390
|
|
|
8,388
|
|
|
8,606
|
|
||||
Asset management and service fees
|
991
|
|
|
1,083
|
|
|
2,024
|
|
|
2,099
|
|
||||
Other income (loss)
|
1,474
|
|
|
643
|
|
|
(1,117
|
)
|
|
1,897
|
|
||||
Realized investment gains (losses), net
|
(3,752
|
)
|
|
(336
|
)
|
|
(2,085
|
)
|
|
(1,102
|
)
|
||||
Total revenues
|
12,115
|
|
|
15,388
|
|
|
25,579
|
|
|
30,479
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
8,450
|
|
|
8,877
|
|
|
17,456
|
|
|
17,315
|
|
||||
Interest credited to policyholders’ account balances
|
1,832
|
|
|
1,278
|
|
|
2,224
|
|
|
2,623
|
|
||||
Dividends to policyholders
|
531
|
|
|
437
|
|
|
454
|
|
|
1,014
|
|
||||
Amortization of deferred policy acquisition costs
|
287
|
|
|
782
|
|
|
1,244
|
|
|
1,217
|
|
||||
General and administrative expenses
|
3,347
|
|
|
3,138
|
|
|
6,871
|
|
|
6,294
|
|
||||
Total benefits and expenses
|
14,447
|
|
|
14,512
|
|
|
28,249
|
|
|
28,463
|
|
||||
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURES
|
(2,332
|
)
|
|
876
|
|
|
(2,670
|
)
|
|
2,016
|
|
||||
Total income tax expense (benefit)
|
115
|
|
|
162
|
|
|
57
|
|
|
394
|
|
||||
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURES
|
(2,447
|
)
|
|
714
|
|
|
(2,727
|
)
|
|
1,622
|
|
||||
Equity in earnings of operating joint ventures, net of taxes
|
42
|
|
|
24
|
|
|
52
|
|
|
53
|
|
||||
NET INCOME (LOSS)
|
(2,405
|
)
|
|
738
|
|
|
(2,675
|
)
|
|
1,675
|
|
||||
Less: Income (loss) attributable to noncontrolling interests
|
4
|
|
|
30
|
|
|
5
|
|
|
35
|
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.
|
$
|
(2,409
|
)
|
|
$
|
708
|
|
|
$
|
(2,680
|
)
|
|
$
|
1,640
|
|
EARNINGS PER SHARE
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share-Common Stock:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
(6.12
|
)
|
|
$
|
1.73
|
|
|
$
|
(6.80
|
)
|
|
$
|
3.98
|
|
Diluted earnings per share-Common Stock:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
(6.12
|
)
|
|
$
|
1.71
|
|
|
$
|
(6.80
|
)
|
|
$
|
3.93
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
NET INCOME (LOSS)
|
$
|
(2,405
|
)
|
|
$
|
738
|
|
|
$
|
(2,675
|
)
|
|
$
|
1,675
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments for the period
|
88
|
|
|
213
|
|
|
(207
|
)
|
|
108
|
|
||||
Net unrealized investment gains (losses)
|
10,101
|
|
|
8,506
|
|
|
8,747
|
|
|
16,795
|
|
||||
Defined benefit pension and postretirement unrecognized periodic benefit (cost)
|
72
|
|
|
17
|
|
|
144
|
|
|
81
|
|
||||
Total
|
10,261
|
|
|
8,736
|
|
|
8,684
|
|
|
16,984
|
|
||||
Less: Income tax expense (benefit) related to other comprehensive income (loss)
|
2,023
|
|
|
1,966
|
|
|
1,885
|
|
|
3,910
|
|
||||
Other comprehensive income (loss), net of taxes
|
8,238
|
|
|
6,770
|
|
|
6,799
|
|
|
13,074
|
|
||||
Comprehensive income (loss)
|
5,833
|
|
|
7,508
|
|
|
4,124
|
|
|
14,749
|
|
||||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
5
|
|
|
36
|
|
|
6
|
|
|
40
|
|
||||
Comprehensive income (loss) attributable to Prudential Financial, Inc.
|
$
|
5,828
|
|
|
$
|
7,472
|
|
|
$
|
4,118
|
|
|
$
|
14,709
|
|
|
Prudential Financial, Inc. Equity
|
|
|
|
|
||||||||||||||||||||||||||
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Common
Stock
Held In
Treasury
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Prudential
Financial, Inc.
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||||||
Balance, December 31, 2019
|
$
|
6
|
|
|
$
|
25,532
|
|
|
$
|
32,991
|
|
|
$
|
(19,453
|
)
|
|
$
|
24,039
|
|
|
$
|
63,115
|
|
|
$
|
604
|
|
|
$
|
63,719
|
|
Cumulative effect of adoption of accounting changes(1)
|
|
|
|
|
(99
|
)
|
|
|
|
|
|
(99
|
)
|
|
|
|
(99
|
)
|
|||||||||||||
Common Stock acquired
|
|
|
|
|
|
|
(500
|
)
|
|
|
|
(500
|
)
|
|
|
|
(500
|
)
|
|||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
31
|
|
||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
(11
|
)
|
||||||||||||||
Stock-based compensation programs
|
|
|
(26
|
)
|
|
|
|
112
|
|
|
|
|
86
|
|
|
|
|
86
|
|
||||||||||||
Dividends declared on Common Stock
|
|
|
|
|
(445
|
)
|
|
|
|
|
|
(445
|
)
|
|
|
|
(445
|
)
|
|||||||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
|
|
|
(271
|
)
|
|
|
|
|
|
(271
|
)
|
|
1
|
|
|
(270
|
)
|
||||||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
(1,439
|
)
|
|
(1,439
|
)
|
|
0
|
|
|
(1,439
|
)
|
||||||||||||
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
(1,710
|
)
|
|
1
|
|
|
(1,709
|
)
|
|||||||||||||
Balance, March 31, 2020
|
6
|
|
|
25,506
|
|
|
32,176
|
|
|
(19,841
|
)
|
|
22,600
|
|
|
60,447
|
|
|
625
|
|
|
61,072
|
|
||||||||
Common Stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4
|
|
||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
|
(23
|
)
|
||||||||||||||
Stock-based compensation programs
|
|
|
7
|
|
|
|
|
56
|
|
|
|
|
63
|
|
|
|
|
63
|
|
||||||||||||
Dividends declared on Common Stock
|
|
|
|
|
(441
|
)
|
|
|
|
|
|
(441
|
)
|
|
|
|
(441
|
)
|
|||||||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
|
|
|
(2,409
|
)
|
|
|
|
|
|
(2,409
|
)
|
|
4
|
|
|
(2,405
|
)
|
||||||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
8,237
|
|
|
8,237
|
|
|
1
|
|
|
8,238
|
|
||||||||||||
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
5,828
|
|
|
5
|
|
|
5,833
|
|
|||||||||||||
Balance, June 30, 2020
|
$
|
6
|
|
|
$
|
25,513
|
|
|
$
|
29,326
|
|
|
$
|
(19,785
|
)
|
|
$
|
30,837
|
|
|
$
|
65,897
|
|
|
$
|
611
|
|
|
$
|
66,508
|
|
|
Prudential Financial, Inc. Equity
|
|
|
|
|
||||||||||||||||||||||||||
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Common
Stock
Held In
Treasury
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Prudential
Financial, Inc.
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||||||
Balance, December 31, 2018
|
$
|
6
|
|
|
$
|
24,828
|
|
|
$
|
30,470
|
|
|
$
|
(17,593
|
)
|
|
$
|
10,906
|
|
|
$
|
48,617
|
|
|
$
|
414
|
|
|
$
|
49,031
|
|
Cumulative effect of adoption of accounting changes(2)
|
|
|
|
|
(21
|
)
|
|
|
|
7
|
|
|
(14
|
)
|
|
|
|
(14
|
)
|
||||||||||||
Common Stock acquired
|
|
|
|
|
|
|
(500
|
)
|
|
|
|
(500
|
)
|
|
|
|
(500
|
)
|
|||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
26
|
|
||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||||||||
Stock-based compensation programs
|
|
|
(46
|
)
|
|
|
|
131
|
|
|
|
|
85
|
|
|
|
|
85
|
|
||||||||||||
Dividends declared on Common Stock
|
|
|
|
|
(415
|
)
|
|
|
|
|
|
(415
|
)
|
|
|
|
(415
|
)
|
|||||||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
|
|
|
932
|
|
|
|
|
|
|
932
|
|
|
5
|
|
|
937
|
|
||||||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
6,305
|
|
|
6,305
|
|
|
(1
|
)
|
|
6,304
|
|
||||||||||||
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
7,237
|
|
|
4
|
|
|
7,241
|
|
|||||||||||||
Balance, March 31, 2019
|
6
|
|
|
24,782
|
|
|
30,966
|
|
|
(17,962
|
)
|
|
17,218
|
|
|
55,010
|
|
|
440
|
|
|
55,450
|
|
||||||||
Common Stock acquired
|
|
|
|
|
|
|
(500
|
)
|
|
|
|
(500
|
)
|
|
|
|
(500
|
)
|
|||||||||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
25
|
|
||||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(16
|
)
|
|
(16
|
)
|
||||||||||||||
Consolidations (deconsolidations) of noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
8
|
|
||||||||||||||
Stock-based compensation programs
|
|
|
43
|
|
|
|
|
46
|
|
|
|
|
89
|
|
|
|
|
89
|
|
||||||||||||
Dividends declared on Common Stock
|
|
|
|
|
(411
|
)
|
|
|
|
|
|
(411
|
)
|
|
|
|
(411
|
)
|
|||||||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
|
|
|
708
|
|
|
|
|
|
|
708
|
|
|
30
|
|
|
738
|
|
||||||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
6,764
|
|
|
6,764
|
|
|
6
|
|
|
6,770
|
|
||||||||||||
Total comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
7,472
|
|
|
36
|
|
|
7,508
|
|
|||||||||||||
Balance, June 30, 2019
|
$
|
6
|
|
|
$
|
24,825
|
|
|
$
|
31,263
|
|
|
$
|
(18,416
|
)
|
|
$
|
23,982
|
|
|
$
|
61,660
|
|
|
$
|
493
|
|
|
$
|
62,153
|
|
(1)
|
Includes the impact from the adoption of ASU 2016-13. See Note 2.
|
(2)
|
Includes the impact from the adoption of ASU 2017-08 and 2017-12. See Note 2 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.
|
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income (loss)
|
$
|
(2,675
|
)
|
|
$
|
1,675
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Realized investment (gains) losses, net
|
2,085
|
|
|
1,102
|
|
||
Policy charges and fee income
|
(1,366
|
)
|
|
(1,483
|
)
|
||
Interest credited to policyholders’ account balances
|
2,224
|
|
|
2,623
|
|
||
Depreciation and amortization
|
383
|
|
|
(89
|
)
|
||
(Gains) losses on assets supporting experience-rated contractholder liabilities, net
|
(142
|
)
|
|
(741
|
)
|
||
Change in:
|
|
|
|
||||
Deferred policy acquisition costs
|
(120
|
)
|
|
(258
|
)
|
||
Future policy benefits and other insurance liabilities
|
5,186
|
|
|
5,603
|
|
||
Income taxes
|
(4
|
)
|
|
(382
|
)
|
||
Derivatives, net
|
10,629
|
|
|
2,010
|
|
||
Other, net
|
(2,721
|
)
|
|
(1,736
|
)
|
||
Cash flows from (used in) operating activities
|
13,479
|
|
|
8,324
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
||||
Fixed maturities, available-for-sale
|
20,664
|
|
|
25,681
|
|
||
Fixed maturities, held-to-maturity
|
58
|
|
|
35
|
|
||
Fixed maturities, trading
|
276
|
|
|
187
|
|
||
Assets supporting experience-rated contractholder liabilities
|
14,015
|
|
|
9,014
|
|
||
Equity securities
|
1,274
|
|
|
1,377
|
|
||
Commercial mortgage and other loans
|
2,639
|
|
|
2,885
|
|
||
Policy loans
|
1,291
|
|
|
1,154
|
|
||
Other invested assets
|
939
|
|
|
724
|
|
||
Short-term investments
|
21,107
|
|
|
16,682
|
|
||
Payments for the purchase/origination of:
|
|
|
|
||||
Fixed maturities, available-for-sale
|
(26,815
|
)
|
|
(32,847
|
)
|
||
Fixed maturities, trading
|
(446
|
)
|
|
(570
|
)
|
||
Assets supporting experience-rated contractholder liabilities
|
(15,453
|
)
|
|
(8,813
|
)
|
||
Equity securities
|
(1,370
|
)
|
|
(1,376
|
)
|
||
Commercial mortgage and other loans
|
(2,463
|
)
|
|
(4,352
|
)
|
||
Policy loans
|
(1,288
|
)
|
|
(945
|
)
|
||
Other invested assets
|
(1,435
|
)
|
|
(1,011
|
)
|
||
Short-term investments
|
(27,076
|
)
|
|
(16,278
|
)
|
||
Derivatives, net
|
841
|
|
|
638
|
|
||
Other, net
|
(107
|
)
|
|
(222
|
)
|
||
Cash flows from (used in) investing activities
|
(13,349
|
)
|
|
(8,037
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Policyholders’ account deposits
|
25,452
|
|
|
13,280
|
|
||
Policyholders’ account withdrawals
|
(20,306
|
)
|
|
(13,045
|
)
|
||
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities
|
41
|
|
|
97
|
|
||
Cash dividends paid on Common Stock
|
(886
|
)
|
|
(827
|
)
|
||
Net change in financing arrangements (maturities 90 days or less)
|
306
|
|
|
166
|
|
||
Common Stock acquired
|
(500
|
)
|
|
(983
|
)
|
||
Common Stock reissued for exercise of stock options
|
73
|
|
|
75
|
|
||
Proceeds from the issuance of debt (maturities longer than 90 days)
|
1,563
|
|
|
1,439
|
|
||
Repayments of debt (maturities longer than 90 days)
|
(791
|
)
|
|
(924
|
)
|
||
Proceeds from notes issued by consolidated VIEs
|
0
|
|
|
925
|
|
||
Repayments of notes issued by consolidated VIEs
|
(18
|
)
|
|
(638
|
)
|
||
Other, net
|
(247
|
)
|
|
196
|
|
||
Cash flows from (used in) financing activities
|
4,687
|
|
|
(239
|
)
|
||
Effect of foreign exchange rate changes on cash balances
|
6
|
|
|
27
|
|
||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS
|
4,823
|
|
|
75
|
|
||
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR
|
16,474
|
|
|
15,495
|
|
||
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD
|
$
|
21,297
|
|
|
$
|
15,570
|
|
NON-CASH TRANSACTIONS DURING THE PERIOD
|
|
|
|
||||
Treasury Stock shares issued for stock-based compensation programs
|
$
|
144
|
|
|
$
|
168
|
|
Significant Pension Risk Transfer transactions:
|
|
|
|
||||
Assets received, excluding cash and cash equivalents
|
$
|
238
|
|
|
$
|
445
|
|
Liabilities assumed
|
505
|
|
|
447
|
|
||
Net cash received
|
$
|
267
|
|
|
$
|
2
|
|
RECONCILIATION TO THE UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
|
|
||||
Cash and cash equivalents
|
$
|
21,149
|
|
|
$
|
15,421
|
|
Restricted cash and restricted cash equivalents (included in “Other assets”)
|
148
|
|
|
149
|
|
||
Total cash, cash equivalents, restricted cash and restricted cash equivalents
|
$
|
21,297
|
|
|
$
|
15,570
|
|
|
June 30, 2020
|
||
|
(in millions)(1)
|
||
Assets held for sale:
|
|
||
Fixed maturities, available-for-sale
|
$
|
14,402
|
|
Equity securities
|
264
|
|
|
Commercial mortgage and other loans
|
3
|
|
|
Policy loans
|
777
|
|
|
Other invested assets
|
109
|
|
|
Short-term investments
|
69
|
|
|
Cash and cash equivalents
|
218
|
|
|
Accrued investment income
|
134
|
|
|
Deferred policy acquisition costs
|
1,178
|
|
|
Other assets(2)
|
254
|
|
|
Separate account assets
|
3,427
|
|
|
Total assets held for sale
|
$
|
20,835
|
|
Liabilities held for sale:
|
|
||
Future policy benefits
|
$
|
10,527
|
|
Policyholders’ account balances
|
1,357
|
|
|
Policyholders’ dividends
|
26
|
|
|
Income taxes
|
989
|
|
|
Other liabilities(2)
|
815
|
|
|
Separate account liabilities
|
3,427
|
|
|
Total liabilities held for sale
|
$
|
17,141
|
|
(1)
|
These amounts held for sale are included, where applicable, in the remaining Notes to the Unaudited Interim Consolidated Financial Statements and are presented within the line items noted in this table.
|
(2)
|
Includes POK’s lower of cost or fair market value adjustment.
|
Standard
|
|
Description
|
|
Effective date and method of adoption
|
|
Effect on the financial statements or other significant matters
|
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, 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.
|
|
The adoption of the ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
|
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
|
|
This ASU provides optional relief for certain contracts impacted by reference rate reform. The standard permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The ASU also temporarily (until December 31, 2022) allows hedge relationships to continue without de-designation upon changes due to reference rate reform.
|
|
March 12, 2020 to December 31, 2022 using the prospective method.
|
|
This ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
The Company made the election under ASU 2020-04 for all applicable contracts as they converted from the current reference rate to the new reference rate.
|
ASU 2018-12 Amended Topic
|
|
Description
|
|
Method of adoption
|
|
Effect on the financial statements or other significant matters
|
Cash flow assumptions used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products
|
|
Requires an entity to review, and if necessary, update the cash flow assumptions used to measure the liability for future policy benefits, for both changes in future assumptions and actual experience, at least annually using a retrospective update method with a cumulative catch-up adjustment recorded in a separate line item in the Consolidated Statements of Operations.
|
|
An entity may choose one of two adoption methods for the liability for future policy benefits: (1) a modified retrospective transition method whereby the entity will apply the amendments to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) a full retrospective transition method.
|
|
The options for method of adoption and the impacts of such methods are under assessment.
|
Discount rate assumption used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products
|
|
Requires discount rate assumptions to be based on an upper-medium grade fixed income instrument yield and will be required to be updated each quarter with the impact recorded through OCI.
|
|
As noted above, an entity may choose either a modified retrospective transition method or full retrospective transition method for the liability for future policy benefits. Under either method, for balance sheet remeasurement purposes, the liability for future policy benefits will be remeasured using current discount rates as of the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.
|
|
Upon adoption, under either transition method, there will be an adjustment to AOCI as a result of remeasuring in-force contract liabilities using current upper-medium grade fixed income instrument yields. The adjustment upon adoption will largely reflect the difference between the discount rate locked-in at contract inception versus current discount rates at transition. The magnitude of such adjustment is currently being assessed.
|
Amortization of deferred acquisition costs (DAC) and other balances
|
|
Requires DAC and other balances, such as unearned revenue reserves and DSI, to be amortized on a constant level basis over the expected term of the related contract, independent of expected profitability.
|
|
An entity may apply one of two adoption methods: (1) a modified retrospective transition method whereby the entity will apply the amendments to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) if an entity chooses a full retrospective transition method for its liability for future policy benefits, as described above, it is required to also use a retrospective transition method for DAC and other balances.
|
|
The options for method of adoption and the impacts of such methods are under assessment. Under the modified retrospective transition method, the Company would not expect a significant impact to the balance sheet, other than the impact of the removal of any related amounts in AOCI.
|
Market Risk Benefits
|
|
Requires an entity to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value, and record market risk benefit assets and liabilities separately on the Consolidated Statements of Financial Position. Changes in fair value of market risk benefits are recorded in net income, except for the portion of the change that is attributable to changes in an entity’s non-performance risk (“NPR”) which is recognized in OCI.
|
|
An entity shall adopt the guidance for market risk benefits using the retrospective transition method, which includes a cumulative effect adjustment on the balance sheet as of the earliest period presented. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the balance of the market risk benefits upon adoption.
|
|
Upon adoption, the Company expects an impact to retained earnings for the difference between the fair value and carrying value of benefits not currently measured at fair value (e.g., guaranteed minimum death benefits on variable annuities) and an impact from reclassifying the cumulative effect of changes in NPR from retained earnings to AOCI. The magnitude of such adjustments is currently being assessed.
|
|
June 30, 2020
|
||||||||||||||||||
|
Amortized
Cost |
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Allowance for Credit Losses
|
|
Fair
Value
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
$
|
31,731
|
|
|
$
|
11,309
|
|
|
$
|
19
|
|
|
$
|
0
|
|
|
$
|
43,021
|
|
Obligations of U.S. states and their political subdivisions
|
10,387
|
|
|
2,012
|
|
|
1
|
|
|
0
|
|
|
12,398
|
|
|||||
Foreign government bonds
|
98,357
|
|
|
18,657
|
|
|
206
|
|
|
38
|
|
|
116,770
|
|
|||||
U.S. public corporate securities
|
91,777
|
|
|
15,518
|
|
|
627
|
|
|
51
|
|
|
106,617
|
|
|||||
U.S. private corporate securities(1)
|
35,145
|
|
|
3,281
|
|
|
215
|
|
|
52
|
|
|
38,159
|
|
|||||
Foreign public corporate securities
|
26,070
|
|
|
3,328
|
|
|
248
|
|
|
32
|
|
|
29,118
|
|
|||||
Foreign private corporate securities
|
28,167
|
|
|
1,145
|
|
|
925
|
|
|
64
|
|
|
28,323
|
|
|||||
Asset-backed securities(2)
|
13,989
|
|
|
152
|
|
|
205
|
|
|
0
|
|
|
13,936
|
|
|||||
Commercial mortgage-backed securities
|
15,089
|
|
|
1,181
|
|
|
7
|
|
|
1
|
|
|
16,262
|
|
|||||
Residential mortgage-backed securities(3)
|
3,100
|
|
|
241
|
|
|
1
|
|
|
0
|
|
|
3,340
|
|
|||||
Total fixed maturities, available-for-sale(1)
|
$
|
353,812
|
|
|
$
|
56,824
|
|
|
$
|
2,454
|
|
|
$
|
238
|
|
|
$
|
407,944
|
|
|
June 30, 2020
|
||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Allowance for Credit Losses
|
|
Amortized Cost,
Net of Allowance
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign government bonds
|
$
|
896
|
|
|
$
|
261
|
|
|
$
|
0
|
|
|
$
|
1,157
|
|
|
$
|
0
|
|
|
$
|
896
|
|
Foreign public corporate securities
|
625
|
|
|
61
|
|
|
0
|
|
|
686
|
|
|
9
|
|
|
616
|
|
||||||
Foreign private corporate securities
|
83
|
|
|
2
|
|
|
0
|
|
|
85
|
|
|
0
|
|
|
83
|
|
||||||
Residential mortgage-backed securities(3)
|
280
|
|
|
23
|
|
|
0
|
|
|
303
|
|
|
0
|
|
|
280
|
|
||||||
Total fixed maturities, held-to-maturity(4)
|
$
|
1,884
|
|
|
$
|
347
|
|
|
$
|
0
|
|
|
$
|
2,231
|
|
|
$
|
9
|
|
|
$
|
1,875
|
|
(1)
|
Excludes notes with amortized cost of $6,466 million (fair value, $6,466 million), which have been offset with the associated debt under a netting agreement.
|
(2)
|
Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, home equity loans and other asset types.
|
(3)
|
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
|
(4)
|
Excludes notes with amortized cost of $4,998 million (fair value, $5,603 million), which have been offset with the associated debt under a netting agreement.
|
|
December 31, 2019
|
||||||||||||||||||
|
Amortized
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
|
$
|
30,625
|
|
|
$
|
5,195
|
|
|
$
|
161
|
|
|
$
|
35,659
|
|
|
$
|
0
|
|
Obligations of U.S. states and their political subdivisions
|
10,068
|
|
|
1,437
|
|
|
8
|
|
|
11,497
|
|
|
0
|
|
|||||
Foreign government bonds
|
98,356
|
|
|
20,761
|
|
|
63
|
|
|
119,054
|
|
|
(34
|
)
|
|||||
U.S. public corporate securities
|
87,566
|
|
|
11,030
|
|
|
257
|
|
|
98,339
|
|
|
(6
|
)
|
|||||
U.S. private corporate securities(1)
|
34,410
|
|
|
2,243
|
|
|
120
|
|
|
36,533
|
|
|
0
|
|
|||||
Foreign public corporate securities
|
26,841
|
|
|
3,054
|
|
|
70
|
|
|
29,825
|
|
|
(1
|
)
|
|||||
Foreign private corporate securities
|
27,619
|
|
|
1,201
|
|
|
580
|
|
|
28,240
|
|
|
0
|
|
|||||
Asset-backed securities(2)
|
13,067
|
|
|
147
|
|
|
40
|
|
|
13,174
|
|
|
(77
|
)
|
|||||
Commercial mortgage-backed securities
|
14,978
|
|
|
610
|
|
|
14
|
|
|
15,574
|
|
|
0
|
|
|||||
Residential mortgage-backed securities(3)
|
3,044
|
|
|
159
|
|
|
2
|
|
|
3,201
|
|
|
(1
|
)
|
|||||
Total fixed maturities, available-for-sale(1)
|
$
|
346,574
|
|
|
$
|
45,837
|
|
|
$
|
1,315
|
|
|
$
|
391,096
|
|
|
$
|
(119
|
)
|
|
December 31, 2019
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
|
||||||||
Foreign government bonds
|
$
|
891
|
|
|
$
|
282
|
|
|
$
|
0
|
|
|
$
|
1,173
|
|
Foreign public corporate securities
|
649
|
|
|
64
|
|
|
0
|
|
|
713
|
|
||||
Foreign private corporate securities
|
83
|
|
|
2
|
|
|
0
|
|
|
85
|
|
||||
Residential mortgage-backed securities(3)
|
310
|
|
|
21
|
|
|
0
|
|
|
331
|
|
||||
Total fixed maturities, held-to-maturity(5)
|
$
|
1,933
|
|
|
$
|
369
|
|
|
$
|
0
|
|
|
$
|
2,302
|
|
(1)
|
Excludes notes with amortized cost of $4,751 million (fair value, $4,757 million), which have been offset with the associated debt under a netting agreement.
|
(2)
|
Includes collateralized loan obligations, auto loans, education loans, home equity 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 $362 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 $4,998 million (fair value, $5,401 million), which have been offset with the associated debt under a netting agreement.
|
|
|
June 30, 2020
|
||||||||||||||||||||||
|
|
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, available-for-sale:
|
|
|
||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
|
$
|
950
|
|
|
$
|
22
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
950
|
|
|
$
|
22
|
|
Obligations of U.S. states and their political subdivisions
|
|
47
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
47
|
|
|
1
|
|
||||||
Foreign government bonds
|
|
4,589
|
|
|
192
|
|
|
31
|
|
|
3
|
|
|
4,620
|
|
|
195
|
|
||||||
U.S. public corporate securities
|
|
6,595
|
|
|
372
|
|
|
1,504
|
|
|
236
|
|
|
8,099
|
|
|
608
|
|
||||||
U.S. private corporate securities
|
|
2,393
|
|
|
118
|
|
|
1,017
|
|
|
97
|
|
|
3,410
|
|
|
215
|
|
||||||
Foreign public corporate securities
|
|
2,875
|
|
|
169
|
|
|
400
|
|
|
60
|
|
|
3,275
|
|
|
229
|
|
||||||
Foreign private corporate securities
|
|
5,775
|
|
|
245
|
|
|
5,223
|
|
|
675
|
|
|
10,998
|
|
|
920
|
|
||||||
Asset-backed securities
|
|
6,741
|
|
|
120
|
|
|
3,510
|
|
|
85
|
|
|
10,251
|
|
|
205
|
|
||||||
Commercial mortgage-backed securities
|
|
105
|
|
|
4
|
|
|
75
|
|
|
3
|
|
|
180
|
|
|
7
|
|
||||||
Residential mortgage-backed securities
|
|
24
|
|
|
0
|
|
|
2
|
|
|
0
|
|
|
26
|
|
|
0
|
|
||||||
Total fixed maturities, available-for-sale
|
|
$
|
30,094
|
|
|
$
|
1,243
|
|
|
$
|
11,762
|
|
|
$
|
1,159
|
|
|
$
|
41,856
|
|
|
$
|
2,402
|
|
|
|
December 31, 2019
|
||||||||||||||||||||||
|
|
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
|
|
$
|
4,950
|
|
|
$
|
161
|
|
|
$
|
267
|
|
|
$
|
0
|
|
|
$
|
5,217
|
|
|
$
|
161
|
|
Obligations of U.S. states and their political subdivisions
|
|
273
|
|
|
8
|
|
|
0
|
|
|
0
|
|
|
273
|
|
|
8
|
|
||||||
Foreign government bonds
|
|
2,332
|
|
|
60
|
|
|
126
|
|
|
3
|
|
|
2,458
|
|
|
63
|
|
||||||
U.S. public corporate securities
|
|
3,944
|
|
|
85
|
|
|
2,203
|
|
|
172
|
|
|
6,147
|
|
|
257
|
|
||||||
U.S. private corporate securities
|
|
2,283
|
|
|
44
|
|
|
1,563
|
|
|
76
|
|
|
3,846
|
|
|
120
|
|
||||||
Foreign public corporate securities
|
|
1,271
|
|
|
23
|
|
|
496
|
|
|
47
|
|
|
1,767
|
|
|
70
|
|
||||||
Foreign private corporate securities
|
|
1,466
|
|
|
33
|
|
|
5,666
|
|
|
547
|
|
|
7,132
|
|
|
580
|
|
||||||
Asset-backed securities
|
|
3,979
|
|
|
12
|
|
|
4,433
|
|
|
28
|
|
|
8,412
|
|
|
40
|
|
||||||
Commercial mortgage-backed securities
|
|
1,193
|
|
|
10
|
|
|
164
|
|
|
4
|
|
|
1,357
|
|
|
14
|
|
||||||
Residential mortgage-backed securities
|
|
207
|
|
|
1
|
|
|
88
|
|
|
1
|
|
|
295
|
|
|
2
|
|
||||||
Total
|
|
$
|
21,898
|
|
|
$
|
437
|
|
|
$
|
15,006
|
|
|
$
|
878
|
|
|
$
|
36,904
|
|
|
$
|
1,315
|
|
(1)
|
As of December 31, 2019, there were no securities classified as held-to-maturity in a gross unrealized loss position.
|
|
June 30, 2020
|
||||||||||||||
|
Available-for-Sale
|
|
Held-to-Maturity
|
||||||||||||
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost, Net of Allowance
|
|
Fair Value
|
||||||||
|
(in millions)
|
||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
17,494
|
|
|
$
|
18,078
|
|
|
$
|
114
|
|
|
$
|
116
|
|
Due after one year through five years
|
51,138
|
|
|
54,309
|
|
|
0
|
|
|
0
|
|
||||
Due after five years through ten years
|
67,575
|
|
|
75,812
|
|
|
588
|
|
|
659
|
|
||||
Due after ten years(1)
|
185,427
|
|
|
226,207
|
|
|
893
|
|
|
1,153
|
|
||||
Asset-backed securities
|
13,989
|
|
|
13,936
|
|
|
0
|
|
|
0
|
|
||||
Commercial mortgage-backed securities
|
15,089
|
|
|
16,262
|
|
|
0
|
|
|
0
|
|
||||
Residential mortgage-backed securities
|
3,100
|
|
|
3,340
|
|
|
280
|
|
|
303
|
|
||||
Total
|
$
|
353,812
|
|
|
$
|
407,944
|
|
|
$
|
1,875
|
|
|
$
|
2,231
|
|
(1)
|
Excludes available-for-sale notes with amortized cost of $6,466 million (fair value, $6,466 million) and held-to-maturity notes with amortized cost of $4,998 million (fair value, $5,603 million), which have been offset with the associated debt under a netting agreement.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Proceeds from sales(1)
|
$
|
5,217
|
|
|
$
|
6,659
|
|
|
$
|
10,370
|
|
|
$
|
16,821
|
|
Proceeds from maturities/prepayments
|
5,539
|
|
|
4,704
|
|
|
10,422
|
|
|
9,192
|
|
||||
Gross investment gains from sales and maturities
|
405
|
|
|
228
|
|
|
873
|
|
|
711
|
|
||||
Gross investment losses from sales and maturities
|
(149
|
)
|
|
(95
|
)
|
|
(210
|
)
|
|
(283
|
)
|
||||
OTTI recognized in earnings(2)
|
N/A
|
|
|
(64
|
)
|
|
N/A
|
|
|
(99
|
)
|
||||
Write-downs recognized in earnings(3)
|
(64
|
)
|
|
N/A
|
|
|
(155
|
)
|
|
N/A
|
|
||||
(Addition to) release of allowance for credit losses(4)
|
(80
|
)
|
|
N/A
|
|
|
(238
|
)
|
|
N/A
|
|
||||
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
|
||||||||
Proceeds from maturities/prepayments(5)
|
$
|
22
|
|
|
$
|
23
|
|
|
$
|
63
|
|
|
$
|
37
|
|
(Addition to) release of allowance for credit losses(4)
|
0
|
|
|
N/A
|
|
|
0
|
|
|
N/A
|
|
(1)
|
Includes $128 million and $332 million of non-cash related proceeds due to the timing of trade settlements for the six months ended June 30, 2020 and 2019, respectively.
|
(2)
|
For the three and six months ended June 30, 2019, amounts exclude the portion of OTTI amounts remaining in 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)
|
For the three and six months ended June 30, 2020, amounts represent write-downs on securities approaching maturity related to foreign exchange movements and securities actively marketed for sale.
|
(4)
|
Effective January 1, 2020, credit losses on available-for-sale and held-to-maturity fixed maturity securities are recorded within the “allowance for credit losses.”
|
(5)
|
Includes $5 million and $2 million of non-cash related proceeds due to the timing of trade settlements for the six months ended June 30, 2020 and 2019, respectively.
|
|
June 30, 2020
|
||||||||||||||||||||||||||
|
U.S. Treasury Securities and Obligations of U.S. States
|
|
Foreign Government Bonds
|
|
U.S. and Foreign Corporate Securities
|
|
Asset-Backed Securities
|
|
Commercial Mortgage-Backed Securities
|
|
Residential Mortgage-Backed Securities
|
|
Total
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, beginning of year
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Additions to allowance for credit losses not previously recorded
|
0
|
|
|
38
|
|
|
205
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
244
|
|
|||||||
Reductions for securities sold during the period
|
0
|
|
|
0
|
|
|
(28
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(28
|
)
|
|||||||
Additions/reductions on securities with previous allowance
|
0
|
|
|
0
|
|
|
22
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
22
|
|
|||||||
Balance, end of period
|
$
|
0
|
|
|
$
|
38
|
|
|
$
|
199
|
|
|
$
|
0
|
|
|
$
|
1
|
|
|
$
|
0
|
|
|
$
|
238
|
|
|
June 30, 2020
|
||||||||||||||||||||||||||
|
U.S. Treasury Securities and Obligations of U.S. States
|
|
Foreign Government Bonds
|
|
U.S. and Foreign Corporate Securities
|
|
Asset-Backed Securities
|
|
Commercial Mortgage-Backed Securities
|
|
Residential Mortgage-Backed Securities
|
|
Total
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Fixed maturities, held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, beginning of year
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Cumulative effect of adoption of ASU 2016-13
|
0
|
|
|
0
|
|
|
9
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
9
|
|
|||||||
Balance, end of period
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
Amortized
Cost or Cost |
|
Fair
Value |
|
Amortized
Cost or Cost |
|
Fair
Value |
||||||||
|
|
(in millions)
|
||||||||||||||
Short-term investments and cash equivalents
|
|
$
|
1,234
|
|
|
$
|
1,234
|
|
|
$
|
277
|
|
|
$
|
277
|
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
|
13,492
|
|
|
14,190
|
|
|
13,143
|
|
|
13,603
|
|
||||
Commercial mortgage-backed securities
|
|
1,832
|
|
|
1,921
|
|
|
1,845
|
|
|
1,896
|
|
||||
Residential mortgage-backed securities(1)
|
|
1,142
|
|
|
1,200
|
|
|
1,134
|
|
|
1,158
|
|
||||
Asset-backed securities(2)
|
|
1,762
|
|
|
1,772
|
|
|
1,639
|
|
|
1,662
|
|
||||
Foreign government bonds
|
|
803
|
|
|
808
|
|
|
802
|
|
|
814
|
|
||||
U.S. government authorities and agencies and obligations of U.S. states
|
|
354
|
|
|
437
|
|
|
341
|
|
|
397
|
|
||||
Total fixed maturities(3)
|
|
19,385
|
|
|
20,328
|
|
|
18,904
|
|
|
19,530
|
|
||||
Equity securities
|
|
1,533
|
|
|
1,683
|
|
|
1,465
|
|
|
1,790
|
|
||||
Total assets supporting experience-rated contractholder liabilities(4)
|
|
$
|
22,152
|
|
|
$
|
23,245
|
|
|
$
|
20,646
|
|
|
$
|
21,597
|
|
(1)
|
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
|
(2)
|
Includes collateralized loan obligations, auto loans, education loans, home equity and other asset types. Collateralized loan obligations at fair value were $1,141 million and $1,060 million as of June 30, 2020 and December 31, 2019, respectively, all of which were rated AAA.
|
(3)
|
As a percentage of amortized cost, 93% and 94% of the portfolio was considered high or highest quality based on NAIC or equivalent ratings, as of June 30, 2020 and December 31, 2019, respectively.
|
(4)
|
As a percentage of amortized cost, 78% and 77% of the portfolio consisted of public securities as of June 30, 2020 and December 31, 2019, respectively.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
Amortized
Cost |
|
Fair
Value
|
|
Amortized
Cost |
|
Fair
Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Investments in Japanese government and government agency securities:
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities, available-for-sale
|
|
$
|
74,765
|
|
|
$
|
87,747
|
|
|
$
|
74,118
|
|
|
$
|
89,546
|
|
Fixed maturities, held-to-maturity
|
|
874
|
|
|
1,127
|
|
|
869
|
|
|
1,143
|
|
||||
Fixed maturities, trading
|
|
23
|
|
|
22
|
|
|
23
|
|
|
23
|
|
||||
Assets supporting experience-rated contractholder liabilities
|
|
647
|
|
|
652
|
|
|
653
|
|
|
664
|
|
||||
Total
|
|
$
|
76,309
|
|
|
$
|
89,548
|
|
|
$
|
75,663
|
|
|
$
|
91,376
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
Amortized
Cost |
|
Fair
Value
|
|
Amortized
Cost |
|
Fair
Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Investments in South Korean government and government agency securities:
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities, available-for-sale
|
|
$
|
10,783
|
|
|
$
|
13,402
|
|
|
$
|
10,823
|
|
|
$
|
13,322
|
|
Assets supporting experience-rated contractholder liabilities
|
|
15
|
|
|
16
|
|
|
15
|
|
|
16
|
|
||||
Total
|
|
$
|
10,798
|
|
|
$
|
13,418
|
|
|
$
|
10,838
|
|
|
$
|
13,338
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||
|
|
Amount
(in millions)
|
|
% of
Total
|
|
Amount
(in millions)
|
|
% of
Total
|
||||||
Commercial mortgage and agricultural property loans by property type:
|
|
|
|
|
|
|
|
|
||||||
Office
|
|
$
|
12,642
|
|
|
20.2
|
%
|
|
$
|
13,462
|
|
|
21.4
|
%
|
Retail
|
|
7,739
|
|
|
12.3
|
|
|
8,379
|
|
|
13.3
|
|
||
Apartments/Multi-Family
|
|
18,031
|
|
|
28.8
|
|
|
17,348
|
|
|
27.6
|
|
||
Industrial
|
|
13,292
|
|
|
21.2
|
|
|
13,226
|
|
|
21.1
|
|
||
Hospitality
|
|
2,378
|
|
|
3.8
|
|
|
2,415
|
|
|
3.9
|
|
||
Other
|
|
4,617
|
|
|
7.4
|
|
|
4,533
|
|
|
7.2
|
|
||
Total commercial mortgage loans
|
|
58,699
|
|
|
93.7
|
|
|
59,363
|
|
|
94.5
|
|
||
Agricultural property loans
|
|
3,978
|
|
|
6.3
|
|
|
3,472
|
|
|
5.5
|
|
||
Total commercial mortgage and agricultural property loans by property type
|
|
62,677
|
|
|
100.0
|
%
|
|
62,835
|
|
|
100.0
|
%
|
||
Allowance for credit losses
|
|
(238
|
)
|
|
|
|
(117
|
)
|
|
|
||||
Total net commercial mortgage and agricultural property loans by property type
|
|
62,439
|
|
|
|
|
62,718
|
|
|
|
||||
Other loans:
|
|
|
|
|
|
|
|
|
||||||
Uncollateralized loans
|
|
680
|
|
|
|
|
656
|
|
|
|
||||
Residential property loans
|
|
109
|
|
|
|
|
124
|
|
|
|
||||
Other collateralized loans
|
|
248
|
|
|
|
|
65
|
|
|
|
||||
Total other loans
|
|
1,037
|
|
|
|
|
845
|
|
|
|
||||
Allowance for credit losses
|
|
(7
|
)
|
|
|
|
(4
|
)
|
|
|
||||
Total net other loans
|
|
1,030
|
|
|
|
|
841
|
|
|
|
||||
Total commercial mortgage and other loans(1)
|
|
$
|
63,469
|
|
|
|
|
$
|
63,559
|
|
|
|
(1)
|
Includes loans held for sale which are carried at fair value and are collateralized primarily by apartment complexes. As of June 30, 2020 and December 31, 2019, the net carrying value of these loans was $682 million and $228 million, respectively.
|
|
|
Commercial
Mortgage
Loans
|
|
Agricultural
Property
Loans
|
|
Residential
Property
Loans
|
|
Other
Collateralized
Loans
|
|
Uncollateralized
Loans
|
|
Total
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Balance at December 31, 2018
|
|
$
|
120
|
|
|
$
|
3
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5
|
|
|
$
|
128
|
|
Addition to (release of) allowance for credit losses
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
|
(6
|
)
|
||||||
Charge-offs, net of recoveries
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
||||||
Change in foreign exchange
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
Balance at December 31, 2019
|
|
114
|
|
|
3
|
|
|
0
|
|
|
0
|
|
|
4
|
|
|
121
|
|
||||||
Cumulative effect of adoption of ASU 2016-13
|
|
110
|
|
|
5
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
115
|
|
||||||
Addition to (release of) allowance for expected losses
|
|
6
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
6
|
|
||||||
Other
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3
|
|
|
0
|
|
|
3
|
|
||||||
Balance at June 30, 2020
|
|
$
|
230
|
|
|
$
|
8
|
|
|
$
|
0
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
245
|
|
|
June 30, 2020
|
||||||||||||||||||||||||||||||
|
Amortized Cost by Origination Year
|
||||||||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
Revolving Loans
|
|
Total
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Loan-to-Value Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commercial mortgage loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
0%-59.99%
|
$
|
346
|
|
|
$
|
2,791
|
|
|
$
|
3,067
|
|
|
$
|
3,462
|
|
|
$
|
3,296
|
|
|
$
|
17,859
|
|
|
$
|
0
|
|
|
$
|
30,821
|
|
60%-69.99%
|
1,265
|
|
|
4,057
|
|
|
3,457
|
|
|
2,668
|
|
|
2,886
|
|
|
4,506
|
|
|
0
|
|
|
18,839
|
|
||||||||
70%-79.99%
|
809
|
|
|
3,021
|
|
|
2,531
|
|
|
1,091
|
|
|
570
|
|
|
720
|
|
|
0
|
|
|
8,742
|
|
||||||||
80% or greater
|
0
|
|
|
10
|
|
|
0
|
|
|
18
|
|
|
61
|
|
|
208
|
|
|
0
|
|
|
297
|
|
||||||||
Subtotal
|
2,420
|
|
|
9,879
|
|
|
9,055
|
|
|
7,239
|
|
|
6,813
|
|
|
23,293
|
|
|
0
|
|
|
58,699
|
|
||||||||
Agricultural property loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
0%-59.99%
|
534
|
|
|
483
|
|
|
376
|
|
|
555
|
|
|
400
|
|
|
1,410
|
|
|
0
|
|
|
3,758
|
|
||||||||
60%-69.99%
|
112
|
|
|
71
|
|
|
34
|
|
|
3
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
220
|
|
||||||||
70%-79.99%
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
80% or greater
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
Subtotal
|
646
|
|
|
554
|
|
|
410
|
|
|
558
|
|
|
400
|
|
|
1,410
|
|
|
0
|
|
|
3,978
|
|
||||||||
Total commercial mortgage and agricultural property loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
0%-59.99%
|
880
|
|
|
3,274
|
|
|
3,443
|
|
|
4,017
|
|
|
3,696
|
|
|
19,269
|
|
|
0
|
|
|
34,579
|
|
||||||||
60%-69.99%
|
1,377
|
|
|
4,128
|
|
|
3,491
|
|
|
2,671
|
|
|
2,886
|
|
|
4,506
|
|
|
0
|
|
|
19,059
|
|
||||||||
70%-79.99%
|
809
|
|
|
3,021
|
|
|
2,531
|
|
|
1,091
|
|
|
570
|
|
|
720
|
|
|
0
|
|
|
8,742
|
|
||||||||
80% or greater
|
0
|
|
|
10
|
|
|
0
|
|
|
18
|
|
|
61
|
|
|
208
|
|
|
0
|
|
|
297
|
|
||||||||
Total commercial mortgage and agricultural property loans
|
$
|
3,066
|
|
|
$
|
10,433
|
|
|
$
|
9,465
|
|
|
$
|
7,797
|
|
|
$
|
7,213
|
|
|
$
|
24,703
|
|
|
$
|
0
|
|
|
$
|
62,677
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Commercial Mortgage Loans
|
|
Agricultural Property Loans
|
|
Commercial Mortgage Loans
|
|
Agricultural Property Loans
|
||||||||
|
(in millions)
|
||||||||||||||
Debt Service Coverage Ratio:
|
|
|
|
|
|
|
|
||||||||
Greater or Equal to 1.2x
|
$
|
55,921
|
|
|
$
|
3,870
|
|
|
$
|
56,346
|
|
|
$
|
3,401
|
|
1.0 - 1.2x
|
2,465
|
|
|
80
|
|
|
2,708
|
|
|
57
|
|
||||
Less than 1.0x
|
313
|
|
|
28
|
|
|
309
|
|
|
14
|
|
||||
Total
|
$
|
58,699
|
|
|
$
|
3,978
|
|
|
$
|
59,363
|
|
|
$
|
3,472
|
|
|
|
June 30, 2020
|
||||||||||||||||||||||||||
|
|
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
|
|
$
|
58,386
|
|
|
$
|
0
|
|
|
$
|
313
|
|
|
$
|
0
|
|
|
$
|
313
|
|
|
$
|
58,699
|
|
|
$
|
44
|
|
Agricultural property loans
|
|
3,971
|
|
|
0
|
|
|
1
|
|
|
6
|
|
|
7
|
|
|
3,978
|
|
|
15
|
|
|||||||
Residential property loans
|
|
107
|
|
|
1
|
|
|
0
|
|
|
1
|
|
|
2
|
|
|
109
|
|
|
1
|
|
|||||||
Other collateralized loans
|
|
248
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
248
|
|
|
0
|
|
|||||||
Uncollateralized loans
|
|
680
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
680
|
|
|
4
|
|
|||||||
Total
|
|
$
|
63,392
|
|
|
$
|
1
|
|
|
$
|
314
|
|
|
$
|
7
|
|
|
$
|
322
|
|
|
$
|
63,714
|
|
|
$
|
64
|
|
(1)
|
As of June 30, 2020, 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 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
|
|
December 31, 2019
|
||||||||||||||||||||||||||
|
|
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
|
|
$
|
59,363
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
59,363
|
|
|
$
|
44
|
|
Agricultural property loans
|
|
3,458
|
|
|
1
|
|
|
0
|
|
|
13
|
|
|
14
|
|
|
3,472
|
|
|
13
|
|
|||||||
Residential property loans
|
|
121
|
|
|
1
|
|
|
0
|
|
|
2
|
|
|
3
|
|
|
124
|
|
|
2
|
|
|||||||
Other collateralized loans
|
|
65
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
65
|
|
|
0
|
|
|||||||
Uncollateralized loans
|
|
656
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
656
|
|
|
0
|
|
|||||||
Total
|
|
$
|
63,663
|
|
|
$
|
2
|
|
|
$
|
0
|
|
|
$
|
15
|
|
|
$
|
17
|
|
|
$
|
63,680
|
|
|
$
|
59
|
|
(1)
|
As of December 31, 2019, 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 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions)
|
||||||
LPs/LLCs:
|
|
|
|
|
||||
Equity method:
|
|
|
|
|
||||
Private equity
|
|
$
|
3,830
|
|
|
$
|
3,625
|
|
Hedge funds
|
|
2,166
|
|
|
1,947
|
|
||
Real estate-related
|
|
1,381
|
|
|
1,372
|
|
||
Subtotal equity method
|
|
7,377
|
|
|
6,944
|
|
||
Fair value:
|
|
|
|
|
||||
Private equity
|
|
1,548
|
|
|
1,705
|
|
||
Hedge funds
|
|
2,100
|
|
|
2,172
|
|
||
Real estate-related
|
|
331
|
|
336
|
||||
Subtotal fair value
|
|
3,979
|
|
|
4,213
|
|
||
Total LPs/LLCs
|
|
11,356
|
|
|
11,157
|
|
||
Real estate held through direct ownership(1)
|
|
2,451
|
|
|
2,388
|
|
||
Derivative instruments
|
|
1,655
|
|
|
877
|
|||
Other(2)
|
|
1,295
|
|
|
1,184
|
|
||
Total other invested assets
|
|
$
|
16,757
|
|
|
$
|
15,606
|
|
(1)
|
As of June 30, 2020 and December 31, 2019, real estate held through direct ownership had mortgage debt of $459 million and $537 million, respectively.
|
(2)
|
Primarily includes strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding the Company’s holdings in the Federal Home Loan Banks of New York and Boston, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
|
June 30, 2020
|
||
|
(in millions)
|
||
Fixed maturities
|
$
|
2,739
|
|
Equity securities
|
9
|
|
|
Commercial mortgage and other loans
|
198
|
|
|
Policy loans
|
301
|
|
|
Other invested assets
|
36
|
|
|
Short-term investments and cash equivalents
|
13
|
|
|
Total accrued investment income
|
$
|
3,296
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(in millions)
|
||||||||||||||
Fixed maturities, available-for-sale(1)
|
|
$
|
3,067
|
|
|
$
|
3,150
|
|
|
$
|
6,179
|
|
|
$
|
6,238
|
|
Fixed maturities, held-to-maturity(1)
|
|
58
|
|
|
58
|
|
|
117
|
|
|
115
|
|
||||
Fixed maturities, trading
|
|
34
|
|
|
38
|
|
|
68
|
|
|
72
|
|
||||
Assets supporting experience-rated contractholder liabilities
|
|
164
|
|
|
182
|
|
|
348
|
|
|
367
|
|
||||
Equity securities
|
|
55
|
|
|
51
|
|
|
83
|
|
|
81
|
|
||||
Commercial mortgage and other loans
|
|
618
|
|
|
627
|
|
|
1,258
|
|
|
1,227
|
|
||||
Policy loans
|
|
150
|
|
|
152
|
|
|
303
|
|
|
303
|
|
||||
Other invested assets
|
|
147
|
|
|
271
|
|
|
278
|
|
|
476
|
|
||||
Short-term investments and cash equivalents
|
|
65
|
|
|
115
|
|
|
152
|
|
|
233
|
|
||||
Gross investment income
|
|
4,358
|
|
|
4,644
|
|
|
8,786
|
|
|
9,112
|
|
||||
Less: investment expenses
|
|
(172
|
)
|
|
(254
|
)
|
|
(398
|
)
|
|
(506
|
)
|
||||
Net investment income
|
|
$
|
4,186
|
|
|
$
|
4,390
|
|
|
$
|
8,388
|
|
|
$
|
8,606
|
|
(1)
|
Includes income on credit-linked notes which are reported on the same financial statement line item as related surplus notes, as conditions are met for right to offset.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
(in millions)
|
||||||||||||||
Fixed maturities(1)
|
|
$
|
112
|
|
|
$
|
69
|
|
|
$
|
270
|
|
|
$
|
329
|
|
Commercial mortgage and other loans
|
|
2
|
|
|
4
|
|
|
24
|
|
|
14
|
|
||||
Investment real estate
|
|
11
|
|
|
0
|
|
|
10
|
|
|
0
|
|
||||
LPs/LLCs
|
|
(3
|
)
|
|
2
|
|
|
(6
|
)
|
|
(3
|
)
|
||||
Derivatives
|
|
(3,881
|
)
|
|
(411
|
)
|
|
(2,389
|
)
|
|
(1,443
|
)
|
||||
Other
|
|
7
|
|
|
0
|
|
|
6
|
|
|
1
|
|
||||
Realized investment gains (losses), net
|
|
$
|
(3,752
|
)
|
|
$
|
(336
|
)
|
|
$
|
(2,085
|
)
|
|
$
|
(1,102
|
)
|
(1)
|
Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Fixed maturity securities, available-for-sale—with OTTI(1)
|
$ N/A
|
|
$
|
243
|
|
||
Fixed maturity securities, available-for-sale—all other(1)
|
N/A
|
|
|
44,279
|
|
||
Fixed maturity securities, available-for-sale with an allowance
|
(40
|
)
|
|
N/A
|
|
||
Fixed maturity securities, available-for-sale without an allowance
|
54,410
|
|
|
N/A
|
|
||
Derivatives designated as cash flow hedges(2)
|
2,498
|
|
|
832
|
|
||
Other investments(3)
|
(2
|
)
|
|
(15
|
)
|
||
Net unrealized gains (losses) on investments
|
$
|
56,866
|
|
|
$
|
45,339
|
|
(1)
|
Effective January 1, 2020, per ASU 2016-13, fixed maturity securities, available-for-sale are no longer required to be disclosed “with OTTI” and “all other.”
|
(2)
|
For additional information on cash flow hedges, see Note 5.
|
(3)
|
As of June 30, 2020, 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.”
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
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)
|
||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S.
government authorities and agencies
|
$
|
9,516
|
|
|
$
|
558
|
|
|
$
|
10,074
|
|
|
$
|
9,431
|
|
|
$
|
0
|
|
|
$
|
9,431
|
|
Residential mortgage-backed securities
|
414
|
|
|
0
|
|
|
414
|
|
|
250
|
|
|
0
|
|
|
250
|
|
||||||
Total securities sold under agreements to repurchase(1)
|
$
|
9,930
|
|
|
$
|
558
|
|
|
$
|
10,488
|
|
|
$
|
9,681
|
|
|
$
|
0
|
|
|
$
|
9,681
|
|
(1)
|
The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
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)
|
||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S.
government authorities and agencies
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9
|
|
|
$
|
0
|
|
|
$
|
9
|
|
Obligations of U.S. states and their political
subdivisions
|
101
|
|
|
0
|
|
|
101
|
|
|
33
|
|
|
0
|
|
|
33
|
|
||||||
Foreign government bonds
|
381
|
|
|
0
|
|
|
381
|
|
|
244
|
|
|
0
|
|
|
244
|
|
||||||
U.S. public corporate securities
|
2,375
|
|
|
0
|
|
|
2,375
|
|
|
2,996
|
|
|
0
|
|
|
2,996
|
|
||||||
Foreign public corporate securities
|
536
|
|
|
0
|
|
|
536
|
|
|
762
|
|
|
0
|
|
|
762
|
|
||||||
Commercial mortgage-backed securities
|
2
|
|
|
0
|
|
|
2
|
|
|
2
|
|
|
0
|
|
|
2
|
|
||||||
Equity securities
|
52
|
|
|
0
|
|
|
52
|
|
|
167
|
|
|
0
|
|
|
167
|
|
||||||
Total cash collateral for loaned securities(1)
|
$
|
3,447
|
|
|
$
|
0
|
|
|
$
|
3,447
|
|
|
$
|
4,213
|
|
|
$
|
0
|
|
|
$
|
4,213
|
|
(1)
|
The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.
|
|
Consolidated VIEs for which the
Company is the Investment
Manager(1)
|
|
Other Consolidated VIEs(1)
|
||||||||||||
|
June 30,
2020 |
|
December 31,
2019 |
|
June 30,
2020 |
|
December 31,
2019 |
||||||||
|
(in millions)
|
||||||||||||||
Fixed maturities, available-for-sale
|
$
|
99
|
|
|
$
|
104
|
|
|
$
|
284
|
|
|
$
|
285
|
|
Fixed maturities, held-to-maturity
|
83
|
|
|
83
|
|
|
843
|
|
|
839
|
|
||||
Fixed maturities, trading
|
1,043
|
|
|
1,112
|
|
|
0
|
|
|
0
|
|
||||
Assets supporting experience-rated contractholder liabilities
|
0
|
|
|
0
|
|
|
2
|
|
|
4
|
|
||||
Equity securities
|
29
|
|
|
47
|
|
|
0
|
|
|
0
|
|
||||
Commercial mortgage and other loans
|
943
|
|
|
883
|
|
|
0
|
|
|
0
|
|
||||
Other invested assets
|
2,379
|
|
|
2,199
|
|
|
151
|
|
|
89
|
|
||||
Cash and cash equivalents
|
153
|
|
|
166
|
|
|
0
|
|
|
0
|
|
||||
Accrued investment income
|
5
|
|
|
4
|
|
|
4
|
|
|
4
|
|
||||
Other assets
|
422
|
|
|
450
|
|
|
663
|
|
|
689
|
|
||||
Total assets of consolidated VIEs
|
$
|
5,156
|
|
|
$
|
5,048
|
|
|
$
|
1,947
|
|
|
$
|
1,910
|
|
Other liabilities
|
$
|
386
|
|
|
$
|
304
|
|
|
$
|
15
|
|
|
$
|
13
|
|
Notes issued by consolidated VIEs(2)
|
1,197
|
|
|
1,274
|
|
|
0
|
|
|
0
|
|
||||
Total liabilities of consolidated VIEs
|
$
|
1,583
|
|
|
$
|
1,578
|
|
|
$
|
15
|
|
|
$
|
13
|
|
(1)
|
Total assets of consolidated VIEs reflect $2,742 million and $2,668 million as of June 30, 2020 and December 31, 2019, 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 June 30, 2020, the maturities of these obligations were between 4 and 9 years.
|
•
|
To-be-announced (“TBA”) forward contracts, loan commitments, embedded derivatives and synthetic guaranteed investment contracts (“GICs”).
|
Primary Underlying Risk /Instrument Type
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
|
Fair Value
|
|
|
|
Fair Value
|
|||||||||||||||||
Gross Notional
|
|
Assets
|
|
Liabilities
|
|
Gross Notional
|
|
Assets
|
|
Liabilities
|
|||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Rate Swaps
|
$
|
3,227
|
|
|
$
|
1,220
|
|
|
$
|
(105
|
)
|
|
$
|
3,257
|
|
|
$
|
628
|
|
|
$
|
(73
|
)
|
Interest Rate Forwards
|
202
|
|
|
36
|
|
|
(1
|
)
|
|
205
|
|
|
4
|
|
|
(1
|
)
|
||||||
Foreign Currency
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign Currency Forwards
|
2,155
|
|
|
73
|
|
|
(12
|
)
|
|
1,461
|
|
|
22
|
|
|
(57
|
)
|
||||||
Currency/Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign Currency Swaps
|
23,372
|
|
|
3,049
|
|
|
(59
|
)
|
|
22,746
|
|
|
1,467
|
|
|
(302
|
)
|
||||||
Total Derivatives Designated as Hedge Accounting Instruments
|
$
|
28,956
|
|
|
$
|
4,378
|
|
|
$
|
(177
|
)
|
|
$
|
27,669
|
|
|
$
|
2,121
|
|
|
$
|
(433
|
)
|
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Rate Swaps
|
$
|
153,866
|
|
|
$
|
22,286
|
|
|
$
|
(11,151
|
)
|
|
$
|
141,162
|
|
|
$
|
10,249
|
|
|
$
|
(4,861
|
)
|
Interest Rate Futures
|
17,326
|
|
|
6
|
|
|
(44
|
)
|
|
17,095
|
|
|
4
|
|
|
(38
|
)
|
||||||
Interest Rate Options
|
14,518
|
|
|
1,813
|
|
|
(267
|
)
|
|
16,496
|
|
|
339
|
|
|
(238
|
)
|
||||||
Interest Rate Forwards
|
2,745
|
|
|
28
|
|
|
0
|
|
|
2,218
|
|
|
18
|
|
|
(3
|
)
|
||||||
Foreign Currency
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign Currency Forwards
|
30,785
|
|
|
308
|
|
|
(235
|
)
|
|
26,604
|
|
|
208
|
|
|
(214
|
)
|
||||||
Foreign Currency Options
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
Currency/Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign Currency Swaps
|
12,819
|
|
|
1,243
|
|
|
(337
|
)
|
|
13,874
|
|
|
740
|
|
|
(345
|
)
|
||||||
Credit
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Credit Default Swaps
|
2,529
|
|
|
20
|
|
|
(17
|
)
|
|
798
|
|
|
21
|
|
|
0
|
|
||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity Futures
|
7,243
|
|
|
2
|
|
|
(84
|
)
|
|
1,802
|
|
|
0
|
|
|
(3
|
)
|
||||||
Equity Options
|
45,519
|
|
|
494
|
|
|
(302
|
)
|
|
32,657
|
|
|
679
|
|
|
(765
|
)
|
||||||
Total Return Swaps
|
24,798
|
|
|
184
|
|
|
(1,071
|
)
|
|
18,218
|
|
|
6
|
|
|
(636
|
)
|
||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other(1)
|
1,260
|
|
|
0
|
|
|
0
|
|
|
1,258
|
|
|
0
|
|
|
0
|
|
||||||
Synthetic GICs
|
82,325
|
|
|
1
|
|
|
0
|
|
|
80,009
|
|
|
1
|
|
|
0
|
|
||||||
Total Derivatives Not Qualifying as Hedge Accounting Instruments
|
$
|
395,733
|
|
|
$
|
26,385
|
|
|
$
|
(13,508
|
)
|
|
$
|
352,191
|
|
|
$
|
12,265
|
|
|
$
|
(7,103
|
)
|
Total Derivatives(2)(3)
|
$
|
424,689
|
|
|
$
|
30,763
|
|
|
$
|
(13,685
|
)
|
|
$
|
379,860
|
|
|
$
|
14,386
|
|
|
$
|
(7,536
|
)
|
(1)
|
“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.
|
(2)
|
Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $27,110 million and $14,035 million as of June 30, 2020 and December 31, 2019, respectively, primarily included in “Future policy benefits.”
|
(3)
|
Recorded in “Other invested assets” and “Other liabilities” on the Unaudited Interim Consolidated Statements of Financial Position.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
Balance Sheet Line Item in which Hedged Item is Recorded
|
Carrying Amount of the Hedged Assets (Liabilities)
|
|
Cumulative Amount of
Fair Value Hedging Adjustment Included in the
Carrying Amount of the Hedged
Assets (Liabilities)(1)
|
|
Carrying Amount of the Hedged Assets (Liabilities)
|
|
Cumulative Amount of
Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1) |
||||||||
|
(in millions)
|
||||||||||||||
Fixed maturities, available-for-sale, at fair value
|
$
|
397
|
|
|
$
|
92
|
|
|
$
|
389
|
|
|
$
|
64
|
|
Commercial mortgage and other loans
|
$
|
22
|
|
|
$
|
2
|
|
|
$
|
23
|
|
|
$
|
2
|
|
Policyholders’ account balances
|
$
|
(1,721
|
)
|
|
$
|
(425
|
)
|
|
$
|
(1,376
|
)
|
|
$
|
(107
|
)
|
Future policy benefits
|
$
|
(1,277
|
)
|
|
$
|
(443
|
)
|
|
$
|
(676
|
)
|
|
$
|
(172
|
)
|
(1)
|
There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.
|
|
June 30, 2020
|
||||||||||||||||||
|
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)
|
$
|
30,611
|
|
|
$
|
(29,119
|
)
|
|
$
|
1,492
|
|
|
$
|
(849
|
)
|
|
$
|
643
|
|
Securities purchased under agreement to resell
|
2,355
|
|
|
0
|
|
|
2,355
|
|
|
(2,355
|
)
|
|
0
|
|
|||||
Total assets
|
$
|
32,966
|
|
|
$
|
(29,119
|
)
|
|
$
|
3,847
|
|
|
$
|
(3,204
|
)
|
|
$
|
643
|
|
Offsetting of Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivatives(1)
|
$
|
13,676
|
|
|
$
|
(13,001
|
)
|
|
$
|
675
|
|
|
$
|
(40
|
)
|
|
$
|
635
|
|
Securities sold under agreement to repurchase
|
10,488
|
|
|
0
|
|
|
10,488
|
|
|
(10,488
|
)
|
|
0
|
|
|||||
Total liabilities
|
$
|
24,164
|
|
|
$
|
(13,001
|
)
|
|
$
|
11,163
|
|
|
$
|
(10,528
|
)
|
|
$
|
635
|
|
|
December 31, 2019
|
||||||||||||||||||
|
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)
|
$
|
14,303
|
|
|
$
|
(13,519
|
)
|
|
$
|
784
|
|
|
$
|
(607
|
)
|
|
$
|
177
|
|
Securities purchased under agreement to resell
|
1,012
|
|
|
0
|
|
|
1,012
|
|
|
(1,012
|
)
|
|
0
|
|
|||||
Total assets
|
$
|
15,315
|
|
|
$
|
(13,519
|
)
|
|
$
|
1,796
|
|
|
$
|
(1,619
|
)
|
|
$
|
177
|
|
Offsetting of Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivatives(1)
|
$
|
7,528
|
|
|
$
|
(6,705
|
)
|
|
$
|
823
|
|
|
$
|
(244
|
)
|
|
$
|
579
|
|
Securities sold under agreement to repurchase
|
9,681
|
|
|
0
|
|
|
9,681
|
|
|
(9,681
|
)
|
|
0
|
|
|||||
Total liabilities
|
$
|
17,209
|
|
|
$
|
(6,705
|
)
|
|
$
|
10,504
|
|
|
$
|
(9,925
|
)
|
|
$
|
579
|
|
(1)
|
Amounts exclude the excess of collateral received/pledged from/to the counterparty.
|
|
Three Months Ended June 30, 2020
|
||||||||||||||||||||||||||
|
Realized
Investment Gains (Losses) |
|
Net
Investment Income |
|
Other
Income (Loss) |
|
Interest
Expense |
|
Interest
Credited to Policyholders’ Account Balances |
|
Policyholders’ Benefits
|
|
AOCI(1)
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gains (losses) on derivatives designated as hedge instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6
|
|
|
$
|
(1
|
)
|
|
$
|
0
|
|
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives designated as hedge instruments
|
1
|
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
6
|
|
|
1
|
|
|
0
|
|
|||||||
Gains (losses) on the hedged item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
(1
|
)
|
|
4
|
|
|
0
|
|
|
0
|
|
|
5
|
|
|
9
|
|
|
0
|
|
|||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(2
|
)
|
|
0
|
|
|||||||
Total gains (losses) on hedged item
|
(1
|
)
|
|
4
|
|
|
0
|
|
|
0
|
|
|
5
|
|
|
7
|
|
|
0
|
|
|||||||
Amortization for gains (losses) excluded from assessment of the effectiveness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(3
|
)
|
|||||||
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(3
|
)
|
|||||||
Total gains (losses) on fair value hedges net of hedged item
|
0
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|
11
|
|
|
8
|
|
|
(3
|
)
|
|||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
10
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(8
|
)
|
|||||||
Currency
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(10
|
)
|
|||||||
Currency/Interest Rate
|
49
|
|
|
82
|
|
|
(99
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(669
|
)
|
|||||||
Total gains (losses) on cash flow hedges
|
61
|
|
|
82
|
|
|
(99
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(687
|
)
|
|||||||
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(4
|
)
|
|||||||
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on net investment hedges
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(4
|
)
|
|||||||
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
(232
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency
|
(103
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency/Interest Rate
|
(86
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Credit
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Equity
|
(5,221
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Other
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Embedded Derivatives
|
1,702
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives not qualifying as hedge accounting instruments
|
(3,940
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total
|
$
|
(3,879
|
)
|
|
$
|
84
|
|
|
$
|
(99
|
)
|
|
$
|
0
|
|
|
$
|
11
|
|
|
$
|
8
|
|
|
$
|
(694
|
)
|
|
Six Months Ended June 30, 2020
|
||||||||||||||||||||||||||
|
Realized
Investment Gains (Losses) |
|
Net
Investment Income |
|
Other
Income (Loss) |
|
Interest
Expense |
|
Interest
Credited to Policyholders’ Account Balances |
|
Policyholders’ Benefits
|
|
AOCI(1)
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gains (losses) on derivatives designated as hedge instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
$
|
(29
|
)
|
|
$
|
(4
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
330
|
|
|
$
|
279
|
|
|
$
|
0
|
|
Currency
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives designated as hedge instruments
|
(27
|
)
|
|
(4
|
)
|
|
0
|
|
|
0
|
|
|
330
|
|
|
281
|
|
|
0
|
|
|||||||
Gains (losses) on the hedged item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
29
|
|
|
9
|
|
|
0
|
|
|
0
|
|
|
(318
|
)
|
|
(270
|
)
|
|
0
|
|
|||||||
Currency
|
(1
|
)
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(2
|
)
|
|
0
|
|
|||||||
Total gains (losses) on hedged item
|
28
|
|
|
10
|
|
|
0
|
|
|
0
|
|
|
(318
|
)
|
|
(272
|
)
|
|
0
|
|
|||||||
Amortization for gains (losses) excluded from assessment of the effectiveness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(3
|
)
|
|||||||
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(3
|
)
|
|||||||
Total gains (losses) on fair value hedges net of hedged item
|
1
|
|
|
6
|
|
|
0
|
|
|
0
|
|
|
12
|
|
|
9
|
|
|
(3
|
)
|
|||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
8
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
44
|
|
|||||||
Currency
|
4
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
91
|
|
|||||||
Currency/Interest Rate
|
67
|
|
|
160
|
|
|
193
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1,531
|
|
|||||||
Total gains (losses) on cash flow hedges
|
79
|
|
|
160
|
|
|
193
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1,666
|
|
|||||||
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10
|
|
|||||||
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on net investment hedges
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10
|
|
|||||||
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
8,992
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency
|
230
|
|
|
0
|
|
|
(7
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency/Interest Rate
|
731
|
|
|
0
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Credit
|
(42
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Equity
|
216
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Other
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Embedded Derivatives
|
(12,593
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives not qualifying as hedge accounting instruments
|
(2,465
|
)
|
|
0
|
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total
|
$
|
(2,385
|
)
|
|
$
|
166
|
|
|
$
|
188
|
|
|
$
|
0
|
|
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
1,673
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||
|
Realized
Investment Gains (Losses) |
|
Net
Investment Income |
|
Other
Income (Loss) |
|
Interest
Expense |
|
Interest
Credited to Policyholders’ Account Balances |
|
Policyholders’ Benefits
|
|
AOCI(1)
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gains (losses) on derivatives designated as hedge instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
$
|
(9
|
)
|
|
$
|
(2
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
101
|
|
|
$
|
80
|
|
|
$
|
0
|
|
Currency
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives designated as hedge instruments
|
(7
|
)
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
101
|
|
|
80
|
|
|
0
|
|
|||||||
Gains (losses) on the hedged item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
9
|
|
|
5
|
|
|
0
|
|
|
0
|
|
|
(98
|
)
|
|
(73
|
)
|
|
0
|
|
|||||||
Currency
|
(1
|
)
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on hedged item
|
8
|
|
|
6
|
|
|
0
|
|
|
0
|
|
|
(98
|
)
|
|
(73
|
)
|
|
0
|
|
|||||||
Total gains (losses) on fair value hedges net of hedged item
|
1
|
|
|
4
|
|
|
0
|
|
|
0
|
|
|
3
|
|
|
7
|
|
|
0
|
|
|||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1
|
)
|
|||||||
Currency
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
14
|
|
|||||||
Currency/Interest Rate
|
47
|
|
|
69
|
|
|
40
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
229
|
|
|||||||
Total gains (losses) on cash flow hedges
|
48
|
|
|
69
|
|
|
40
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
242
|
|
|||||||
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||||
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on net investment hedges
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|||||||
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
2,346
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency
|
122
|
|
|
0
|
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency/Interest Rate
|
20
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Credit
|
36
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Equity
|
(617
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Other
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Embedded Derivatives
|
(2,368
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives not qualifying as hedge accounting instruments
|
(461
|
)
|
|
0
|
|
|
(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total
|
$
|
(412
|
)
|
|
$
|
73
|
|
|
$
|
35
|
|
|
$
|
0
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
243
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||
|
Realized
Investment Gains (Losses) |
|
Net
Investment Income |
|
Other
Income (Loss) |
|
Interest
Expense |
|
Interest
Credited to Policyholders’ Account Balances |
|
Policyholders’ Benefits
|
|
AOCI(1)
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gains (losses) on derivatives designated as hedge instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
$
|
(15
|
)
|
|
$
|
(4
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
168
|
|
|
$
|
131
|
|
|
$
|
0
|
|
Currency
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives designated as hedge instruments
|
(14
|
)
|
|
(4
|
)
|
|
0
|
|
|
0
|
|
|
168
|
|
|
131
|
|
|
0
|
|
|||||||
Gains (losses) on the hedged item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
11
|
|
|
11
|
|
|
0
|
|
|
0
|
|
|
(164
|
)
|
|
(119
|
)
|
|
0
|
|
|||||||
Currency
|
0
|
|
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on hedged item
|
11
|
|
|
13
|
|
|
0
|
|
|
0
|
|
|
(164
|
)
|
|
(119
|
)
|
|
0
|
|
|||||||
Total gains (losses) on fair value hedges net of hedged item
|
(3
|
)
|
|
9
|
|
|
0
|
|
|
0
|
|
|
4
|
|
|
12
|
|
|
0
|
|
|||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
22
|
|
|||||||
Currency
|
2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
5
|
|
|||||||
Currency/Interest Rate
|
40
|
|
|
137
|
|
|
(6
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
170
|
|
|||||||
Total gains (losses) on cash flow hedges
|
41
|
|
|
137
|
|
|
(6
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
197
|
|
|||||||
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Currency
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|||||||
Currency/Interest Rate
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on net investment hedges
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|||||||
Derivatives Not Qualifying as Hedge Accounting Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest Rate
|
3,734
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency
|
84
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Currency/Interest Rate
|
204
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Credit
|
104
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Equity
|
(2,427
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Other
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Embedded Derivatives
|
(3,180
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total gains (losses) on derivatives not qualifying as hedge accounting instruments
|
(1,481
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total
|
$
|
(1,443
|
)
|
|
$
|
146
|
|
|
$
|
(6
|
)
|
|
$
|
0
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
199
|
|
(1)
|
Net change in AOCI.
|
|
(in millions)
|
||
Balance, December 31, 2019
|
$
|
832
|
|
Amount recorded in AOCI
|
|
||
Interest Rate
|
52
|
|
|
Currency
|
95
|
|
|
Currency/Interest Rate
|
1,951
|
|
|
Total amount recorded in AOCI
|
2,098
|
|
|
Amount reclassified from AOCI to income
|
|
||
Interest Rate
|
(8
|
)
|
|
Currency
|
(4
|
)
|
|
Currency/Interest Rate
|
(420
|
)
|
|
Total amount reclassified from AOCI to income
|
(432
|
)
|
|
Balance, June 30, 2020
|
$
|
2,498
|
|
|
June 30, 2020
|
|||||||||||||||||||||||||||||||||||||||||
|
NAIC Rating Designation of Underlying Credit Obligation(1)
|
|||||||||||||||||||||||||||||||||||||||||
|
NAIC 1
|
NAIC 2
|
NAIC 3
|
NAIC 4
|
NAIC 5
|
NAIC 6
|
Total
|
|||||||||||||||||||||||||||||||||||
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
||||||||||||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||||||||||||||
Single name reference(2)
|
$
|
48
|
|
$
|
0
|
|
$
|
48
|
|
$
|
0
|
|
$
|
4
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
100
|
|
$
|
0
|
|
Index reference(2)
|
50
|
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1,940
|
|
13
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1,990
|
|
14
|
|
||||||||||||||
Total
|
$
|
98
|
|
$
|
1
|
|
$
|
48
|
|
$
|
0
|
|
$
|
4
|
|
$
|
0
|
|
$
|
1,940
|
|
$
|
13
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
2,090
|
|
$
|
14
|
|
|
December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||
|
NAIC Rating Designation of Underlying Credit Obligation(1)
|
|||||||||||||||||||||||||||||||||||||||||
|
NAIC 1
|
NAIC 2
|
NAIC 3
|
NAIC 4
|
NAIC 5
|
NAIC 6
|
Total
|
|||||||||||||||||||||||||||||||||||
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
Gross Notional
|
Fair Value
|
||||||||||||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||||||||||||||
Single name reference(2)
|
$
|
36
|
|
$
|
0
|
|
$
|
60
|
|
$
|
1
|
|
$
|
4
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
100
|
|
$
|
1
|
|
Index reference(2)
|
50
|
|
0
|
|
0
|
|
0
|
|
570
|
|
13
|
|
0
|
|
0
|
|
0
|
|
0
|
|
72
|
|
7
|
|
692
|
|
20
|
|
||||||||||||||
Total
|
$
|
86
|
|
$
|
0
|
|
$
|
60
|
|
$
|
1
|
|
$
|
574
|
|
$
|
13
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
72
|
|
$
|
7
|
|
$
|
792
|
|
$
|
21
|
|
(1)
|
The NAIC rating designations are based on availability and the lowest ratings among Moody's Investors Service, Inc. ("Moody's"), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, a NAIC 6 rating is used.
|
(2)
|
Single name credit default swaps may reference to the credit of corporate debt, sovereign debt, and structured finance. Index references NAIC designations are based on the lowest rated single name reference included in the index.
|
|
As of June 30, 2020
|
||||||||||||||||||
|
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
|
|
|
$
|
42,899
|
|
|
$
|
122
|
|
|
$
|
|
$
|
43,021
|
|
||
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
12,394
|
|
|
4
|
|
|
|
|
12,398
|
|
||||||
Foreign government bonds
|
0
|
|
|
116,749
|
|
|
21
|
|
|
|
|
116,770
|
|
||||||
U.S. corporate public securities
|
0
|
|
|
106,181
|
|
|
436
|
|
|
|
|
106,617
|
|
||||||
U.S. corporate private securities(2)
|
0
|
|
|
36,305
|
|
|
1,854
|
|
|
|
|
38,159
|
|
||||||
Foreign corporate public securities
|
0
|
|
|
29,033
|
|
|
85
|
|
|
|
|
29,118
|
|
||||||
Foreign corporate private securities
|
0
|
|
|
25,794
|
|
|
2,529
|
|
|
|
|
28,323
|
|
||||||
Asset-backed securities(3)
|
0
|
|
|
13,246
|
|
|
690
|
|
|
|
|
13,936
|
|
||||||
Commercial mortgage-backed securities
|
0
|
|
|
16,262
|
|
|
0
|
|
|
|
|
16,262
|
|
||||||
Residential mortgage-backed securities
|
0
|
|
|
3,229
|
|
|
111
|
|
|
|
|
3,340
|
|
||||||
Subtotal
|
0
|
|
|
402,092
|
|
|
5,852
|
|
|
|
|
407,944
|
|
||||||
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
0
|
|
|
208
|
|
|
0
|
|
|
|
|
208
|
|
||||||
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
229
|
|
|
0
|
|
|
|
|
229
|
|
||||||
Foreign government bonds
|
0
|
|
|
784
|
|
|
24
|
|
|
|
|
808
|
|
||||||
Corporate securities
|
0
|
|
|
13,566
|
|
|
624
|
|
|
|
|
14,190
|
|
||||||
Asset-backed securities(3)
|
0
|
|
|
1,673
|
|
|
99
|
|
|
|
|
1,772
|
|
||||||
Commercial mortgage-backed securities
|
0
|
|
|
1,921
|
|
|
0
|
|
|
|
|
1,921
|
|
||||||
Residential mortgage-backed securities
|
0
|
|
|
1,200
|
|
|
0
|
|
|
|
|
1,200
|
|
||||||
Equity securities
|
1,444
|
|
|
239
|
|
|
0
|
|
|
|
|
1,683
|
|
||||||
All other(4)
|
360
|
|
|
548
|
|
|
7
|
|
|
|
|
915
|
|
||||||
Subtotal
|
1,804
|
|
|
20,368
|
|
|
754
|
|
|
|
|
22,926
|
|
||||||
Fixed maturities, trading
|
0
|
|
|
3,697
|
|
|
236
|
|
|
|
|
3,933
|
|
||||||
Equity securities
|
5,249
|
|
|
1,030
|
|
|
594
|
|
|
|
|
6,873
|
|
||||||
Commercial mortgage and other loans
|
0
|
|
|
682
|
|
|
0
|
|
|
|
|
682
|
|
||||||
Other invested assets(5)
|
69
|
|
|
30,693
|
|
|
658
|
|
|
(29,119
|
)
|
|
2,301
|
|
|||||
Short-term investments
|
2,685
|
|
|
6,247
|
|
|
44
|
|
|
|
|
8,976
|
|
||||||
Cash equivalents
|
4,653
|
|
|
5,439
|
|
|
1
|
|
|
|
|
10,093
|
|
||||||
Other assets
|
0
|
|
|
0
|
|
|
377
|
|
|
|
|
377
|
|
||||||
Separate account assets(6)(7)
|
47,429
|
|
|
228,772
|
|
|
1,684
|
|
|
|
|
277,885
|
|
||||||
Total assets
|
$
|
61,889
|
|
|
$
|
699,020
|
|
|
$
|
10,200
|
|
|
$
|
(29,119
|
)
|
|
$
|
741,990
|
|
Future policy benefits(8)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
26,439
|
|
|
$
|
|
$
|
26,439
|
|
||
Policyholders’ account balances
|
0
|
|
|
0
|
|
|
1,441
|
|
|
|
|
1,441
|
|
||||||
Other liabilities
|
130
|
|
|
13,163
|
|
|
0
|
|
|
(13,001
|
)
|
|
292
|
|
|||||
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
741
|
|
|
|
|
741
|
|
||||||
Total liabilities
|
$
|
130
|
|
|
$
|
13,163
|
|
|
$
|
28,621
|
|
|
$
|
(13,001
|
)
|
|
$
|
28,913
|
|
|
As of December 31, 2019
|
||||||||||||||||||
|
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
|
|
|
$
|
35,554
|
|
|
$
|
105
|
|
|
$
|
|
$
|
35,659
|
|
||
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
11,493
|
|
|
4
|
|
|
|
|
11,497
|
|
||||||
Foreign government bonds
|
0
|
|
|
119,032
|
|
|
22
|
|
|
|
|
119,054
|
|
||||||
U.S. corporate public securities
|
0
|
|
|
97,959
|
|
|
380
|
|
|
|
|
98,339
|
|
||||||
U.S. corporate private securities(2)
|
0
|
|
|
34,749
|
|
|
1,784
|
|
|
|
|
36,533
|
|
||||||
Foreign corporate public securities
|
0
|
|
|
29,756
|
|
|
69
|
|
|
|
|
29,825
|
|
||||||
Foreign corporate private securities
|
0
|
|
|
27,237
|
|
|
1,003
|
|
|
|
|
28,240
|
|
||||||
Asset-backed securities(3)
|
0
|
|
|
12,238
|
|
|
936
|
|
|
|
|
13,174
|
|
||||||
Commercial mortgage-backed securities
|
0
|
|
|
15,574
|
|
|
0
|
|
|
|
|
15,574
|
|
||||||
Residential mortgage-backed securities
|
0
|
|
|
3,189
|
|
|
12
|
|
|
|
|
3,201
|
|
||||||
Subtotal
|
0
|
|
|
386,781
|
|
|
4,315
|
|
|
|
|
391,096
|
|
||||||
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury securities and obligations of U.S. government authorities and agencies
|
0
|
|
|
185
|
|
|
0
|
|
|
|
|
185
|
|
||||||
Obligations of U.S. states and their political subdivisions
|
0
|
|
|
212
|
|
|
0
|
|
|
|
|
212
|
|
||||||
Foreign government bonds
|
0
|
|
|
790
|
|
|
24
|
|
|
|
|
814
|
|
||||||
Corporate securities
|
0
|
|
|
12,966
|
|
|
637
|
|
|
|
|
13,603
|
|
||||||
Asset-backed securities(3)
|
0
|
|
|
1,593
|
|
|
69
|
|
|
|
|
1,662
|
|
||||||
Commercial mortgage-backed securities
|
0
|
|
|
1,896
|
|
|
0
|
|
|
|
|
1,896
|
|
||||||
Residential mortgage-backed securities
|
0
|
|
|
1,158
|
|
|
0
|
|
|
|
|
1,158
|
|
||||||
Equity securities
|
1,505
|
|
|
285
|
|
|
0
|
|
|
|
|
1,790
|
|
||||||
All other(4)
|
0
|
|
|
261
|
|
|
0
|
|
|
|
|
261
|
|
||||||
Subtotal
|
1,505
|
|
|
19,346
|
|
|
730
|
|
|
|
|
21,581
|
|
||||||
Fixed maturities, trading
|
0
|
|
|
3,597
|
|
|
287
|
|
|
|
|
3,884
|
|
||||||
Equity securities
|
5,813
|
|
|
939
|
|
|
633
|
|
|
|
|
7,385
|
|
||||||
Commercial mortgage and other loans
|
0
|
|
|
228
|
|
|
0
|
|
|
|
|
228
|
|
||||||
Other invested assets(5)
|
6
|
|
|
14,379
|
|
|
567
|
|
|
(13,519
|
)
|
|
1,433
|
|
|||||
Short-term investments
|
1,806
|
|
|
1,975
|
|
|
155
|
|
|
|
|
3,936
|
|
||||||
Cash equivalents
|
2,079
|
|
|
6,796
|
|
|
131
|
|
|
|
|
9,006
|
|
||||||
Other assets
|
0
|
|
|
0
|
|
|
113
|
|
|
|
|
113
|
|
||||||
Separate account assets(6)(7)
|
46,574
|
|
|
240,433
|
|
|
1,717
|
|
|
|
|
288,724
|
|
||||||
Total assets
|
$
|
57,783
|
|
|
$
|
674,474
|
|
|
$
|
8,648
|
|
|
$
|
(13,519
|
)
|
|
$
|
727,386
|
|
Future policy benefits(8)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
12,831
|
|
|
$
|
|
$
|
12,831
|
|
||
Policyholders’ account balances
|
0
|
|
|
0
|
|
|
1,316
|
|
|
|
|
1,316
|
|
||||||
Other liabilities
|
41
|
|
|
7,495
|
|
|
105
|
|
|
(6,705
|
)
|
|
936
|
|
|||||
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
800
|
|
|
|
|
800
|
|
||||||
Total liabilities
|
$
|
41
|
|
|
$
|
7,495
|
|
|
$
|
15,052
|
|
|
$
|
(6,705
|
)
|
|
$
|
15,883
|
|
(1)
|
“Netting” amounts represent cash collateral of $16,118 million and $6,814 million as of June 30, 2020 and December 31, 2019, respectively.
|
(2)
|
Excludes notes with fair value of $6,466 million (carrying amount of $6,466 million) and $4,757 million (carrying amount of $4,751 million) as of June 30, 2020 and December 31, 2019, 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)
|
All other represents cash equivalents and short-term investments.
|
(5)
|
Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of June 30, 2020 and December 31, 2019, the fair values of such investments were $3,979 million and $4,213 million respectively.
|
(6)
|
Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV 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. As of June 30, 2020 and December 31, 2019, the fair value of such investments was $23,117 million and $23,557 million, respectively.
|
(7)
|
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 Unaudited Interim Consolidated Statements of Financial Position.
|
(8)
|
As of June 30, 2020, the net embedded derivative liability position of $26.4 billion includes $0.3 billion of embedded derivatives in an asset position and $26.7 billion of embedded derivatives in a liability position. As of December 31, 2019, the net embedded derivative liability position of $12.8 billion includes $0.7 billion of embedded derivatives in an asset position and $13.5 billion of embedded derivatives in a liability position.
|
|
As of June 30, 2020
|
||||||||||||||
|
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)
|
$
|
3,382
|
|
|
Discounted
cash flow(4)
|
|
Discount rate
|
|
0.56%
|
|
30%
|
|
5.31%
|
|
Decrease
|
|
|
|
Market comparables
|
|
EBITDA multiples(3)
|
|
6.5X
|
|
15.0X
|
|
9.3X
|
|
Increase
|
||
|
|
|
Liquidation
|
|
Liquidation value
|
|
14.98%
|
|
92.79%
|
|
67.50%
|
|
Increase
|
||
Equity securities
|
$
|
185
|
|
|
Discounted cash flow(4)
|
|
Discount rate
|
|
10%
|
|
30%
|
|
|
|
Decrease
|
|
|
|
Market comparables
|
|
EBITDA multiples(3)
|
|
1X
|
|
9.0X
|
|
1.7X
|
|
Increase
|
||
|
|
|
Net Asset Value
|
|
Share price
|
|
$1
|
|
$1,414
|
|
$450
|
|
Increase
|
||
Separate account assets-commercial mortgage loans(5)
|
$
|
803
|
|
|
Discounted
cash flow
|
|
Spread
|
|
1.83%
|
|
3.18%
|
|
2.05%
|
|
Decrease
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Future policy benefits(6)
|
$
|
26,439
|
|
|
Discounted
cash flow
|
|
Lapse rate(8)
|
|
1%
|
|
20%
|
|
|
|
Decrease
|
|
|
|
|
|
Spread over LIBOR(9)
|
|
0.17%
|
|
1.69%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Utilization rate(10)
|
|
39%
|
|
96%
|
|
|
|
Increase
|
||
|
|
|
|
|
Withdrawal rate
|
|
See table footnote (11) below.
|
||||||||
|
|
|
|
|
Mortality rate(12)
|
|
0%
|
|
15%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Equity volatility curve
|
|
18%
|
|
29%
|
|
|
|
Increase
|
||
Policyholders’ account balances(7)
|
$
|
1,441
|
|
|
Discounted
cash flow
|
|
Lapse rate(8)
|
|
1%
|
|
42%
|
|
|
|
Decrease
|
|
|
|
|
|
Spread over LIBOR(9)
|
|
0.17%
|
|
1.69%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Mortality rate(12)
|
|
0%
|
|
24%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Equity volatility curve
|
|
6%
|
|
38%
|
|
|
|
Increase
|
|
As of December 31, 2019
|
||||||||||||||
|
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)
|
$
|
1,424
|
|
|
Discounted
cash flow(4)
|
|
Discount rate
|
|
0.49%
|
|
20%
|
|
7.41%
|
|
Decrease
|
|
|
|
Market comparables
|
|
EBITDA multiples(3)
|
|
5.7X
|
|
9.2X
|
|
7.3X
|
|
Increase
|
||
|
|
|
Liquidation
|
|
Liquidation value
|
|
14.25%
|
|
83.61%
|
|
59.47%
|
|
Increase
|
||
Equity securities
|
$
|
210
|
|
|
Discounted cash flow(4)
|
|
Discount rate
|
|
10%
|
|
30%
|
|
|
|
Decrease
|
|
|
|
Market comparables
|
|
EBITDA multiples(3)
|
|
1X
|
|
10.1X
|
|
5.4X
|
|
Increase
|
||
|
|
|
Net Asset Value
|
|
Share price
|
|
$5
|
|
$1,353
|
|
$451
|
|
Increase
|
||
Separate account assets-commercial mortgage loans(5)
|
$
|
796
|
|
|
Discounted
cash flow
|
|
Spread
|
|
1.11%
|
|
1.85%
|
|
1.26%
|
|
Decrease
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Future policy benefits(6)
|
$
|
12,831
|
|
|
Discounted
cash flow
|
|
Lapse rate(8)
|
|
1%
|
|
18%
|
|
|
|
Decrease
|
|
|
|
|
|
Spread over LIBOR(9)
|
|
0.10%
|
|
1.23%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Utilization rate(10)
|
|
43%
|
|
97%
|
|
|
|
Increase
|
||
|
|
|
|
|
Withdrawal rate
|
|
See table footnote (11) below.
|
||||||||
|
|
|
|
|
Mortality rate(12)
|
|
0%
|
|
15%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Equity volatility curve
|
|
13%
|
|
23%
|
|
|
|
Increase
|
||
Policyholders’ account balances(7)
|
$
|
1,316
|
|
|
Discounted
cash flow
|
|
Lapse rate(8)
|
|
1%
|
|
42%
|
|
|
|
Decrease
|
|
|
|
|
|
Spread over LIBOR(9)
|
|
0.10%
|
|
1.23%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Mortality rate(12)
|
|
0%
|
|
24%
|
|
|
|
Decrease
|
||
|
|
|
|
|
Equity volatility curve
|
|
6%
|
|
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, assets supporting experience-rated contractholder liabilities and fixed maturities trading.
|
(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)
|
These investments typically use a range of discount rates (10% to 20%), therefore presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.
|
(5)
|
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 Unaudited Interim Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Unaudited Interim Consolidated Statements of Operations.
|
(6)
|
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.
|
(7)
|
Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that 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.
|
(8)
|
Lapse rates for contracts with living benefit guarantees 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 for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these embedded derivatives.
|
(9)
|
The spread over the London Inter-Bank Offered Rate (“LIBOR”) swap curve represents the premium added to the proxy for the risk-free rate (LIBOR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees. 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 funding agreements, living benefit guarantees, and index-linked interest crediting guarantees are insurance liabilities and are therefore senior to debt.
|
(10)
|
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.
|
(11)
|
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 June 30, 2020 and December 31, 2019, the minimum withdrawal rate assumption is 76% and 78% respectively. As of June 30, 2020 and December 31, 2019, 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%.
|
(12)
|
The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 45 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age, and duration. A mortality improvement assumption is also incorporated into the overall mortality table.
|
|
Three Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other(1)
|
Transfers into
Level 3
|
Transfers out of Level 3
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(2)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
U.S. government
|
$
|
115
|
|
$
|
0
|
|
$
|
7
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
122
|
|
$
|
0
|
|
U.S. states
|
4
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
4
|
|
0
|
|
|||||||||||
Foreign government
|
21
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
(1
|
)
|
21
|
|
(1
|
)
|
|||||||||||
Corporate securities(3)
|
4,496
|
|
318
|
|
125
|
|
(5
|
)
|
0
|
|
(95
|
)
|
0
|
|
196
|
|
(131
|
)
|
4,904
|
|
316
|
|
|||||||||||
Structured securities(4)
|
948
|
|
4
|
|
73
|
|
0
|
|
0
|
|
(197
|
)
|
0
|
|
80
|
|
(107
|
)
|
801
|
|
11
|
|
|||||||||||
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Foreign government
|
24
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
24
|
|
0
|
|
|||||||||||
Corporate securities(3)
|
603
|
|
19
|
|
0
|
|
1
|
|
0
|
|
(20
|
)
|
0
|
|
29
|
|
(8
|
)
|
624
|
|
17
|
|
|||||||||||
Structured securities(4)
|
177
|
|
2
|
|
39
|
|
0
|
|
0
|
|
(6
|
)
|
0
|
|
0
|
|
(113
|
)
|
99
|
|
2
|
|
|||||||||||
Equity securities
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|||||||||||
All other activity
|
7
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
7
|
|
0
|
|
|||||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Fixed maturities, trading
|
249
|
|
(1
|
)
|
4
|
|
(26
|
)
|
0
|
|
0
|
|
10
|
|
0
|
|
0
|
|
236
|
|
(1
|
)
|
|||||||||||
Equity securities
|
594
|
|
(14
|
)
|
19
|
|
(5
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
594
|
|
(16
|
)
|
|||||||||||
Other invested assets
|
581
|
|
(4
|
)
|
54
|
|
0
|
|
4
|
|
(3
|
)
|
26
|
|
0
|
|
0
|
|
658
|
|
3
|
|
|||||||||||
Short-term investments
|
53
|
|
0
|
|
1
|
|
0
|
|
0
|
|
0
|
|
(10
|
)
|
0
|
|
0
|
|
44
|
|
0
|
|
|||||||||||
Cash equivalents
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
Other assets
|
382
|
|
(24
|
)
|
19
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
377
|
|
(22
|
)
|
|||||||||||
Separate account assets(5)
|
1,528
|
|
114
|
|
48
|
|
(8
|
)
|
0
|
|
(15
|
)
|
0
|
|
26
|
|
(9
|
)
|
1,684
|
|
112
|
|
|||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Future policy benefits
|
(27,935
|
)
|
1,820
|
|
0
|
|
0
|
|
(322
|
)
|
0
|
|
(2
|
)
|
0
|
|
0
|
|
(26,439
|
)
|
1,565
|
|
|||||||||||
Policyholders’ account balances(6)
|
(1,206
|
)
|
(134
|
)
|
0
|
|
0
|
|
(101
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
(1,441
|
)
|
(127
|
)
|
|||||||||||
Other liabilities
|
(47
|
)
|
47
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
47
|
|
|||||||||||
Notes issued by consolidated VIEs
|
(799
|
)
|
58
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(741
|
)
|
59
|
|
|
Six Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other(1)
|
Transfers into
Level 3
|
Transfers out of Level 3
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(2)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
U.S. government
|
$
|
105
|
|
$
|
0
|
|
$
|
17
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
122
|
|
$
|
0
|
|
U.S. states
|
4
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
4
|
|
0
|
|
|||||||||||
Foreign government
|
22
|
|
(1
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
(1
|
)
|
21
|
|
(1
|
)
|
|||||||||||
Corporate securities(3)
|
3,236
|
|
(182
|
)
|
419
|
|
(118
|
)
|
0
|
|
(330
|
)
|
1
|
|
2,023
|
|
(145
|
)
|
4,904
|
|
(175
|
)
|
|||||||||||
Structured securities(4)
|
948
|
|
(3
|
)
|
388
|
|
(17
|
)
|
0
|
|
(297
|
)
|
155
|
|
92
|
|
(465
|
)
|
801
|
|
(4
|
)
|
|||||||||||
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Foreign government
|
24
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
24
|
|
0
|
|
|||||||||||
Corporate securities(3)
|
637
|
|
(27
|
)
|
4
|
|
(9
|
)
|
0
|
|
(65
|
)
|
0
|
|
92
|
|
(8
|
)
|
624
|
|
(27
|
)
|
|||||||||||
Structured securities(4)
|
69
|
|
(2
|
)
|
155
|
|
0
|
|
0
|
|
(10
|
)
|
0
|
|
0
|
|
(113
|
)
|
99
|
|
2
|
|
|||||||||||
Equity securities
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|||||||||||
All other activity
|
0
|
|
0
|
|
7
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
7
|
|
0
|
|
|||||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Fixed maturities, trading
|
287
|
|
(16
|
)
|
22
|
|
(32
|
)
|
0
|
|
0
|
|
8
|
|
15
|
|
(48
|
)
|
236
|
|
(16
|
)
|
|||||||||||
Equity securities
|
633
|
|
(58
|
)
|
28
|
|
(10
|
)
|
0
|
|
0
|
|
1
|
|
0
|
|
0
|
|
594
|
|
(60
|
)
|
|||||||||||
Other invested assets
|
567
|
|
4
|
|
81
|
|
0
|
|
4
|
|
(4
|
)
|
6
|
|
0
|
|
0
|
|
658
|
|
5
|
|
|||||||||||
Short-term investments
|
155
|
|
2
|
|
44
|
|
0
|
|
0
|
|
(110
|
)
|
(47
|
)
|
0
|
|
0
|
|
44
|
|
0
|
|
|||||||||||
Cash equivalents
|
131
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(130
|
)
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
Other assets
|
113
|
|
228
|
|
36
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
377
|
|
229
|
|
|||||||||||
Separate account assets(5)
|
1,717
|
|
(26
|
)
|
104
|
|
(21
|
)
|
0
|
|
(33
|
)
|
0
|
|
33
|
|
(90
|
)
|
1,684
|
|
(17
|
)
|
|||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Future policy benefits
|
(12,831
|
)
|
(12,969
|
)
|
0
|
|
0
|
|
(641
|
)
|
0
|
|
2
|
|
0
|
|
0
|
|
(26,439
|
)
|
(13,183
|
)
|
|||||||||||
Policyholders’ account balances(6)
|
(1,316
|
)
|
72
|
|
0
|
|
0
|
|
(197
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
(1,441
|
)
|
63
|
|
|||||||||||
Other liabilities
|
(105
|
)
|
105
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
104
|
|
|||||||||||
Notes issued by consolidated VIEs
|
(800
|
)
|
59
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(741
|
)
|
59
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other(1)
|
Transfers into
Level 3
|
Transfers out of Level 3
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(2)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
U.S. government
|
$
|
88
|
|
$
|
0
|
|
$
|
6
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
94
|
|
$
|
0
|
|
U.S. states
|
4
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
4
|
|
0
|
|
|||||||||||
Foreign government
|
138
|
|
(1
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
(2
|
)
|
0
|
|
(111
|
)
|
24
|
|
0
|
|
|||||||||||
Corporate securities(3)
|
2,757
|
|
6
|
|
288
|
|
(17
|
)
|
0
|
|
(225
|
)
|
1
|
|
19
|
|
(37
|
)
|
2,792
|
|
(5
|
)
|
|||||||||||
Structured securities(4)
|
1,915
|
|
8
|
|
113
|
|
(47
|
)
|
0
|
|
(101
|
)
|
9
|
|
17
|
|
(1,053
|
)
|
861
|
|
0
|
|
|||||||||||
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Foreign government
|
29
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(3
|
)
|
0
|
|
0
|
|
0
|
|
26
|
|
0
|
|
|||||||||||
Corporate securities(3)
|
592
|
|
5
|
|
14
|
|
0
|
|
0
|
|
(67
|
)
|
0
|
|
10
|
|
(1
|
)
|
553
|
|
11
|
|
|||||||||||
Structured securities(4)
|
60
|
|
1
|
|
0
|
|
0
|
|
0
|
|
(4
|
)
|
0
|
|
0
|
|
0
|
|
57
|
|
1
|
|
|||||||||||
Equity securities
|
1
|
|
1
|
|
0
|
|
(1
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
All other activity
|
0
|
|
0
|
|
3
|
|
0
|
|
0
|
|
(2
|
)
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Fixed maturities, trading
|
240
|
|
(7
|
)
|
36
|
|
(13
|
)
|
0
|
|
0
|
|
1
|
|
39
|
|
0
|
|
296
|
|
(7
|
)
|
|||||||||||
Equity securities
|
674
|
|
16
|
|
23
|
|
(13
|
)
|
0
|
|
(59
|
)
|
6
|
|
1
|
|
(24
|
)
|
624
|
|
15
|
|
|||||||||||
Other invested assets
|
373
|
|
0
|
|
61
|
|
0
|
|
0
|
|
0
|
|
2
|
|
0
|
|
0
|
|
436
|
|
0
|
|
|||||||||||
Short-term investments
|
168
|
|
0
|
|
273
|
|
0
|
|
0
|
|
(153
|
)
|
0
|
|
0
|
|
0
|
|
288
|
|
0
|
|
|||||||||||
Cash equivalents
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
Other assets
|
48
|
|
42
|
|
8
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
98
|
|
41
|
|
|||||||||||
Separate account assets(5)
|
1,635
|
|
44
|
|
139
|
|
(6
|
)
|
0
|
|
(27
|
)
|
0
|
|
0
|
|
(77
|
)
|
1,708
|
|
41
|
|
|||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Future policy benefits
|
(10,025
|
)
|
(2,400
|
)
|
0
|
|
0
|
|
(298
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
(12,723
|
)
|
(2,503
|
)
|
|||||||||||
Policyholders’ account balances(6)
|
(146
|
)
|
(828
|
)
|
0
|
|
0
|
|
(73
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
(1,047
|
)
|
(821
|
)
|
|||||||||||
Other liabilities
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|||||||||||
Notes issued by consolidated VIEs
|
(817
|
)
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(816
|
)
|
1
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other(1)
|
Transfers into
Level 3
|
Transfers out of Level 3
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(2)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
U.S. government
|
$
|
81
|
|
$
|
0
|
|
$
|
13
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
94
|
|
$
|
0
|
|
U.S. states
|
5
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(1
|
)
|
0
|
|
0
|
|
0
|
|
4
|
|
0
|
|
|||||||||||
Foreign government
|
125
|
|
2
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(1
|
)
|
9
|
|
(111
|
)
|
24
|
|
0
|
|
|||||||||||
Corporate securities(3)
|
2,685
|
|
10
|
|
607
|
|
(29
|
)
|
0
|
|
(604
|
)
|
(1
|
)
|
183
|
|
(59
|
)
|
2,792
|
|
(26
|
)
|
|||||||||||
Structured securities(4)
|
1,339
|
|
25
|
|
431
|
|
(47
|
)
|
0
|
|
(332
|
)
|
7
|
|
750
|
|
(1,312
|
)
|
861
|
|
0
|
|
|||||||||||
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Foreign government
|
225
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(3
|
)
|
(196
|
)
|
0
|
|
0
|
|
26
|
|
0
|
|
|||||||||||
Corporate securities(3)
|
444
|
|
10
|
|
41
|
|
0
|
|
0
|
|
(143
|
)
|
196
|
|
10
|
|
(5
|
)
|
553
|
|
6
|
|
|||||||||||
Structured securities(4)
|
149
|
|
1
|
|
6
|
|
0
|
|
0
|
|
(25
|
)
|
0
|
|
0
|
|
(74
|
)
|
57
|
|
1
|
|
|||||||||||
Equity securities
|
1
|
|
1
|
|
0
|
|
(1
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
1
|
|
|||||||||||
All other activity
|
0
|
|
0
|
|
3
|
|
0
|
|
0
|
|
(2
|
)
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Fixed maturities, trading
|
206
|
|
(11
|
)
|
74
|
|
(14
|
)
|
0
|
|
0
|
|
3
|
|
39
|
|
(1
|
)
|
296
|
|
(7
|
)
|
|||||||||||
Equity securities
|
671
|
|
24
|
|
46
|
|
(24
|
)
|
0
|
|
(74
|
)
|
4
|
|
1
|
|
(24
|
)
|
624
|
|
22
|
|
|||||||||||
Other invested assets
|
263
|
|
(1
|
)
|
218
|
|
0
|
|
0
|
|
(42
|
)
|
(2
|
)
|
0
|
|
0
|
|
436
|
|
(1
|
)
|
|||||||||||
Short-term investments
|
89
|
|
0
|
|
426
|
|
0
|
|
0
|
|
(227
|
)
|
0
|
|
0
|
|
0
|
|
288
|
|
0
|
|
|||||||||||
Cash equivalents
|
77
|
|
0
|
|
1
|
|
0
|
|
0
|
|
(77
|
)
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|||||||||||
Other assets
|
25
|
|
56
|
|
17
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
98
|
|
55
|
|
|||||||||||
Separate account assets(5)
|
1,534
|
|
125
|
|
228
|
|
(17
|
)
|
0
|
|
(50
|
)
|
0
|
|
0
|
|
(112
|
)
|
1,708
|
|
115
|
|
|||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Future policy benefits
|
(8,926
|
)
|
(3,210
|
)
|
0
|
|
0
|
|
(588
|
)
|
0
|
|
1
|
|
0
|
|
0
|
|
(12,723
|
)
|
(3,364
|
)
|
|||||||||||
Policyholders’ account balances(6)
|
(56
|
)
|
(879
|
)
|
0
|
|
0
|
|
(109
|
)
|
0
|
|
(3
|
)
|
0
|
|
0
|
|
(1,047
|
)
|
(872
|
)
|
|||||||||||
Other liabilities
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|||||||||||
Notes issued by consolidated VIEs
|
(595
|
)
|
(1
|
)
|
0
|
|
0
|
|
(858
|
)
|
638
|
|
0
|
|
0
|
|
0
|
|
(816
|
)
|
(1
|
)
|
(1)
|
“Other,” for the periods ended June 30, 2020 and June 30, 2019, primarily represent deconsolidation of VIE, reclassifications of certain assets between reporting categories and foreign currency translation.
|
(2)
|
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.
|
(3)
|
Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.
|
(4)
|
Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.
|
(5)
|
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 Unaudited Interim Consolidated Statements of Financial Position.
|
(6)
|
Issuances and settlements for Policyholders’ account balances are presented net in the rollforward.
|
(7)
|
Effective January 1, 2020, the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period were added prospectively due to adoption of ASU 2018-13. Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.
|
|
As of June 30, 2020
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Derivative Assets:
|
|
|
|
||||||||||||||||
Interest Rate
|
$
|
6
|
|
|
$
|
25,383
|
|
|
$
|
1
|
|
|
$
|
|
$
|
25,390
|
|
||
Currency
|
0
|
|
|
381
|
|
|
0
|
|
|
|
|
381
|
|
||||||
Credit
|
0
|
|
|
20
|
|
|
0
|
|
|
|
|
20
|
|
||||||
Currency/Interest Rate
|
0
|
|
|
4,292
|
|
|
0
|
|
|
|
|
4,292
|
|
||||||
Equity
|
63
|
|
|
617
|
|
|
0
|
|
|
|
|
680
|
|
||||||
Other
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
Netting(1)
|
|
|
|
|
|
|
(29,119
|
)
|
|
(29,119
|
)
|
||||||||
Total derivative assets
|
$
|
69
|
|
|
$
|
30,693
|
|
|
$
|
1
|
|
|
$
|
(29,119
|
)
|
|
$
|
1,644
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Rate
|
$
|
44
|
|
|
$
|
11,524
|
|
|
$
|
0
|
|
|
$
|
|
$
|
11,568
|
|
||
Currency
|
0
|
|
|
247
|
|
|
0
|
|
|
|
|
247
|
|
||||||
Credit
|
0
|
|
|
17
|
|
|
0
|
|
|
|
|
17
|
|
||||||
Currency/Interest Rate
|
0
|
|
|
396
|
|
|
0
|
|
|
|
|
396
|
|
||||||
Equity
|
84
|
|
|
1,373
|
|
|
0
|
|
|
|
|
1,457
|
|
||||||
Other
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
Netting(1)
|
|
|
|
|
|
|
(13,001
|
)
|
|
(13,001
|
)
|
||||||||
Total derivative liabilities
|
$
|
128
|
|
|
$
|
13,557
|
|
|
$
|
0
|
|
|
$
|
(13,001
|
)
|
|
$
|
684
|
|
|
As of December 31, 2019
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting(1)
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Derivative Assets:
|
|
|
|
||||||||||||||||
Interest Rate
|
$
|
4
|
|
|
$
|
11,238
|
|
|
$
|
1
|
|
|
$
|
|
$
|
11,243
|
|
||
Currency
|
0
|
|
|
230
|
|
|
0
|
|
|
|
|
230
|
|
||||||
Credit
|
0
|
|
|
21
|
|
|
0
|
|
|
|
|
21
|
|
||||||
Currency/Interest Rate
|
0
|
|
|
2,207
|
|
|
0
|
|
|
|
|
2,207
|
|
||||||
Equity
|
2
|
|
|
683
|
|
|
0
|
|
|
|
|
685
|
|
||||||
Other
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
Netting(1)
|
|
|
|
|
|
|
|
|
|
(13,519
|
)
|
|
(13,519
|
)
|
|||||
Total derivative assets
|
$
|
6
|
|
|
$
|
14,379
|
|
|
$
|
1
|
|
|
$
|
(13,519
|
)
|
|
$
|
867
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Rate
|
$
|
38
|
|
|
$
|
5,176
|
|
|
$
|
0
|
|
|
$
|
|
$
|
5,214
|
|
||
Currency
|
0
|
|
|
271
|
|
|
0
|
|
|
|
|
271
|
|
||||||
Credit
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
Currency/Interest Rate
|
0
|
|
|
647
|
|
|
0
|
|
|
|
|
647
|
|
||||||
Equity
|
3
|
|
|
1,401
|
|
|
0
|
|
|
|
|
1,404
|
|
||||||
Other
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
0
|
|
||||||
Netting(1)
|
|
|
|
|
|
|
|
|
|
(6,705
|
)
|
|
(6,705
|
)
|
|||||
Total derivative liabilities
|
$
|
41
|
|
|
$
|
7,495
|
|
|
$
|
0
|
|
|
$
|
(6,705
|
)
|
|
$
|
831
|
|
(1)
|
“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreement.
|
|
Three Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)(1)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other
|
Transfers into
Level 3(2) |
Transfers out of Level 3(2)
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(1)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Net Derivative - Equity
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Net Derivative - Interest Rate
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|
Six Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)(1)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other
|
Transfers into
Level 3(2) |
Transfers out of Level 3(2)
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(1)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Net Derivative - Equity
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Net Derivative - Interest Rate
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)(1)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other
|
Transfers into
Level 3(2) |
Transfers out of Level 3(2)
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(1)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Net Derivative - Equity
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Net Derivative - Interest Rate
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
0
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||
|
Fair Value, beginning of period
|
Total realized and unrealized gains (losses)(1)
|
Purchases
|
Sales
|
Issuances
|
Settlements
|
Other
|
Transfers into
Level 3(2) |
Transfers out of Level 3(2)
|
Fair Value, end of period
|
Unrealized gains (losses) for assets still held(1)
|
||||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||
Net Derivative - Equity
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Net Derivative - Interest Rate
|
2
|
|
(1
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1
|
|
(1
|
)
|
(1)
|
Total realized and unrealized gains (losses) as well as unrealized gains (losses) for assets still held at the end of the period are recorded in “Realized investment gains (losses), net.”
|
(2)
|
Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Carrying value after measurement as of period end:
|
|
|
|
||||
Commercial mortgage loans(1)
|
$
|
11
|
|
|
$
|
15
|
|
Mortgage servicing rights(2)
|
$
|
280
|
|
|
$
|
87
|
|
(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 including a liquidity and risk premium. This estimate includes available relevant data from any active market sales of mortgage servicing rights.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Notes issued by consolidated VIEs:
|
|
|
|
|
|
|
|
||||||||
Changes in fair value
|
$
|
(59
|
)
|
|
$
|
(1
|
)
|
|
$
|
(59
|
)
|
|
$
|
1
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Commercial mortgage and other loans:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
11
|
|
Notes issued by consolidated VIEs:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
$
|
11
|
|
|
$
|
13
|
|
|
$
|
22
|
|
|
$
|
22
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Commercial mortgage and other loans(1):
|
|
|
|
||||
Fair value as of period end
|
$
|
682
|
|
|
$
|
228
|
|
Aggregate contractual principal as of period end
|
$
|
670
|
|
|
$
|
224
|
|
Other assets:
|
|
|
|
||||
Fair value as of period end
|
$
|
10
|
|
|
$
|
10
|
|
Notes issued by consolidated VIEs:
|
|
|
|
||||
Fair value as of period end
|
$
|
741
|
|
|
$
|
800
|
|
Aggregate contractual principal as of period end
|
$
|
857
|
|
|
$
|
857
|
|
(1)
|
As of June 30, 2020, 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.
|
|
June 30, 2020
|
||||||||||||||||||
|
Fair Value
|
|
Carrying
Amount(1)
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities, held-to-maturity(2)
|
$
|
0
|
|
|
$
|
2,146
|
|
|
$
|
85
|
|
|
$
|
2,231
|
|
|
$
|
1,875
|
|
Assets supporting experience-rated contractholder liabilities
|
219
|
|
|
100
|
|
|
0
|
|
|
319
|
|
|
319
|
|
|||||
Commercial mortgage and other loans
|
0
|
|
|
108
|
|
|
65,666
|
|
|
65,774
|
|
|
62,787
|
|
|||||
Policy loans
|
0
|
|
|
0
|
|
|
12,283
|
|
|
12,283
|
|
|
12,283
|
|
|||||
Other invested assets
|
0
|
|
|
200
|
|
|
0
|
|
|
200
|
|
|
200
|
|
|||||
Short-term investments
|
2,351
|
|
|
89
|
|
|
0
|
|
|
2,440
|
|
|
2,440
|
|
|||||
Cash and cash equivalents
|
8,785
|
|
|
2,271
|
|
|
0
|
|
|
11,056
|
|
|
11,056
|
|
|||||
Accrued investment income
|
0
|
|
|
3,296
|
|
|
0
|
|
|
3,296
|
|
|
3,296
|
|
|||||
Other assets
|
148
|
|
|
2,548
|
|
|
276
|
|
|
2,972
|
|
|
2,971
|
|
|||||
Total assets
|
$
|
11,503
|
|
|
$
|
10,758
|
|
|
$
|
78,310
|
|
|
$
|
100,571
|
|
|
$
|
97,227
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholders’ account balances—investment contracts
|
$
|
0
|
|
|
$
|
37,374
|
|
|
$
|
71,832
|
|
|
$
|
109,206
|
|
|
$
|
106,501
|
|
Securities sold under agreements to repurchase
|
0
|
|
|
10,488
|
|
|
0
|
|
|
10,488
|
|
|
10,488
|
|
|||||
Cash collateral for loaned securities
|
0
|
|
|
3,447
|
|
|
0
|
|
|
3,447
|
|
|
3,447
|
|
|||||
Short-term debt
|
0
|
|
|
1,036
|
|
|
102
|
|
|
1,138
|
|
|
1,130
|
|
|||||
Long-term debt(3)
|
1,900
|
|
|
19,884
|
|
|
1,206
|
|
|
22,990
|
|
|
20,162
|
|
|||||
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
456
|
|
|
456
|
|
|
456
|
|
|||||
Other liabilities
|
0
|
|
|
7,546
|
|
|
48
|
|
|
7,594
|
|
|
7,594
|
|
|||||
Separate account liabilities—investment contracts
|
0
|
|
|
77,492
|
|
|
23,687
|
|
|
101,179
|
|
|
101,179
|
|
|||||
Total liabilities
|
$
|
1,900
|
|
|
$
|
157,267
|
|
|
$
|
97,331
|
|
|
$
|
256,498
|
|
|
$
|
250,957
|
|
|
December 31, 2019
|
||||||||||||||||||
|
Fair Value
|
|
Carrying
Amount(1)
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities, held-to-maturity(2)
|
$
|
0
|
|
|
$
|
2,217
|
|
|
$
|
85
|
|
|
$
|
2,302
|
|
|
$
|
1,933
|
|
Assets supporting experience-rated contractholder liabilities
|
16
|
|
|
0
|
|
|
0
|
|
|
16
|
|
|
16
|
|
|||||
Commercial mortgage and other loans
|
0
|
|
|
107
|
|
|
65,558
|
|
|
65,665
|
|
|
63,331
|
|
|||||
Policy loans
|
0
|
|
|
0
|
|
|
12,096
|
|
|
12,096
|
|
|
12,096
|
|
|||||
Other invested assets
|
0
|
|
|
36
|
|
|
0
|
|
|
36
|
|
|
36
|
|
|||||
Short-term investments
|
1,492
|
|
|
39
|
|
|
0
|
|
|
1,531
|
|
|
1,531
|
|
|||||
Cash and cash equivalents
|
6,278
|
|
|
1,043
|
|
|
0
|
|
|
7,321
|
|
|
7,321
|
|
|||||
Accrued investment income
|
0
|
|
|
3,330
|
|
|
0
|
|
|
3,330
|
|
|
3,330
|
|
|||||
Other assets
|
147
|
|
|
2,526
|
|
|
643
|
|
|
3,316
|
|
|
3,315
|
|
|||||
Total assets
|
$
|
7,933
|
|
|
$
|
9,298
|
|
|
$
|
78,382
|
|
|
$
|
95,613
|
|
|
$
|
92,909
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholders’ account balances—investment contracts
|
$
|
0
|
|
|
$
|
32,940
|
|
|
$
|
69,216
|
|
|
$
|
102,156
|
|
|
$
|
101,241
|
|
Securities sold under agreements to repurchase
|
0
|
|
|
9,681
|
|
|
0
|
|
|
9,681
|
|
|
9,681
|
|
|||||
Cash collateral for loaned securities
|
0
|
|
|
4,213
|
|
|
0
|
|
|
4,213
|
|
|
4,213
|
|
|||||
Short-term debt
|
0
|
|
|
1,748
|
|
|
205
|
|
|
1,953
|
|
|
1,933
|
|
|||||
Long-term debt(3)
|
1,950
|
|
|
18,188
|
|
|
1,186
|
|
|
21,324
|
|
|
18,646
|
|
|||||
Notes issued by consolidated VIEs
|
0
|
|
|
0
|
|
|
474
|
|
|
474
|
|
|
474
|
|
|||||
Other liabilities
|
0
|
|
|
6,403
|
|
|
579
|
|
|
6,982
|
|
|
6,982
|
|
|||||
Separate account liabilities—investment contracts
|
0
|
|
|
77,134
|
|
|
24,407
|
|
|
101,541
|
|
|
101,541
|
|
|||||
Total liabilities
|
$
|
1,950
|
|
|
$
|
150,307
|
|
|
$
|
96,067
|
|
|
$
|
248,324
|
|
|
$
|
244,711
|
|
(1)
|
Carrying values presented herein differ from those in the Company’s Unaudited Interim Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or are out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.
|
(2)
|
Excludes notes with fair value of $5,603 million (carrying amount of $4,998 million) and $5,401 million (carrying amount of $4,998 million) as of June 30, 2020 and December 31, 2019, respectively, which have been offset with the associated payables under a netting agreement.
|
(3)
|
Includes notes with fair value of $12,069 million (carrying amount of $11,464 million) and $10,158 million (carrying amount of $9,749 million) as of June 30, 2020 and December 31, 2019, respectively, which have been offset with the associated receivables under a netting agreement.
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
|
(in millions)
|
||||||
Closed Block liabilities
|
|
|
|
|
||||
Future policy benefits
|
|
$
|
47,142
|
|
|
$
|
47,613
|
|
Policyholders’ dividends payable
|
|
728
|
|
|
717
|
|
||
Policyholders’ dividend obligation
|
|
7,755
|
|
|
6,149
|
|
||
Policyholders’ account balances
|
|
4,914
|
|
|
4,973
|
|
||
Other Closed Block liabilities
|
|
3,322
|
|
|
4,049
|
|
||
Total Closed Block liabilities
|
|
63,861
|
|
|
63,501
|
|
||
Closed Block assets
|
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value
|
|
42,058
|
|
|
41,146
|
|
||
Fixed maturities, trading, at fair value
|
|
239
|
|
|
256
|
|
||
Equity securities, at fair value
|
|
2,047
|
|
|
2,245
|
|
||
Commercial mortgage and other loans
|
|
8,388
|
|
|
8,629
|
|
||
Policy loans
|
|
4,158
|
|
|
4,264
|
|
||
Other invested assets
|
|
3,259
|
|
|
3,333
|
|
||
Short-term investments
|
|
95
|
|
|
227
|
|
||
Total investments
|
|
60,244
|
|
|
60,100
|
|
||
Cash and cash equivalents
|
|
462
|
|
|
191
|
|
||
Accrued investment income
|
|
436
|
|
|
456
|
|
||
Other Closed Block assets
|
|
86
|
|
|
93
|
|
||
Total Closed Block assets
|
|
61,228
|
|
|
60,840
|
|
||
Excess of reported Closed Block liabilities over Closed Block assets
|
|
2,633
|
|
|
2,661
|
|
||
Portion of above representing accumulated other comprehensive income (loss):
|
|
|
|
|
||||
Net unrealized investment gains (losses)
|
|
5,250
|
|
|
3,280
|
|
||
Allocated to policyholder dividend obligation
|
|
(5,305
|
)
|
|
(3,332
|
)
|
||
Future earnings to be recognized from Closed Block assets and Closed Block liabilities
|
|
$
|
2,578
|
|
|
$
|
2,609
|
|
|
|
Six Months Ended
June 30, 2020 |
||
|
|
(in millions)
|
||
Balance, December 31, 2019
|
|
$
|
6,149
|
|
Cumulative effect adjustment from the adoption of ASU 2016-13(1)
|
|
(13
|
)
|
|
Impact from earnings allocable to policyholder dividend obligation
|
|
(353
|
)
|
|
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation
|
|
1,972
|
|
|
Balance, June 30, 2020
|
|
$
|
7,755
|
|
(1)
|
See Note 2 for more information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Premiums
|
$
|
519
|
|
|
$
|
581
|
|
|
$
|
999
|
|
|
$
|
1,108
|
|
Net investment income
|
515
|
|
|
576
|
|
|
1,063
|
|
|
1,141
|
|
||||
Realized investment gains (losses), net
|
(8
|
)
|
|
49
|
|
|
248
|
|
|
105
|
|
||||
Other income (loss)
|
318
|
|
|
97
|
|
|
(285
|
)
|
|
325
|
|
||||
Total Closed Block revenues
|
1,344
|
|
|
1,303
|
|
|
2,025
|
|
|
2,679
|
|
||||
Benefits and Expenses
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
725
|
|
|
780
|
|
|
1,372
|
|
|
1,489
|
|
||||
Interest credited to policyholders’ account balances
|
32
|
|
|
32
|
|
|
64
|
|
|
64
|
|
||||
Dividends to policyholders
|
517
|
|
|
415
|
|
|
423
|
|
|
968
|
|
||||
General and administrative expenses
|
82
|
|
|
89
|
|
|
167
|
|
|
178
|
|
||||
Total Closed Block benefits and expenses
|
1,356
|
|
|
1,316
|
|
|
2,026
|
|
|
2,699
|
|
||||
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes
|
(12
|
)
|
|
(13
|
)
|
|
(1
|
)
|
|
(20
|
)
|
||||
Income tax expense (benefit)
|
(28
|
)
|
|
(29
|
)
|
|
(34
|
)
|
|
(53
|
)
|
||||
Closed Block revenues, net of Closed Block benefits and expenses and income taxes
|
$
|
16
|
|
|
$
|
16
|
|
|
$
|
33
|
|
|
$
|
33
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
($ in millions)
|
||||||
Commercial paper:
|
|
|
|
||||
Prudential Financial
|
$
|
25
|
|
|
$
|
25
|
|
Prudential Funding, LLC
|
475
|
|
|
524
|
|
||
Subtotal commercial paper
|
500
|
|
|
549
|
|
||
Current portion of long-term debt:
|
|
|
|
||||
Senior Notes
|
528
|
|
|
1,179
|
|
||
Mortgage Debt
|
95
|
|
|
192
|
|
||
Surplus notes subject to set-off arrangements (1)
|
250
|
|
|
0
|
|
||
Subtotal current portion of long-term debt
|
873
|
|
|
1,371
|
|
||
Other(2)
|
7
|
|
|
13
|
|
||
Subtotal
|
1,380
|
|
|
1,933
|
|
||
Less: assets under set-off arrangements(1)
|
250
|
|
|
0
|
|
||
Total short-term debt(3)
|
$
|
1,130
|
|
|
$
|
1,933
|
|
Supplemental short-term debt information:
|
|
|
|
||||
Portion of commercial paper borrowings due overnight
|
$
|
240
|
|
|
$
|
224
|
|
Daily average commercial paper outstanding for the quarter ended
|
$
|
1,869
|
|
|
$
|
1,702
|
|
Weighted average maturity of outstanding commercial paper, in days
|
14
|
|
|
6
|
|
||
Weighted average interest rate on outstanding commercial paper
|
0.13
|
%
|
|
1.61
|
%
|
(1)
|
The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes.
|
(2)
|
Includes $7 million drawn on a revolving line of credit held by a subsidiary at June 30, 2020.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Fixed-rate obligations:
|
|
|
|
||||
Surplus notes
|
$
|
343
|
|
|
$
|
342
|
|
Surplus notes subject to set-off arrangements(1)
|
8,884
|
|
|
7,484
|
|
||
Senior notes
|
11,575
|
|
|
10,084
|
|
||
Mortgage debt(2)
|
100
|
|
|
104
|
|
||
Floating-rate obligations:
|
|
|
|
||||
Line of credit
|
300
|
|
|
300
|
|
||
Surplus notes subject to set-off arrangements(1)
|
2,330
|
|
|
2,265
|
|
||
Mortgage debt(3)
|
264
|
|
|
241
|
|
||
Junior subordinated notes(4)
|
7,580
|
|
|
7,575
|
|
||
Subtotal
|
31,376
|
|
|
28,395
|
|
||
Less: assets under set-off arrangements(1)
|
11,214
|
|
|
9,749
|
|
||
Total long-term debt(5)
|
$
|
20,162
|
|
|
$
|
18,646
|
|
(1)
|
The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes included in long-term debt.
|
(2)
|
Includes $40 million and $43 million of debt denominated in foreign currency at June 30, 2020 and December 31, 2019, respectively.
|
(3)
|
Includes $50 million and $53 million of debt denominated in foreign currency at June 30, 2020 and December 31, 2019, respectively.
|
(4)
|
Includes Prudential Financial debt of $7,522 million and $7,518 million at June 30, 2020 and December 31, 2019, respectively. Also includes subsidiary debt of $58 million and $57 million denominated in foreign currency at June 30, 2020 and December 31, 2019, respectively.
|
(5)
|
Includes Prudential Financial debt of $18,925 million and $17,430 million at June 30, 2020 and December 31, 2019, respectively.
|
|
Three Months Ended June 30,
|
||||||||||||||
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Components of net periodic (benefit) cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
81
|
|
|
$
|
72
|
|
|
$
|
6
|
|
|
$
|
5
|
|
Interest cost
|
107
|
|
|
123
|
|
|
16
|
|
|
20
|
|
||||
Expected return on plan assets
|
(202
|
)
|
|
(204
|
)
|
|
(25
|
)
|
|
(23
|
)
|
||||
Amortization of prior service cost
|
(1
|
)
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
||||
Amortization of actuarial (gain) loss, net
|
66
|
|
|
54
|
|
|
4
|
|
|
6
|
|
||||
Settlements
|
4
|
|
|
48
|
|
|
0
|
|
|
0
|
|
||||
Special termination benefits(1)(2)
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
||||
Net periodic (benefit) cost
|
$
|
55
|
|
|
$
|
93
|
|
|
$
|
2
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
||||||||
|
Six Months Ended June 30,
|
||||||||||||||
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Components of net periodic (benefit) cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
161
|
|
|
$
|
145
|
|
|
$
|
12
|
|
|
$
|
11
|
|
Interest cost
|
215
|
|
|
246
|
|
|
32
|
|
|
39
|
|
||||
Expected return on plan assets
|
(403
|
)
|
|
(408
|
)
|
|
(50
|
)
|
|
(47
|
)
|
||||
Amortization of prior service cost
|
(2
|
)
|
|
(2
|
)
|
|
3
|
|
|
2
|
|
||||
Amortization of actuarial (gain) loss, net
|
131
|
|
|
108
|
|
|
8
|
|
|
12
|
|
||||
Settlements
|
4
|
|
|
48
|
|
|
0
|
|
|
0
|
|
||||
Special termination benefits(1)(2)
|
2
|
|
|
1
|
|
|
0
|
|
|
0
|
|
||||
Net periodic (benefit) cost
|
$
|
108
|
|
|
$
|
138
|
|
|
$
|
5
|
|
|
$
|
17
|
|
(1)
|
For 2020 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 or participation in the Voluntary Separation Program that was offered to eligible U.S.-based employees in 2019.
|
(2)
|
For 2019 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.
|
|
Common Stock
|
|||||||
|
Issued
|
|
Held In
Treasury
|
|
Outstanding
|
|||
|
(in millions)
|
|||||||
Balance, December 31, 2019
|
666.3
|
|
|
267.5
|
|
|
398.8
|
|
Common Stock issued
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
Common Stock acquired
|
0.0
|
|
|
6.7
|
|
|
(6.7
|
)
|
Stock-based compensation programs(1)
|
0.0
|
|
|
(2.5
|
)
|
|
2.5
|
|
Balance, June 30, 2020
|
666.3
|
|
|
271.7
|
|
|
394.6
|
|
(1)
|
Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Dividends declared per share of Common Stock
|
$
|
1.10
|
|
|
$
|
1.00
|
|
|
$
|
2.20
|
|
|
$
|
2.00
|
|
|
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, 2019
|
$
|
(536
|
)
|
|
$
|
28,112
|
|
|
$
|
(3,537
|
)
|
|
$
|
24,039
|
|
Change in OCI before reclassifications
|
(213
|
)
|
|
9,449
|
|
|
4
|
|
|
9,240
|
|
||||
Amounts reclassified from AOCI
|
5
|
|
|
(702
|
)
|
|
140
|
|
|
(557
|
)
|
||||
Income tax benefit (expense)
|
28
|
|
|
(1,881
|
)
|
|
(32
|
)
|
|
(1,885
|
)
|
||||
Balance, June 30, 2020
|
$
|
(716
|
)
|
|
$
|
34,978
|
|
|
$
|
(3,425
|
)
|
|
$
|
30,837
|
|
|
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, 2018
|
$
|
(564
|
)
|
|
$
|
14,745
|
|
|
$
|
(3,275
|
)
|
|
$
|
10,906
|
|
Change in OCI before reclassifications
|
98
|
|
|
17,296
|
|
|
(39
|
)
|
|
17,355
|
|
||||
Amounts reclassified from AOCI
|
5
|
|
|
(501
|
)
|
|
120
|
|
|
(376
|
)
|
||||
Income tax benefit (expense)
|
8
|
|
|
(3,899
|
)
|
|
(19
|
)
|
|
(3,910
|
)
|
||||
Cumulative effect of adoption of ASU 2017-12
|
0
|
|
|
7
|
|
|
0
|
|
|
7
|
|
||||
Balance, June 30, 2019
|
$
|
(453
|
)
|
|
$
|
27,648
|
|
|
$
|
(3,213
|
)
|
|
$
|
23,982
|
|
(1)
|
Includes cash flow hedges of $2,498 million and $832 million as of June 30, 2020 and December 31, 2019, respectively, and $1,017 million and $811 million as of June 30, 2019 and December 31, 2018, respectively, and fair value hedges of $(3) million and $0 million as of June 30, 2020 and December 31, 2019, respectively.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Affected line item in Consolidated Statements of Operations
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|||||||||
|
(in millions)
|
|
|
||||||||||||||
Amounts reclassified from AOCI(1)(2):
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
$
|
(2
|
)
|
|
$
|
0
|
|
|
$
|
(5
|
)
|
|
$
|
(5
|
)
|
|
Realized investment gains (losses), net
|
Foreign currency translation adjustments
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Other income (loss)
|
||||
Total foreign currency translation adjustment
|
(2
|
)
|
|
0
|
|
|
(5
|
)
|
|
(5
|
)
|
|
|
||||
Net unrealized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges—Interest rate
|
9
|
|
|
0
|
|
|
8
|
|
|
(1
|
)
|
|
(3)
|
||||
Cash flow hedges—Currency
|
3
|
|
|
1
|
|
|
4
|
|
|
2
|
|
|
(3)
|
||||
Cash flow hedges—Currency/Interest rate
|
32
|
|
|
156
|
|
|
420
|
|
|
171
|
|
|
(3)
|
||||
Net unrealized investment gains (losses) on available-for-sale securities
|
112
|
|
|
69
|
|
|
270
|
|
|
329
|
|
|
|
||||
Total net unrealized investment gains (losses)
|
156
|
|
|
226
|
|
|
702
|
|
|
501
|
|
|
(4)
|
||||
Amortization of defined benefit pension items:
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost
|
0
|
|
|
0
|
|
|
(1
|
)
|
|
0
|
|
|
(5)
|
||||
Actuarial gain (loss)
|
(70
|
)
|
|
(60
|
)
|
|
(139
|
)
|
|
(120
|
)
|
|
(5)
|
||||
Total amortization of defined benefit pension items
|
(70
|
)
|
|
(60
|
)
|
|
(140
|
)
|
|
(120
|
)
|
|
|
||||
Total reclassifications for the period
|
$
|
84
|
|
|
$
|
166
|
|
|
$
|
557
|
|
|
$
|
376
|
|
|
|
(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 5 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 10 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, 2019(1)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Net investment gains (losses) on investments arising during the period
|
34
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
27
|
|
|||||||||
Reclassification adjustment for (gains) losses included in net income
|
13
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
10
|
|
|||||||||
Increase (Decrease) due to non-credit related losses recognized in AOCI during the period
|
(87
|
)
|
|
|
|
|
|
|
|
19
|
|
|
(68
|
)
|
|||||||||
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables
|
|
|
2
|
|
|
|
|
|
|
0
|
|
|
2
|
|
|||||||||
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
0
|
|
|||||||||
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
(5
|
)
|
|
1
|
|
|
(4
|
)
|
|||||||||
Balance, June 30, 2020
|
$
|
(40
|
)
|
|
$
|
2
|
|
|
$
|
0
|
|
|
$
|
(5
|
)
|
|
$
|
10
|
|
|
$
|
(33
|
)
|
(1)
|
Allowance for credit losses on available-for-sale fixed maturity securities effective January 1, 2020.
|
|
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, 2019(2)
|
$
|
45,339
|
|
|
$
|
(1,585
|
)
|
|
$
|
(2,909
|
)
|
|
$
|
(3,366
|
)
|
|
$
|
(9,367
|
)
|
|
$
|
28,112
|
|
Net investment gains (losses) on investments arising during the period
|
12,195
|
|
|
|
|
|
|
|
|
(2,599
|
)
|
|
9,596
|
|
|||||||||
Reclassification adjustment for (gains) losses included in net income
|
(715
|
)
|
|
|
|
|
|
|
|
152
|
|
|
(563
|
)
|
|||||||||
Reclassification due to allowance for credit losses recorded during the period
|
87
|
|
|
|
|
|
|
|
|
(19
|
)
|
|
68
|
|
|||||||||
Impact of net unrealized investment (gains) losses on DAC, DSI, VOBA and reinsurance recoverables
|
|
|
226
|
|
|
|
|
|
|
(40
|
)
|
|
186
|
|
|||||||||
Impact of net unrealized investment (gains) losses on future policy benefits, policyholders’ account balances and reinsurance payables
|
|
|
|
|
(1,036
|
)
|
|
|
|
202
|
|
|
(834
|
)
|
|||||||||
Impact of net unrealized investment (gains) losses on policyholders’ dividends
|
|
|
|
|
|
|
(1,967
|
)
|
|
413
|
|
|
(1,554
|
)
|
|||||||||
Balance, June 30, 2020
|
$
|
56,906
|
|
|
$
|
(1,359
|
)
|
|
$
|
(3,945
|
)
|
|
$
|
(5,333
|
)
|
|
$
|
(11,258
|
)
|
|
$
|
35,011
|
|
(1)
|
Includes cash flow and fair value hedges. See Note 5 for information on cash flow and fair value hedges.
|
(2)
|
Includes net unrealized gains (losses) for which an OTTI loss had been previously recognized.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||
|
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)
|
$
|
(2,405
|
)
|
|
|
|
|
|
$
|
738
|
|
|
|
|
|
||||||
Less: Income (loss) attributable to noncontrolling interests
|
4
|
|
|
|
|
|
|
30
|
|
|
|
|
|
||||||||
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards
|
6
|
|
|
|
|
|
|
8
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Prudential Financial available to holders of Common Stock
|
$
|
(2,415
|
)
|
|
394.6
|
|
|
$
|
(6.12
|
)
|
|
$
|
700
|
|
|
405.3
|
|
|
$
|
1.73
|
|
Effect of dilutive securities and compensation programs
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic
|
$
|
6
|
|
|
|
|
|
|
$
|
8
|
|
|
|
|
|
||||||
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted
|
6
|
|
|
|
|
|
|
8
|
|
|
|
|
|
||||||||
Stock options
|
|
|
0.0
|
|
|
|
|
|
|
1.3
|
|
|
|
||||||||
Deferred and long-term compensation programs
|
|
|
0.0
|
|
|
|
|
|
|
1.1
|
|
|
|
||||||||
Exchangeable Surplus Notes
|
0
|
|
|
0.0
|
|
|
|
|
6
|
|
|
6.2
|
|
|
|
||||||
Diluted earnings per share(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to Prudential Financial available to holders of Common Stock
|
$
|
(2,415
|
)
|
|
394.6
|
|
|
$
|
(6.12
|
)
|
|
$
|
706
|
|
|
413.9
|
|
|
$
|
1.71
|
|
(1)
|
For the three months ended June 30, 2020, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because dilutive shares and dilutive earnings per share are not applicable when a net loss is reported. As a result of the net loss attributable to Prudential Financial available to holders of Common Stock for the three months ended June 30, 2020, all potential stock options and compensation programs were considered antidilutive.
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||
|
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)
|
$
|
(2,675
|
)
|
|
|
|
|
|
$
|
1,675
|
|
|
|
|
|
||||||
Less: Income (loss) attributable to noncontrolling interests
|
5
|
|
|
|
|
|
|
35
|
|
|
|
|
|
||||||||
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards
|
11
|
|
|
|
|
|
|
18
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Prudential Financial available to holders of Common Stock
|
$
|
(2,691
|
)
|
|
395.8
|
|
|
$
|
(6.80
|
)
|
|
$
|
1,622
|
|
|
407.3
|
|
|
$
|
3.98
|
|
Effect of dilutive securities and compensation programs
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic
|
$
|
11
|
|
|
|
|
|
|
$
|
18
|
|
|
|
|
|
||||||
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted
|
11
|
|
|
|
|
|
|
18
|
|
|
|
|
|
||||||||
Stock options
|
|
|
0.0
|
|
|
|
|
|
|
1.2
|
|
|
|
||||||||
Deferred and long-term compensation programs
|
|
|
0.0
|
|
|
|
|
|
|
1.1
|
|
|
|
||||||||
Exchangeable Surplus Notes
|
0
|
|
|
0.0
|
|
|
|
|
11
|
|
|
6.2
|
|
|
|
||||||
Diluted earnings per share(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to Prudential Financial available to holders of Common Stock
|
$
|
(2,691
|
)
|
|
395.8
|
|
|
$
|
(6.80
|
)
|
|
$
|
1,633
|
|
|
415.8
|
|
|
$
|
3.93
|
|
(1)
|
For the six months ended June 30, 2020, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because dilutive shares and dilutive earnings per share are not applicable when a net loss is reported. As a result of the net loss attributable to Prudential Financial available to holders of Common Stock for the six months ended June 30, 2020, all potential stock options and compensation programs were considered antidilutive.
|
|
Three Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
||||||||||
|
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
|
4.7
|
|
|
$
|
74.92
|
|
|
0.9
|
|
|
$
|
105.95
|
|
Antidilutive stock options due to net loss available to holders of Common Stock
|
0.2
|
|
|
|
|
0.0
|
|
|
|
||||
Antidilutive shares based on application of the treasury stock method
|
0.2
|
|
|
|
|
0.0
|
|
|
|
||||
Antidilutive shares due to net loss available to holders of Common Stock
|
1.3
|
|
|
|
|
0.0
|
|
|
|
||||
Total antidilutive stock options and shares
|
6.4
|
|
|
|
|
0.9
|
|
|
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
||||||||||
|
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
|
3.5
|
|
|
$
|
79.06
|
|
|
1.0
|
|
|
$
|
104.57
|
|
Antidilutive stock options due to net loss available to holders of Common Stock
|
0.5
|
|
|
|
|
0.0
|
|
|
|
||||
Antidilutive shares based on application of the treasury stock method
|
0.2
|
|
|
|
|
0.0
|
|
|
|
||||
Antidilutive shares due to net loss available to holders of Common Stock
|
1.5
|
|
|
|
|
0.0
|
|
|
|
||||
Total antidilutive stock options and shares
|
5.7
|
|
|
|
|
1.0
|
|
|
|
•
|
Realized investment gains (losses), net, and related adjustments;
|
•
|
Charges related to realized investment gains (losses), net;
|
•
|
Market experience updates;
|
•
|
Divested and Run-off Businesses;
|
•
|
Other adjustments; and
|
•
|
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Adjusted operating income before income taxes by segment:
|
(in millions)
|
||||||||||||||
PGIM
|
$
|
324
|
|
|
$
|
264
|
|
|
$
|
488
|
|
|
$
|
478
|
|
U.S. Businesses:
|
|
|
|
|
|
|
|
||||||||
U.S. Workplace Solutions division:
|
|
|
|
|
|
|
|
||||||||
Retirement
|
281
|
|
|
467
|
|
|
526
|
|
|
718
|
|
||||
Group Insurance
|
5
|
|
|
81
|
|
|
49
|
|
|
134
|
|
||||
Total U.S. Workplace Solutions division
|
286
|
|
|
548
|
|
|
575
|
|
|
852
|
|
||||
U.S. Individual Solutions division:
|
|
|
|
|
|
|
|
||||||||
Individual Annuities(1)
|
249
|
|
|
462
|
|
|
622
|
|
|
934
|
|
||||
Individual Life
|
(64
|
)
|
|
(135
|
)
|
|
(84
|
)
|
|
(30
|
)
|
||||
Total U.S. Individual Solutions division
|
185
|
|
|
327
|
|
|
538
|
|
|
904
|
|
||||
Assurance IQ division(2):
|
|
|
|
|
|
|
|
||||||||
Assurance IQ
|
(16
|
)
|
|
0
|
|
|
(39
|
)
|
|
0
|
|
||||
Total Assurance IQ division
|
(16
|
)
|
|
0
|
|
|
(39
|
)
|
|
0
|
|
||||
Total U.S. Businesses
|
455
|
|
|
875
|
|
|
1,074
|
|
|
1,756
|
|
||||
International Businesses(3)
|
693
|
|
|
790
|
|
|
1,391
|
|
|
1,649
|
|
||||
Corporate and Other
|
(541
|
)
|
|
(335
|
)
|
|
(883
|
)
|
|
(747
|
)
|
||||
Total segment adjusted operating income before income taxes
|
931
|
|
|
1,594
|
|
|
2,070
|
|
|
3,136
|
|
||||
Reconciling items:
|
|
|
|
|
|
|
|
||||||||
Realized investment gains (losses), net, and related adjustments(4)
|
(3,191
|
)
|
|
(572
|
)
|
|
(2,982
|
)
|
|
(1,194
|
)
|
||||
Charges related to realized investment gains (losses), net
|
519
|
|
|
(82
|
)
|
|
(283
|
)
|
|
(57
|
)
|
||||
Market experience updates(5)
|
55
|
|
|
(207
|
)
|
|
(886
|
)
|
|
(207
|
)
|
||||
Divested and Run-off Businesses:
|
|
|
|
|
|
|
|
||||||||
Closed Block division
|
(22
|
)
|
|
(21
|
)
|
|
(23
|
)
|
|
(40
|
)
|
||||
Other Divested and Run-off Businesses(3)
|
(602
|
)
|
|
168
|
|
|
(580
|
)
|
|
415
|
|
||||
Other adjustments(6)
|
32
|
|
|
0
|
|
|
77
|
|
|
0
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
(54
|
)
|
|
(4
|
)
|
|
(63
|
)
|
|
(37
|
)
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures per Unaudited Interim Consolidated Financial Statements
|
$
|
(2,332
|
)
|
|
$
|
876
|
|
|
$
|
(2,670
|
)
|
|
$
|
2,016
|
|
(1)
|
Individual Annuities segment results reflect DAC as if the Individual Annuities business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.
|
(2)
|
Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
(3)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.
|
(4)
|
Prior period amounts have been updated to conform to current period presentation.
|
(5)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.
|
(6)
|
Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
Assets by segment:
|
(in millions)
|
||||||
PGIM
|
$
|
47,722
|
|
|
$
|
47,655
|
|
U.S. Businesses:
|
|
|
|
||||
U.S. Workplace Solutions division:
|
|
|
|
||||
Retirement
|
203,191
|
|
|
198,153
|
|
||
Group Insurance
|
43,900
|
|
|
43,712
|
|
||
Total U.S. Workplace Solutions division
|
247,091
|
|
|
241,865
|
|
||
U.S. Individual Solutions division:
|
|
|
|
||||
Individual Annuities
|
191,259
|
|
|
189,040
|
|
||
Individual Life
|
100,429
|
|
|
96,072
|
|
||
Total U.S. Individual Solutions division
|
291,688
|
|
|
285,112
|
|
||
Assurance IQ division(1):
|
|
|
|
||||
Assurance IQ
|
2,599
|
|
|
2,639
|
|
||
Total Assurance IQ division
|
2,599
|
|
|
2,639
|
|
||
Total U.S. Businesses
|
541,378
|
|
|
529,616
|
|
||
International Businesses(2)
|
226,611
|
|
|
220,381
|
|
||
Corporate and Other(2)
|
37,927
|
|
|
37,573
|
|
||
Closed Block division
|
61,749
|
|
|
61,327
|
|
||
Total assets per Unaudited Interim Consolidated Financial Statements
|
$
|
915,387
|
|
|
$
|
896,552
|
|
(1)
|
Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
(2)
|
Effective second quarter of 2020, the carrying amounts of assets of POK are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues on an adjusted operating income basis:
|
(in millions)
|
||||||||||||||
PGIM
|
$
|
957
|
|
|
$
|
926
|
|
|
$
|
1,735
|
|
|
$
|
1,796
|
|
U.S. Businesses:
|
|
|
|
|
|
|
|
||||||||
U.S. Workplace Solutions division:
|
|
|
|
|
|
|
|
||||||||
Retirement
|
2,992
|
|
|
3,586
|
|
|
5,429
|
|
|
6,225
|
|
||||
Group Insurance
|
1,471
|
|
|
1,461
|
|
|
2,895
|
|
|
2,902
|
|
||||
Total U.S. Workplace Solutions division
|
4,463
|
|
|
5,047
|
|
|
8,324
|
|
|
9,127
|
|
||||
U.S. Individual Solutions division:
|
|
|
|
|
|
|
|
||||||||
Individual Annuities
|
953
|
|
|
1,288
|
|
|
2,101
|
|
|
2,523
|
|
||||
Individual Life
|
1,563
|
|
|
1,508
|
|
|
3,093
|
|
|
2,990
|
|
||||
Total U.S. Individual Solutions division
|
2,516
|
|
|
2,796
|
|
|
5,194
|
|
|
5,513
|
|
||||
Assurance IQ division(1):
|
|
|
|
|
|
|
|
||||||||
Assurance IQ
|
59
|
|
|
0
|
|
|
119
|
|
|
0
|
|
||||
Total Assurance IQ division
|
59
|
|
|
0
|
|
|
119
|
|
|
0
|
|
||||
Total U.S. Businesses
|
7,038
|
|
|
7,843
|
|
|
13,637
|
|
|
14,640
|
|
||||
International Businesses(2)
|
5,233
|
|
|
5,058
|
|
|
11,010
|
|
|
10,782
|
|
||||
Corporate and Other
|
(150
|
)
|
|
(164
|
)
|
|
(355
|
)
|
|
(335
|
)
|
||||
Total revenues on an adjusted operating income basis
|
13,078
|
|
|
13,663
|
|
|
26,027
|
|
|
26,883
|
|
||||
Reconciling items:
|
|
|
|
|
|
|
|
||||||||
Realized investment gains (losses), net, and related adjustments(3)
|
(2,241
|
)
|
|
(259
|
)
|
|
(2,695
|
)
|
|
(478
|
)
|
||||
Charges related to realized investment gains (losses), net
|
(20
|
)
|
|
(54
|
)
|
|
(81
|
)
|
|
(125
|
)
|
||||
Market experience updates(4)
|
(14
|
)
|
|
(7
|
)
|
|
(348
|
)
|
|
(7
|
)
|
||||
Divested and Run-off Businesses:
|
|
|
|
|
|
|
|
||||||||
Closed Block division
|
1,340
|
|
|
1,301
|
|
|
2,017
|
|
|
2,675
|
|
||||
Other Divested and Run-off Businesses(2)
|
(18
|
)
|
|
777
|
|
|
623
|
|
|
1,602
|
|
||||
Other adjustments(5)
|
47
|
|
|
0
|
|
|
105
|
|
|
0
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
(57
|
)
|
|
(33
|
)
|
|
(69
|
)
|
|
(71
|
)
|
||||
Total revenues per Unaudited Interim Consolidated Financial Statements
|
$
|
12,115
|
|
|
$
|
15,388
|
|
|
$
|
25,579
|
|
|
$
|
30,479
|
|
(1)
|
Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
(2)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information.
|
(3)
|
Prior period amounts have been updated to conform to current period presentation.
|
(4)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.
|
(5)
|
Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
PGIM segment intersegment revenues
|
$
|
208
|
|
|
$
|
194
|
|
|
$
|
425
|
|
|
$
|
374
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Asset-based management fees
|
$
|
840
|
|
|
$
|
872
|
|
|
$
|
1,715
|
|
|
$
|
1,715
|
|
Performance-based incentive fees
|
16
|
|
|
62
|
|
|
30
|
|
|
98
|
|
||||
Other fees
|
135
|
|
|
149
|
|
|
279
|
|
|
286
|
|
||||
Total asset management and service fees
|
$
|
991
|
|
|
$
|
1,083
|
|
|
$
|
2,024
|
|
|
$
|
2,099
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Total outstanding mortgage loan commitments
|
$
|
1,754
|
|
|
$
|
2,129
|
|
Portion of commitment where prearrangement to sell to investor exists
|
$
|
787
|
|
|
$
|
751
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Expected to be funded from the general account and other operations outside the separate accounts
|
$
|
8,394
|
|
|
$
|
7,372
|
|
Expected to be funded from separate accounts
|
$
|
53
|
|
|
$
|
49
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Indemnification provided to certain clients for securities lending and securities repurchase transactions(1)
|
$
|
7,167
|
|
|
$
|
5,071
|
|
Fair value of related collateral associated with above indemnifications(2)
|
$
|
7,317
|
|
|
$
|
5,204
|
|
Accrued liability associated with guarantee
|
$
|
0
|
|
|
$
|
0
|
|
(1)
|
Includes $34 million and $38 million related to securities repurchase transactions as of June 30, 2020 and December 31, 2019, respectively.
|
(2)
|
Includes $34 million and $37 million related to securities repurchase transactions as of June 30, 2020 and December 31, 2019, respectively.
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Guaranteed value of third-parties’ assets
|
$
|
82,325
|
|
|
$
|
80,009
|
|
Fair value of collateral supporting these assets
|
$
|
86,247
|
|
|
$
|
81,604
|
|
Asset (liability) associated with guarantee, carried at fair value
|
$
|
1
|
|
|
$
|
1
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Maximum exposure under indemnification agreements for mortgage loans serviced by the Company
|
$
|
2,278
|
|
|
$
|
2,113
|
|
First-loss exposure portion of above
|
$
|
668
|
|
|
$
|
622
|
|
Accrued liability associated with guarantees(1)
|
$
|
37
|
|
|
$
|
19
|
|
(1)
|
As of June 30, 2020, the accrued liability associated with guarantees includes an allowance for credit losses of $17 million, which is a change of $0 million and $(1) million for the three and six months ended June 30, 2020, respectively.
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Other guarantees where amount can be determined
|
$
|
51
|
|
|
$
|
55
|
|
Accrued liability for other guarantees and indemnifications
|
$
|
0
|
|
|
$
|
0
|
|
•
|
If Variable Profits are less than $900 million, no additional amount is payable.
|
•
|
If Variable Profits are greater than $1,300 million, an additional amount of $1,150 million is payable.
|
•
|
If Variable Profits are greater than $900 million but less than or equal to $1,300 million, an additional amount is payable equal to the product of (i) the quotient of (A) an amount equal to (1) Variable Profits achieved minus (2) $900 million divided by (B) $400 million and (ii) $1,150 million.
|
|
Page
|
•
|
Outlook
|
•
|
Results of Operations. For the three months and six months ended June 30, 2020 we reported a net loss of $(2,409) million and $(2,680) million, respectively, as unfavorable financial market conditions had a substantial negative effect on the reported results of our businesses. See “Results of Operations” and “Results of Operations by Segment” for a discussion of results for second quarter and first half of the year.
|
•
|
Liquidity. As of June 30, 2020, we had $4,517 million in highly liquid assets at Prudential Financial. During the first half of the year, we took several steps to proactively manage liquidity, including entering into a $1.5 billion facility agreement with a Delaware trust to increase our alternative sources of liquidity and issuing $1.5 billion in senior debt in part to pre-
|
•
|
Capital Resources. As of June 30, 2020, all of our significant insurance subsidiaries maintained capital levels consistent with their ratings targets. However, market conditions could negatively impact the statutory capital of our insurance companies and constrain our overall capital flexibility, including as a result of credit migration and losses in our investment portfolio as discussed below. Adverse market conditions could require us to take additional management actions for our insurance subsidiaries to maintain capital consistent with their ratings objectives, which may include redeploying financial resources from internal sources, or using available external sources of capital or seeking additional sources. See “Liquidity and Capital Resources—Capital” for a discussion of our capital resources.
|
•
|
Investment Portfolio. Net unrealized gains (losses) on fixed maturity investments (excluding securities classified as trading) were a net unrealized gain of $54,717 million as of June 30, 2020, compared to a net unrealized gain of $44,891 million as of December 31, 2019. Gross unrealized gains increased from $46,206 million as of December 31, 2019 to $57,171 million as of June 30, 2020 and gross unrealized losses increased from $1,315 million to $2,454 million for the same period. The increase in gross unrealized gains was primarily due to a decrease in U.S. interest rates, while the increase in gross unrealized losses was primarily due to credit spread widening and liquidity concerns. The continued impact of COVID-19 on the global economy and corporate credit may continue to result in negative credit migration and possible losses in our investment portfolio. Due to the highly uncertain nature of these conditions, it is not possible to estimate the overall impacts at this time. The sectors most impacted by the COVID-19 crisis include energy, consumer cyclical and retail related investments (see “—General Account Investments” for additional information). During 2020, approximately 1% of total invested assets were modified to allow for limited forbearance. Under the terms of forbearance, the borrower is allowed to defer a portion of current year principal and/or interest payments for a short period (e.g., 6 months). These deferrals accrue additional interest and do not have a material impact on our investment value.
|
•
|
Sales and Flows. See “Segment Results of Operations” for a discussion of sales and flows in each of our segments.
|
•
|
Underwriting Results. See “Segment Results of Operations” for a discussion of mortality experience in each of our segments.
|
•
|
Expenses. We expect higher expenses in 2020 from costs associated with COVID-19, including approximately $80 million incurred in the second quarter of 2020 and approximately $60 million expected in the second half of 2020. These higher expenses are primarily related to agent compensation, as well as technology and third-party vendor capabilities related to remote work functionality and protecting our employees’ health. However, we also expect cost savings associated with COVID-19 of approximately $60 million in 2020, including approximately $30 million of cost savings expected to be realized in aggregate over the third and fourth quarters of 2020. These cost savings are from lower employee health and welfare claims, and lower travel, meeting, meal and entertainment costs.
|
•
|
Risk Management. Prudential has a robust risk management framework that seeks to ensure we can fulfill our customer, regulatory, and other stakeholder obligations under a range of stress scenarios by maintaining the appropriate balance between the Company’s resources and risks. We evaluate the Company’s exposure to stress under four lenses (economic, STAT, GAAP, and liquidity).
|
•
|
Risk Factors. The COVID-19 pandemic has adversely impacted our results of operations, financial position, investment portfolio, new business opportunities and operations, and these impacts are expected to continue. For additional information on the risks to our business posed by the COVID-19 pandemic, see “Risk Factors.”
|
•
|
Business Continuity. One of the main impacts of the COVID-19 pandemic has been executing our business continuity protocols to ensure our employees are safe and able to serve our customers. This included effectively transitioning the vast majority of our employees to remote work arrangements.
|
•
|
CARES Act and Other Regulatory Developments. In March 2020 Congress enacted the CARES Act, which provides $2 trillion in economic stimulus to taxpayers, small businesses, and corporations through various grant and loan programs, tax provisions and regulatory relief. One provision of the CARES Act amends the Tax Cuts and Jobs Act (“TCJA”) and allows companies with net operating losses (“NOLs”) originating in 2018, 2019 or 2020 to carry back those losses for five years. See Note 8 to the Unaudited Interim Financial Statements for more information. We are continuing to analyze the CARES Act and its potential impact on Prudential, and implementing operational changes necessary in our Retirement, Annuities and PGIM businesses to accommodate the CARES Act.
|
•
|
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
June 30, 2020
|
||
|
(in billions)
|
||
Long-duration insurance products with fixed and guaranteed terms
|
$
|
157
|
|
Contracts with adjustable crediting rates subject to guaranteed minimums
|
60
|
|
|
Participating contracts where investment income risk ultimately accrues to contractholders
|
14
|
|
|
Total
|
$
|
231
|
|
(1)
|
Includes approximately $0.68 billion related to contracts that impose a market value adjustment if the invested amount is not held to maturity.
|
|
As of
June 30, 2020
|
||
|
(in billions)
|
||
Insurance products with fixed and guaranteed terms
|
$
|
132
|
|
Contracts with a market value adjustment if invested amount is not held to maturity
|
25
|
|
|
Contracts with adjustable crediting rates subject to guaranteed minimums
|
11
|
|
|
Total
|
$
|
168
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
12,115
|
|
|
$
|
15,388
|
|
|
$
|
25,579
|
|
|
$
|
30,479
|
|
Benefits and expenses
|
14,447
|
|
|
14,512
|
|
|
28,249
|
|
|
28,463
|
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
(2,332
|
)
|
|
876
|
|
|
(2,670
|
)
|
|
2,016
|
|
||||
Income tax expense (benefit)
|
115
|
|
|
162
|
|
|
57
|
|
|
394
|
|
||||
Income (loss) before equity in earnings of operating joint ventures
|
(2,447
|
)
|
|
714
|
|
|
(2,727
|
)
|
|
1,622
|
|
||||
Equity in earnings of operating joint ventures, net of taxes
|
42
|
|
|
24
|
|
|
52
|
|
|
53
|
|
||||
Net income (loss)
|
(2,405
|
)
|
|
738
|
|
|
(2,675
|
)
|
|
1,675
|
|
||||
Less: Income attributable to noncontrolling interests
|
4
|
|
|
30
|
|
|
5
|
|
|
35
|
|
||||
Net income (loss) attributable to Prudential Financial, Inc.
|
$
|
(2,409
|
)
|
|
$
|
708
|
|
|
$
|
(2,680
|
)
|
|
$
|
1,640
|
|
•
|
$2,136 million unfavorable variance, on a pre-tax basis, from realized investment gains and losses for PFI excluding the Divested and Run-off Businesses, and excluding the impact of the hedging program associated with certain variable annuities discussed below (see “General Account Investments” for additional information);
|
•
|
$771 million unfavorable variance, on a pre-tax basis, from a loss in the current period from our Divested and Run-off Businesses compared to a gain in the prior period (see “Results of Operations by Segment—Divested and Run-off Businesses” for additional information);
|
•
|
$663 million unfavorable variance, on a pre-tax basis, from lower adjusted operating income from our business segments (see “—Segment Results of Operations” for additional information); and
|
•
|
$491 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. Businesses—U.S. Individual Solutions Division—Individual Annuities—Variable Annuity Risks and Risk Mitigants” for additional information).
|
•
|
$446 million favorable variance, on a pre-tax basis, from investment related activities that are primarily within “Other income (loss)” for PFI excluding our Divested and Run-off Businesses. These favorable impacts were primarily driven by unrealized gains (losses) from equity securities as well as fixed maturity securities designated as trading; and
|
•
|
$258 million favorable variance, on a pre-tax basis, driven by market experience updates excluding those impacts related to the hedging program associated with certain variable annuities discussed above.
|
•
|
$1,300 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. Businesses—U.S. Individual Solutions Division—Individual Annuities—Variable Annuity Risks and Risk Mitigants” for additional information);
|
•
|
$1,066 million unfavorable variance, on a pre-tax basis, from lower adjusted operating income from our business segments (see “Segment Results of Operations” for additional information);
|
•
|
$978 million unfavorable variance, on a pre-tax basis, from a loss in the current period from our Divested and Run-off Businesses compared to a gain in the prior period (see “Results of Operations by Segment—Divested and Run-off Businesses” for additional information);
|
•
|
$859 million unfavorable variance, on a pre-tax basis, from investment related activities that are primarily within “Other income (loss)” for PFI excluding our Divested and Run-off Businesses. These unfavorable impacts were primarily driven by unrealized gains (losses) from equity securities as well as fixed maturity securities designated as trading; and
|
•
|
$326 million unfavorable variance, on a pre-tax basis, driven by market experience updates excluding those impacts related to the hedging program associated with certain variable annuities discussed above.
|
•
|
$114 million favorable variance, on a pre-tax basis, from realized investment gains and losses for PFI excluding Divested and Run-off Businesses, and excluding the impact of the hedging program associated with certain variable annuities discussed above (see “General Account Investments” for additional information).
|
|
Three and Six Months Ended
June 30, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Favorable (unfavorable) impact to adjusted operating income before income taxes by segment:
|
|
|
|
||||
U.S. Businesses:
|
|
|
|
||||
U.S Workplace Solutions division:
|
|
|
|
||||
Retirement
|
$
|
(22
|
)
|
|
$
|
154
|
|
Group Insurance
|
11
|
|
|
9
|
|
||
Total U.S. Workplace Solutions division
|
(11
|
)
|
|
163
|
|
||
U.S. Individual Solutions division:
|
|
|
|
||||
Individual Annuities
|
(136
|
)
|
|
(12
|
)
|
||
Individual Life
|
(92
|
)
|
|
(208
|
)
|
||
Total U.S. Individual Solutions division
|
(228
|
)
|
|
(220
|
)
|
||
Total U.S. Businesses
|
(239
|
)
|
|
(57
|
)
|
||
International Businesses(1)
|
(95
|
)
|
|
11
|
|
||
Corporate and Other
|
0
|
|
|
0
|
|
||
Total segment favorable (unfavorable) impact to adjusted operating income before income taxes
|
(334
|
)
|
|
(46
|
)
|
||
Reconciling items:
|
|
|
|
||||
Realized investment gains (losses), net, and related adjustments
|
302
|
|
|
9
|
|
||
Charges related to realized investment gains (losses), net
|
(41
|
)
|
|
16
|
|
||
Divested and Run-off Businesses:
|
|
|
|
||||
Closed Block division
|
0
|
|
|
(7
|
)
|
||
Other Divested and Run-off Businesses(1)
|
(33
|
)
|
|
(12
|
)
|
||
Favorable (unfavorable) impact to consolidated income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(106
|
)
|
|
$
|
(40
|
)
|
(1)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Adjusted operating income before income taxes by segment:
|
|
|
|
|
|
|
|
||||||||
PGIM
|
$
|
324
|
|
|
$
|
264
|
|
|
$
|
488
|
|
|
$
|
478
|
|
U.S. Businesses:
|
|
|
|
|
|
|
|
||||||||
U.S. Workplace Solutions division:
|
|
|
|
|
|
|
|
||||||||
Retirement
|
281
|
|
|
467
|
|
|
526
|
|
|
718
|
|
||||
Group Insurance
|
5
|
|
|
81
|
|
|
49
|
|
|
134
|
|
||||
Total U.S. Workplace Solutions division
|
286
|
|
|
548
|
|
|
575
|
|
|
852
|
|
||||
U.S. Individual Solutions division:
|
|
|
|
|
|
|
|
||||||||
Individual Annuities
|
249
|
|
|
462
|
|
|
622
|
|
|
934
|
|
||||
Individual Life
|
(64
|
)
|
|
(135
|
)
|
|
(84
|
)
|
|
(30
|
)
|
||||
Total U.S. Individual Solutions division
|
185
|
|
|
327
|
|
|
538
|
|
|
904
|
|
||||
Assurance IQ division(1):
|
|
|
|
|
|
|
|
||||||||
Assurance IQ
|
(16
|
)
|
|
0
|
|
|
(39
|
)
|
|
0
|
|
||||
Total Assurance IQ division
|
(16
|
)
|
|
0
|
|
|
(39
|
)
|
|
0
|
|
||||
Total U.S. Businesses
|
455
|
|
|
875
|
|
|
1,074
|
|
|
1,756
|
|
||||
International Businesses(2)
|
693
|
|
|
790
|
|
|
1,391
|
|
|
1,649
|
|
||||
Corporate and Other
|
(541
|
)
|
|
(335
|
)
|
|
(883
|
)
|
|
(747
|
)
|
||||
Total segment adjusted operating income before income taxes
|
931
|
|
|
1,594
|
|
|
2,070
|
|
|
3,136
|
|
||||
Reconciling items:
|
|
|
|
|
|
|
|
||||||||
Realized investment gains (losses), net, and related adjustments(3)
|
(3,191
|
)
|
|
(572
|
)
|
|
(2,982
|
)
|
|
(1,194
|
)
|
||||
Charges related to realized investment gains (losses), net(4)
|
519
|
|
|
(82
|
)
|
|
(283
|
)
|
|
(57
|
)
|
||||
Market experience updates(5)
|
55
|
|
|
(207
|
)
|
|
(886
|
)
|
|
(207
|
)
|
||||
Divested and Run-off Businesses(6):
|
|
|
|
|
|
|
|
||||||||
Closed Block division
|
(22
|
)
|
|
(21
|
)
|
|
(23
|
)
|
|
(40
|
)
|
||||
Other Divested and Run-off Businesses(2)
|
(602
|
)
|
|
168
|
|
|
(580
|
)
|
|
415
|
|
||||
Other adjustments(7)
|
32
|
|
|
0
|
|
|
77
|
|
|
0
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests(8)
|
(54
|
)
|
|
(4
|
)
|
|
(63
|
)
|
|
(37
|
)
|
||||
Consolidated income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(2,332
|
)
|
|
$
|
876
|
|
|
$
|
(2,670
|
)
|
|
$
|
2,016
|
|
(1)
|
Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
(2)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(3)
|
Represents “Realized investment gains (losses), net,” and related adjustments. See “—General Account Investments” and Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information. Prior period amounts have been updated to conform to current period presentation.
|
(4)
|
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.
|
(5)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(6)
|
Represents the contribution to income (loss) of Divested and Run-off 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 and Run-off Businesses.”
|
(7)
|
Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(8)
|
Equity in earnings of operating joint ventures are included in adjusted operating income but excluded from “Income (loss) 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 the Unaudited Interim Consolidated Statements of Operations. Earnings attributable to noncontrolling interests are excluded from adjusted operating income but included in “Income (loss) before income taxes and equity in earnings of operating joint ventures” as they are reflected on a U.S. GAAP basis as a separate line in the Unaudited Interim 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.
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in billions)
|
||||||
Foreign currency hedging instruments:
|
|
|
|
||||
Hedging USD-equivalent earnings:
|
|
|
|
||||
Forward currency contracts (notional amount outstanding)
|
$
|
0.4
|
|
|
$
|
0.6
|
|
Hedging USD-equivalent equity:
|
|
|
|
||||
USD-denominated assets held in yen-based entities(1)
|
10.9
|
|
|
13.1
|
|
||
Dual currency and synthetic dual currency investments(2)
|
0.6
|
|
|
0.6
|
|
||
Total USD-equivalent equity foreign currency hedging instruments
|
11.5
|
|
|
13.7
|
|
||
Total foreign currency hedges
|
$
|
11.9
|
|
|
$
|
14.3
|
|
(1)
|
Includes USD-denominated fixed maturities at amortized cost plus any related accrued investment income, as well as USD notional amount of foreign currency derivative contracts outstanding. Note this amount represents only those USD assets serving to hedge the impact of foreign currency volatility on equity. Separate from this program, our Japanese operations also have $62.2 billion and $57.8 billion as of June 30, 2020 and December 31, 2019, respectively, of USD-denominated assets supporting USD-denominated liabilities related to USD-denominated products.
|
(2)
|
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 USD-denominated interest income. The amounts shown represent the present value of future USD-denominated cash flows.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Segment impacts of intercompany arrangements:
|
|
|
|
|
|
|
|
||||||||
International Businesses(3)
|
$
|
19
|
|
|
$
|
11
|
|
|
$
|
31
|
|
|
$
|
26
|
|
PGIM
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Impact of intercompany arrangements(1)
|
21
|
|
|
13
|
|
|
33
|
|
|
29
|
|
||||
Corporate and Other:
|
|
|
|
|
|
|
|
||||||||
Impact of intercompany arrangements(1)(3)
|
(21
|
)
|
|
(13
|
)
|
|
(33
|
)
|
|
(29
|
)
|
||||
Settlement gains (losses) on forward currency contracts(2)(3)
|
20
|
|
|
16
|
|
|
42
|
|
|
29
|
|
||||
Net benefit (detriment) to Corporate and Other
|
(1
|
)
|
|
3
|
|
|
9
|
|
|
0
|
|
||||
Net impact on consolidated revenues and adjusted operating income
|
$
|
20
|
|
|
$
|
16
|
|
|
$
|
42
|
|
|
$
|
29
|
|
(1)
|
Represents the difference between non-USD-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 June 30, 2020 and 2019, the total notional amounts of these forward currency contracts within our Corporate and Other operations were $1.1 billion and $2.0 billion, respectively, of which $0.4 billion and $1.2 billion, respectively, were related to our Japanese insurance operations. Prior period total notional amount of these forward currency contracts has been updated to conform to current period presentation.
|
(3)
|
Excludes impacts related to POK. Prior period amounts have been updated to conform to current period presentation. Effective second quarter of 2020, the intercompany arrangement for the Korean won between our International Businesses and Corporate and Other operations was terminated and the related hedges were repurposed in relation to the anticipated sale of POK. Effective second quarter of 2020, Korean won-denominated earnings for 2020 and 2019 that were translated at fixed currency exchange rates of 1,090 and 1,110 Korean won per USD, respectively, are excluded from the International Businesses and are included in the Divested and Run-off Businesses included in Corporate and Other. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
•
|
DAC, deferred sales inducements (“DSI”) and VOBA;
|
•
|
Policyholder liabilities;
|
•
|
Goodwill;
|
•
|
Valuation of investments including derivatives, measurement of allowance for credit losses, and recognition of other-than-temporary impairments (“OTTI”);
|
•
|
Pension and other postretirement benefits;
|
•
|
Taxes on income; and
|
•
|
Reserves for contingencies, including reserves for losses in connection with unresolved legal matters.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Operating results(1):
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
957
|
|
|
$
|
926
|
|
|
$
|
1,735
|
|
|
$
|
1,796
|
|
Expenses
|
633
|
|
|
662
|
|
|
1,247
|
|
|
1,318
|
|
||||
Adjusted operating income
|
324
|
|
|
264
|
|
|
488
|
|
|
478
|
|
||||
Realized investment gains (losses), net, and related adjustments
|
(1
|
)
|
|
1
|
|
|
3
|
|
|
1
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
(6
|
)
|
|
30
|
|
|
(42
|
)
|
|
35
|
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
317
|
|
|
$
|
295
|
|
|
$
|
449
|
|
|
$
|
514
|
|
(1)
|
Certain of PGIM’s investment activities are based in currencies other than the U.S. dollar and are therefore subject to foreign currency exchange rate risk. The financial results of PGIM include the impact of an intercompany arrangement with our Corporate and Other operations designed to mitigate the impact of exchange rate changes on PGIM’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.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues by type:
|
|
|
|
|
|
|
|
||||||||
Asset management fees by source:
|
|
|
|
|
|
|
|
||||||||
Institutional customers
|
$
|
325
|
|
|
$
|
319
|
|
|
$
|
653
|
|
|
$
|
631
|
|
Retail customers(1)
|
227
|
|
|
220
|
|
|
456
|
|
|
429
|
|
||||
General account
|
138
|
|
|
132
|
|
|
274
|
|
|
255
|
|
||||
Total asset management fees
|
690
|
|
|
671
|
|
|
1,383
|
|
|
1,315
|
|
||||
Other related revenues by source:
|
|
|
|
|
|
|
|
||||||||
Incentive fees
|
17
|
|
|
62
|
|
|
35
|
|
|
98
|
|
||||
Transaction fees
|
4
|
|
|
10
|
|
|
8
|
|
|
12
|
|
||||
Strategic investing
|
64
|
|
|
18
|
|
|
37
|
|
|
54
|
|
||||
Commercial mortgage(2)
|
32
|
|
|
25
|
|
|
59
|
|
|
51
|
|
||||
Total other related revenues(3)
|
117
|
|
|
115
|
|
|
139
|
|
|
215
|
|
||||
Service, distribution and other revenues(4)
|
150
|
|
|
140
|
|
|
213
|
|
|
266
|
|
||||
Total revenues
|
$
|
957
|
|
|
$
|
926
|
|
|
$
|
1,735
|
|
|
$
|
1,796
|
|
(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 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)
|
Prior period amount 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 extended for ten years from the Wachovia Securities joint venture termination date of December 31, 2009 to December 31, 2019. The revenue from Wells Fargo under this agreement was $15 million for the three months ended June 30, 2019 and $31 million for the six months ended June 30, 2019.
|
|
June 30, 2020
|
|
December 31, 2019
|
|
June 30, 2019
|
||||||
|
(in billions)
|
||||||||||
Assets Under Management(1) (at fair value):
|
|
|
|
|
|
||||||
Institutional customers:
|
|
|
|
|
|
||||||
Public equity
|
$
|
48.9
|
|
|
$
|
57.1
|
|
|
$
|
54.9
|
|
Public fixed income
|
443.9
|
|
|
418.6
|
|
|
404.7
|
|
|||
Real estate
|
48.9
|
|
|
49.1
|
|
|
48.3
|
|
|||
Private credit and other alternatives
|
24.7
|
|
|
23.5
|
|
|
23.0
|
|
|||
Multi-asset
|
4.8
|
|
|
4.5
|
|
|
4.0
|
|
|||
Institutional customers(2)
|
571.2
|
|
|
552.8
|
|
|
534.9
|
|
|||
Retail customers:
|
|
|
|
|
|
||||||
Public equity
|
109.7
|
|
|
104.2
|
|
|
105.2
|
|
|||
Public fixed income
|
152.0
|
|
|
138.7
|
|
|
119.7
|
|
|||
Real estate
|
1.8
|
|
|
2.0
|
|
|
1.9
|
|
|||
Private credit and other alternatives
|
0.5
|
|
|
0.5
|
|
|
0.3
|
|
|||
Multi-asset
|
56.2
|
|
|
60.2
|
|
|
60.8
|
|
|||
Retail customers(3)
|
320.2
|
|
|
305.6
|
|
|
287.9
|
|
|||
General account:
|
|
|
|
|
|
||||||
Public equity
|
4.0
|
|
|
4.4
|
|
|
4.0
|
|
|||
Public fixed income
|
354.8
|
|
|
328.6
|
|
|
321.9
|
|
|||
Real estate
|
67.2
|
|
|
66.0
|
|
|
63.5
|
|
|||
Private credit and other alternatives
|
77.1
|
|
|
73.5
|
|
|
70.3
|
|
|||
Multi-asset
|
0.0
|
|
|
0.1
|
|
|
0.1
|
|
|||
General account
|
503.1
|
|
|
472.6
|
|
|
459.8
|
|
|||
Total PGIM assets under management(4)
|
$
|
1,394.5
|
|
|
$
|
1,331.0
|
|
|
$
|
1,282.6
|
|
|
|
|
|
|
|
||||||
Assets under management within other reporting segments(4)(5)
|
$
|
210.8
|
|
|
$
|
219.9
|
|
|
$
|
214.8
|
|
Total PFI assets under management
|
$
|
1,605.3
|
|
|
$
|
1,550.9
|
|
|
$
|
1,497.4
|
|
(1)
|
Prior period amounts have been updated to conform to current period presentation. “Public equity” represents stock ownership interest in a corporation or partnership (excluding hedge funds) or real estate investment trust. “Public fixed income” represents debt instruments that pay interest and usually have a maturity (excluding mortgages). “Real estate” includes direct real estate equity and real estate mortgages. “Private credit and other alternatives” includes private credit, private equity, hedge funds, agricultural debt and equity and other alternative strategies. “Multi-asset” includes funds or products that invest in more than one asset class balancing equity and fixed income funds and target date funds.
|
(2)
|
Consists of third-party institutional assets and group insurance contracts.
|
(3)
|
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.
|
(4)
|
Effective first quarter of 2020, certain assets have been reclassified from the U.S. Individual Solutions division to PGIM.
|
(5)
|
Primarily include certain assets related to annuity and variable life products in our U.S. Individual Solutions division, retirement and group life products in our U.S. Workplace Solutions division and certain general account assets of our International Businesses. These assets are not directly managed by PGIM, but rather are invested in non-proprietary funds or are managed by either the divisions themselves or our Chief Investment Officer Organization.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Twelve
Months Ended June 30, |
||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||||
|
(in billions)
|
||||||||||||||||||
Institutional Customers:
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning assets under management
|
$
|
524.8
|
|
|
$
|
524.0
|
|
|
$
|
552.8
|
|
|
$
|
493.5
|
|
|
$
|
534.9
|
|
Net additions (withdrawals), excluding money market activity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third-party
|
(5.7
|
)
|
|
(6.0
|
)
|
|
(1.5
|
)
|
|
(5.0
|
)
|
|
(3.0
|
)
|
|||||
Third-party via affiliates(1)
|
(0.3
|
)
|
|
0.8
|
|
|
(1.1
|
)
|
|
0.5
|
|
|
(1.4
|
)
|
|||||
Total
|
(6.0
|
)
|
|
(5.2
|
)
|
|
(2.6
|
)
|
|
(4.5
|
)
|
|
(4.4
|
)
|
|||||
Market appreciation (depreciation)(2)
|
43.3
|
|
|
16.6
|
|
|
12.8
|
|
|
40.9
|
|
|
34.2
|
|
|||||
Other increases (decreases)(3)
|
9.1
|
|
|
(0.5
|
)
|
|
8.2
|
|
|
5.0
|
|
|
6.5
|
|
|||||
Ending assets under management
|
571.2
|
|
|
534.9
|
|
|
571.2
|
|
|
534.9
|
|
|
571.2
|
|
|||||
Retail Customers(4):
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning assets under management
|
282.4
|
|
|
279.1
|
|
|
305.6
|
|
|
260.2
|
|
|
287.9
|
|
|||||
Net additions (withdrawals), excluding money market activity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third-party
|
9.4
|
|
|
1.1
|
|
|
8.1
|
|
|
1.5
|
|
|
12.3
|
|
|||||
Third-party via affiliates(1)
|
(14.0
|
)
|
|
(0.3
|
)
|
|
(3.1
|
)
|
|
(6.8
|
)
|
|
(6.5
|
)
|
|||||
Total
|
(4.6
|
)
|
|
0.8
|
|
|
5.0
|
|
|
(5.3
|
)
|
|
5.8
|
|
|||||
Market appreciation (depreciation)(2)
|
42.0
|
|
|
7.8
|
|
|
9.4
|
|
|
32.9
|
|
|
25.9
|
|
|||||
Other increases (decreases)(3)
|
0.4
|
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|
0.6
|
|
|||||
Ending assets under management
|
320.2
|
|
|
287.9
|
|
|
320.2
|
|
|
287.9
|
|
|
320.2
|
|
|||||
General Account:
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning assets under management
|
488.5
|
|
|
441.0
|
|
|
472.6
|
|
|
427.8
|
|
|
459.8
|
|
|||||
Net additions (withdrawals), excluding money market activity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third-party
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|||||
Affiliated
|
0.1
|
|
|
1.0
|
|
|
0.8
|
|
|
1.6
|
|
|
5.3
|
|
|||||
Total
|
0.1
|
|
|
1.0
|
|
|
0.8
|
|
|
1.6
|
|
|
5.3
|
|
|||||
Market appreciation (depreciation)(2)
|
18.0
|
|
|
14.2
|
|
|
17.4
|
|
|
28.4
|
|
|
25.9
|
|
|||||
Other increases (decreases)(3)
|
(3.5
|
)
|
|
3.6
|
|
|
12.3
|
|
|
2.0
|
|
|
12.1
|
|
|||||
Ending assets under management
|
503.1
|
|
|
459.8
|
|
|
503.1
|
|
|
459.8
|
|
|
503.1
|
|
|||||
Total assets under management(4)
|
$
|
1,394.5
|
|
|
$
|
1,282.6
|
|
|
$
|
1,394.5
|
|
|
$
|
1,282.6
|
|
|
$
|
1,394.5
|
|
(1)
|
Represents assets that PGIM 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 and the impact of acquired business. The impact from foreign currency fluctuations, which primarily impact the general account, resulted in a gain of $1.1 billion and $1.9 billion for the three months ended June 30, 2020 and 2019, respectively, and a loss of $0.7 billion and gain of $0.7 billion for the six months ended June 30, 2020 and 2019, respectively; and a loss of $0.9 billion for the twelve months ended June 30, 2020.
|
(4)
|
Prior period amounts have been updated to conform to current period presentation.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Co-Investments(1):
|
|
|
|
||||
Public fixed income
|
$
|
441
|
|
|
$
|
462
|
|
Real estate
|
210
|
|
|
228
|
|
||
Private credit and other alternatives
|
22
|
|
|
19
|
|
||
Seed Investments(1):
|
|
|
|
||||
Public equity
|
635
|
|
|
671
|
|
||
Public fixed income
|
343
|
|
|
325
|
|
||
Real estate
|
31
|
|
|
34
|
|
||
Private credit and other alternatives
|
61
|
|
|
59
|
|
||
Multi-asset
|
63
|
|
|
74
|
|
||
Total
|
$
|
1,806
|
|
|
$
|
1,872
|
|
(1)
|
Prior period amounts have been updated to conform to current period presentation. For more information, see the “Assets Under Management” table above.
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30, 2020
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Adjusted operating income before income taxes:
|
|
|
|
|
|
|
|
||||||||
U.S. Businesses:
|
|
|
|
|
|
|
|
||||||||
U.S. Workplace Solutions division:
|
|
|
|
|
|
|
|
||||||||
Retirement
|
$
|
281
|
|
|
$
|
467
|
|
|
$
|
526
|
|
|
$
|
718
|
|
Group Insurance
|
5
|
|
|
81
|
|
|
49
|
|
|
134
|
|
||||
Total U.S. Workplace Solutions division
|
286
|
|
|
548
|
|
|
575
|
|
|
852
|
|
||||
U.S. Individual Solutions division:
|
|
|
|
|
|
|
|
||||||||
Individual Annuities
|
249
|
|
|
462
|
|
|
622
|
|
|
934
|
|
||||
Individual Life
|
(64
|
)
|
|
(135
|
)
|
|
(84
|
)
|
|
(30
|
)
|
||||
Total U.S. Individual Solutions division
|
185
|
|
|
327
|
|
|
538
|
|
|
904
|
|
||||
Assurance IQ division(1):
|
|
|
|
|
|
|
|
||||||||
Assurance IQ
|
(16
|
)
|
|
0
|
|
|
(39
|
)
|
|
0
|
|
||||
Total Assurance IQ division
|
(16
|
)
|
|
0
|
|
|
(39
|
)
|
|
0
|
|
||||
Total U.S. Businesses
|
455
|
|
|
875
|
|
|
1,074
|
|
|
1,756
|
|
||||
Reconciling Items:
|
|
|
|
|
|
|
|
||||||||
Realized investment gains (losses), net, and related adjustments(2)
|
(2,188
|
)
|
|
(677
|
)
|
|
(2,428
|
)
|
|
(1,771
|
)
|
||||
Charges related to realized investment gains (losses), net
|
551
|
|
|
2
|
|
|
(265
|
)
|
|
33
|
|
||||
Market experience updates(3)
|
96
|
|
|
(170
|
)
|
|
(844
|
)
|
|
(170
|
)
|
||||
Other adjustments(4)
|
32
|
|
|
0
|
|
|
77
|
|
|
0
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
0
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(1,054
|
)
|
|
$
|
31
|
|
|
$
|
(2,385
|
)
|
|
$
|
(151
|
)
|
(1)
|
Assurance IQ was acquired by the Company in October 2019. For additional information, see Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
(2)
|
Prior period amounts have been updated to conform to current period presentation.
|
(3)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(4)
|
Represents adjustments not included in the above reconciling items. “Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
•
|
Lower net investment spread results driven by lower income on non-coupon investments;
|
•
|
An unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements; and
|
•
|
Lower fee income, net of distribution expenses and other associated costs, in our Individual Annuities business.
|
•
|
Higher underwriting results primarily driven by our Retirement business due to higher reserve gains driven by COVID-19 related mortality gains; and
|
•
|
Lower expenses, including costs associated with strategic initiatives.
|
•
|
Lower net investment spread results driven by lower income on non-coupon investments;
|
•
|
An unfavorable comparative net impact from our annual reviews and update of assumptions and other refinements;
|
•
|
Lower fee income, net of distribution expenses and other associated costs, in our Individual Annuities business; and
|
•
|
A favorable impact from changes in market conditions on estimates of profitability in the prior year period, which beginning with the second quarter of 2019 is excluded from adjusted operating income (see Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information).
|
•
|
Lower expenses, including costs associated with strategic initiatives.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Operating results:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
2,992
|
|
|
$
|
3,586
|
|
|
$
|
5,429
|
|
|
$
|
6,225
|
|
Benefits and expenses
|
2,711
|
|
|
3,119
|
|
|
4,903
|
|
|
5,507
|
|
||||
Adjusted operating income
|
281
|
|
|
467
|
|
|
526
|
|
|
718
|
|
||||
Realized investment gains (losses), net, and related adjustments(1)
|
16
|
|
|
38
|
|
|
(5
|
)
|
|
168
|
|
||||
Charges related to realized investment gains (losses), net
|
12
|
|
|
8
|
|
|
(11
|
)
|
|
11
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
0
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
309
|
|
|
$
|
514
|
|
|
$
|
511
|
|
|
$
|
898
|
|
(1)
|
Prior period amounts have been updated to conform to current period presentation.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Twelve
Months Ended June 30, |
||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Full Service:
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning total account value
|
$
|
238,435
|
|
|
$
|
251,071
|
|
|
$
|
272,448
|
|
|
$
|
231,669
|
|
|
$
|
262,133
|
|
Deposits and sales
|
5,455
|
|
|
11,047
|
|
|
14,407
|
|
|
20,614
|
|
|
30,187
|
|
|||||
Withdrawals and benefits
|
(7,040
|
)
|
|
(7,259
|
)
|
|
(15,708
|
)
|
|
(16,364
|
)
|
|
(35,050
|
)
|
|||||
Change in market value, interest credited and interest income and other activity
|
29,583
|
|
|
7,274
|
|
|
(4,714
|
)
|
|
26,214
|
|
|
9,163
|
|
|||||
Ending total account value
|
$
|
266,433
|
|
|
$
|
262,133
|
|
|
$
|
266,433
|
|
|
$
|
262,133
|
|
|
$
|
266,433
|
|
Institutional Investment Products:
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning total account value
|
$
|
227,346
|
|
|
$
|
203,101
|
|
|
$
|
227,596
|
|
|
$
|
200,759
|
|
|
$
|
215,978
|
|
Additions(1)
|
4,545
|
|
|
15,044
|
|
|
11,438
|
|
|
17,291
|
|
|
25,248
|
|
|||||
Withdrawals and benefits
|
(3,527
|
)
|
|
(4,161
|
)
|
|
(9,037
|
)
|
|
(7,810
|
)
|
|
(17,970
|
)
|
|||||
Change in market value, interest credited and interest income
|
3,000
|
|
|
2,826
|
|
|
5,435
|
|
|
5,470
|
|
|
9,054
|
|
|||||
Other(2)
|
(222
|
)
|
|
(832
|
)
|
|
(4,290
|
)
|
|
268
|
|
|
(1,168
|
)
|
|||||
Ending total account value
|
$
|
231,142
|
|
|
$
|
215,978
|
|
|
$
|
231,142
|
|
|
$
|
215,978
|
|
|
$
|
231,142
|
|
(1)
|
Additions primarily include: group annuities calculated based on premiums received; funding agreements issued; unfunded 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 British pounds sterling denominated longevity reinsurance business and changes in asset balances for externally-managed accounts. For the three months ended June 30, 2020 and 2019, “Other” activity also includes $2,614 million in receipts offset by $2,740 million in payments and $792 million in receipts offset by $577 million in payments, respectively, and for the six months ended June 30, 2020 and 2019, includes $5,366 million in receipts offset by $5,276 million in payments and $1,403 million in receipts offset by $1,194 million in payments, respectively, related to funding agreements backed by commercial paper which typically have maturities of less than 90 days.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
($ in millions)
|
||||||||||||||
Operating results:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,471
|
|
|
$
|
1,461
|
|
|
$
|
2,895
|
|
|
$
|
2,902
|
|
Benefits and expenses
|
1,466
|
|
|
1,380
|
|
|
2,846
|
|
|
2,768
|
|
||||
Adjusted operating income
|
5
|
|
|
81
|
|
|
49
|
|
|
134
|
|
||||
Realized investment gains (losses), net, and related adjustments
|
(10
|
)
|
|
8
|
|
|
71
|
|
|
9
|
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(5
|
)
|
|
$
|
89
|
|
|
$
|
120
|
|
|
$
|
143
|
|
Benefits ratio(1)(4):
|
|
|
|
|
|
|
|
||||||||
Group life(2)
|
93.0
|
%
|
|
90.2
|
%
|
|
90.7
|
%
|
|
89.6
|
%
|
||||
Group disability(2)
|
74.0
|
%
|
|
65.3
|
%
|
|
75.0
|
%
|
|
69.9
|
%
|
||||
Total Group Insurance(2)
|
89.0
|
%
|
|
84.7
|
%
|
|
87.3
|
%
|
|
85.3
|
%
|
||||
Administrative operating expense ratio(3)(4):
|
|
|
|
|
|
|
|
||||||||
Group life
|
11.8
|
%
|
|
12.2
|
%
|
|
12.1
|
%
|
|
11.9
|
%
|
||||
Group disability
|
26.1
|
%
|
|
24.2
|
%
|
|
25.4
|
%
|
|
25.5
|
%
|
||||
Total Group Insurance
|
14.9
|
%
|
|
14.8
|
%
|
|
15.0
|
%
|
|
14.8
|
%
|
(1)
|
Ratio of policyholder benefits to earned premiums plus policy charges and fee income.
|
(2)
|
Benefit ratios reflect the impact of our annual reviews and update of assumptions and other refinements. Excluding these impacts, the group life, group disability and total Group Insurance benefit ratios were 93.4%, 75.7% and 89.6% for the three months ended June 30, 2020, respectively, 90.9%, 75.8% and 87.6% for the six months ended June 30, 2020, respectively, 88.5%, 74.5% and 85.5% for the three months ended June 30, 2019, respectively, and 88.7%, 74.6% and 85.7% for the six months ended June 30, 2019, respectively.
|
(3)
|
Ratio of general and administrative expenses (excluding commissions) to gross premiums plus policy charges and fee income.
|
(4)
|
The benefit and administrative ratios are measures used to evaluate profitability and efficiency.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Annualized new business premiums(1):
|
|
|
|
|
|
|
|
||||||||
Group life
|
$
|
8
|
|
|
$
|
17
|
|
|
$
|
181
|
|
|
$
|
191
|
|
Group disability
|
18
|
|
|
16
|
|
|
126
|
|
|
135
|
|
||||
Total
|
$
|
26
|
|
|
$
|
33
|
|
|
$
|
307
|
|
|
$
|
326
|
|
(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.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Operating results:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
953
|
|
|
$
|
1,288
|
|
|
$
|
2,101
|
|
|
$
|
2,523
|
|
Benefits and expenses
|
704
|
|
|
826
|
|
|
1,479
|
|
|
1,589
|
|
||||
Adjusted operating income
|
249
|
|
|
462
|
|
|
622
|
|
|
934
|
|
||||
Realized investment gains (losses), net, and related adjustments
|
(2,178
|
)
|
|
(881
|
)
|
|
(3,043
|
)
|
|
(2,225
|
)
|
||||
Charges related to realized investment gains (losses), net
|
474
|
|
|
56
|
|
|
99
|
|
|
190
|
|
||||
Market experience updates(1)
|
18
|
|
|
(10
|
)
|
|
(628
|
)
|
|
(10
|
)
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(1,437
|
)
|
|
$
|
(373
|
)
|
|
$
|
(2,950
|
)
|
|
$
|
(1,111
|
)
|
(1)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Twelve
Months Ended June 30, |
||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Total Individual Annuities(1):
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning total account value
|
$
|
143,976
|
|
|
$
|
161,890
|
|
|
$
|
169,681
|
|
|
$
|
151,080
|
|
|
$
|
165,313
|
|
Sales
|
1,346
|
|
|
2,675
|
|
|
3,273
|
|
|
4,982
|
|
|
8,011
|
|
|||||
Full surrenders and death benefits
|
(1,410
|
)
|
|
(2,397
|
)
|
|
(3,929
|
)
|
|
(4,337
|
)
|
|
(8,966
|
)
|
|||||
Sales, net of full surrenders and death benefits
|
(64
|
)
|
|
278
|
|
|
(656
|
)
|
|
645
|
|
|
(955
|
)
|
|||||
Partial withdrawals and other benefit payments
|
(1,146
|
)
|
|
(1,229
|
)
|
|
(2,545
|
)
|
|
(2,465
|
)
|
|
(5,243
|
)
|
|||||
Net flows
|
(1,210
|
)
|
|
(951
|
)
|
|
(3,201
|
)
|
|
(1,820
|
)
|
|
(6,198
|
)
|
|||||
Change in market value, interest credited and other activity
|
17,358
|
|
|
5,289
|
|
|
(5,464
|
)
|
|
17,862
|
|
|
3,747
|
|
|||||
Policy charges
|
(848
|
)
|
|
(915
|
)
|
|
(1,740
|
)
|
|
(1,809
|
)
|
|
(3,586
|
)
|
|||||
Ending total account value
|
$
|
159,276
|
|
|
$
|
165,313
|
|
|
$
|
159,276
|
|
|
$
|
165,313
|
|
|
$
|
159,276
|
|
(1)
|
Includes gross variable and fixed annuities sold as retail investment products. Investments sold through defined contribution plan products are included with such products within our Retirement business. Variable annuity account values were $154.1 billion and $161.0 billion as of June 30, 2020 and 2019, respectively. Fixed annuity account values were $5.2 billion and $4.3 billion as of June 30, 2020 and 2019, respectively.
|
|
June 30,
2020
|
|
December 31,
2019
|
||||
|
(in millions)
|
||||||
U.S. GAAP liability, including NPR, net of reinsurance recoverables(1)
|
$
|
25,777
|
|
|
$
|
12,612
|
|
NPR adjustment, net of reinsurance recoverables(1)
|
6,539
|
|
|
3,522
|
|
||
Subtotal
|
32,316
|
|
|
16,134
|
|
||
Adjustments including risk margins and valuation methodology differences
|
(8,907
|
)
|
|
(4,385
|
)
|
||
Economic liability managed through the ALM strategy
|
$
|
23,409
|
|
|
$
|
11,749
|
|
(1)
|
Prior period amounts have been updated to conform to current period presentation.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Results excluded from adjusted operating income(2)
|
(in millions)(1)
|
||||||||||||||
Change in value of U.S. GAAP liability, pre-NPR(3)
|
$
|
5,467
|
|
|
$
|
(2,545
|
)
|
|
$
|
(15,071
|
)
|
|
$
|
(2,265
|
)
|
Change in the NPR adjustment
|
(3,582
|
)
|
|
190
|
|
|
3,017
|
|
|
(873
|
)
|
||||
Change in fair value of hedge assets, excluding capital hedges(4)
|
(3,349
|
)
|
|
1,410
|
|
|
8,605
|
|
|
1,265
|
|
||||
Change in fair value of capital hedges(5)
|
(704
|
)
|
|
(159
|
)
|
|
248
|
|
|
(631
|
)
|
||||
Other
|
(10
|
)
|
|
223
|
|
|
158
|
|
|
279
|
|
||||
Realized investment gains (losses), net, and related adjustments
|
(2,178
|
)
|
|
(881
|
)
|
|
(3,043
|
)
|
|
(2,225
|
)
|
||||
Market experience updates(6)
|
18
|
|
|
(10
|
)
|
|
(628
|
)
|
|
(10
|
)
|
||||
Charges related to realized investment gains (losses), net
|
474
|
|
|
56
|
|
|
99
|
|
|
190
|
|
||||
Total results excluded from adjusted operating income(7)
|
$
|
(1,686
|
)
|
|
$
|
(835
|
)
|
|
$
|
(3,572
|
)
|
|
$
|
(2,045
|
)
|
(1)
|
Positive amount represents income; negative amount represents a loss.
|
(2)
|
Includes the impact of annual reviews and update of assumptions and other refinements.
|
(3)
|
Represents the change in the liability (excluding NPR) for our variable annuities living benefit guarantees which is measured utilizing a valuation methodology that is required under U.S. GAAP. This liability includes such items as risk margins which are required by U.S. GAAP but not included in our best estimate of the liability.
|
(4)
|
Represents the change in fair value of the derivatives utilized to hedge potential claims associated with our variable annuity living benefit guarantees.
|
(5)
|
Represents the changes in fair value of equity derivatives of the capital hedge program intended to protect a portion of the overall capital position of the variable annuities business against its exposure to the equity markets.
|
(6)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019.
|
(7)
|
Excludes amounts from the changes in fair value of fixed income instruments recorded in OCI (versus net income): a loss of $4 million and gain of $391 million for the three months ended June 30, 2020 and 2019, respectively; and a gain of $1,702 million and $651 million for the six months ended June 30, 2020 and 2019, respectively.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
June 30, 2019
|
|||||||||||||||
|
|
Account
Value
|
|
% of
Total
|
|
Account
Value
|
|
% of
Total
|
|
Account
Value
|
|
% of
Total
|
|||||||||
|
|
($ in millions)
|
|||||||||||||||||||
Living benefit/GMDB features(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Both ALM strategy and automatic rebalancing(2)(3)
|
|
$
|
102,137
|
|
|
66
|
%
|
|
$
|
111,535
|
|
|
68
|
%
|
|
$
|
109,819
|
|
|
68
|
%
|
ALM strategy only(3)
|
|
6,836
|
|
|
4
|
%
|
|
7,703
|
|
|
5
|
%
|
|
7,855
|
|
|
5
|
%
|
|||
Automatic rebalancing only
|
|
646
|
|
|
1
|
%
|
|
732
|
|
|
1
|
%
|
|
778
|
|
|
1
|
%
|
|||
External reinsurance(4)
|
|
2,855
|
|
|
2
|
%
|
|
3,150
|
|
|
2
|
%
|
|
3,096
|
|
|
2
|
%
|
|||
PDI
|
|
17,646
|
|
|
12
|
%
|
|
16,296
|
|
|
9
|
%
|
|
14,248
|
|
|
9
|
%
|
|||
Other products
|
|
2,225
|
|
|
1
|
%
|
|
2,457
|
|
|
1
|
%
|
|
2,475
|
|
|
1
|
%
|
|||
Total living benefit/GMDB features
|
|
$
|
132,345
|
|
|
|
|
$
|
141,873
|
|
|
|
|
$
|
138,271
|
|
|
|
|||
GMDB features and other(5)
|
|
21,734
|
|
|
14
|
%
|
|
23,055
|
|
|
14
|
%
|
|
22,746
|
|
|
14
|
%
|
|||
Total variable annuity account value
|
|
$
|
154,079
|
|
|
|
|
$
|
164,928
|
|
|
|
|
$
|
161,017
|
|
|
|
(1)
|
All contracts with living benefit guarantees also contain GMDB features, which cover the same insured contract.
|
(2)
|
Contracts with living benefits that are included in our ALM strategy and that have an automatic rebalancing feature.
|
(3)
|
Excludes PDI which is presented separately within this table.
|
(4)
|
Represents contracts subject to a reinsurance transaction with an external counterparty covering certain new Highest Daily Lifetime Income (“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.
|
(5)
|
Includes contracts that have a GMDB feature and do not have an automatic rebalancing feature.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Operating results:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,563
|
|
|
$
|
1,508
|
|
|
$
|
3,093
|
|
|
$
|
2,990
|
|
Benefits and expenses
|
1,627
|
|
|
1,643
|
|
|
3,177
|
|
|
3,020
|
|
||||
Adjusted operating income
|
(64
|
)
|
|
(135
|
)
|
|
(84
|
)
|
|
(30
|
)
|
||||
Realized investment gains (losses), net, and related adjustments
|
(16
|
)
|
|
158
|
|
|
549
|
|
|
277
|
|
||||
Charges related to realized investment gains (losses), net
|
65
|
|
|
(62
|
)
|
|
(353
|
)
|
|
(168
|
)
|
||||
Market experience updates(1)
|
78
|
|
|
(160
|
)
|
|
(216
|
)
|
|
(160
|
)
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
63
|
|
|
$
|
(199
|
)
|
|
$
|
(104
|
)
|
|
$
|
(81
|
)
|
(1)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
|
Three Months Ended June 30, 2020
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||
|
|
Prudential
Advisors
|
|
Third-
Party
|
|
Total
|
|
Prudential
Advisors
|
|
Third-
Party
|
|
Total
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Term Life
|
|
$
|
7
|
|
|
$
|
33
|
|
|
$
|
40
|
|
|
$
|
7
|
|
|
$
|
46
|
|
|
$
|
53
|
|
Guaranteed Universal Life(1)
|
|
1
|
|
|
33
|
|
|
34
|
|
|
2
|
|
|
22
|
|
|
24
|
|
||||||
Other Universal Life(1)
|
|
5
|
|
|
18
|
|
|
23
|
|
|
11
|
|
|
37
|
|
|
48
|
|
||||||
Variable Life
|
|
22
|
|
|
65
|
|
|
87
|
|
|
19
|
|
|
37
|
|
|
56
|
|
||||||
Total
|
|
$
|
35
|
|
|
$
|
149
|
|
|
$
|
184
|
|
|
$
|
39
|
|
|
$
|
142
|
|
|
$
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Six Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||
|
|
Prudential
Advisors
|
|
Third-
Party
|
|
Total
|
|
Prudential
Advisors
|
|
Third-
Party
|
|
Total
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Term Life
|
|
$
|
13
|
|
|
$
|
67
|
|
|
$
|
80
|
|
|
$
|
14
|
|
|
$
|
90
|
|
|
$
|
104
|
|
Guaranteed Universal Life(1)
|
|
3
|
|
|
60
|
|
|
63
|
|
|
4
|
|
|
41
|
|
|
45
|
|
||||||
Other Universal Life(1)
|
|
12
|
|
|
41
|
|
|
53
|
|
|
20
|
|
|
58
|
|
|
78
|
|
||||||
Variable Life
|
|
42
|
|
|
133
|
|
|
175
|
|
|
35
|
|
|
82
|
|
|
117
|
|
||||||
Total
|
|
$
|
70
|
|
|
$
|
301
|
|
|
$
|
371
|
|
|
$
|
73
|
|
|
$
|
271
|
|
|
$
|
344
|
|
(1)
|
Single pay life premiums and excess (unscheduled) premiums are included in annualized new business premiums based on a 10% credit and represented approximately 12% and 7% of Guaranteed Universal Life and 11% and 17% of Other Universal Life annualized new business premiums for the three months ended June 30, 2020 and 2019, respectively, and approximately 9% and 7% of Guaranteed Universal Life and 10% and 14% of Other Universal Life annualized new business premiums for the six months ended June 30, 2020 and 2019, respectively. Prior period percentages have been updated to conform to current period presentation.
|
|
|
Three Months Ended
June 30, 2020 |
|
Six Months Ended
June 30, 2020 |
||||
|
|
(in millions)
|
||||||
Operating results:
|
|
|
|
|
||||
Revenues
|
|
$
|
59
|
|
|
$
|
119
|
|
Expenses
|
|
75
|
|
|
158
|
|
||
Adjusted operating income
|
|
(16
|
)
|
|
(39
|
)
|
||
Other adjustments(1)
|
|
32
|
|
|
77
|
|
||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
|
$
|
16
|
|
|
$
|
38
|
|
(1)
|
“Other adjustments” include certain components of the consideration for the Assurance IQ acquisition, which are recognized as compensation expense over the requisite service periods, as well as changes in the fair value of contingent consideration. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
•
|
In April 2020, we entered into a definitive agreement with KB Financial Group, Inc., a Korean financial services provider, to sell The Prudential Life Insurance Company of Korea, Ltd. (“POK”) for cash consideration of approximately $1.9 billion (based on current exchange rates) to be paid at closing. The transaction is consistent with our strategic focus internationally on Japan and higher-growth emerging markets around the world. The transaction is expected to close by the end of 2020, subject to regulatory approvals and customary closing conditions. In the second quarter of 2020, we reported our investment in POK as “held for sale” and recognized an approximately $700 million after-tax charge to earnings to adjust the carrying value of POK to the fair market value reflected in the purchase price (see Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information). Effective in the second quarter of 2020, the results of this business and the impact of the anticipated sale are reflected in the Divested and Run-off Businesses that are included in Corporate and Other, and all prior period amounts have been updated to conform to the current period presentation. We intend to use the proceeds of the transaction for general corporate purposes.
|
•
|
We are exploring strategic options for our Taiwanese insurance business, which may include a sale.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Operating results(1):
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Life Planner
|
$
|
2,474
|
|
|
$
|
2,409
|
|
|
$
|
5,333
|
|
|
$
|
5,156
|
|
Gibraltar Life and Other
|
2,759
|
|
|
2,649
|
|
|
5,677
|
|
|
5,626
|
|
||||
Total revenues
|
5,233
|
|
|
5,058
|
|
|
11,010
|
|
|
10,782
|
|
||||
Benefits and expenses:
|
|
|
|
|
|
|
|
||||||||
Life Planner
|
2,170
|
|
|
2,030
|
|
|
4,665
|
|
|
4,359
|
|
||||
Gibraltar Life and Other
|
2,370
|
|
|
2,238
|
|
|
4,954
|
|
|
4,774
|
|
||||
Total benefits and expenses
|
4,540
|
|
|
4,268
|
|
|
9,619
|
|
|
9,133
|
|
||||
Adjusted operating income:
|
|
|
|
|
|
|
|
||||||||
Life Planner
|
304
|
|
|
379
|
|
|
668
|
|
|
797
|
|
||||
Gibraltar Life and Other
|
389
|
|
|
411
|
|
|
723
|
|
|
852
|
|
||||
Total adjusted operating income
|
693
|
|
|
790
|
|
|
1,391
|
|
|
1,649
|
|
||||
Realized investment gains (losses), net, and related adjustments(2)
|
177
|
|
|
261
|
|
|
662
|
|
|
783
|
|
||||
Charges related to realized investment gains (losses), net
|
(15
|
)
|
|
(3
|
)
|
|
(22
|
)
|
|
(3
|
)
|
||||
Market experience updates(3)
|
(37
|
)
|
|
(37
|
)
|
|
(46
|
)
|
|
(37
|
)
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
(34
|
)
|
|
(28
|
)
|
|
(30
|
)
|
|
(58
|
)
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
784
|
|
|
$
|
983
|
|
|
$
|
1,955
|
|
|
$
|
2,334
|
|
(1)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(2)
|
Prior period amounts have been updated to conform to current period presentation.
|
(3)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Annualized new business premiums(1):
|
|
|
|
|
|
|
|
||||||||
On an actual exchange rate basis:
|
|
|
|
|
|
|
|
||||||||
Life Planner
|
$
|
166
|
|
|
$
|
253
|
|
|
$
|
487
|
|
|
$
|
608
|
|
Gibraltar Life and Other
|
197
|
|
|
296
|
|
|
504
|
|
|
619
|
|
||||
Total
|
$
|
363
|
|
|
$
|
549
|
|
|
$
|
991
|
|
|
$
|
1,227
|
|
On a constant exchange rate basis:
|
|
|
|
|
|
|
|
||||||||
Life Planner
|
$
|
178
|
|
|
$
|
255
|
|
|
$
|
505
|
|
|
$
|
613
|
|
Gibraltar Life and Other
|
198
|
|
|
298
|
|
|
507
|
|
|
623
|
|
||||
Total
|
$
|
376
|
|
|
$
|
553
|
|
|
$
|
1,012
|
|
|
$
|
1,236
|
|
(1)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
Three Months Ended June 30, 2020
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||||||
|
Life
|
|
Accident
&
Health
|
|
Retirement(1)
|
|
Annuity
|
|
Total
|
|
Life
|
|
Accident
&
Health
|
|
Retirement(1)
|
|
Annuity
|
|
Total
|
||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Life Planner(2)
|
$
|
89
|
|
|
$
|
18
|
|
|
$
|
71
|
|
|
$
|
0
|
|
|
$
|
178
|
|
|
$
|
137
|
|
|
$
|
23
|
|
|
$
|
95
|
|
|
$
|
0
|
|
|
$
|
255
|
|
Gibraltar Life and Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Life Consultants
|
$
|
59
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
17
|
|
|
$
|
89
|
|
|
$
|
84
|
|
|
$
|
10
|
|
|
$
|
19
|
|
|
$
|
56
|
|
|
$
|
169
|
|
Banks(3)
|
57
|
|
|
0
|
|
|
3
|
|
|
2
|
|
|
62
|
|
|
73
|
|
|
0
|
|
|
9
|
|
|
3
|
|
|
85
|
|
||||||||||
Independent Agency
|
18
|
|
|
2
|
|
|
27
|
|
|
0
|
|
|
47
|
|
|
19
|
|
|
3
|
|
|
18
|
|
|
4
|
|
|
44
|
|
||||||||||
Subtotal
|
134
|
|
|
9
|
|
|
36
|
|
|
19
|
|
|
198
|
|
|
176
|
|
|
13
|
|
|
46
|
|
|
63
|
|
|
298
|
|
||||||||||
Total
|
$
|
223
|
|
|
$
|
27
|
|
|
$
|
107
|
|
|
$
|
19
|
|
|
$
|
376
|
|
|
$
|
313
|
|
|
$
|
36
|
|
|
$
|
141
|
|
|
$
|
63
|
|
|
$
|
553
|
|
(1)
|
Includes retirement income, endowment and savings variable universal life.
|
(2)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(3)
|
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 3% and 75%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the three months ended June 30, 2020, and 0% and 68%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the three months ended June 30, 2019.
|
|
Six Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||||||
|
Life
|
|
Accident
&
Health
|
|
Retirement(1)
|
|
Annuity
|
|
Total
|
|
Life
|
|
Accident
&
Health
|
|
Retirement(1)
|
|
Annuity
|
|
Total
|
||||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Life Planner(2)
|
$
|
268
|
|
|
$
|
42
|
|
|
$
|
194
|
|
|
$
|
1
|
|
|
$
|
505
|
|
|
$
|
345
|
|
|
$
|
56
|
|
|
$
|
209
|
|
|
$
|
3
|
|
|
$
|
613
|
|
Gibraltar Life and Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Life Consultants
|
$
|
141
|
|
|
$
|
16
|
|
|
$
|
24
|
|
|
$
|
39
|
|
|
$
|
220
|
|
|
$
|
171
|
|
|
$
|
21
|
|
|
$
|
42
|
|
|
$
|
101
|
|
|
$
|
335
|
|
Banks(3)
|
177
|
|
|
0
|
|
|
13
|
|
|
4
|
|
|
194
|
|
|
167
|
|
|
0
|
|
|
18
|
|
|
8
|
|
|
193
|
|
||||||||||
Independent Agency
|
40
|
|
|
3
|
|
|
48
|
|
|
2
|
|
|
93
|
|
|
50
|
|
|
6
|
|
|
27
|
|
|
12
|
|
|
95
|
|
||||||||||
Subtotal
|
358
|
|
|
19
|
|
|
85
|
|
|
45
|
|
|
507
|
|
|
388
|
|
|
27
|
|
|
87
|
|
|
121
|
|
|
623
|
|
||||||||||
Total
|
$
|
626
|
|
|
$
|
61
|
|
|
$
|
279
|
|
|
$
|
46
|
|
|
$
|
1,012
|
|
|
$
|
733
|
|
|
$
|
83
|
|
|
$
|
296
|
|
|
$
|
124
|
|
|
$
|
1,236
|
|
(1)
|
Includes retirement income, endowment and savings variable universal life.
|
(2)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(3)
|
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 4% and 70%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the six months ended June 30, 2020, and 0% and 66%, respectively, of total Japanese bank distribution channel annualized new business premiums, excluding annuity products, for the six months ended June 30, 2019.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Operating results:
|
|
|
|
|
|
|
|
||||||||
Interest expense on debt(1)
|
$
|
(227
|
)
|
|
$
|
(222
|
)
|
|
$
|
(445
|
)
|
|
$
|
(439
|
)
|
Investment income(1)
|
26
|
|
|
64
|
|
|
74
|
|
|
126
|
|
||||
Pension and employee benefits
|
58
|
|
|
36
|
|
|
108
|
|
|
60
|
|
||||
Other corporate activities(2)
|
(398
|
)
|
|
(213
|
)
|
|
(620
|
)
|
|
(494
|
)
|
||||
Adjusted operating income
|
(541
|
)
|
|
(335
|
)
|
|
(883
|
)
|
|
(747
|
)
|
||||
Realized investment gains (losses), net, and related adjustments
|
(1,179
|
)
|
|
(157
|
)
|
|
(1,219
|
)
|
|
(207
|
)
|
||||
Charges related to realized investment gains (losses), net
|
(17
|
)
|
|
(81
|
)
|
|
4
|
|
|
(87
|
)
|
||||
Market experience updates(3)
|
(4
|
)
|
|
0
|
|
|
4
|
|
|
0
|
|
||||
Divested and Run-off Businesses(4)
|
(602
|
)
|
|
168
|
|
|
(580
|
)
|
|
415
|
|
||||
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests
|
(14
|
)
|
|
(7
|
)
|
|
8
|
|
|
(15
|
)
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(2,357
|
)
|
|
$
|
(412
|
)
|
|
$
|
(2,666
|
)
|
|
$
|
(641
|
)
|
(1)
|
Prior period amounts have been updated to conform to current period presentation.
|
(2)
|
Includes consolidating adjustments.
|
(3)
|
Represents the immediate impacts in current period results from changes in current market conditions on estimates of profitability, which are excluded from adjusted operating income beginning with the second quarter of 2019. See Note 13 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
(4)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Long-Term Care
|
$
|
107
|
|
|
$
|
145
|
|
|
$
|
188
|
|
|
$
|
309
|
|
Other(1)
|
(709
|
)
|
|
23
|
|
|
(768
|
)
|
|
106
|
|
||||
Total Divested and Run-off Businesses income (loss) excluded from adjusted operating income
|
$
|
(602
|
)
|
|
$
|
168
|
|
|
$
|
(580
|
)
|
|
$
|
415
|
|
(1)
|
Effective second quarter of 2020, the results of POK and the impact of its anticipated sale are excluded from the International Businesses and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Unaudited Interim Consolidated Financial Statements for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
U.S. GAAP results:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,340
|
|
|
$
|
1,301
|
|
|
$
|
2,017
|
|
|
$
|
2,675
|
|
Benefits and expenses
|
1,362
|
|
|
1,322
|
|
|
2,040
|
|
|
2,715
|
|
||||
Income (loss) before income taxes and equity in earnings of operating joint ventures
|
$
|
(22
|
)
|
|
$
|
(21
|
)
|
|
$
|
(23
|
)
|
|
$
|
(40
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
Retirement:
|
|
|
|
|
|
|
|
||||||||
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net(1)
|
$
|
768
|
|
|
$
|
318
|
|
|
$
|
479
|
|
|
$
|
644
|
|
Change in experience-rated contractholder liabilities due to asset value changes
|
(787
|
)
|
|
(331
|
)
|
|
(460
|
)
|
|
(610
|
)
|
||||
Gains (losses), net, on experienced rated contracts(2)(3)
|
$
|
(19
|
)
|
|
$
|
(13
|
)
|
|
$
|
19
|
|
|
$
|
34
|
|
International Businesses:
|
|
|
|
|
|
|
|
||||||||
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net
|
$
|
163
|
|
|
$
|
(18
|
)
|
|
$
|
(173
|
)
|
|
$
|
106
|
|
Change in experience-rated contractholder liabilities due to asset value changes
|
(163
|
)
|
|
18
|
|
|
173
|
|
|
(106
|
)
|
||||
Gains (losses), net, on experienced rated contracts
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total:
|
|
|
|
|
|
|
|
||||||||
Investment gains (losses) on assets supporting experience-rated contractholder liabilities, net(1)
|
$
|
931
|
|
|
$
|
300
|
|
|
$
|
306
|
|
|
$
|
750
|
|
Change in experience-rated contractholder liabilities due to asset value changes
|
(950
|
)
|
|
(313
|
)
|
|
(287
|
)
|
|
(716
|
)
|
||||
Gains (losses), net, on experienced rated contracts(2)(3)
|
$
|
(19
|
)
|
|
$
|
(13
|
)
|
|
$
|
19
|
|
|
$
|
34
|
|
(1)
|
Prior period amounts have been reclassified to conform to current period presentation.
|
(2)
|
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 $3 million and $9 million as of June 30, 2020 and 2019, 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.
|
(3)
|
Included in the amounts above related to the change in the liability to contractholders as a result of commercial mortgage and other loans are increases of $31 million and $26 million for the three months ended June 30, 2020 and 2019, respectively, and a decrease of $6 million and an increase of $55 million for the six months ended June 30, 2020 and 2019, 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 June 30, 2020
|
|
As of December 31, 2019
|
||||||||||||||||||||||||||||
|
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
|
$
|
365,612
|
|
|
$
|
4,753
|
|
|
$
|
42,332
|
|
|
$
|
1,099
|
|
|
$
|
349,720
|
|
|
$
|
3,570
|
|
|
$
|
41,376
|
|
|
$
|
745
|
|
Assets supporting experience-rated contractholder liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed maturities
|
20,328
|
|
|
747
|
|
|
0
|
|
|
0
|
|
|
19,530
|
|
|
730
|
|
|
0
|
|
|
0
|
|
||||||||
Equity securities
|
1,683
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1,790
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
All other(2)
|
915
|
|
|
7
|
|
|
0
|
|
|
0
|
|
|
261
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
Subtotal
|
22,926
|
|
|
754
|
|
|
0
|
|
|
0
|
|
|
21,581
|
|
|
730
|
|
|
0
|
|
|
0
|
|
||||||||
Fixed maturities, trading
|
3,694
|
|
|
225
|
|
|
239
|
|
|
11
|
|
|
3,628
|
|
|
275
|
|
|
256
|
|
|
12
|
|
||||||||
Equity securities
|
4,826
|
|
|
523
|
|
|
2,047
|
|
|
71
|
|
|
5,140
|
|
|
557
|
|
|
2,245
|
|
|
76
|
|
||||||||
Commercial mortgage and other
loans
|
682
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
228
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
Other invested assets(3)
|
2,301
|
|
|
658
|
|
|
0
|
|
|
0
|
|
|
1,433
|
|
|
567
|
|
|
0
|
|
|
0
|
|
||||||||
Short-term investments
|
8,892
|
|
|
34
|
|
|
84
|
|
|
10
|
|
|
3,789
|
|
|
119
|
|
|
147
|
|
|
36
|
|
||||||||
Cash equivalents
|
9,867
|
|
|
1
|
|
|
226
|
|
|
0
|
|
|
8,855
|
|
|
99
|
|
|
151
|
|
|
32
|
|
||||||||
Other assets
|
377
|
|
|
377
|
|
|
0
|
|
|
0
|
|
|
113
|
|
|
113
|
|
|
0
|
|
|
0
|
|
||||||||
Separate account assets
|
277,885
|
|
|
1,684
|
|
|
0
|
|
|
0
|
|
|
288,724
|
|
|
1,717
|
|
|
0
|
|
|
0
|
|
||||||||
Total assets
|
$
|
697,062
|
|
|
$
|
9,009
|
|
|
$
|
44,928
|
|
|
$
|
1,191
|
|
|
$
|
683,211
|
|
|
$
|
7,747
|
|
|
$
|
44,175
|
|
|
$
|
901
|
|
Future policy benefits
|
$
|
26,439
|
|
|
$
|
26,439
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
12,831
|
|
|
$
|
12,831
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Policyholders’ account balances
|
1,441
|
|
|
1,441
|
|
|
0
|
|
|
0
|
|
|
1,316
|
|
|
1,316
|
|
|
0
|
|
|
0
|
|
||||||||
Other liabilities(3)
|
287
|
|
|
0
|
|
|
5
|
|
|
0
|
|
|
928
|
|
|
105
|
|
|
8
|
|
|
0
|
|
||||||||
Notes issued by consolidated
variable interest entities
(“VIEs”)
|
741
|
|
|
741
|
|
|
0
|
|
|
0
|
|
|
800
|
|
|
800
|
|
|
0
|
|
|
0
|
|
||||||||
Total liabilities
|
$
|
28,908
|
|
|
$
|
28,621
|
|
|
$
|
5
|
|
|
$
|
0
|
|
|
$
|
15,875
|
|
|
$
|
15,052
|
|
|
$
|
8
|
|
|
$
|
0
|
|
(1)
|
Level 3 assets expressed 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 1.3% and 2.7%, respectively, as of June 30, 2020, and 1.1% and 2.0%, respectively, as of December 31, 2019.
|
(2)
|
“All other” represents cash equivalents and short-term investments.
|
(3)
|
“Other invested assets” and “Other liabilities” primarily include derivatives. The amounts include the impact of netting subject to master netting agreements.
|
|
|
June 30, 2020
|
|||||||||||||
|
|
PFI Excluding
Closed Block Division
|
|
Closed Block
Division
|
|
Total
|
|||||||||
|
|
($ in millions)
|
|||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|||||||
Public, available-for-sale, at fair value
|
|
$
|
310,203
|
|
|
64.6
|
%
|
|
$
|
30,264
|
|
|
$
|
340,467
|
|
Public, held-to-maturity, at amortized cost, net of allowance
|
|
1,662
|
|
|
0.3
|
|
|
0
|
|
|
1,662
|
|
|||
Private, available-for-sale, at fair value
|
|
54,793
|
|
|
11.4
|
|
|
12,069
|
|
|
66,862
|
|
|||
Private, held-to-maturity, at amortized cost, net of allowance
|
|
213
|
|
|
0.1
|
|
|
0
|
|
|
213
|
|
|||
Fixed maturities, trading, at fair value
|
|
2,610
|
|
|
0.6
|
|
|
239
|
|
|
2,849
|
|
|||
Assets supporting experience-rated contractholder liabilities, at fair value
|
|
23,245
|
|
|
4.8
|
|
|
0
|
|
|
23,245
|
|
|||
Equity securities, at fair value
|
|
4,314
|
|
|
0.9
|
|
|
2,047
|
|
|
6,361
|
|
|||
Commercial mortgage and other loans, at book value, net of allowance
|
|
54,377
|
|
|
11.3
|
|
|
8,389
|
|
|
62,766
|
|
|||
Policy loans, at outstanding balance
|
|
8,125
|
|
|
1.7
|
|
|
4,158
|
|
|
12,283
|
|
|||
Other invested assets, net of allowance(1)
|
|
9,578
|
|
|
2.0
|
|
|
3,259
|
|
|
12,837
|
|
|||
Short-term investments, net of allowance
|
|
11,286
|
|
|
2.3
|
|
|
94
|
|
|
11,380
|
|
|||
Total general account investments
|
|
480,406
|
|
|
100.0
|
%
|
|
60,519
|
|
|
540,925
|
|
|||
Invested assets of other entities and operations(2)
|
|
7,007
|
|
|
|
|
|
0
|
|
|
7,007
|
|
|||
Total investments
|
|
$
|
487,413
|
|
|
|
|
|
$
|
60,519
|
|
|
$
|
547,932
|
|
|
|
December 31, 2019
|
|||||||||||||
|
|
PFI Excluding
Closed Block Division
|
|
Closed Block
Division
|
|
Total
|
|||||||||
|
|
($ in millions)
|
|||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|||||||
Public, available-for-sale, at fair value
|
|
$
|
296,382
|
|
|
64.9
|
%
|
|
$
|
29,011
|
|
|
$
|
325,393
|
|
Public, held-to-maturity, at amortized cost
|
|
1,705
|
|
|
0.4
|
|
|
0
|
|
|
1,705
|
|
|||
Private, available-for-sale, at fair value
|
|
52,750
|
|
|
11.6
|
|
|
12,365
|
|
|
65,115
|
|
|||
Private, held-to-maturity, at amortized cost
|
|
228
|
|
|
0.1
|
|
|
0
|
|
|
228
|
|
|||
Fixed maturities, trading, at fair value
|
|
2,467
|
|
|
0.5
|
|
|
256
|
|
|
2,723
|
|
|||
Assets supporting experience-rated contractholder liabilities, at fair value
|
|
21,597
|
|
|
4.7
|
|
|
0
|
|
|
21,597
|
|
|||
Equity securities, at fair value
|
|
4,586
|
|
|
1.0
|
|
|
2,245
|
|
|
6,831
|
|
|||
Commercial mortgage and other loans, at book value, net of allowance
|
|
54,671
|
|
|
12.0
|
|
|
8,629
|
|
|
63,300
|
|
|||
Policy loans, at outstanding balance
|
|
7,832
|
|
|
1.7
|
|
|
4,264
|
|
|
12,096
|
|
|||
Other invested assets(1)
|
|
9,210
|
|
|
2.0
|
|
|
3,334
|
|
|
12,544
|
|
|||
Short-term investments
|
|
5,223
|
|
|
1.1
|
|
|
227
|
|
|
5,450
|
|
|||
Total general account investments
|
|
456,651
|
|
|
100.0
|
%
|
|
60,331
|
|
|
516,982
|
|
|||
Invested assets of other entities and operations(2)
|
|
5,778
|
|
|
|
|
0
|
|
|
5,778
|
|
||||
Total investments
|
|
$
|
462,429
|
|
|
|
|
$
|
60,331
|
|
|
$
|
522,760
|
|
(1)
|
Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments. For additional information regarding these investments, see “—Other Invested Assets” 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.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions)
|
||||||
Fixed maturities:
|
|
|
|
|
||||
Public, available-for-sale, at fair value
|
|
$
|
146,391
|
|
|
$
|
142,220
|
|
Public, held-to-maturity, at amortized cost, net of allowance
|
|
1,662
|
|
|
1,705
|
|
||
Private, available-for-sale, at fair value
|
|
19,953
|
|
|
19,189
|
|
||
Private, held-to-maturity, at amortized cost, net of allowance
|
|
213
|
|
|
228
|
|
||
Fixed maturities, trading, at fair value
|
|
472
|
|
|
492
|
|
||
Assets supporting experience-rated contractholder liabilities, at fair value
|
|
2,603
|
|
|
2,777
|
|
||
Equity securities, at fair value
|
|
1,927
|
|
|
2,185
|
|
||
Commercial mortgage and other loans, at book value, net of allowance
|
|
19,214
|
|
|
19,138
|
|
||
Policy loans, at outstanding balance
|
|
3,257
|
|
|
2,859
|
|
||
Other invested assets(1)
|
|
2,687
|
|
|
2,187
|
|
||
Short-term investments
|
|
658
|
|
|
165
|
|
||
Total Japanese general account investments
|
|
$
|
199,037
|
|
|
$
|
193,145
|
|
(1)
|
Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments and other miscellaneous investments.
|
|
Three Months Ended June 30, 2020
|
|||||||||||||||||||||||||||
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(5)
|
|||||||||||||||||||
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
($ in millions)
|
|||||||||||||||||||||||||||
Fixed maturities(2)
|
4.42
|
%
|
|
$
|
1,852
|
|
|
2.77
|
%
|
|
$
|
952
|
|
|
3.68
|
%
|
|
$
|
2,804
|
|
|
$
|
395
|
|
|
$
|
3,199
|
|
Assets supporting experience-rated contractholder liabilities
|
3.12
|
|
|
155
|
|
|
1.11
|
|
|
7
|
|
|
2.89
|
|
|
162
|
|
|
0
|
|
|
162
|
|
|||||
Equity securities
|
1.72
|
|
|
10
|
|
|
7.21
|
|
|
33
|
|
|
4.23
|
|
|
43
|
|
|
11
|
|
|
54
|
|
|||||
Commercial mortgage and other loans
|
3.94
|
|
|
345
|
|
|
3.79
|
|
|
180
|
|
|
3.88
|
|
|
525
|
|
|
89
|
|
|
614
|
|
|||||
Policy loans
|
5.19
|
|
|
63
|
|
|
3.20
|
|
|
25
|
|
|
4.42
|
|
|
88
|
|
|
63
|
|
|
151
|
|
|||||
Short-term investments and cash equivalents
|
0.87
|
|
|
60
|
|
|
0.89
|
|
|
3
|
|
|
0.87
|
|
|
63
|
|
|
2
|
|
|
65
|
|
|||||
Gross investment income
|
3.88
|
|
|
2,485
|
|
|
2.90
|
|
|
1,200
|
|
|
3.49
|
|
|
3,685
|
|
|
560
|
|
|
4,245
|
|
|||||
Investment expenses
|
(0.11
|
)
|
|
(62
|
)
|
|
(0.14
|
)
|
|
(56
|
)
|
|
(0.12
|
)
|
|
(118
|
)
|
|
(32
|
)
|
|
(150
|
)
|
|||||
Investment income after investment expenses
|
3.77
|
%
|
|
2,423
|
|
|
2.76
|
%
|
|
1,144
|
|
|
3.37
|
%
|
|
3,567
|
|
|
528
|
|
|
4,095
|
|
|||||
Other invested assets(3)
|
|
|
(62
|
)
|
|
|
|
79
|
|
|
|
|
17
|
|
|
(17
|
)
|
|
0
|
|
||||||||
Investment results of other entities and operations(4)
|
|
|
91
|
|
|
|
|
0
|
|
|
|
|
91
|
|
|
0
|
|
|
91
|
|
||||||||
Total investment income
|
|
|
$
|
2,452
|
|
|
|
|
$
|
1,223
|
|
|
|
|
$
|
3,675
|
|
|
$
|
511
|
|
|
$
|
4,186
|
|
|
Three Months Ended June 30, 2019
|
|||||||||||||||||||||||||||
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(5)
|
|||||||||||||||||||
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
($ in millions)
|
|||||||||||||||||||||||||||
Fixed maturities(2)
|
4.63
|
%
|
|
$
|
1,887
|
|
|
2.83
|
%
|
|
$
|
955
|
|
|
3.82
|
%
|
|
$
|
2,842
|
|
|
$
|
426
|
|
|
$
|
3,268
|
|
Assets supporting experience-rated contractholder liabilities
|
3.66
|
|
|
175
|
|
|
1.17
|
|
|
7
|
|
|
3.36
|
|
|
182
|
|
|
0
|
|
|
182
|
|
|||||
Equity securities
|
1.82
|
|
|
10
|
|
|
5.48
|
|
|
27
|
|
|
3.60
|
|
|
37
|
|
|
14
|
|
|
51
|
|
|||||
Commercial mortgage and other loans
|
4.15
|
|
|
350
|
|
|
3.87
|
|
|
174
|
|
|
4.05
|
|
|
524
|
|
|
98
|
|
|
622
|
|
|||||
Policy loans
|
5.25
|
|
|
64
|
|
|
3.81
|
|
|
26
|
|
|
4.73
|
|
|
90
|
|
|
62
|
|
|
152
|
|
|||||
Short-term investments and cash equivalents
|
2.85
|
|
|
94
|
|
|
2.91
|
|
|
6
|
|
|
2.85
|
|
|
100
|
|
|
10
|
|
|
110
|
|
|||||
Gross investment income
|
4.38
|
|
|
2,580
|
|
|
2.97
|
|
|
1,195
|
|
|
3.81
|
|
|
3,775
|
|
|
610
|
|
|
4,385
|
|
|||||
Investment expenses
|
(0.12
|
)
|
|
(103
|
)
|
|
(0.13
|
)
|
|
(71
|
)
|
|
(0.13
|
)
|
|
(174
|
)
|
|
(55
|
)
|
|
(229
|
)
|
|||||
Investment income after investment expenses
|
4.26
|
%
|
|
2,477
|
|
|
2.84
|
%
|
|
1,124
|
|
|
3.68
|
%
|
|
3,601
|
|
|
555
|
|
|
4,156
|
|
|||||
Other invested assets(3)
|
|
|
132
|
|
|
|
|
52
|
|
|
|
|
184
|
|
|
19
|
|
|
203
|
|
||||||||
Investment results of other entities and operations(4)
|
|
|
31
|
|
|
|
|
0
|
|
|
|
|
31
|
|
|
0
|
|
|
31
|
|
||||||||
Total investment income
|
|
|
$
|
2,640
|
|
|
|
|
$
|
1,176
|
|
|
|
|
$
|
3,816
|
|
|
$
|
574
|
|
|
$
|
4,390
|
|
(1)
|
For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for securities lending liabilities). A yield is not presented for other invested assets as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to other invested assets.
|
(2)
|
Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in other invested assets.
|
(3)
|
Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments, fixed maturities classified as trading and other miscellaneous investments.
|
(4)
|
Includes net investment income of our investment management operations.
|
(5)
|
The total yield was 3.46% and 3.76% for the three months ended June 30, 2020 and 2019, respectively.
|
|
Six Months Ended June 30, 2020
|
|||||||||||||||||||||||||||
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(5)
|
|||||||||||||||||||
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
($ in millions)
|
|||||||||||||||||||||||||||
Fixed maturities(2)
|
4.49
|
%
|
|
$
|
3,747
|
|
|
2.77
|
%
|
|
$
|
1,898
|
|
|
3.72
|
%
|
|
$
|
5,645
|
|
|
$
|
794
|
|
|
$
|
6,439
|
|
Assets supporting experience-rated contractholder liabilities
|
3.25
|
|
|
315
|
|
|
2.14
|
|
|
28
|
|
|
3.12
|
|
|
343
|
|
|
0
|
|
|
343
|
|
|||||
Equity securities
|
1.82
|
|
|
21
|
|
|
3.99
|
|
|
39
|
|
|
2.83
|
|
|
60
|
|
|
23
|
|
|
83
|
|
|||||
Commercial mortgage and other loans
|
3.99
|
|
|
700
|
|
|
3.90
|
|
|
369
|
|
|
3.96
|
|
|
1,069
|
|
|
182
|
|
|
1,251
|
|
|||||
Policy loans
|
5.19
|
|
|
126
|
|
|
3.58
|
|
|
54
|
|
|
4.58
|
|
|
180
|
|
|
124
|
|
|
304
|
|
|||||
Short-term investments and cash equivalents
|
1.13
|
|
|
131
|
|
|
1.28
|
|
|
10
|
|
|
1.14
|
|
|
141
|
|
|
5
|
|
|
146
|
|
|||||
Gross investment income
|
4.01
|
|
|
5,040
|
|
|
2.91
|
|
|
2,398
|
|
|
3.58
|
|
|
7,438
|
|
|
1,128
|
|
|
8,566
|
|
|||||
Investment expenses
|
(0.12
|
)
|
|
(147
|
)
|
|
(0.14
|
)
|
|
(124
|
)
|
|
(0.13
|
)
|
|
(271
|
)
|
|
(75
|
)
|
|
(346
|
)
|
|||||
Investment income after investment expenses
|
3.89
|
%
|
|
4,893
|
|
|
2.77
|
%
|
|
2,274
|
|
|
3.45
|
%
|
|
7,167
|
|
|
1,053
|
|
|
8,220
|
|
|||||
Other invested assets(3)
|
|
|
19
|
|
|
|
|
52
|
|
|
|
|
71
|
|
|
3
|
|
|
74
|
|
||||||||
Investment results of other entities and operations(4)
|
|
|
94
|
|
|
|
|
0
|
|
|
|
|
94
|
|
|
0
|
|
|
94
|
|
||||||||
Total investment income
|
|
|
$
|
5,006
|
|
|
|
|
$
|
2,326
|
|
|
|
|
$
|
7,332
|
|
|
$
|
1,056
|
|
|
$
|
8,388
|
|
|
Six Months Ended June 30, 2019
|
|||||||||||||||||||||||||||
|
PFI Excluding Closed Block Division and Japanese Operations
|
|
Japanese Insurance Operations
|
|
PFI Excluding Closed Block Division
|
|
Closed Block Division
|
|
Total(5)
|
|||||||||||||||||||
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Yield(1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||||||||||
|
($ in millions)
|
|||||||||||||||||||||||||||
Fixed maturities(2)
|
4.64
|
%
|
|
$
|
3,735
|
|
|
2.83
|
%
|
|
$
|
1,892
|
|
|
3.82
|
%
|
|
$
|
5,627
|
|
|
$
|
845
|
|
|
$
|
6,472
|
|
Assets supporting experience-rated contractholder liabilities
|
3.60
|
|
|
340
|
|
|
2.15
|
|
|
27
|
|
|
3.43
|
|
|
367
|
|
|
0
|
|
|
367
|
|
|||||
Equity securities
|
2.12
|
|
|
22
|
|
|
3.48
|
|
|
34
|
|
|
2.79
|
|
|
56
|
|
|
25
|
|
|
81
|
|
|||||
Commercial mortgage and other loans
|
4.10
|
|
|
682
|
|
|
3.85
|
|
|
339
|
|
|
4.02
|
|
|
1,021
|
|
|
193
|
|
|
1,214
|
|
|||||
Policy loans
|
5.21
|
|
|
126
|
|
|
3.84
|
|
|
52
|
|
|
4.72
|
|
|
178
|
|
|
125
|
|
|
303
|
|
|||||
Short-term investments and cash equivalents
|
2.80
|
|
|
189
|
|
|
3.43
|
|
|
14
|
|
|
2.82
|
|
|
203
|
|
|
19
|
|
|
222
|
|
|||||
Gross investment income
|
4.37
|
|
|
5,094
|
|
|
2.96
|
|
|
2,358
|
|
|
3.80
|
|
|
7,452
|
|
|
1,207
|
|
|
8,659
|
|
|||||
Investment expenses
|
(0.13
|
)
|
|
(209
|
)
|
|
(0.13
|
)
|
|
(139
|
)
|
|
(0.13
|
)
|
|
(348
|
)
|
|
(109
|
)
|
|
(457
|
)
|
|||||
Investment income after investment expenses
|
4.24
|
%
|
|
4,885
|
|
|
2.83
|
%
|
|
2,219
|
|
|
3.67
|
%
|
|
7,104
|
|
|
1,098
|
|
|
8,202
|
|
|||||
Other invested assets(3)
|
|
|
170
|
|
|
|
|
103
|
|
|
|
|
273
|
|
|
39
|
|
|
312
|
|
||||||||
Investment results of other entities and operations(4)
|
|
|
92
|
|
|
|
|
0
|
|
|
|
|
92
|
|
|
0
|
|
|
92
|
|
||||||||
Total investment income
|
|
|
$
|
5,147
|
|
|
|
|
$
|
2,322
|
|
|
|
|
$
|
7,469
|
|
|
$
|
1,137
|
|
|
$
|
8,606
|
|
(1)
|
For interim periods, yields are annualized. The denominator in the yield percentage is based on quarterly average carrying values for all asset types except for fixed maturities which are based on amortized cost, net of allowance. Amounts for fixed maturities, short-term investments and cash equivalents are also netted for securities lending activity (i.e., income netted for rebate expenses and asset values netted for securities lending liabilities). A yield is not presented for other invested assets as it is not considered a meaningful measure of investment performance. Yields exclude investment income and assets related to other invested assets.
|
(2)
|
Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading, which are included in other invested assets.
|
(3)
|
Other invested assets consist of investments in LPs/LLCs, investment real estate held through direct ownership, derivative instruments, fixed maturities classified as trading and other miscellaneous investments.
|
(4)
|
Includes net investment income of our investment management operations.
|
(5)
|
The total yield was 3.53% and 3.75% for the six months ended June 30, 2020 and 2019, respectively.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in millions)
|
||||||||||||||
PFI excluding Closed Block Division:
|
|
|
|
|
|
|
|
||||||||
Realized investment gains (losses), net:
|
|
|
|
|
|
|
|
||||||||
Due to foreign exchange movements on securities approaching maturity(2)
|
$
|
(16
|
)
|
|
$
|
(16
|
)
|
|
$
|
(19
|
)
|
|
$
|
(16
|
)
|
Due to securities actively marketed for sale(2)
|
(12
|
)
|
|
0
|
|
|
(81
|
)
|
|
(1
|
)
|
||||
Due to credit or adverse conditions of the respective issuer(1)(3)
|
N/A
|
|
|
(12
|
)
|
|
N/A
|
|
|
(42
|
)
|
||||
Allowance for credit losses on fixed maturities(1)(3)
|
(68
|
)
|
|
N/A
|
|
|
(218
|
)
|
|
N/A
|
|
||||
Net gains (losses) on sales and maturities
|
144
|
|
|
103
|
|
|
455
|
|
|
372
|
|
||||
Fixed maturity securities(4)
|
48
|
|
|
75
|
|
|
137
|
|
|
313
|
|
||||
Commercial mortgage and other loans
|
0
|
|
|
(8
|
)
|
|
6
|
|
|
(11
|
)
|
||||
Derivatives
|
(3,710
|
)
|
|
(463
|
)
|
|
(2,601
|
)
|
|
(1,469
|
)
|
||||
OTTI losses on other invested assets recognized in earnings(3)
|
(9
|
)
|
|
0
|
|
|
(9
|
)
|
|
0
|
|
||||
Allowance for credit losses on other invested assets(3)
|
4
|
|
|
N/A
|
|
|
0
|
|
|
N/A
|
|
||||
Other net gains (losses)
|
24
|
|
|
5
|
|
|
21
|
|
|
6
|
|
||||
Other
|
19
|
|
|
5
|
|
|
12
|
|
|
6
|
|
||||
Subtotal
|
(3,643
|
)
|
|
(391
|
)
|
|
(2,446
|
)
|
|
(1,161
|
)
|
||||
Investment results of other entities and operations(5)
|
(101
|
)
|
|
6
|
|
|
113
|
|
|
(46
|
)
|
||||
Total — PFI excluding Closed Block Division
|
(3,744
|
)
|
|
(385
|
)
|
|
(2,333
|
)
|
|
(1,207
|
)
|
||||
Related adjustments(6)
|
553
|
|
|
(187
|
)
|
|
(649
|
)
|
|
13
|
|
||||
Realized investment gains (losses), net, and related adjustments(6)
|
(3,191
|
)
|
|
(572
|
)
|
|
(2,982
|
)
|
|
(1,194
|
)
|
||||
Charges related to realized investment gains (losses), net
|
519
|
|
|
(82
|
)
|
|
(283
|
)
|
|
(57
|
)
|
||||
Realized investment gains (losses), net, and charges related to realized investment gains (losses), net and adjustments(6)
|
$
|
(2,672
|
)
|
|
$
|
(654
|
)
|
|
$
|
(3,265
|
)
|
|
$
|
(1,251
|
)
|
Closed Block Division:
|
|
|
|
|
|
|
|
||||||||
Realized investment gains (losses), net:
|
|
|
|
|
|
|
|
||||||||
Due to foreign exchange movements on securities approaching maturity(2)
|
$
|
(38
|
)
|
|
$
|
(34
|
)
|
|
$
|
(47
|
)
|
|
$
|
(34
|
)
|
Due to securities actively marketed for sale(2)
|
1
|
|
|
0
|
|
|
(9
|
)
|
|
0
|
|
||||
Due to credit or adverse conditions of the respective issuer(1)(3)
|
N/A
|
|
|
(2
|
)
|
|
N/A
|
|
|
(6
|
)
|
||||
Allowance for credit losses on fixed maturities(1)(3)
|
(12
|
)
|
|
N/A
|
|
|
(20
|
)
|
|
N/A
|
|
||||
Net gains (losses) on sales and maturities
|
112
|
|
|
30
|
|
|
208
|
|
|
56
|
|
||||
Fixed maturity securities(4)
|
63
|
|
|
(6
|
)
|
|
132
|
|
|
16
|
|
||||
Commercial mortgage and other loans
|
(4
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Derivatives
|
(64
|
)
|
|
54
|
|
|
120
|
|
|
93
|
|
||||
OTTI losses on other invested assets recognized in earnings(3)
|
N/A
|
|
|
0
|
|
|
N/A
|
|
|
0
|
|
||||
Allowance for credit losses on other invested assets(3)
|
0
|
|
|
N/A
|
|
|
0
|
|
|
N/A
|
|
||||
Other net gains (losses)
|
(3
|
)
|
|
1
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Other
|
(3
|
)
|
|
1
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Subtotal — Closed Block Division
|
(8
|
)
|
|
49
|
|
|
248
|
|
|
105
|
|
||||
Consolidated PFI realized investment gains (losses), net
|
$
|
(3,752
|
)
|
|
$
|
(336
|
)
|
|
$
|
(2,085
|
)
|
|
$
|
(1,102
|
)
|
(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 or allowance 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 (2019) or allowance (2020).
|
(2)
|
Represents the difference between the fair value of the debt security and the amortized cost at the time of the write-down.
|
(3)
|
Effective January 1, 2020, due to the implementation of ASU 2016-13, OTTI is no longer recorded.
|
(4)
|
Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.
|
(5)
|
Includes “realized investment gains (losses), net” of our investment management operations.
|
(6)
|
Prior period amounts have been updated to conform to current period presentation.
|
•
|
$2,202 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts;
|
•
|
$1,345 million of losses on capital hedges due to increases in equity indices;
|
•
|
$147 million of losses on interest rate derivatives due to increases in the 30-year swap and U.S. Treasury rates; and
|
•
|
$104 million of losses on foreign currency hedges due to U.S. dollar depreciation versus the euro and Australian dollar.
|
•
|
$1,219 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts; and
|
•
|
$177 million of losses on capital hedges due to increases in equity indices;
|
•
|
$676 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates;
|
•
|
$145 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the British pound;
|
•
|
$36 million of gains on credit default swaps primarily due to spreads tightening; and
|
•
|
$36 million of gains for fees earned on fee-based synthetic GICs.
|
•
|
$5,592 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts; and
|
•
|
$232 million of losses on capital hedges due to increases in equity indices;
|
•
|
$2,207 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates; and
|
•
|
$897 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the British pound and due to USD interest rates declining more than foreign interest rates.
|
•
|
$2,419 million of losses on product-related embedded derivatives and related hedge positions associated with certain variable annuity contracts; and
|
•
|
$663 million of losses on capital hedges due to increases in equity indices;
|
•
|
$1,104 million of gains on interest rate derivatives due to decreases in swap and U.S. Treasury rates;
|
•
|
$245 million of gains on foreign currency hedges due to U.S. dollar appreciation versus the euro and British pound and Japanese yen appreciation;
|
•
|
$104 million of gains on credit default swaps primarily due to spreads tightening; and
|
•
|
$72 million of gains for fees earned on fee-based synthetic GICs.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||||||
Industry(1)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Allowance for Credit Losses (5)
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Finance
|
|
$
|
36,123
|
|
|
$
|
3,973
|
|
|
$
|
189
|
|
|
$
|
0
|
|
|
$
|
39,907
|
|
|
$
|
34,710
|
|
|
$
|
2,796
|
|
|
$
|
85
|
|
|
$
|
37,421
|
|
Consumer non-cyclical
|
|
26,249
|
|
|
4,300
|
|
|
134
|
|
|
1
|
|
|
30,414
|
|
|
24,941
|
|
|
2,846
|
|
|
112
|
|
|
27,675
|
|
|||||||||
Utility
|
|
23,326
|
|
|
3,782
|
|
|
83
|
|
|
0
|
|
|
27,025
|
|
|
22,341
|
|
|
2,498
|
|
|
81
|
|
|
24,758
|
|
|||||||||
Capital goods
|
|
12,896
|
|
|
1,426
|
|
|
196
|
|
|
5
|
|
|
14,121
|
|
|
12,287
|
|
|
1,150
|
|
|
83
|
|
|
13,354
|
|
|||||||||
Consumer cyclical
|
|
11,455
|
|
|
1,207
|
|
|
236
|
|
|
30
|
|
|
12,396
|
|
|
10,871
|
|
|
994
|
|
|
45
|
|
|
11,820
|
|
|||||||||
Foreign agencies
|
|
5,275
|
|
|
919
|
|
|
47
|
|
|
0
|
|
|
6,147
|
|
|
5,649
|
|
|
928
|
|
|
10
|
|
|
6,567
|
|
|||||||||
Energy
|
|
12,283
|
|
|
1,005
|
|
|
405
|
|
|
107
|
|
|
12,776
|
|
|
12,922
|
|
|
1,126
|
|
|
186
|
|
|
13,862
|
|
|||||||||
Communications
|
|
5,978
|
|
|
1,178
|
|
|
60
|
|
|
36
|
|
|
7,060
|
|
|
5,916
|
|
|
939
|
|
|
34
|
|
|
6,821
|
|
|||||||||
Basic industry
|
|
5,985
|
|
|
648
|
|
|
48
|
|
|
0
|
|
|
6,585
|
|
|
5,866
|
|
|
497
|
|
|
38
|
|
|
6,325
|
|
|||||||||
Transportation
|
|
9,896
|
|
|
1,076
|
|
|
120
|
|
|
0
|
|
|
10,852
|
|
|
9,443
|
|
|
833
|
|
|
34
|
|
|
10,242
|
|
|||||||||
Technology
|
|
3,579
|
|
|
341
|
|
|
23
|
|
|
0
|
|
|
3,897
|
|
|
3,395
|
|
|
278
|
|
|
13
|
|
|
3,660
|
|
|||||||||
Industrial other
|
|
4,317
|
|
|
559
|
|
|
42
|
|
|
0
|
|
|
4,834
|
|
|
3,894
|
|
|
351
|
|
|
33
|
|
|
4,212
|
|
|||||||||
Total corporate securities
|
|
157,362
|
|
|
20,414
|
|
|
1,583
|
|
|
179
|
|
|
176,014
|
|
|
152,235
|
|
|
15,236
|
|
|
754
|
|
|
166,717
|
|
|||||||||
Foreign government(2)
|
|
97,841
|
|
|
18,540
|
|
|
201
|
|
|
39
|
|
|
116,141
|
|
|
97,880
|
|
|
20,658
|
|
|
63
|
|
|
118,475
|
|
|||||||||
Residential mortgage-backed(3)
|
|
2,980
|
|
|
233
|
|
|
0
|
|
|
0
|
|
|
3,213
|
|
|
2,955
|
|
|
154
|
|
|
1
|
|
|
3,108
|
|
|||||||||
Asset-backed
|
|
10,869
|
|
|
124
|
|
|
164
|
|
|
0
|
|
|
10,829
|
|
|
9,832
|
|
|
123
|
|
|
34
|
|
|
9,921
|
|
|||||||||
Commercial mortgage-backed
|
|
10,314
|
|
|
821
|
|
|
4
|
|
|
0
|
|
|
11,131
|
|
|
10,211
|
|
|
441
|
|
|
9
|
|
|
10,643
|
|
|||||||||
U.S. Government
|
|
26,317
|
|
|
9,593
|
|
|
21
|
|
|
0
|
|
|
35,889
|
|
|
24,938
|
|
|
4,511
|
|
|
94
|
|
|
29,355
|
|
|||||||||
State & Municipal
|
|
9,919
|
|
|
1,861
|
|
|
1
|
|
|
0
|
|
|
11,779
|
|
|
9,593
|
|
|
1,327
|
|
|
7
|
|
|
10,913
|
|
|||||||||
Total fixed maturities, available-for-sale(4)(5)
|
|
$
|
315,602
|
|
|
$
|
51,586
|
|
|
$
|
1,974
|
|
|
$
|
218
|
|
|
$
|
364,996
|
|
|
$
|
307,644
|
|
|
$
|
42,450
|
|
|
$
|
962
|
|
|
$
|
349,132
|
|
(1)
|
Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||||||
Industry(1)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Allowance for Credit Losses
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Finance
|
|
$
|
625
|
|
|
$
|
61
|
|
|
$
|
0
|
|
|
$
|
686
|
|
|
$
|
9
|
|
|
$
|
628
|
|
|
$
|
64
|
|
|
$
|
0
|
|
|
$
|
692
|
|
Foreign agencies
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
21
|
|
|
0
|
|
|
0
|
|
|
21
|
|
|||||||||
Basic industry
|
|
83
|
|
|
2
|
|
|
0
|
|
|
85
|
|
|
0
|
|
|
83
|
|
|
2
|
|
|
0
|
|
|
85
|
|
|||||||||
Total corporate securities
|
|
708
|
|
|
63
|
|
|
0
|
|
|
771
|
|
|
9
|
|
|
732
|
|
|
66
|
|
|
0
|
|
|
798
|
|
|||||||||
Foreign government(2)
|
|
896
|
|
|
261
|
|
|
0
|
|
|
1,157
|
|
|
0
|
|
|
891
|
|
|
282
|
|
|
0
|
|
|
1,173
|
|
|||||||||
Residential mortgage-backed(3)
|
|
280
|
|
|
23
|
|
|
0
|
|
|
303
|
|
|
0
|
|
|
310
|
|
|
21
|
|
|
0
|
|
|
331
|
|
|||||||||
Total fixed maturities, held-to-maturity(4)
|
|
$
|
1,884
|
|
|
$
|
347
|
|
|
$
|
0
|
|
|
$
|
2,231
|
|
|
$
|
9
|
|
|
$
|
1,933
|
|
|
$
|
369
|
|
|
$
|
0
|
|
|
$
|
2,302
|
|
(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)
|
As of both June 30, 2020 and December 31, 2019, based on amortized cost, 98% represent Japanese government bonds held by our Japanese insurance operations.
|
(3)
|
As of June 30, 2020 and December 31, 2019, based on amortized cost, all were rated A or higher.
|
(4)
|
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.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||||||
NAIC Designation(1)(2)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses(3)
|
|
Allowance for Credit Losses(7)
|
|
Fair Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses(3)
|
|
Fair Value
|
||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||||
1
|
$
|
232,891
|
|
|
$
|
43,319
|
|
|
$
|
511
|
|
|
$
|
0
|
|
|
$
|
275,699
|
|
|
$
|
232,039
|
|
|
$
|
35,923
|
|
|
$
|
287
|
|
|
$
|
267,675
|
|
2
|
64,892
|
|
|
7,365
|
|
|
615
|
|
|
0
|
|
|
71,642
|
|
|
59,114
|
|
|
5,198
|
|
|
384
|
|
|
63,928
|
|
|||||||||
Subtotal High or Highest Quality Securities(4)
|
297,783
|
|
|
50,684
|
|
|
1,126
|
|
|
0
|
|
|
347,341
|
|
|
291,153
|
|
|
41,121
|
|
|
671
|
|
|
331,603
|
|
|||||||||
3
|
10,583
|
|
|
557
|
|
|
390
|
|
|
11
|
|
|
10,739
|
|
|
10,033
|
|
|
854
|
|
|
93
|
|
|
10,794
|
|
|||||||||
4
|
5,318
|
|
|
132
|
|
|
270
|
|
|
58
|
|
|
5,122
|
|
|
4,914
|
|
|
248
|
|
|
98
|
|
|
5,064
|
|
|||||||||
5
|
1,583
|
|
|
77
|
|
|
143
|
|
|
50
|
|
|
1,467
|
|
|
1,280
|
|
|
196
|
|
|
83
|
|
|
1,393
|
|
|||||||||
6
|
335
|
|
|
136
|
|
|
45
|
|
|
99
|
|
|
327
|
|
|
264
|
|
|
31
|
|
|
17
|
|
|
278
|
|
|||||||||
Subtotal Other Securities(5)(6)
|
17,819
|
|
|
902
|
|
|
848
|
|
|
218
|
|
|
17,655
|
|
|
16,491
|
|
|
1,329
|
|
|
291
|
|
|
17,529
|
|
|||||||||
Total fixed maturities, available-for-sale(7)
|
$
|
315,602
|
|
|
$
|
51,586
|
|
|
$
|
1,974
|
|
|
$
|
218
|
|
|
$
|
364,996
|
|
|
$
|
307,644
|
|
|
$
|
42,450
|
|
|
$
|
962
|
|
|
$
|
349,132
|
|
(1)
|
Reflects equivalent ratings for investments of the international insurance operations.
|
(2)
|
Includes, as of June 30, 2020 and December 31, 2019, 868 securities with amortized cost of $4,168 million (fair value, $4,307 million) and 796 securities with amortized cost of $3,073 million (fair value, $3,130 million), respectively, that have been categorized based on expected NAIC Designations pending receipt of SVO ratings.
|
(3)
|
As of June 30, 2020, includes gross unrealized losses of $552 million on public fixed maturities and $296 million on private fixed maturities considered to be other than high or highest quality and, as of December 31, 2019, includes gross unrealized losses of $188 million on public fixed maturities and $103 million on private fixed maturities considered to be other than high or highest quality.
|
(4)
|
On an amortized cost basis, as of June 30, 2020, includes $254,054 million of public fixed maturities and $43,729 million of private fixed maturities and, as of December 31, 2019, includes $248,179 million of public fixed maturities and $42,974 million of private fixed maturities.
|
(5)
|
On an amortized cost basis, as of June 30, 2020, includes $9,452 million of public fixed maturities and $8,367 million of private fixed maturities and, as of December 31, 2019, includes $9,049 million of public fixed maturities and $7,442 million of private fixed maturities.
|
(6)
|
On an amortized cost basis, as of June 30, 2020, securities considered below investment grade based on lowest of external rating agency ratings total $17,997 million, or 6% of the total fixed maturities, and include securities considered high or highest quality by the NAIC based on the rules described above.
|
(7)
|
Effective January 1, 2020, due to the implementation of ASU 2016-13, an allowance for credit losses is now presented for available-for-sale securities. Prior period amounts have been updated to exclude held-to-maturity securities to conform to current period presentation.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||||||
NAIC Designation(1)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses(2)
|
|
Fair Value
|
|
Allowance for Credit Losses
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses(2)
|
|
Fair Value
|
||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||||
1
|
$
|
1,692
|
|
|
$
|
328
|
|
|
$
|
0
|
|
|
$
|
2,020
|
|
|
$
|
4
|
|
|
$
|
1,743
|
|
|
$
|
351
|
|
|
$
|
0
|
|
|
$
|
2,094
|
|
2
|
192
|
|
|
19
|
|
|
0
|
|
|
211
|
|
|
5
|
|
|
190
|
|
|
18
|
|
|
0
|
|
|
208
|
|
|||||||||
Subtotal High or Highest Quality Securities(3)
|
1,884
|
|
|
347
|
|
|
0
|
|
|
2,231
|
|
|
9
|
|
|
1,933
|
|
|
369
|
|
|
0
|
|
|
2,302
|
|
|||||||||
3
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||||
4
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||||
5
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||||
6
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||||
Subtotal Other Securities
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||||
Total fixed maturities, held-to-maturity
|
$
|
1,884
|
|
|
$
|
347
|
|
|
$
|
0
|
|
|
$
|
2,231
|
|
|
$
|
9
|
|
|
$
|
1,933
|
|
|
$
|
369
|
|
|
$
|
0
|
|
|
$
|
2,302
|
|
(1)
|
Reflects equivalent ratings for investments of the international insurance operations.
|
(2)
|
As of both June 30, 2020 and December 31, 2019, there were no gross unrealized losses on public fixed maturities and private fixed maturities considered to be other than high or highest quality.
|
(3)
|
On an amortized cost basis, as of June 30, 2020, includes $1,670 million of public fixed maturities and $214 million of private fixed maturities and, as of December 31, 2019, includes $1,705 million of public fixed maturities and $228 million of private fixed maturities.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
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
|
$
|
10,306
|
|
|
$
|
10,195
|
|
|
$
|
8,262
|
|
|
$
|
8,836
|
|
|
$
|
9,381
|
|
|
$
|
9,377
|
|
|
$
|
8,128
|
|
|
$
|
8,454
|
|
AA
|
358
|
|
|
363
|
|
|
2,039
|
|
|
2,282
|
|
|
288
|
|
304
|
|
2,068
|
|
|
2,173
|
|
||||||||||
A
|
83
|
|
|
84
|
|
|
4
|
|
|
5
|
|
|
5
|
|
6
|
|
6
|
|
7
|
||||||||||||
BBB
|
3
|
|
|
3
|
|
|
9
|
|
|
8
|
|
|
12
|
|
12
|
|
9
|
|
9
|
||||||||||||
BB and below
|
119
|
|
|
184
|
|
|
0
|
|
|
0
|
|
|
146
|
|
222
|
|
0
|
|
0
|
||||||||||||
Total(4)
|
$
|
10,869
|
|
|
$
|
10,829
|
|
|
$
|
10,314
|
|
|
$
|
11,131
|
|
|
$
|
9,832
|
|
|
$
|
9,921
|
|
|
$
|
10,211
|
|
|
$
|
10,643
|
|
(1)
|
The table above provides ratings as assigned by nationally recognized rating agencies as of June 30, 2020, including S&P, Moody’s, Fitch Ratings, Inc. (“Fitch”) and Morningstar, Inc. (“Morningstar”).
|
(2)
|
Includes collateralized loan obligations (“CLOs”), credit-tranched securities collateralized by auto loans, education loans, credit card loans, and other asset types.
|
(3)
|
As of both June 30, 2020 and December 31, 2019, based on amortized cost, 97% were securities with vintages of 2013 or later.
|
(4)
|
Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading,” as well as securities held outside the general account in other entities and operations.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Collateralized Loan Obligations
|
||||||||||||||
Lowest Rating Agency Rating(1)
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
|
(in millions)
|
||||||||||||||
AAA
|
$
|
8,481
|
|
|
$
|
8,335
|
|
|
$
|
7,294
|
|
|
$
|
7,271
|
|
AA
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
A
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
BBB
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
BB and below
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Total(2)(3)
|
$
|
8,481
|
|
|
$
|
8,335
|
|
|
$
|
7,294
|
|
|
$
|
7,271
|
|
(1)
|
The table above provides ratings as assigned by nationally recognized rating agencies as of June 30, 2020, including S&P, Moody’s, Fitch Ratings, Inc. (“Fitch”) and Morningstar, Inc. (“Morningstar”).
|
(2)
|
There was no allowance for credit losses as of June 30, 2020.
|
(3)
|
Excludes fixed maturity securities classified as “Assets supporting experience-rated contractholder liabilities” and “Fixed maturities, trading,” as well as securities held outside the general account in other entities and operations.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions)
|
||||||
Commercial mortgage and agricultural property loans
|
|
$
|
53,596
|
|
|
$
|
53,928
|
|
Uncollateralized loans
|
|
680
|
|
|
656
|
|
||
Residential property loans
|
|
109
|
|
|
124
|
|
||
Other collateralized loans
|
|
202
|
|
|
65
|
|
||
Total recorded investment gross of allowance(1)
|
|
54,587
|
|
|
54,773
|
|
||
Allowance for credit losses
|
|
(210
|
)
|
|
(102
|
)
|
||
Total net commercial mortgage and other loans(2)
|
|
$
|
54,377
|
|
|
$
|
54,671
|
|
(1)
|
As a percentage of recorded investment gross of allowance, more than 99% of these assets were current as of both June 30, 2020 and December 31, 2019.
|
(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.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||
|
|
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
|
|
$
|
18,460
|
|
|
34.4
|
%
|
|
$
|
18,061
|
|
|
33.5
|
%
|
South Atlantic
|
|
8,593
|
|
|
16.0
|
|
|
8,943
|
|
|
16.6
|
|
||
Middle Atlantic
|
|
6,377
|
|
|
11.9
|
|
|
6,664
|
|
|
12.4
|
|
||
East North Central
|
|
3,265
|
|
|
6.1
|
|
|
3,413
|
|
|
6.3
|
|
||
West South Central
|
|
5,571
|
|
|
10.4
|
|
|
5,439
|
|
|
10.1
|
|
||
Mountain
|
|
2,291
|
|
|
4.3
|
|
|
2,442
|
|
|
4.5
|
|
||
New England
|
|
1,730
|
|
|
3.2
|
|
|
1,902
|
|
|
3.5
|
|
||
West North Central
|
|
485
|
|
|
0.9
|
|
|
454
|
|
|
0.8
|
|
||
East South Central
|
|
599
|
|
|
1.1
|
|
|
622
|
|
|
1.2
|
|
||
Subtotal-U.S.
|
|
47,371
|
|
|
88.3
|
|
|
47,940
|
|
|
88.9
|
|
||
Europe
|
|
3,895
|
|
|
7.3
|
|
|
3,781
|
|
|
7.0
|
|
||
Asia
|
|
948
|
|
|
1.8
|
|
|
886
|
|
|
1.6
|
|
||
Other
|
|
1,382
|
|
|
2.6
|
|
|
1,321
|
|
|
2.5
|
|
||
Total commercial mortgage and agricultural property loans
|
|
$
|
53,596
|
|
|
100.0
|
%
|
|
$
|
53,928
|
|
|
100.0
|
%
|
(1)
|
Regions as defined by the United States Census Bureau.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||
|
|
Gross
Carrying
Value
|
|
% of
Total
|
|
Gross
Carrying
Value
|
|
% of
Total
|
||||||
|
|
($ in millions)
|
||||||||||||
Commercial mortgage and agricultural property loans by property type:
|
|
|
|
|
|
|
|
|
||||||
Industrial
|
|
$
|
12,270
|
|
|
22.9
|
%
|
|
$
|
12,224
|
|
|
22.7
|
%
|
Retail
|
|
6,029
|
|
|
11.2
|
|
|
6,524
|
|
|
12.1
|
|
||
Office
|
|
10,594
|
|
|
19.8
|
|
|
11,203
|
|
|
20.8
|
|
||
Apartments/Multi-Family
|
|
15,395
|
|
|
28.7
|
|
|
15,176
|
|
|
28.1
|
|
||
Agricultural properties
|
|
3,316
|
|
|
6.2
|
|
|
2,856
|
|
|
5.3
|
|
||
Hospitality
|
|
2,035
|
|
|
3.8
|
|
|
2,066
|
|
|
3.8
|
|
||
Other
|
|
3,957
|
|
|
7.4
|
|
|
3,879
|
|
|
7.2
|
|
||
Total commercial mortgage and agricultural property loans
|
|
$
|
53,596
|
|
|
100.0
|
%
|
|
$
|
53,928
|
|
|
100.0
|
%
|
|
|
June 30, 2020
|
||||||||||||||
|
|
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%
|
|
$
|
28,065
|
|
|
$
|
738
|
|
|
$
|
99
|
|
|
$
|
28,902
|
|
60%-69.99%
|
|
15,323
|
|
|
720
|
|
|
140
|
|
|
16,183
|
|
||||
70%-79.99%
|
|
7,623
|
|
|
596
|
|
|
73
|
|
|
8,292
|
|
||||
80% or greater
|
|
125
|
|
|
92
|
|
|
2
|
|
|
219
|
|
||||
Total commercial mortgage and agricultural property loans
|
|
$
|
51,136
|
|
|
$
|
2,146
|
|
|
$
|
314
|
|
|
$
|
53,596
|
|
|
|
June 30, 2020
|
|||||
|
|
Gross
Carrying
Value
|
|
% of
Total
|
|||
Year of Origination
|
|
($ in millions)
|
|||||
2020
|
|
$
|
2,319
|
|
|
4.3
|
%
|
2019
|
|
9,720
|
|
|
18.1
|
|
|
2018
|
|
8,512
|
|
|
15.9
|
|
|
2017
|
|
7,171
|
|
|
13.4
|
|
|
2016
|
|
6,291
|
|
|
11.7
|
|
|
2015
|
|
5,611
|
|
|
10.5
|
|
|
2014
|
|
4,675
|
|
|
8.7
|
|
|
2013 & Prior
|
|
9,297
|
|
|
17.4
|
|
|
Total commercial mortgage and agricultural property loans
|
|
$
|
53,596
|
|
|
100.0
|
%
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions)
|
||||||
Allowance, beginning of year
|
|
$
|
102
|
|
|
$
|
106
|
|
Cumulative effect of adoption of ASU 2016-13
|
|
101
|
|
|
0
|
|
||
Addition to (release of) allowance for credit losses
|
|
4
|
|
|
(4
|
)
|
||
Write-downs charged against the allowance
|
|
0
|
|
|
0
|
|
||
Recoveries of amounts previously written-down
|
|
0
|
|
|
N/A
|
|
||
Change in foreign exchange
|
|
0
|
|
|
0
|
|
||
Other
|
|
3
|
|
|
0
|
|
||
Allowance, end of period
|
|
$
|
210
|
|
|
$
|
102
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Mutual funds
|
|
$
|
926
|
|
|
$
|
218
|
|
|
$
|
13
|
|
|
$
|
1,131
|
|
|
$
|
817
|
|
|
$
|
258
|
|
|
$
|
1
|
|
|
$
|
1,074
|
|
Other Common Stocks
|
|
2,428
|
|
|
834
|
|
|
135
|
|
|
3,127
|
|
|
2,429
|
|
|
1,091
|
|
|
57
|
|
|
3,463
|
|
||||||||
Non-redeemable Preferred Stocks
|
|
57
|
|
|
5
|
|
|
6
|
|
|
56
|
|
|
51
|
|
|
3
|
|
|
5
|
|
|
49
|
|
||||||||
Total equity securities, at fair value(1)
|
|
$
|
3,411
|
|
|
$
|
1,057
|
|
|
$
|
154
|
|
|
$
|
4,314
|
|
|
$
|
3,297
|
|
|
$
|
1,352
|
|
|
$
|
63
|
|
|
$
|
4,586
|
|
(1)
|
Amounts presented exclude investments in private equity and hedge funds and other investments which are reported in “Other invested assets.”
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions)
|
||||||
LPs/LLCs:
|
|
|
|
|
||||
Equity method:
|
|
|
|
|
||||
Private equity
|
|
$
|
2,938
|
|
|
$
|
2,740
|
|
Hedge funds
|
|
1,552
|
|
|
1,362
|
|
||
Real estate-related
|
|
795
|
|
|
792
|
|
||
Subtotal equity method
|
|
5,285
|
|
|
4,894
|
|
||
Fair value:
|
|
|
|
|
||||
Private equity
|
|
912
|
|
|
990
|
|
||
Hedge funds
|
|
1,110
|
|
|
1,233
|
|
||
Real estate-related
|
|
45
|
|
|
50
|
|
||
Subtotal fair value
|
|
2,067
|
|
|
2,273
|
|
||
Total LPs/LLCs
|
|
7,352
|
|
|
7,167
|
|
||
Real estate held through direct ownership(1)
|
|
1,330
|
|
|
1,350
|
|
||
Derivative instruments
|
|
164
|
|
|
73
|
|
||
Other(2)
|
|
732
|
|
|
620
|
|
||
Total other invested assets
|
|
$
|
9,578
|
|
|
$
|
9,210
|
|
(1)
|
As of June 30, 2020 and December 31, 2019, real estate held through direct ownership had mortgage debt of $459 million and $537 million, respectively.
|
(2)
|
Primarily includes leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding our holdings in the Federal Home Loan Banks of New York and Boston, see Note 17 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions)
|
||||||
Fixed maturities:
|
|
|
|
|
||||
Public, available-for-sale, at fair value(1)
|
|
$
|
614
|
|
|
$
|
587
|
|
Private, available-for-sale, at fair value
|
|
1
|
|
|
1
|
|
||
Fixed maturities, trading, at fair value(1)
|
|
1,084
|
|
|
1,161
|
|
||
Equity securities, at fair value
|
|
649
|
|
|
691
|
|
||
Commercial mortgage and other loans, at book value(2)
|
|
703
|
|
|
259
|
|
||
Other invested assets(1)
|
|
3,920
|
|
|
3,062
|
|
||
Short-term investments
|
|
36
|
|
|
17
|
|
||
Total investments
|
|
$
|
7,007
|
|
|
$
|
5,778
|
|
(1)
|
As of June 30, 2020 and December 31, 2019, balances include investments in CLOs with fair value of $448 million and $438 million, respectively.
|
(2)
|
Book value is generally based on unpaid principal balance, net of any allowance for credit losses, or at fair value, when the fair value option has been elected.
|
•
|
We augmented our alternative sources of liquidity by entering into a facility agreement with a Delaware trust, pursuant to which Prudential Financial may issue and sell to the trust at any time over a ten-year period up to $1.5 billion of 2.850% senior notes due May 15, 2030 and receive in exchange a corresponding amount of U.S. Treasury securities. The facility agreement is similar to our existing put option agreement that allows us to issue up to $1.5 billion of senior notes to a trust, which we established in 2013 and expires in 2023;
|
•
|
We temporarily suspended Common Stock repurchases under our existing repurchase authorization beginning April 1, 2020, after repurchasing $500 million of shares of Prudential Financial’s Common Stock in the first quarter of 2020. We continue to evaluate the resumption of share repurchases under our existing Board authorization for 2020, as informed by the market environment and any alternative opportunities for capital deployment;
|
•
|
In March 2020, we issued $1.5 billion of senior notes, with maturities ranging from 2026 to 2040 for general corporate purposes, including pre-funding part of our senior notes maturing through 2021. Of these senior notes, $500 million were issued in the form of “green bonds,” where proceeds are allocated to existing or future investments in assets, businesses or projects that provide environmental benefits;
|
•
|
We executed additional capital hedges that protect the capital position of our U.S. insurance subsidiaries against additional declines in the equity markets;
|
•
|
Prudential Legacy Insurance Company of New Jersey issued $800 million of surplus notes under its $4 billion reserve financing facility to enhance the statutory surplus of the Closed Block. This facility, established in 2015, is intended to alleviate any temporary impact to the Closed Block’s surplus due to the timing difference between the mark to market on assets and the decision on the level of the policyholder dividend; and
|
•
|
We accelerated our product diversification strategy and repriced certain products, which are expected to support the capital position of our insurance subsidiaries over time.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in millions)
|
||||||
Equity(1)
|
$
|
35,060
|
|
|
$
|
39,076
|
|
Junior subordinated debt (including hybrid securities)
|
7,580
|
|
|
7,575
|
|
||
Other capital debt
|
6,354
|
|
|
7,001
|
|
||
Total capital
|
$
|
48,994
|
|
|
$
|
53,652
|
|
(1)
|
Amounts attributable to Prudential Financial, excluding AOCI.
|
|
Ratio(1)
|
|
PICA(2)
|
411
|
%
|
Prudential Annuities Life Assurance Corporation (“PALAC”)
|
484
|
%
|
Composite Major U.S. Insurance Subsidiaries(3)
|
426
|
%
|
(1)
|
The RBC ratio calculations are intended to assist insurance regulators in measuring an insurer’s solvency and ability to pay future claims. The reporting of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities, but is available to the public.
|
(2)
|
Includes Prudential Retirement Insurance and Annuity Company (“PRIAC”), Pruco Life Insurance Company (“Pruco Life”), Pruco Life Insurance Company of New Jersey (“PLNJ”), which is a subsidiary of Pruco Life, and Prudential Legacy Insurance Company of New Jersey (“PLIC”).
|
(3)
|
Includes PICA 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)
|
818
|
%
|
Gibraltar Life consolidated(2)
|
835
|
%
|
(1)
|
Includes Prudential Trust Co., Ltd., a subsidiary of Prudential of Japan.
|
(2)
|
Includes Prudential Gibraltar Financial Life Insurance Co., Ltd. (“PGFL”), a subsidiary of Gibraltar Life.
|
|
Dividend Amount
|
|
Shares Repurchased
|
|||||||||||
Three months ended:
|
Per Share
|
|
Aggregate
|
|
Shares
|
|
Total Cost
|
|||||||
|
(in millions, except per share data)
|
|||||||||||||
March 31, 2020
|
$
|
1.10
|
|
|
$
|
445
|
|
|
6.7
|
|
|
$
|
500
|
|
June 30, 2020
|
$
|
1.10
|
|
|
$
|
441
|
|
|
0.0
|
|
|
$
|
0
|
|
Sources and Uses of Holding Company Highly Liquid Assets(1):
|
|
Six Months Ended June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions)
|
||||||
Highly Liquid Assets, beginning of period
|
|
$
|
4,061
|
|
|
$
|
5,548
|
|
Dividends and/or returns of capital from subsidiaries(2)
|
|
1,016
|
|
|
929
|
|
||
Capital contributions to subsidiaries(3)
|
|
0
|
|
|
(268
|
)
|
||
Total Business Capital Activity
|
|
1,016
|
|
|
661
|
|
||
Share repurchases(4)
|
|
(500
|
)
|
|
(983
|
)
|
||
Common stock dividends(5)
|
|
(886
|
)
|
|
(827
|
)
|
||
Total Share Repurchases and Dividends
|
|
(1,386
|
)
|
|
(1,810
|
)
|
||
Proceeds from the issuance of debt
|
|
1,486
|
|
|
989
|
|
||
Repayments of debt
|
|
(651
|
)
|
|
(761
|
)
|
||
Total Debt Activity(6)
|
|
835
|
|
|
228
|
|
||
Proceeds from stock-based compensation and exercise of stock options
|
|
156
|
|
|
154
|
|
||
Net income tax receipts & payments
|
|
176
|
|
|
(491
|
)
|
||
Affiliated (borrowings)/loans - (operating activities)(7)
|
|
288
|
|
|
1,065
|
|
||
Interest paid on external debt
|
|
(493
|
)
|
|
(480
|
)
|
||
Other, net(6)
|
|
(136
|
)
|
|
(8
|
)
|
||
Total Other Activity
|
|
(9
|
)
|
|
240
|
|
||
Net increase/(decrease) in highly liquid assets
|
|
456
|
|
|
(681
|
)
|
||
Highly Liquid Assets, end of period
|
|
$
|
4,517
|
|
|
$
|
4,867
|
|
(1)
|
Prior period amounts have been updated to conform to current period presentation.
|
(2)
|
2020 includes $444 million from international insurance subsidiaries, $380 million from PALAC, $108 million from PGIM subsidiaries, $80 million from Prudential Annuities Holding Company, and $4 million from other subsidiaries. 2019 includes $492 million from PALAC, $223 million from PGIM subsidiaries, $126 million from international insurance subsidiaries, $79 million from Prudential Annuities Holding Company, and $9 million from other subsidiaries.
|
(3)
|
2019 includes capital contributions of $200 million to PICA and $68 million to PGIM subsidiaries.
|
(4)
|
Excludes cash payments made on trades that settled in the subsequent period.
|
(5)
|
Includes cash payments made on dividends declared in prior periods.
|
(6)
|
“Total Debt Activity” excludes changes in PFI commercial paper. These changes are captured in “Other, net” in the “Total Other Activity” section.
|
|
June 30, 2020
|
|
|
||||||||||||||||||||||||
|
Prudential
Insurance
|
|
PLIC
|
|
PRIAC
|
|
PALAC
|
|
Pruco Life
|
|
Total
|
|
December 31, 2019
|
||||||||||||||
|
(in billions)
|
||||||||||||||||||||||||||
Cash and short-term investments
|
$
|
9.9
|
|
|
$
|
0.5
|
|
|
$
|
1.3
|
|
|
$
|
10.2
|
|
|
$
|
0.8
|
|
|
$
|
22.7
|
|
|
$
|
11.9
|
|
Fixed maturity investments(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
High or highest quality
|
133.9
|
|
|
37.9
|
|
|
20.1
|
|
|
16.8
|
|
|
5.8
|
|
|
214.5
|
|
|
201.3
|
|
|||||||
Other than high or highest quality
|
8.0
|
|
|
3.0
|
|
|
1.3
|
|
|
0.7
|
|
|
0.4
|
|
|
13.4
|
|
|
12.2
|
|
|||||||
Subtotal
|
141.9
|
|
|
40.9
|
|
|
21.4
|
|
|
17.5
|
|
|
6.2
|
|
|
227.9
|
|
|
213.5
|
|
|||||||
Public equity securities, at fair value
|
0.2
|
|
|
2.0
|
|
|
0.1
|
|
|
0.1
|
|
|
0.0
|
|
|
2.4
|
|
|
2.5
|
|
|||||||
Total
|
$
|
152.0
|
|
|
$
|
43.4
|
|
|
$
|
22.8
|
|
|
$
|
27.8
|
|
|
$
|
7.0
|
|
|
$
|
253.0
|
|
|
$
|
227.9
|
|
(1)
|
Excludes fixed maturities designated as held-to-maturity. Credit quality is based on NAIC or equivalent rating.
|
|
June 30, 2020
|
|
|
||||||||||||||||
|
Prudential
of Japan
|
|
Gibraltar
Life(1)
|
|
All
Other(2)
|
|
Total
|
|
December 31, 2019
|
||||||||||
|
(in billions)
|
||||||||||||||||||
Cash and short-term investments
|
$
|
1.6
|
|
|
$
|
3.2
|
|
|
$
|
1.3
|
|
|
$
|
6.1
|
|
|
$
|
5.0
|
|
Fixed maturity investments(3):
|
|
|
|
|
|
|
|
|
|
||||||||||
High or highest quality(4)
|
41.6
|
|
|
93.8
|
|
|
11.2
|
|
|
146.6
|
|
|
157.2
|
|
|||||
Other than high or highest quality
|
0.6
|
|
|
2.4
|
|
|
1.4
|
|
|
4.4
|
|
|
5.4
|
|
|||||
Subtotal
|
42.2
|
|
|
96.2
|
|
|
12.6
|
|
|
151.0
|
|
|
162.6
|
|
|||||
Public equity securities
|
1.8
|
|
|
1.6
|
|
|
0.4
|
|
|
3.8
|
|
|
4.7
|
|
|||||
Total
|
$
|
45.6
|
|
|
$
|
101.0
|
|
|
$
|
14.3
|
|
|
$
|
160.9
|
|
|
$
|
172.3
|
|
(1)
|
Includes PGFL.
|
(2)
|
Represents our international insurance operations, excluding Japan.
|
(3)
|
Excludes fixed maturities designated as held-to-maturity. Credit quality is based on NAIC or equivalent rating.
|
(4)
|
As of June 30, 2020, $110.4 billion, or 75%, were invested in government or government agency bonds.
|
|
Six Months Ended
June 30, |
||||||
Cash Settlements: Received (Paid)
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Income Hedges (External)(1)
|
$
|
55
|
|
|
$
|
32
|
|
Equity Hedges:
|
|
|
|
||||
Internal(2)
|
120
|
|
|
233
|
|
||
External(3)
|
102
|
|
|
4
|
|
||
Total Equity Hedges
|
222
|
|
|
237
|
|
||
Total Cash Settlements
|
$
|
277
|
|
|
$
|
269
|
|
|
|
|
|
||||
|
June 30,
|
|
December 31,
|
||||
Assets (Liabilities):
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Income Hedges (External)(4)
|
$
|
132
|
|
|
$
|
60
|
|
Equity Hedges:
|
|
|
|
||||
Internal(2)
|
814
|
|
|
506
|
|
||
External(5)
|
45
|
|
|
43
|
|
||
Total Equity Hedges(6)
|
859
|
|
|
549
|
|
||
Total Assets (Liabilities)
|
$
|
991
|
|
|
$
|
609
|
|
(1)
|
Includes non-yen related cash settlements of $46 million, primarily denominated in Brazilian real, Korean won and Australian dollar and $17 million, primarily denominated in Australian dollar, Chilean peso, Korean won and Brazilian real for the six months ended June 30, 2020 and 2019, 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 cash settlements of $33 million and $5 million, denominated in Korean won for the six months ended June 30, 2020 and 2019, respectively.
|
(4)
|
Includes non-yen related assets of $111 million, primarily denominated in Brazilian real, Korean won and Australian dollar, and assets of $37 million, primarily denominated in Korean won, Australian dollar and Chilean peso, as of June 30, 2020 and December 31, 2019, respectively.
|
(5)
|
Includes non-yen related assets of $8 million, denominated in Korean won, and assets of $1 million, denominated in Korean won, as of June 30, 2020 and December 31, 2019, respectively.
|
(6)
|
As of June 30, 2020, approximately $131 million, $391 million, $214 million and $123 million of the net market values are scheduled to settle in 2020, 2021, 2022 and thereafter, respectively. The net market value of the assets (liabilities) will vary with changing market conditions to the extent there are no corresponding offsetting positions.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
PFI
Excluding
Closed Block
Division
|
|
Closed
Block
Division
|
|
Consolidated
|
|
PFI
Excluding
Closed Block
Division
|
|
Closed
Block
Division
|
|
Consolidated
|
||||||||||||
|
($ in millions)
|
||||||||||||||||||||||
Securities sold under agreements to repurchase
|
$
|
7,805
|
|
|
$
|
2,683
|
|
|
$
|
10,488
|
|
|
$
|
6,834
|
|
|
$
|
2,847
|
|
|
$
|
9,681
|
|
Cash collateral for loaned securities
|
3,056
|
|
|
391
|
|
|
3,447
|
|
|
3,228
|
|
|
986
|
|
|
4,214
|
|
||||||
Securities sold but not yet purchased
|
1
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
Total(1)
|
$
|
10,862
|
|
|
$
|
3,074
|
|
|
$
|
13,936
|
|
|
$
|
10,062
|
|
|
$
|
3,833
|
|
|
$
|
13,895
|
|
Portion of above securities that may be returned to the Company overnight requiring immediate return of the cash collateral(2)
|
$
|
10,303
|
|
|
$
|
3,074
|
|
|
$
|
13,377
|
|
|
$
|
10,062
|
|
|
$
|
3,833
|
|
|
$
|
13,895
|
|
Weighted average maturity, in days(2)
|
27
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
|
(1)
|
The daily weighted average outstanding balance for the three and six months ended June 30, 2020 was $11,475 million and $11,139 million, respectively, for PFI excluding the Closed Block division, and $3,823 million and $3,500 million, respectively, for the Closed Block division.
|
(2)
|
Excludes securities that may be returned to the Company overnight. “N/A” reflects that all outstanding balances may be returned to the Company overnight.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
Borrowings:
|
Prudential
Financial
|
|
Subsidiaries
|
|
Consolidated
|
|
Prudential
Financial
|
|
Subsidiaries
|
|
Consolidated
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
General obligation short-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial paper
|
$
|
25
|
|
|
$
|
475
|
|
|
$
|
500
|
|
|
$
|
25
|
|
|
$
|
524
|
|
|
$
|
549
|
|
Current portion of long-term debt
|
528
|
|
|
0
|
|
|
528
|
|
|
1,179
|
|
|
0
|
|
|
1,179
|
|
||||||
Subtotal
|
553
|
|
|
475
|
|
|
1,028
|
|
|
1,204
|
|
|
524
|
|
|
1,728
|
|
||||||
General obligation long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Senior debt
|
11,402
|
|
|
173
|
|
|
11,575
|
|
|
9,912
|
|
|
172
|
|
|
10,084
|
|
||||||
Junior subordinated debt
|
7,522
|
|
|
58
|
|
|
7,580
|
|
|
7,518
|
|
|
57
|
|
|
7,575
|
|
||||||
Surplus notes(1)
|
0
|
|
|
343
|
|
|
343
|
|
|
0
|
|
|
342
|
|
|
342
|
|
||||||
Subtotal
|
18,924
|
|
|
574
|
|
|
19,498
|
|
|
17,430
|
|
|
571
|
|
|
18,001
|
|
||||||
Total general obligations
|
19,477
|
|
|
1,049
|
|
|
20,526
|
|
|
18,634
|
|
|
1,095
|
|
|
19,729
|
|
||||||
Limited and non-recourse borrowings(2):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term debt
|
0
|
|
|
7
|
|
|
7
|
|
|
0
|
|
|
13
|
|
|
13
|
|
||||||
Current portion of long-term debt
|
0
|
|
|
95
|
|
|
95
|
|
|
0
|
|
|
192
|
|
|
192
|
|
||||||
Long-term debt
|
0
|
|
|
664
|
|
|
664
|
|
|
0
|
|
|
645
|
|
|
645
|
|
||||||
Total limited and non-recourse borrowings
|
0
|
|
|
766
|
|
|
766
|
|
|
0
|
|
|
850
|
|
|
850
|
|
||||||
Total borrowings
|
$
|
19,477
|
|
|
$
|
1,815
|
|
|
$
|
21,292
|
|
|
$
|
18,634
|
|
|
$
|
1,945
|
|
|
$
|
20,579
|
|
(1)
|
Amounts are net of assets under set-off arrangements of $11,464 million and $9,749 million as of June 30, 2020 and December 31, 2019, respectively.
|
(2)
|
Limited and non-recourse borrowing primarily represents mortgage debt of our subsidiaries that has recourse only to real estate investment property of $459 million and $537 million as of June 30, 2020 and December 31, 2019, respectively, and a $300 million draw on a credit facility that has recourse only to collateral pledged by the Company as of both June 30, 2020 and December 31, 2019.
|
|
Surplus Notes
|
|
Outstanding
as of
June 30, 2020
|
|
|
|||||||
Credit-Linked Note Structures:
|
Original
Issue Dates
|
|
Maturity
Dates
|
|
|
Facility
Size
|
||||||
|
($ in millions)
|
|||||||||||
XXX
|
2011-2014
|
|
2021-2024
|
|
$
|
1,750
|
|
(1)
|
|
$
|
1,750
|
|
AXXX
|
2013
|
|
2033
|
|
3,248
|
|
|
|
3,500
|
|
||
XXX
|
2014-2018
|
|
2021-2034
|
|
2,285
|
|
(2)
|
|
2,375
|
|
||
XXX
|
2014-2017
|
|
2024-2037
|
|
2,330
|
|
|
|
2,400
|
|
||
AXXX
|
2017
|
|
2037
|
|
1,466
|
|
|
|
2,000
|
|
||
XXX
|
2018
|
|
2038
|
|
1,070
|
|
|
|
1,600
|
|
||
AXXX
|
2020
|
|
2032
|
|
700
|
|
|
|
1,200
|
|
||
Total Credit-Linked Note Structures
|
|
|
|
|
$
|
12,849
|
|
|
|
$
|
14,825
|
|
(1)
|
Prudential Financial has agreed to reimburse amounts paid under the credit-linked notes issued in this structure up to $0.5 billion. During the fourth quarter of 2019, this financing facility was restructured to allow for an extension through 2036.
|
(2)
|
The $2.3 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.
|
Period
|
|
Total Number
of Shares
Purchased(1)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Program(2)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program(2)
|
||||||
April 1, 2020 through April 30, 2020
|
|
10,713
|
|
|
$
|
55.93
|
|
|
0
|
|
|
|
||
May 1, 2020 through May 31, 2020
|
|
8,092
|
|
|
$
|
52.93
|
|
|
0
|
|
|
|
||
June 1, 2020 through June 30, 2020
|
|
3,734
|
|
|
$
|
64.54
|
|
|
0
|
|
|
|
||
Total
|
|
22,539
|
|
|
$
|
56.28
|
|
|
0
|
|
|
$
|
1,500,000,000
|
|
(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 2019, Prudential Financial’s Board of Directors authorized the Company to repurchase, at management’s discretion, up to $2.0 billion of its outstanding Common Stock during the period from January 1, 2020 through December 31, 2020. The Company temporarily suspended Common Stock repurchases under its existing repurchase authorization beginning April 1, 2020; however, the Company continues to evaluate the resumption of share repurchases under the existing Board authorization.
|
|
|
|
|
|
|
|
|
|
|
Prudential Entities
|
||||
|
|
|
|
|
Assurance IQ
|
Assurance IQ, LLC
|
|
POK
|
The Prudential Life Insurance Company of Korea, Ltd.
|
Company
|
Prudential Financial, Inc. and its subsidiaries
|
|
PRIAC
|
Prudential Retirement Insurance and Annuity Company
|
PALAC
|
Prudential Annuities Life Assurance Corporation
|
|
Pruco Life
|
Pruco Life Insurance Company
|
PFI
|
Prudential Financial, Inc. and its subsidiaries
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Prudential
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Prudential Financial, Inc. and its subsidiaries
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PGFL
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Prudential Gibraltar Financial Life Insurance Co., Ltd.
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Prudential Financial
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Prudential Financial, Inc.
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PIIH
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Prudential International Insurance Holdings, Ltd.
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Prudential Funding
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Prudential Funding, LLC
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PLIC
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Prudential Legacy Insurance Company of New Jersey
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Prudential Insurance/PICA
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The Prudential Insurance Company of America
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PLNJ
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Pruco Life Insurance Company of New Jersey
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Prudential of Japan
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The Prudential Life Insurance Company, Ltd.
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POA
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Prudential of Argentina
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Registrant
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Prudential Financial, Inc.
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Defined Terms
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Board
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Prudential Financial's Board of Directors
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Other Postretirement Benefits
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Certain health care and life insurance benefits provided by the Company for its retired employees, their beneficiaries and covered dependents
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Closed Block
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Certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders' dividends on these products
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Pension Benefits
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Funded and non-funded non-contributory defined benefit pension plans which cover substantially all of the Company’s employees
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Exchange Act
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The Securities Exchange Act of 1934
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PGIM
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The global investment management businesses of Prudential Financial, Inc.
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Fitch
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Fitch Ratings Inc.
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Regulation XXX
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Valuation of Life Insurance Policies Model Regulation
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Guideline AXXX
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The Application of the Valuation of Life Insurance Policies Model Regulation
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S&P
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Standard & Poor's Rating Services
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Moody's
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Moody's Investors Service, Inc.
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U.S. GAAP
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Generally accepted accounting principles in the United States of America
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Morningstar
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Morningstar, Inc.
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Acronyms
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ALM
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Asset Liability Management
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LPs/LLCs
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Limited Partnerships and Limited Liability Companies
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AOCI
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Accumulated Other Comprehensive Income (Loss)
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MD&A
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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ASU
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Accounting Standards Update
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NAIC
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National Association of Insurance Commissioners
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AUD
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Australian Dollar
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NAV
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Net Asset Value
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bps
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Basis Points
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NJDOBI
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New Jersey Department of Banking and Insurance
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CARES Act
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Coronavirus Aid, Relief, and Economic Security Act
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NOLs
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Net Operating Losses
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CECL
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Current Expected Credit Loss
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NPR
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Non-Performance Risk
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CLO
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Collateralized Loan Obligations
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OCI
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Other Comprehensive Income (Loss)
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COVID-19
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2019 Novel Coronavirus
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ODL
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Overall Domestic Losses
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DAC
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Deferred Policy Acquisition Costs
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OTC
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Over-The-Counter
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DSI
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Deferred Sales Inducements
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OTTI
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Other-Than-Temporary Impairments
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EBITDA
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Earnings Before Interest, Taxes, Depreciation and Amortization
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PDI
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Prudential Defined Income
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FASB
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Financial Accounting Standards Board
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RAF
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Risk Appetite Framework
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FHLBNY
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Federal Home Loan Bank of New York
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RBC
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Risk-Based Capital
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FSA
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Financial Services Agency (an agency of the Japanese government)
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SEC
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Securities and Exchange Commission
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GICs
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Guaranteed Investment Contracts
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SVO
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Securities Valuation Office
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GILTI
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Global Intangible Low-Taxed Income
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TBA
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To Be Announced
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GMDB
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Guaranteed Minimum Death Benefits
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TCJA
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Tax Cuts and Jobs Act
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GSE
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Government Sponsored Entities
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U.S.
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The United States of America
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HDI
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Highest Daily Lifetime Income
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USD
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U.S. Dollar
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LIBOR
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London Inter-Bank Offered Rate
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VIEs
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Variable Interest Entities
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IRA
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Individual Retirement Account
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VOBA
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Value of Business Acquired
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Prudential Financial, Inc.
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By:
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/S/ KENNETH Y. TANJI
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Kenneth Y. Tanji
Executive Vice President and Chief Financial Officer
(Authorized signatory and principal financial officer)
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Parent:
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PRUDENTIAL FINANCIAL, INC.
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By:
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/s/ Bernard J. Jacob
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Name: Bernard J. Jacob
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Title: Senior Vice President
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Surviving Company:
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ASSURANCE IQ, LLC
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By:
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/s/ Michael Rowell
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Name: Michael Rowell
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Title: Chief Executive Officer
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Shareholder Representative:
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GULLIVER SWENSON
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By:
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/s/ Gulliver Swenson
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Founders:
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MICHAEL ROWELL
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By:
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/s/ Michael Rowell
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MICHAEL PAULUS
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By:
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/s/ Michael Paulus
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Prudential Financial, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date: August 6, 2020
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/s/ Charles F. Lowrey
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Charles F. Lowrey
Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Prudential Financial, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date: August 6, 2020
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/s/ Kenneth Y. Tanji
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Kenneth Y. Tanji
Chief Financial Officer
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Date: August 6, 2020
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/s/ Charles F. Lowrey
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Name:
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Charles F. Lowrey
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Title:
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Chief Executive Officer
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Date: August 6, 2020
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/s/ Kenneth Y. Tanji
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Name:
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Kenneth Y. Tanji
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Title:
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Chief Financial Officer
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