FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 2023
SUBACCOUNTS
PSF PGIM Government Money Market Portfolio (Class I)PSF PGIM Total Return Bond Portfolio (Class I)PSF PGIM Jennison Blend Portfolio (Class I)PSF PGIM Flexible Managed Portfolio (Class I)PSF PGIM 50/50 Balanced Portfolio (Class I)
ASSETS
    Investment in the portfolios, at fair value$1,988,594 $2,475,909 $18,800,343 $20,093,850 $19,826,433 
    Net Assets$1,988,594 $2,475,909 $18,800,343 $20,093,850 $19,826,433 
NET ASSETS, representing:
    Accumulation units$1,988,594 $2,475,909 $18,800,343 $20,093,850 $19,826,433 
$1,988,594 $2,475,909 $18,800,343 $20,093,850 $19,826,433 
     Units outstanding957,118 400,042 744,963 1,499,945 1,991,146 
     Portfolio shares held198,859 173,019 193,101 452,564 507,459 
     Portfolio net asset value per share$10.00 $14.31 $97.36 $44.40 $39.07 
     Investment in portfolio shares, at cost$1,988,594 $1,967,411 $4,799,474 $7,527,411 $7,690,875 


STATEMENTS OF OPERATIONS
For the period ended December 31, 2023
SUBACCOUNTS
PSF PGIM Government Money Market Portfolio (Class I)PSF PGIM Total Return Bond Portfolio (Class I)PSF PGIM Jennison Blend Portfolio (Class I)PSF PGIM Flexible Managed Portfolio (Class I)PSF PGIM 50/50 Balanced Portfolio (Class I)
1/1/20231/1/20231/1/20231/1/20231/1/2023
tototototo
12/31/202312/31/202312/31/202312/31/202312/31/2023
INVESTMENT INCOME
   Dividend income$106,077 $— $— $— $— 
EXPENSES
   Charges for mortality and expense risk, and
       for administration27,642 31,817 213,190 241,546 245,242 
   Reimbursement for excess expenses— (876)(11,037)(41,304)(34,395)
NET EXPENSES27,642 30,941 202,153 200,242 210,847 
NET INVESTMENT INCOME (LOSS)78,435 (30,941)(202,153)(200,242)(210,847)
NET REALIZED AND UNREALIZED GAIN (LOSS)
   ON INVESTMENTS
  Capital gains distributions received— — — — — 
  Net realized gain (loss) on shares redeemed— 94,319 1,251,611 1,399,461 1,801,917 
  Net change in unrealized appreciation (depreciation) on investments— 86,419 3,569,055 1,806,767 1,034,193 
NET GAIN (LOSS) ON INVESTMENTS— 180,738 4,820,666 3,206,228 2,836,110 
NET INCREASE (DECREASE) IN NET ASSETS
    RESULTING FROM OPERATIONS$78,435 $149,797 $4,618,513 $3,005,986 $2,625,263 

The accompanying notes are an integral part of these financial statements.
A1

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 2023
SUBACCOUNTS
PSF PGIM High Yield Bond Portfolio (Class I)PSF Stock Index Portfolio (Class I)PSF PGIM Jennison Value Portfolio (Class I)PSF Natural Resources Portfolio (Class I)PSF Global Portfolio (Class I)
ASSETS
    Investment in the portfolios, at fair value$1,295,326 $9,934,602 $5,220,860 $2,885,846 $2,375,785 
    Net Assets$1,295,326 $9,934,602 $5,220,860 $2,885,846 $2,375,785 
NET ASSETS, representing:
    Accumulation units$1,295,326 $9,934,602 $5,220,860 $2,885,846 $2,375,785 
$1,295,326 $9,934,602 $5,220,860 $2,885,846 $2,375,785 
     Units outstanding182,694 486,023 300,988 173,846 430,231 
     Portfolio shares held195,669 85,917 103,281 67,600 43,055 
     Portfolio net asset value per share$6.62 $115.63 $50.55 $42.69 $55.18 
     Investment in portfolio shares, at cost$1,178,591 $3,538,470 $2,064,189 $2,380,729 $961,715 


STATEMENTS OF OPERATIONS
For the period ended December 31, 2023
SUBACCOUNTS
PSF PGIM High Yield Bond Portfolio (Class I)PSF Stock Index Portfolio (Class I)PSF PGIM Jennison Value Portfolio (Class I)PSF Natural Resources Portfolio (Class I)PSF Global Portfolio (Class I)
1/1/20231/1/20231/1/20231/1/20231/1/2023
tototototo
12/31/202312/31/202312/31/202312/31/202312/31/2023
INVESTMENT INCOME
   Dividend income$— $— $— $— $— 
EXPENSES
   Charges for mortality and expense risk, and
       for administration15,457 113,222 62,420 38,005 29,890 
   Reimbursement for excess expenses— — — — — 
NET EXPENSES15,457 113,222 62,420 38,005 29,890 
NET INVESTMENT INCOME (LOSS)(15,457)(113,222)(62,420)(38,005)(29,890)
NET REALIZED AND UNREALIZED GAIN (LOSS)
   ON INVESTMENTS
  Capital gains distributions received— — — — — 
  Net realized gain (loss) on shares redeemed1,733 636,090 459,449 69,853 266,835 
  Net change in unrealized appreciation (depreciation) on investments137,609 1,481,283 250,345 (3,740)160,452 
NET GAIN (LOSS) ON INVESTMENTS139,342 2,117,373 709,794 66,113 427,287 
NET INCREASE (DECREASE) IN NET ASSETS
    RESULTING FROM OPERATIONS$123,885 $2,004,151 $647,374 $28,108 $397,397 
The accompanying notes are an integral part of these financial statements.
A2

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 2023
SUBACCOUNTS
PSF PGIM Government Income Portfolio (Class I)PSF PGIM Jennison Growth Portfolio (Class I)PSF Small-Cap Stock Index Portfolio (Class I)AST Cohen & Steers Realty Portfolio
ASSETS
    Investment in the portfolios, at fair value$310,402 $9,242,290 $3,585,470 $623,703 
    Net Assets$310,402 $9,242,290 $3,585,470 $623,703 
NET ASSETS, representing:
    Accumulation units$310,402 $9,242,290 $3,585,470 $623,703 
$310,402 $9,242,290 $3,585,470 $623,703 
     Units outstanding89,558 668,139 305,231 56,432 
     Portfolio shares held24,288 65,238 61,395 37,147 
     Portfolio net asset value per share$12.78 $141.67 $58.40 $16.79 
     Investment in portfolio shares, at cost$301,086 $2,747,205 $1,398,541 $654,466 


STATEMENTS OF OPERATIONS
For the period ended December 31, 2023
SUBACCOUNTS
PSF PGIM Government Income Portfolio (Class I)PSF PGIM Jennison Growth Portfolio (Class I)PSF Small-Cap Stock Index Portfolio (Class I)AST Cohen & Steers Realty Portfolio
1/1/20231/1/20231/1/20231/1/2023
totototo
12/31/202312/31/202312/31/202312/31/2023
INVESTMENT INCOME
   Dividend income$— $— $— $— 
EXPENSES
   Charges for mortality and expense risk, and
       for administration3,974 97,922 44,446 7,746 
   Reimbursement for excess expenses— — — — 
NET EXPENSES3,974 97,922 44,446 7,746 
NET INVESTMENT INCOME (LOSS)(3,974)(97,922)(44,446)(7,746)
NET REALIZED AND UNREALIZED GAIN (LOSS)
   ON INVESTMENTS
  Capital gains distributions received— — — — 
  Net realized gain (loss) on shares redeemed(59)608,742 332,771 (17,619)
  Net change in unrealized appreciation (depreciation) on investments16,084 2,717,294 160,457 87,637 
NET GAIN (LOSS) ON INVESTMENTS16,025 3,326,036 493,228 70,018 
NET INCREASE (DECREASE) IN NET ASSETS
    RESULTING FROM OPERATIONS$12,051 $3,228,114 $448,782 $62,272 

The accompanying notes are an integral part of these financial statements.
A3

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 2023
SUBACCOUNTS
PSF PGIM Government Money Market Portfolio (Class I)PSF PGIM Total Return Bond Portfolio (Class I)PSF PGIM Jennison Blend Portfolio (Class I)PSF PGIM Flexible Managed Portfolio (Class I)PSF PGIM 50/50 Balanced Portfolio (Class I)
1/1/20231/1/20231/1/20231/1/20231/1/2023
tototototo
12/31/202312/31/202312/31/202312/31/202312/31/2023
OPERATIONS
  Net investment income (loss)$78,435 $(30,941)$(202,153)$(200,242)$(210,847)
  Capital gains distributions received— — — — — 
  Net realized gain (loss) on shares redeemed— 94,319 1,251,611 1,399,461 1,801,917 
  Net change in unrealized appreciation (depreciation) on investments— 86,419 3,569,055 1,806,767 1,034,193 
NET INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS78,435 149,797 4,618,513 3,005,986 2,625,263 
CONTRACT OWNER TRANSACTIONS
  Policy loans(73,616)(26,865)(72,547)(101,789)(187,272)
  Policy loan repayments and interest85,236 122,187 496,876 198,387 1,111,163 
  Surrenders, withdrawals and death benefits(29,625)(414,897)(1,650,064)(1,702,547)(3,041,234)
  Net transfers between other subaccounts
    or fixed rate option(179,446)(140,072)(80,252)(324,752)(194,330)
  Miscellaneous transactions(3,705)3,587 (49,816)(26,408)(41,982)
  Other charges(59,700)(18,980)(106,648)(124,951)(120,682)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CONTRACT OWNER TRANSACTIONS(260,856)(475,040)(1,462,451)(2,082,060)(2,474,337)
TOTAL INCREASE (DECREASE) IN NET ASSETS(182,421)(325,243)3,156,062 923,926 150,926 
NET ASSETS
  Beginning of period2,171,015 2,801,152 15,644,281 19,169,924 19,675,507 
  End of period$1,988,594 $2,475,909 $18,800,343 $20,093,850 $19,826,433 
  Beginning units1,082,428 479,675 811,869 1,670,244 2,257,155 
  Units issued78,674 8,302 4,899 8,411 44,523 
  Units redeemed(203,984)(87,935)(71,805)(178,710)(310,532)
  Ending units957,118 400,042 744,963 1,499,945 1,991,146 
The accompanying notes are an integral part of these financial statements.
A4

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 2023
SUBACCOUNTS
PSF PGIM High Yield Bond Portfolio (Class I)PSF Stock Index Portfolio (Class I)PSF PGIM Jennison Value Portfolio (Class I)PSF Natural Resources Portfolio (Class I)PSF Global Portfolio (Class I)
1/1/20231/1/20231/1/20231/1/20231/1/2023
tototototo
12/31/202312/31/202312/31/202312/31/202312/31/2023
OPERATIONS
  Net investment income (loss)$(15,457)$(113,222)$(62,420)$(38,005)$(29,890)
  Capital gains distributions received— — — — — 
  Net realized gain (loss) on shares redeemed1,733 636,090 459,449 69,853 266,835 
  Net change in unrealized appreciation (depreciation) on investments137,609 1,481,283 250,345 (3,740)160,452 
NET INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS123,885 2,004,151 647,374 28,108 397,397 
CONTRACT OWNER TRANSACTIONS
  Policy loans(3,908)(133,037)(15,389)(3,177)(10,517)
  Policy loan repayments and interest6,079 222,589 26,850 19,145 25,536 
  Surrenders, withdrawals and death benefits(30,471)(853,496)(679,608)(279,313)(412,128)
  Net transfers between other subaccounts
    or fixed rate option(6,697)85,347 85,558 (39,962)(29,332)
  Miscellaneous transactions30 (13,179)(1,778)(16,528)(9,512)
  Other charges(7,877)(73,084)(30,989)(18,325)(14,729)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CONTRACT OWNER TRANSACTIONS(42,844)(764,860)(615,356)(338,160)(450,682)
TOTAL INCREASE (DECREASE) IN NET ASSETS81,041 1,239,291 32,018 (310,052)(53,285)
NET ASSETS
  Beginning of period1,214,285 8,695,311 5,188,842 3,195,898 2,429,070 
  End of period$1,295,326 $9,934,602 $5,220,860 $2,885,846 $2,375,785 
  Beginning units189,150 529,041 340,363 193,917 519,578 
  Units issued1,469 10,176 8,299 498 528 
  Units redeemed(7,925)(53,194)(47,674)(20,569)(89,875)
  Ending units182,694 486,023 300,988 173,846 430,231 
The accompanying notes are an integral part of these financial statements.
A5

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 2023
SUBACCOUNTS
PSF PGIM Government Income Portfolio (Class I)PSF PGIM Jennison Growth Portfolio (Class I)PSF Small-Cap Stock Index Portfolio (Class I)AST Cohen & Steers Realty Portfolio
1/1/20231/1/20231/1/20231/1/2023
totototo
12/31/202312/31/202312/31/202312/31/2023
OPERATIONS
  Net investment income (loss)$(3,974)$(97,922)$(44,446)$(7,746)
  Capital gains distributions received— — — — 
  Net realized gain (loss) on shares redeemed(59)608,742 332,771 (17,619)
  Net change in unrealized appreciation (depreciation) on investments16,084 2,717,294 160,457 87,637 
NET INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS12,051 3,228,114 448,782 62,272 
CONTRACT OWNER TRANSACTIONS
  Policy loans(21,042)(33,324)(9,571)(8,671)
  Policy loan repayments and interest24,625 111,021 83,982 327,373 
  Surrenders, withdrawals and death benefits(44,399)(699,730)(360,373)(422,760)
  Net transfers between other subaccounts
    or fixed rate option— 221,063 (242,076)— 
  Miscellaneous transactions(735)(46,691)(4,891)1,967 
  Other charges(3,983)(54,925)(20,562)(8,465)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CONTRACT OWNER TRANSACTIONS(45,534)(502,586)(553,491)(110,556)
TOTAL INCREASE (DECREASE) IN NET ASSETS(33,483)2,725,528 (104,709)(48,284)
NET ASSETS
  Beginning of period343,885 6,516,762 3,690,179 671,987 
  End of period$310,402 $9,242,290 $3,585,470 $623,703 
  Beginning units102,992 714,271 359,090 67,306 
  Units issued4,847 24,448 576 112 
  Units redeemed(18,281)(70,580)(54,435)(10,986)
  Ending units89,558 668,139 305,231 56,432 


The accompanying notes are an integral part of these financial statements.
A6

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 2022
SUBACCOUNTS
PSF PGIM Government Money Market Portfolio (Class I)PSF PGIM Total Return Bond Portfolio (Class I)PSF PGIM Jennison Blend Portfolio (Class I)PSF PGIM Flexible Managed Portfolio (Class I)PSF PGIM 50/50 Balanced Portfolio (Class I)
1/1/20221/1/20221/1/20221/1/20221/1/2022
tototototo
12/31/202212/31/202212/31/202212/31/202212/31/2022
OPERATIONS
Net investment income (loss)$3,216 $(36,688)$(212,297)$(223,199)$(230,360)
Capital gains distributions received— — — — — 
Net realized gain (loss) on shares redeemed— 35,273 1,360,256 1,979,560 1,243,553 
Net change in unrealized appreciation (depreciation) on investments— (544,419)(7,024,872)(5,605,500)(4,873,841)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS3,216 (545,834)(5,876,913)(3,849,139)(3,860,648)
CONTRACT OWNER TRANSACTIONS
Policy loans(488,186)(67,204)(190,676)(165,046)(281,572)
Policy loan repayments and interest54,887 40,885 281,723 224,779 269,985 
Surrenders, withdrawals and death benefits(42,215)(89,007)(1,519,513)(2,462,461)(1,755,013)
Net transfers between other subaccounts
or fixed rate option913,211 — (98,745)— — 
Miscellaneous transactions(488)2,332 (103,492)(301,963)25,299 
Other charges(54,591)(25,267)(108,857)(134,947)(135,881)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CONTRACT OWNER TRANSACTIONS382,618 (138,261)(1,739,560)(2,839,638)(1,877,182)
TOTAL INCREASE (DECREASE) IN NET ASSETS385,834 (684,095)(7,616,473)(6,688,777)(5,737,830)
NET ASSETS
Beginning of period1,785,181 3,485,247 23,260,754 25,858,701 25,413,337 
End of period$2,171,015 $2,801,152 $15,644,281 $19,169,924 $19,675,507 
Beginning units891,187 502,282 893,530 1,902,143 2,460,418 
Units issued272,476 3,634 479 26,125 4,968 
Units redeemed(81,235)(26,241)(82,140)(258,024)(208,231)
Ending units1,082,428 479,675 811,869 1,670,244 2,257,155 
The accompanying notes are an integral part of these financial statements.
A7

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 2022
SUBACCOUNTS
PSF PGIM High Yield Bond Portfolio (Class I)PSF Stock Index Portfolio (Class I)PSF PGIM Jennison Value Portfolio (Class I)PSF Natural Resources Portfolio (Class I)PSF Global Portfolio (Class I)
1/1/20221/1/20221/1/20221/1/20221/1/2022
tototototo
12/31/202212/31/202212/31/202212/31/202212/31/2022
OPERATIONS
Net investment income (loss)$(16,351)$(119,351)$(67,356)$(39,098)$(34,610)
Capital gains distributions received— — — — — 
Net realized gain (loss) on shares redeemed26,834 914,027 165,357 33,893 320,751 
Net change in unrealized appreciation (depreciation) on investments(194,788)(2,990,128)(645,535)582,496 (991,989)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS(184,305)(2,195,452)(547,534)577,291 (705,848)
CONTRACT OWNER TRANSACTIONS
Policy loans(3,807)(104,046)(15,148)(9,053)(14,344)
Policy loan repayments and interest7,075 121,176 13,408 67,659 82,760 
Surrenders, withdrawals and death benefits(44,673)(1,003,356)(206,698)(297,583)(243,239)
Net transfers between other subaccounts
or fixed rate option(343,960)(1,506)30,001 29,867 (367,354)
Miscellaneous transactions5,091 33,811 8,077 (12,873)7,568 
Other charges(8,584)(86,645)(33,247)(18,855)(17,385)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CONTRACT OWNER TRANSACTIONS(388,858)(1,040,566)(203,607)(240,838)(551,994)
TOTAL INCREASE (DECREASE) IN NET ASSETS(573,163)(3,236,018)(751,141)336,453 (1,257,842)
NET ASSETS
Beginning of period1,787,448 11,931,329 5,939,983 2,859,445 3,686,912 
End of period$1,214,285 $8,695,311 $5,188,842 $3,195,898 $2,429,070 
Beginning units244,068 585,484 354,449 209,127 632,484 
Units issued579 20,576 2,062 2,071 2,756 
Units redeemed(55,497)(77,019)(16,148)(17,281)(115,662)
Ending units189,150 529,041 340,363 193,917 519,578 
The accompanying notes are an integral part of these financial statements.
A8

FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS
For the period ended December 31, 2022
SUBACCOUNTS
PSF PGIM Government Income Portfolio (Class I)PSF PGIM Jennison Growth Portfolio (Class I)PSF Small-Cap Stock Index Portfolio (Class I)AST Cohen & Steers Realty Portfolio
1/1/20221/1/20221/1/20221/1/2022
totototo
12/31/202212/31/202212/31/202212/31/2022
OPERATIONS
Net investment income (loss)$(4,497)$(102,583)$(49,056)$(8,890)
Capital gains distributions received— — — — 
Net realized gain (loss) on shares redeemed975 780,090 131,745 (12,074)
Net change in unrealized appreciation (depreciation) on investments(54,811)(5,205,369)(880,283)(124,612)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS(58,333)(4,527,862)(797,594)(145,576)
CONTRACT OWNER TRANSACTIONS
Policy loans(18,491)(33,821)(9,261)(5,321)
Policy loan repayments and interest18,722 62,431 8,440 3,845 
Surrenders, withdrawals and death benefits— (1,081,209)(107,017)(49,419)
Net transfers between other subaccounts
or fixed rate option— (92,837)(30,373)871,234 
Miscellaneous transactions— 98,898 5,642 (40,523)
Other charges(4,349)(59,276)(23,861)(7,381)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CONTRACT OWNER TRANSACTIONS(4,118)(1,105,814)(156,430)772,435 
TOTAL INCREASE (DECREASE) IN NET ASSETS(62,451)(5,633,676)(954,024)626,859 
NET ASSETS
Beginning of period406,336 12,150,438 4,644,203 45,128 
End of period$343,885 $6,516,762 $3,690,179 $671,987 
Beginning units104,024 820,735 373,257 3,332 
Units issued4,310 3,148 2,245 75,911 
Units redeemed(5,342)(109,612)(16,412)(11,937)
Ending units102,992 714,271 359,090 67,306 

The accompanying notes are an integral part of these financial statements.
A9
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
December 31, 2023






Note 1:    General

Pruco Life Single Premium Variable Life Account (the “Account”) was established under the laws of the State of Arizona on April 15, 1985 as a separate investment account of Pruco Life Insurance Company (“Pruco Life”), which is a wholly-owned subsidiary of The Prudential Insurance Company of America (“Prudential”). Prudential is a wholly-owned subsidiary of Prudential Financial, Inc. (“Prudential Financial”). Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of Pruco Life. Proceeds from purchases of Discovery Life Plus contract (the “contract” or "product") are invested in the Account. The portion of the Account’s assets applicable to the contract is not chargeable with liabilities arising out of any other business Pruco Life may conduct.

The Account is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended, as a unit investment trust. The Account is a funding vehicle for the contract. The contract offers the option to invest in various subaccounts listed below, each of which invests in a corresponding portfolio of either The Prudential Series Fund or the Advanced Series Trust (collectively, the "Portfolios").

The corresponding subaccount names are as follows:
PSF PGIM Government Money Market Portfolio (Class I)
PSF PGIM Total Return Bond Portfolio (Class I)
PSF PGIM Jennison Blend Portfolio (Class I)
PSF PGIM Flexible Managed Portfolio (Class I)
PSF PGIM 50/50 Balanced Portfolio (Class I)
PSF PGIM High Yield Bond Portfolio (Class I)
PSF Stock Index Portfolio (Class I)
PSF PGIM Jennison Value Portfolio (Class I)
PSF Natural Resources Portfolio (Class I)
PSF Global Portfolio (Class I)
PSF PGIM Government Income Portfolio (Class I)
PSF PGIM Jennison Growth Portfolio (Class I)
PSF Small-Cap Stock Index Portfolio (Class I)
AST Cohen & Steers Realty Portfolio

There were no mergers during the period ended December 31, 2023.

New sales of the product which invests in the Account have been discontinued. However, premium payments made by contract owners will continue to be received by the Account, subject to the rules of the product and any optional benefits, if elected.

The Portfolios are open-end management investment companies, and each portfolio of The Prudential Series Fund and the Advanced Series Trust is managed by affiliates of Prudential. Each subaccount of the Account indirectly bears exposure to risks which may be interrelated and include, but are not limited to, the market, credit and liquidity risks of the portfolio in which it invests. These financial statements should be read in conjunction with the financial statements and footnotes of the Portfolios. Additional information on these Portfolios is available upon request to the appropriate companies.

Note 2:    Significant Accounting Policies

The Account is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services-Investment Companies, which is part of the generally accepted accounting principles in the United States of America (“GAAP”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and the reported amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates. The most significant estimates relate to the valuation of
A10
Note 2:    Significant Accounting Policies (continued)
investments in the Portfolios. Subsequent events have been evaluated through the date these financial statements were issued, and no adjustment or disclosure is required in the financial statements.

Investments - The investments in shares of the Portfolios are stated at the reported net asset value per share of the respective Portfolios, which is based on the fair value of the underlying securities in the respective Portfolios. All changes in fair value are recorded as net change in unrealized appreciation (depreciation) on investments in the Statements of Operations of the applicable subaccounts.

Security Transactions - Purchase and sale transactions are recorded as of the trade date of the security being purchased or sold. Realized gains and losses on security transactions are determined based upon the average cost method.

Dividend Income and Distributions Received - Dividend and capital gain distributions received are reinvested in additional shares of the Portfolios and are recorded on the ex-distribution date.

Note 3:    Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1 - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Account can access.
Level 2 - Fair value is based on significant inputs, other than Level 1 inputs, that are observable for the investment, either directly or indirectly, for substantially the full term of the investment through corroboration with observable market data. Level 2 inputs include the reported net asset value per share of the underlying portfolio, quoted market prices in active markets for similar investments, quoted market prices in markets that are not active for identical or similar investments, and other market observable inputs.
Level 3 - Fair value is based on at least one significant unobservable input for the investment, which may require significant judgment or estimation in determining the fair value.
As of December 31, 2023, management determined that the fair value inputs for all of the Account’s investments, which consist solely of investments in open-end mutual funds registered with the SEC, were considered Level 2.


Note 4:    Taxes

Pruco Life is taxed as a “life insurance company” as defined by the Internal Revenue Code. The results of operations of the Account form a part of Prudential Financial’s consolidated federal tax return. No federal, state or local income taxes are payable by the Account. As such, no provision for tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law.

Note 5:    Purchases and Sales of Investments

The aggregate costs of purchases and proceeds from sales, excluding distributions received and reinvested, of investments in the Portfolios for the period ended December 31, 2023 were as follows:

PurchasesSales
PSF PGIM Government Money Market Portfolio (Class I)$155,219 $443,717 
PSF PGIM Total Return Bond Portfolio (Class I)43,219 549,200 
PSF PGIM Jennison Blend Portfolio (Class I)104,141 1,768,745 
PSF PGIM Flexible Managed Portfolio (Class I)89,587 2,371,889 
A11
Note 5:    Purchases and Sales of Investments (continued)
PurchasesSales
PSF PGIM 50/50 Balanced Portfolio (Class I)$382,402 $3,067,586 
PSF PGIM High Yield Bond Portfolio (Class I)8,760 67,060 
PSF Stock Index Portfolio (Class I)177,355 1,055,437 
PSF PGIM Jennison Value Portfolio (Class I)127,919 805,694 
PSF Natural Resources Portfolio (Class I)8,082 384,247 
PSF Global Portfolio (Class I)822 481,395 
PSF PGIM Government Income Portfolio (Class I)15,555 65,062 
PSF PGIM Jennison Growth Portfolio (Class I)308,617 909,125 
PSF Small-Cap Stock Index Portfolio (Class I)3,515 601,452 
AST Cohen & Steers Realty Portfolio332 118,634 

Note 6:    Related Party Transactions

The Account has extensive transactions and relationships with Prudential and other affiliates. Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among wholly unrelated parties. Prudential Financial and its affiliates perform various services on behalf of the portfolios of The Prudential Series Fund and the Advanced Series Trust in which the Account invests and may receive fees for the services performed. These services include, among other things, investment management, subadvisory, shareholder communications, postage, transfer agency and various other record keeping, administrative and customer service functions.

The Prudential Series Fund has entered into a management agreement with PGIM Investments LLC ("PGIM Investments"), and the Advanced Series Trust has entered into a management agreement with PGIM Investments and AST Investment Services, Inc., both indirect, wholly-owned subsidiaries of Prudential Financial (together, the “Investment Managers”). Pursuant to these agreements, the Investment Managers have responsibility for all investment advisory services and supervise the subadvisers’ performance of such services with respect to each portfolio of The Prudential Series Fund and the Advanced Series Trust. The Investment Managers have entered into subadvisory agreements with several subadvisers, including PGIM, Inc., PGIM Limited, Jennison Associates LLC, and PGIM Quantitative Solutions LLC, each of which are indirect, wholly-owned subsidiaries of Prudential Financial.

The Prudential Series Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), an indirect, wholly-owned subsidiary of Prudential Financial, which acts as the distributor of the Class I and Class II shares of the portfolios of The Prudential Series Fund. No distribution or service (12b-1) fees are paid to PIMS as distributor of the Class I shares of the portfolios of The Prudential Series Fund, which is the class of shares owned by the Account.

The Advanced Series Trust has a distribution agreement with Prudential Annuities Distributors, Inc. (“PAD”), an indirect, wholly-owned subsidiary of Prudential Financial, which acts as the distributor of the shares of each portfolio of the Advanced Series Trust. Distribution and service fees are paid to PAD by most portfolios of the Advanced Series Trust.

Prudential Mutual Fund Services LLC, an affiliate of the Investment Managers and an indirect, wholly-owned subsidiary of Prudential Financial, serves as the transfer agent of each portfolio of The Prudential Series Fund and the Advanced Series Trust.

Certain charges and fees of the portfolios of The Prudential Series Fund and the Advanced Series Trust may be waived and/or reimbursed by Prudential and its affiliates. Prudential and its affiliates reserve the right to discontinue these waivers/reimbursements at its discretion, subject to the contractual obligations of Prudential and its affiliates.

See The Prudential Series Fund and the Advanced Series Trust financial statements for further discussion of such expense and waiver/reimbursement arrangements. The Account indirectly bears the
A12
Note 6:    Related Party Transactions (continued)
expenses of the underlying portfolios of The Prudential Series Fund and the Advanced Series Trust in which it invests, including the related party expenses disclosed above.

Note 7:    Financial Highlights

A summary of units outstanding, accumulation unit values, net assets, investment income ratios, expense ratios, excluding expenses of the underlying Portfolios, and total returns by subaccount is presented below for each of the five years in the period ended December 31, 2023.


At the year endedFor the year ended
Units
(000s)		Unit ValueNet Assets
(000s)		Investment Income Ratio*Expense Ratio**Total Return***
PSF PGIM Government Money Market Portfolio (Class I)
December 31, 2023957 $2.08 $1,989 4.77 %1.25 %3.59 %
December 31, 20221,082 $2.01 $2,171 1.39 %1.25 %0.13 %
December 31, 2021891 $2.00 $1,785 0.05 %1.25 %-1.22 %
December 31, 20201,224 $2.03 $2,482 0.26 %1.25 %-0.96 %
December 31, 20191,102 $2.05 $2,257 1.91 %1.25 %0.66 %
PSF PGIM Total Return Bond Portfolio (Class I)
December 31, 2023400 $6.19 $2,476 0.00 %1.22 %5.98 %
December 31, 2022480 $5.84 $2,801 0.00 %1.22 %-15.84 %
December 31, 2021502 $6.94 $3,485 0.00 %1.23 %-1.96 %
December 31, 2020562 $7.08 $3,981 0.00 %1.22 %7.15 %
December 31, 2019603 $6.61 $3,984 0.00 %1.21 %9.57 %
PSF PGIM Jennison Blend Portfolio (Class I)
December 31, 2023745 $25.24 $18,800 0.00 %1.19 %30.97 %
December 31, 2022812 $19.27 $15,644 0.00 %1.19 %-25.98 %
December 31, 2021894 $26.03 $23,261 0.00 %1.19 %18.94 %
December 31, 2020990 $21.89 $21,666 0.00 %1.18 %27.49 %
December 31, 20191,156 $17.17 $19,842 0.00 %1.18 %27.38 %
PSF PGIM Flexible Managed Portfolio (Class I)
December 31, 20231,500 $13.40 $20,094 0.00 %1.04 %16.72 %
December 31, 20221,670 $11.48 $19,170 0.00 %1.03 %-15.57 %
December 31, 20211,902 $13.59 $25,859 0.00 %1.04 %16.16 %
December 31, 20202,096 $11.70 $24,526 0.00 %1.03 %8.47 %
December 31, 20192,376 $10.79 $25,639 0.00 %1.02 %18.66 %
PSF PGIM 50/50 Balanced Portfolio (Class I)
December 31, 20231,991 $9.96 $19,826 0.00 %1.08 %14.23 %
December 31, 20222,257 $8.72 $19,676 0.00 %1.08 %-15.61 %
December 31, 20212,460 $10.33 $25,413 0.00 %1.08 %12.16 %
December 31, 20202,681 $9.21 $24,690 0.00 %1.07 %10.25 %
December 31, 20193,011 $8.35 $25,146 0.00 %1.06 %17.24 %
PSF PGIM High Yield Bond Portfolio (Class I)
December 31, 2023183 $7.09 $1,295 0.00 %1.25 %10.44 %
December 31, 2022189 $6.42 $1,214 0.00 %1.25 %-12.34 %
December 31, 2021244 $7.32 $1,787 0.00 %1.25 %6.59 %
December 31, 2020270 $6.87 $1,854 0.00 %1.25 %5.78 %
December 31, 2019282 $6.50 $1,834 0.00 %1.25 %14.89 %
PSF Stock Index Portfolio (Class I)
December 31, 2023486 $20.44 $9,935 0.00 %1.25 %24.36 %
December 31, 2022529 $16.44 $8,695 0.00 %1.25 %-19.35 %
December 31, 2021585 $20.38 $11,931 0.00 %1.25 %26.69 %
December 31, 2020651 $16.08 $10,465 0.00 %1.25 %16.62 %
December 31, 2019701 $13.79 $9,669 0.00 %1.25 %29.45 %
A13
Note 7:    Financial Highlights (continued)
At the year endedFor the year ended
Units
(000s)		Unit ValueNet Assets
(000s)		Investment Income Ratio*Expense Ratio**Total Return***
PSF PGIM Jennison Value Portfolio (Class I)
December 31, 2023301 $17.35 $5,221 0.00 %1.25 %13.78 %
December 31, 2022340 $15.25 $5,189 0.00 %1.25 %-9.03 %
December 31, 2021354 $16.76 $5,940 0.00 %1.25 %26.21 %
December 31, 2020372 $13.28 $4,941 0.00 %1.25 %2.30 %
December 31, 2019416 $12.98 $5,399 0.00 %1.25 %24.50 %
PSF Natural Resources Portfolio (Class I)
December 31, 2023174 $16.60 $2,886 0.00 %1.25 %0.72 %
December 31, 2022194 $16.48 $3,196 0.00 %1.25 %20.53 %
December 31, 2021209 $13.67 $2,859 0.00 %1.25 %23.95 %
December 31, 2020169 $11.03 $1,869 0.00 %1.25 %10.89 %
December 31, 2019188 $9.95 $1,868 0.00 %1.25 %9.32 %
PSF Global Portfolio (Class I)
December 31, 2023430 $5.52 $2,376 0.00 %1.25 %18.12 %
December 31, 2022520 $4.68 $2,429 0.00 %1.25 %-19.80 %
December 31, 2021632 $5.83 $3,687 0.00 %1.25 %16.76 %
December 31, 2020670 $4.99 $3,346 0.00 %1.25 %14.40 %
December 31, 2019736 $4.36 $3,210 0.00 %1.25 %28.77 %
PSF PGIM Government Income Portfolio (Class I)
December 31, 202390 $3.47 $310 0.00 %1.25 %3.80 %
December 31, 2022103 $3.34 $344 0.00 %1.25 %-14.52 %
December 31, 2021104 $3.91 $406 0.00 %1.25 %-4.37 %
December 31, 2020105 $4.08 $431 0.00 %1.25 %5.84 %
December 31, 2019128 $3.86 $492 0.00 %1.25 %5.30 %
PSF PGIM Jennison Growth Portfolio (Class I)
December 31, 2023668 $13.83 $9,242 0.00 %1.25 %51.62 %
December 31, 2022714 $9.12 $6,517 0.00 %1.25 %-38.37 %
December 31, 2021821 $14.80 $12,150 0.00 %1.25 %14.57 %
December 31, 2020849 $12.92 $10,965 0.00 %1.25 %54.27 %
December 31, 2019995 $8.38 $8,335 0.00 %1.25 %31.69 %
PSF Small-Cap Stock Index Portfolio (Class I)
December 31, 2023305 $11.75 $3,585 0.00 %1.25 %14.31 %
December 31, 2022359 $10.28 $3,690 0.00 %1.25 %-17.41 %
December 31, 2021373 $12.44 $4,644 0.00 %1.25 %24.78 %
December 31, 2020394 $9.97 $3,928 0.00 %1.25 %9.62 %
December 31, 2019478 $9.10 $4,352 0.00 %1.25 %20.90 %
AST Cohen & Steers Realty Portfolio (available February 22, 2021)
December 31, 202356 $11.05 $624 0.00 %1.25 %10.70 %
December 31, 202267 $9.98 $672 0.00 %1.25 %-26.29 %
December 31, 20213 $13.54 $45 0.00 %1.25 %34.45 %
December 31, 2020— $— $— 0.00 %0.00 %0.00 %
December 31, 2019— $— $— 0.00 %0.00 %0.00 %



A14
Note 7:    Financial Highlights (continued)
*
These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying Portfolios, net of management fees assessed by the fund manager, divided by the average daily net assets. These ratios exclude those expenses, such as mortality and expense risk and administration charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying Portfolios in which the subaccount invests.
**
These amounts represent the annualized contract expenses of the Account, consisting primarily of mortality and expense risk and administration charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Portfolios are excluded. Expense ratio is net of the reimbursement for excess expenses. In the absence of the reimbursement for excess expenses, the expense ratio would be higher.
***
These amounts represent the total returns for the periods indicated, including changes in the value of the underlying Portfolios, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Contract owners may experience different total returns based on their investment options. Subaccounts with a date notation indicate the effective date of that subaccount in the Account. Total returns for periods less than one year are not annualized. The total return is calculated for each of the five years in the period ended December 31, 2023 or for the periods indicated within. Total return may reflect the reimbursement for excess expenses. In the absence of the reimbursement for excess expenses, the total return would be lower.

Note 8: Charges and Expenses

The following represents the various charges and expenses of the Account which are paid to Pruco Life.

A.Mortality and Expense Risk Charges

The mortality and expense risk charges, at an effective annual rate of 0.90%, are applied daily against the net assets of each subaccount. Mortality risk is the risk that contract owners may not live as long as estimated and expense risk is the risk that the cost of issuing and administering the contract may exceed related charges assessed by Pruco Life. These charges are assessed through a reduction in unit values.

B.Administration Charge

The administration charge, at an effective annual rate of 0.35%, is applied daily against the net assets of each subaccount. Administration charge includes costs associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners. This charge is assessed through a reduction in unit values.

C.Reimbursement For Excess Expenses

Expenses, including a management fee charged by PGIM Investments, are incurred by each portfolio of The Prudential Series Fund. Pursuant to a prior merger agreement, the PSF PGIM Government Money Market Portfolio (Class I), PSF PGIM Total Return Bond Portfolio (Class I), PSF PGIM Jennison Blend Portfolio (Class I), PSF PGIM Flexible Managed Portfolio (Class I) and PSF PGIM 50/50 Balanced Portfolio (Class I) subaccounts of the Account are reimbursed by Pruco Life for expenses indirectly incurred through their investment in the respective portfolios of The Prudential Series Fund when such expenses exceed 0.40% of the average daily net assets of the respective portfolios of The Prudential Series Fund. During the period ended December 31, 2023, there was a reimbursement for excess expenses.






A15
Note 8: Charges and Expenses (continued)
D.Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Account. The deductions are for (1) transaction costs which are deducted from each premium payment to cover premium collection and processing costs; (2) state premium taxes; and (3) the contract is also subject to monthly cost of insurance charges for the costs of administering the contract and to compensate Pruco Life for the guaranteed minimum death benefit risk. These charges are assessed through the redemption of units and are generally assessed at the rate of 0.05% per month of the contract value.

Note 9: Other

Accumulation units are the basic valuation units used to calculate a contract owner's interest allocated to the variable account.

Policy loans represent amounts borrowed by contract owners using the contract as the security for the loan.

Policy loan repayments and interest represent payments made by contract owners to reduce the total outstanding policy loan principal plus accrued interest.

Surrenders, withdrawals and death benefits are payments to contract owners and beneficiaries made under the terms of the contract, including amounts that contract owners have requested to be withdrawn or paid to them.

Net transfers between other subaccounts or fixed rate option are amounts that contract owners have directed to be moved among subaccounts, including permitted transfers to and from the guaranteed interest account.

Miscellaneous transactions primarily represent timing related adjustments on contract owner transactions, such as premiums, surrenders, transfers, etc. which are funded by the general account in order to maintain appropriate contract owner account balances.

Other charges are contract level charges assessed through the redemption of units as described in Note 8, Charges and Expenses.
A16

Report of Independent Registered Public Accounting Firm

To the Board of Directors of Pruco Life Insurance Company
and the Contract Owners of Pruco Life Single Premium Variable Life Account

Opinions on the Financial Statements

We have audited the accompanying statements of net assets of each of the subaccounts of Pruco Life Single Premium Variable Life Account indicated in the table below as of December 31, 2023, the related statements of operations for the period then ended, and the statements of changes in net assets for each of the two years in the period ended December 31, 2023, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the subaccounts of Pruco Life Single Premium Variable Life Account as of December 31, 2023, the results of each of their operations for the period then ended, and the changes in each of their net assets for each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

PSF PGIM Government Money Market Portfolio (Class I)PSF PGIM Jennison Value Portfolio (Class I)
PSF PGIM Total Return Bond Portfolio (Class I)PSF Natural Resources Portfolio (Class I)
PSF PGIM Jennison Blend Portfolio (Class I)PSF Global Portfolio (Class I)
PSF PGIM Flexible Managed Portfolio (Class I)PSF PGIM Government Income Portfolio (Class I)
PSF PGIM 50/50 Balanced Portfolio (Class I)PSF PGIM Jennison Growth Portfolio (Class I)
PSF PGIM High Yield Bond Portfolio (Class I)PSF Small-Cap Stock Index Portfolio (Class I)
PSF Stock Index Portfolio (Class I)AST Cohen & Steers Realty Portfolio

Basis for Opinions

These financial statements are the responsibility of the Pruco Life Insurance Company management. Our responsibility is to express an opinion on the financial statements of each of the subaccounts of Pruco Life Single Premium Variable Life Account based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to each of the subaccounts of Pruco Life Single Premium Variable Life Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of investments owned as of December 31, 2023 by correspondence with the transfer agent of the investee mutual funds. We believe that our audits provide a reasonable basis for our opinions.






/s/ PricewaterhouseCoopers LLP
New York, New York
April 23, 2024

We have served as the auditor of one or more of the subaccounts of Pruco Life Single Premium Variable Life Account since at least 2013. We have not been able to determine the specific year we began serving as auditor of one or more of the subaccounts of Pruco Life Single Premium Variable Life Account.
A17

PRUCO LIFE INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS INDEX
 Page
B-2
B-3
B-5
B-6
B-7
B-8
B-9
B-10
B-20
B-37
B-49
B-57
B-72
B-74
B-76
B-86
B-91
B-93
B-101
B-104
B-106
B-106
B-111
B-1

Management’s Annual Report on Internal Control Over Financial Reporting
Management of Pruco Life Insurance Company (together with its consolidated subsidiaries, the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Management conducted an assessment of the effectiveness, as of December 31, 2023, of the Company’s internal control over financial reporting, based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our assessment under that framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023.
Our internal control over financial reporting is a process designed by or under the supervision of our principal executive and principal financial officers 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. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
This Annual Report does not include an attestation report of the Company’s registered public accounting firm, PricewaterhouseCoopers LLP, regarding the internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
March 20, 2024

B-2

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholder of Pruco Life Insurance Company
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Pruco Life Insurance Company and its subsidiaries (the "Company") as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for long-duration insurance and investment contracts in 2023.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
B-3

Valuation of Guaranteed Benefit Features Associated with Certain Annuity and Life Products Included in the Market Risk Benefits and the Liability for Future Policy Benefits

As described in Notes 2, 5, 8 and 10 to the consolidated financial statements, the Company issues certain annuity and life contracts which contain guaranteed benefit features. Certain of the guarantees associated with variable annuity contracts are accounted for as market risk benefits. The market risk benefits represent contracts or contract features that expose the Company to other than nominal capital market risk, primarily related to deferred annuities with guaranteed minimum benefits. The benefits are accounted for using a fair value measurement methodology. The fair value of market risk benefits is calculated as the present value of expected future benefit payments to contractholders less the present value of expected future fees attributable to the market risk benefits, based on assumptions a market participant would use in valuing the market risk benefits. On a quarterly basis, changes in the fair value of market risk benefits are recorded in net income, net of related hedges, except for the portion of the change attributable to changes in the Company’s non-performance risk which is recorded in other comprehensive income. This methodology could result in either a liability or asset balance, given changing capital market conditions and various actuarial assumptions. As of December 31, 2023, the fair value of the obligations associated with these guarantees accounted for as market risk benefit assets was $2.37 billion and for market risk benefit liabilities was $5.14 billion. As there is no observable active market for the transfer of these obligations, the valuations are calculated using internally-developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The significant inputs to the valuation models for these market risk benefits include capital market assumptions, such as interest rate levels and volatility assumptions, the Company’s market-perceived non-performance risk under the contract, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates and mortality rates (collectively, the significant market risk benefit assumptions). For certain life insurance products that include certain other contract features, including no-lapse guarantees, additional insurance reserves are established when associated assessments are recognized. The liability for no-lapse guarantee features is included within the additional insurance reserves balance in Note 8. As of December 31, 2023, the additional insurance reserve was $14.28 billion, recorded within the liability for future policy benefits. As disclosed by management, this liability is established using current best estimate assumptions, including mortality rates, lapse rates, and premium pattern rates, as well as interest rate and equity market return assumptions (collectively, the significant additional insurance reserve assumptions), and is based on the ratio of the present value of total expected excess payments (i.e., payments in excess of account value) over the life of the contract divided by the present value of total expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date.

The principal considerations for our determination that performing procedures relating to the valuation of guaranteed benefit features associated with certain annuity and life products that are accounted for as market risk benefits and those that are included in the liability for future policy benefits is a critical audit matter are (i) the significant judgment by management when determining the valuation model for the benefit features accounted for as market risk benefits due to the lack of an observable market for these guarantees and when developing the aforementioned significant assumptions for the guaranteed benefit features accounted for as market risk benefits and additional insurance reserves, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management's model for market risk benefits recorded at fair value and the aforementioned assumptions used by management in the valuation of the liabilities for the guaranteed benefit features accounted for as market risk benefits and additional insurance reserves, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of guaranteed benefit features associated with certain annuity and life products included in market risk benefits and the liability for future policy benefits, including controls over the model for the benefit features accounted for as market risk benefits and development of the assumptions used in the valuation of the liabilities for the guaranteed benefit features accounted for as market risk benefits and additional insurance reserves. These procedures also included, among others, (i) testing management’s process for determining the valuation of guaranteed benefit features associated with certain annuity and life products included in market risk benefits and the liability for future policy benefits, (ii) the use of professionals with specialized skill and knowledge to assist in evaluating (a) the appropriateness of management’s model for market risk benefits recorded at fair value and (b) the reasonableness of the aforementioned assumptions used in the valuation based on industry knowledge and data as well as historical Company data and experience. The procedures also included testing the completeness and accuracy of data used to develop the aforementioned assumptions and testing that the aforementioned assumptions are accurately reflected in the models.


/s/ PricewaterhouseCoopers LLP

New York, New York
March 20, 2024

We have served as the Company's auditor since 1996.
B-4


PRUCO LIFE INSURANCE COMPANY
Consolidated Statements of Financial Position
December 31, 2023 and 2022 (in thousands, except share amounts)

December 31, 2023December 31, 2022
ASSETS
Fixed maturities, available-for-sale, at fair value (allowance for credit losses: 2023 – $2,008; 2022 – $4,769) (amortized cost: 2023 – $27,538,066; 2022 – $21,311,087)
$26,131,780 $19,025,401 
Fixed maturities, trading, at fair value (amortized cost: 2023 – $3,476,746; 2022 – $2,682,022)
2,796,446 1,936,159 
Equity securities, at fair value (cost: 2023 – $824,270; 2022 – $148,179)
844,950 143,072 
Policy loans1,472,677 505,367 
Short-term investments380,366 124,491 
Commercial mortgage and other loans (net of $37,689 and $20,263 allowance for credit losses at December 31, 2023 and December 31, 2022, respectively)
6,122,721 4,928,680 
Other invested assets (includes $85,025 and $116,110 of assets measured at fair value at December 31, 2023 and 2022, respectively)
1,222,985 1,088,613 
Total investments38,971,925 27,751,783 
Cash and cash equivalents2,139,792 2,397,627 
Deferred policy acquisition costs(1)7,097,511 6,930,425 
Accrued investment income333,838 219,635 
Reinsurance recoverables(1)38,709,651 37,096,562 
Receivables from parent and affiliates332,583 224,921 
Deferred sales inducements(1)351,424 381,504 
Income tax assets(1)1,737,651 1,694,751 
Market risk benefit assets(1)2,367,243 1,393,237 
Other assets(1)2,078,938 1,331,427 
Separate account assets119,188,485 114,051,246 
TOTAL ASSETS$213,309,041 $193,473,118 
LIABILITIES AND EQUITY
LIABILITIES
Policyholders’ account balances(1)$53,012,800 $41,912,536 
Future policy benefits(1)23,205,205 20,829,033 
Market risk benefit liabilities(1)5,144,401 5,521,601 
Cash collateral for loaned securities218,310 86,750 
Short-term debt to affiliates180,411 126,250 
Long-term debt to affiliates0 185,563 
Payables to parent and affiliates2,667,696 2,126,571 
Other liabilities(1)5,170,308 3,597,373 
Separate account liabilities119,188,485 114,051,246 
Total liabilities208,787,616 188,436,923 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 16)
EQUITY
Common stock ($10 par value; 1,000,000 shares authorized; 250,000 shares issued and outstanding)
2,500 2,500 
Additional paid-in capital5,052,602 6,037,914 
Retained earnings / (accumulated deficit)(1)(532,951)(994,154)
Accumulated other comprehensive income (loss)(1)(30,920)(10,065)
Total Pruco Life Insurance Company equity4,491,231 5,036,195 
Noncontrolling interests30,194 0
Total equity4,521,425 5,036,195 
TOTAL LIABILITIES AND EQUITY$213,309,041 $193,473,118 
    
(1)    Prior period amounts reflect the implementation of Accounting Standard Update ("ASU") 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
See Notes to Consolidated Financial Statements
B-5

PRUCO LIFE INSURANCE COMPANY
Consolidated Statements of Operations and Comprehensive Income (Loss)
Years Ended December 31, 2023, 2022 and 2021 (in thousands)

202320222021
REVENUES
Premiums(1)$328,897 $265,208 $184,458 
Policy charges and fee income(1)1,536,606 1,230,601 1,300,095 
Net investment income1,675,522 884,001 550,235 
Asset administration fees232,950 284,182 202,177 
Other income (loss)(1)744,628 (651,469)262,420 
Realized investment gains (losses), net(1)(1,083,660)336,382 (386,894)
Change in value of market risk benefits, net of related hedging gain (loss)(1)(94,368)(700,581)(4,222,530)
TOTAL REVENUES3,340,575 1,648,324 (2,110,039)
BENEFITS AND EXPENSES
Policyholders’ benefits(1)503,789 458,373 82,710 
Change in estimates of liability for future policy benefits(1)3,952 55,099 27,008 
Interest credited to policyholders’ account balances(1)655,445 445,215 (151,389)
Amortization of deferred policy acquisition costs(1)534,435 520,276 325,595 
General, administrative and other expenses(1)1,151,452 1,156,464 (523,774)
TOTAL BENEFITS AND EXPENSES2,849,073 2,635,427 (239,850)
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURE491,502 (987,103)(1,870,189)
Income tax expense (benefit)(1)29,378 (295,535)(474,786)
INCOME (LOSS) FROM OPERATIONS BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURE
462,124 (691,568)(1,395,403)
Equity in earnings of operating joint venture, net of taxes(433)(75,137)702 
NET INCOME (LOSS)$461,691 $(766,705)$(1,394,701)
Less: Income (loss) attributable to noncontrolling interests488 00
NET INCOME (LOSS) ATTRIBUTABLE TO PRUCO LIFE INSURANCE COMPANY$461,203 $(766,705)$(1,394,701)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments2,419 (9,337)(3,891)
Net unrealized investment gains (losses)(1)691,952 (2,254,037)(210,486)
Interest rate remeasurement of future policy benefits(1)(60,978)310,353 37,274 
Gain (loss) from changes in non-performance risk on market risk benefits(1)(659,875)1,440,305 (435,232)
Total(26,482)(512,716)(612,335)
Less: Income tax expense (benefit) related to other comprehensive income (loss)(1)(5,627)(106,197)(128,241)
Other comprehensive income (loss), net of taxes(20,855)(406,519)(484,094)
Comprehensive income (loss)440,836 (1,173,224)(1,878,795)
Less: Comprehensive income (loss) attributable to noncontrolling interests488 00
Comprehensive income (loss) attributable to Pruco Life Insurance Company$440,348 $(1,173,224)$(1,878,795)
(1)    Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.








See Notes to Consolidated Financial Statements
B-6

PRUCO LIFE INSURANCE COMPANY
Consolidated Statements of Equity
Years Ended December 31, 2023, 2022 and 2021 (in thousands)
  Common  Stock  Additional  Paid-in
Capital		Retained Earnings / (Accumulated Deficit)Accumulated
Other
  Comprehensive  Income (Loss)		Total Pruco Life Insurance Company EquityNoncontrolling InterestsTotal 
Equity
Balance, December 31, 2020$2,500 $1,726,690 $1,772,398 $546,128 $4,047,716 $0 $4,047,716 
Cumulative effect of adoption of ASU 2018-12(605,146)334,420 (270,726)(270,726)
Contributed capital4,342,215 4,342,215 4,342,215 
Contributed (distributed) capital-parent/child asset transfers(26,414)(26,414)(26,414)
Comprehensive income (loss):
Net income (loss)(1,394,701)(1,394,701)(1,394,701)
Other comprehensive income (loss), net of tax(484,094)(484,094)0 (484,094)
Total comprehensive income (loss)(1,878,795)0 (1,878,795)
Balance, December 31, 2021(1)2,500 6,042,491 (227,449)396,454 6,213,996 0 6,213,996 
Contributed capital17,861 17,861 17,861 
Contributed (distributed) capital-parent/child asset transfers(22,438)(22,438)(22,438)
Comprehensive income (loss):
Net income (loss)(766,705)(766,705)(766,705)
Other comprehensive income (loss), net of tax(406,519)(406,519)0 (406,519)
Total comprehensive income (loss)(1,173,224)0 (1,173,224)
Balance, December 31, 2022(1)2,500 6,037,914 (994,154)(10,065)5,036,195 0 5,036,195 
Return of capital(1,400,000)(1,400,000)(1,400,000)
Contributed capital412,382 412,382 412,382 
Contributions from noncontrolling interests29,706 29,706 
Contributed (distributed) capital-parent/child asset transfers2,306 2,306 2,306 
Comprehensive income (loss):
Net income (loss)461,203 461,203 488 461,691 
Other comprehensive income (loss), net of tax(20,855)(20,855)(20,855)
Total comprehensive income (loss)440,348 488 440,836 
Balance, December 31, 2023$2,500 $5,052,602 $(532,951)$(30,920)$4,491,231 $30,194 $4,521,425 
(1) Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
See Notes to Consolidated Financial Statements
B-7

PRUCO LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
Years Ended December 31, 2023, 2022 and 2021 (in thousands)

202320222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)(1)$461,691 $(766,705)$(1,394,701)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Policy charges and fee income(1)69,986 131,936 165,675 
Interest credited to policyholders’ account balances(1)655,445 445,215 (151,389)
Realized investment (gains) losses, net(1)1,083,660 (336,382)386,894 
Change in value of market risk benefits, net of related hedging (gains) losses(1)94,368 700,581 4,222,530 
Change in:
Future policy benefits and other insurance liabilities(1)2,241,530 3,743,780 1,831,520 
Reinsurance recoverables(1)(639,002)(2,254,290)(1,134,683)
Accrued investment income(110,760)(58,762)(66,414)
Net payables to/receivables from parent and affiliates(120,565)80,370 (16,904)
Deferred policy acquisition costs(1)(560,471)(442,303)(4,067,946)
Income taxes(1)(37,886)(334,769)(842,107)
Derivatives, net(282,729)(651,654)(1,193,004)
Other, net(1)(395,372)1,567,947 1,376,588 
Cash flows from (used in) operating activities2,459,895 1,824,964 (883,941)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale1,736,809 1,688,079 1,251,269 
Fixed maturities, trading97,693 907,941 914,662 
Equity securities189,237 242,292 100,151 
Policy loans182,973 169,723 172,932 
Ceded policy loans(119,787)(112,164)(13,387)
Short-term investments456,983 632,069 221,645 
Commercial mortgage and other loans167,888 196,672 280,103 
Other invested assets19,693 60,349 302,692 
Payments for the purchase/origination of:
Fixed maturities, available-for-sale(7,544,596)(7,009,578)(2,504,582)
Fixed maturities, trading(857,717)(425,267)(117,247)
Equity securities(678,847)(281,684)(98,122)
Policy loans(1,162,959)(144,764)(122,297)
Ceded policy loans151,019 71,402 12,161 
Short-term investments(690,173)(558,161)(317,593)
Commercial mortgage and other loans(1,341,450)(1,076,351)(565,222)
Other invested assets(190,826)(166,345)(148,842)
Notes receivable from parent and affiliates, net4,456 771 (54,026)
Derivatives, net(55,091)(366,805)(3,234)
Other, net(4,808)57,687 (10,392)
Cash flows from (used in) investing activities(9,639,503)(6,114,134)(699,329)
B-8

202320222021
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders’ account deposits12,101,043 9,996,128 5,690,619 
Ceded policyholders’ account deposits(1,189,331)(1,216,195)(1,149,254)
Policyholders’ account withdrawals(3,695,248)(3,727,579)(3,927,948)
Ceded policyholders’ account withdrawals625,238 638,392 326,680 
Net change in securities sold under agreement to repurchase and cash collateral for loaned securities
131,577 83,762 287 
Contributed / (return of) capital (995,000)0 776,657 
Contributed (distributed) capital - parent/child asset transfers2,919 (11,478)(6,148)
Net change in all other financing arrangements (maturities 90 days or less)(584)584 0 
Proceeds from the issuance of debt (maturities longer than 90 days)0 0 323,839 
Repayments of debt (maturities longer than 90 days)(121,772)0 0 
Drafts outstanding(885)63,579 43,741 
Other, net63,816 (59,327)(3,251)
Cash flows from (used in) financing activities6,921,773 5,767,866 2,075,222 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(257,835)1,478,696 491,952 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR2,397,627 918,931 426,979 
CASH AND CASH EQUIVALENTS, END OF YEAR$2,139,792 $2,397,627 $918,931 
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid (refund)$67,203 $39,201 $391,015 
Interest paid$4,533 $7,863 $6,341 
(1)    Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

Significant Non-Cash Transactions
"Cash flows from (used in) operating activities" for the year ended December 31, 2023 excludes certain non-cash activities in the amount of $475 million related to the novated indexed variable annuities under the reinsurance agreement with Fortitude Life Insurance & Annuity Company (“FLIAC”). See Note 11 for more details regarding this transaction.
"Cash flows from (used in) operating activities" for the year ended December 31, 2022 excludes certain non-cash activities in the amount of $531 million related to the Company entering into an affiliated reinsurance agreement with Lotus Reinsurance Company Ltd. ("Lotus Re") on January 1, 2022 and $4,656 million related to the indexed variable annuities novated to the Company in connection with the reinsurance agreement with FLIAC. See Note 11 for more details regarding these transactions. The Company also received $18 million of non-cash assets from its parent, The Prudential Insurance Company of America ("Prudential Insurance"). See Note 15 for additional information.

Cash Flows from Investing and Financing Activities for the year ended December 31, 2021 excludes certain non-cash activities related to the following transactions:

Effective July 1, 2021, Pruco Life Insurance Company recaptured the risks related to its business that had previously been reinsured to Prudential Annuities Life Assurance Corporation from April 1, 2016 through June 30, 2021. See Note 1 for additional information.

Effective December 1, 2021, the Pruco Life Insurance Company assumed certain variable and fixed annuities from Prudential Annuities Life Assurance Corporation, which resulted in $2.6 billion of investment transfers and $0.2 billion of dividend payment in securities. See Note 1 for additional information.


See Notes to Consolidated Financial Statements

B-9

1. BUSINESS AND BASIS OF PRESENTATION

Pruco Life Insurance Company, (“Pruco Life”) is a wholly-owned subsidiary of The Prudential Insurance Company of America ("Prudential Insurance"), which in turn is a direct wholly-owned subsidiary of Prudential Financial, Inc. (“Prudential Financial”). Pruco Life is a stock life insurance company organized in 1971 under the laws of the State of Arizona. It is licensed to sell life insurance and annuities in the District of Columbia, Guam and in all states except New York, and sells such products primarily through affiliated and unaffiliated distributors.

Pruco Life has one wholly-owned insurance subsidiary, Pruco Life Insurance Company of New Jersey, (“PLNJ”). PLNJ is a stock life insurance company organized in 1982 under the laws of the State of New Jersey. It is licensed to sell life insurance and annuities in New Jersey and New York only. Pruco Life and its subsidiaries are together referred to as the "Company", "we" or "our" and all financial information is shown on a consolidated basis.

Prudential Financial Sale of PALAC

Effective April 1, 2022, Prudential Financial completed the sale of Prudential Annuities Life Assurance Corporation (“PALAC”) to Fortitude Group Holdings, LLC (“Fortitude”). As such, PALAC is no longer an affiliate of Prudential Financial or the Company. Fortitude subsequently renamed the company Fortitude Life Insurance & Annuity Company (“FLIAC”).

2021 Variable Annuities Recapture

Effective July 1, 2021, the Company recaptured the risks related to its variable annuity base contracts, along with the living benefit guarantees, that had previously been reinsured to PALAC from April 1, 2016 through June 30, 2021. The recapture does not impact PLNJ, which will continue to reinsure its new and in force business to Prudential Insurance. The product risks related to the previously reinsured business that were being managed in PALAC, were transferred to the Company. In addition, the living benefit hedging program related to the previously reinsured living benefit riders are being managed within the Company. This transaction is referred to as the "2021 Variable Annuities Recapture".

The day 1 impact of the Variable Annuities Recapture resulted in the following significant non-cash transactions:
•The increase in total investments includes non-cash activities of $8.3 billion related to the recapture transaction.
•The Company incurred a loss related to ceding commissions of $2 billion.
•The increase in Additional paid-in capital includes non-cash activities of $3.4 billion in invested assets related to capital contributions from Prudential Insurance

B-10

Affiliated Asset Transfers
AffiliatePeriodTransactionSecurity TypeFair ValueBook ValueAPIC/ Retained Earnings Increase/(Decrease)Realized Investment Gain/(Loss), NetDerivative Gain/(Loss)
(in millions)
PALACJuly 1, 2021PurchaseDerivatives, Fixed Maturities, Equity Securities, Commercial Mortgages and JV/LP Investments$4,908 $4,908 $0 $0 $0 
Prudential InsuranceJuly 1, 2021Contributed CapitalFixed Maturities$3,420 $3,420 $3,420 $0 $0 

As part of the recapture transaction, the Company received invested assets of $6.8 billion, net of $2 billion ceding commissions as consideration from PALAC, which is equivalent to the amount of statutory reserve credit taken as of June 30, 2021. The Company released a reinsurance recoverable of $11.6 billion.

The Company derecognized its ceded DAC and Deferred Sales Inducements ("DSI") balances as of June 30, 2021. The company also recognized a net deferred reinsurance loss from the original transaction of $0.2 billion. As a result of the recapture transaction, the Company recognized a pre-tax loss of $2.9 billion immediately.

There was a $3.8 billion capital contribution from Prudential Insurance, which includes $3.4 billion in invested assets and $0.4 billion in cash.

Reinsurance Agreement with FLIAC

Effective December 1, 2021, the Company entered into a reinsurance agreement with FLIAC (previously named PALAC) under which the Company assumed all of its variable and fixed indexed annuities, and fixed annuities with a guaranteed lifetime withdrawal income feature from FLIAC. As a result, the Company recognized a deferred reinsurance loss of $238 million. As of December 31, 2021, the reinsurance recoverable from the reinsurance of indexed variable annuities was $7.2 billion, and the Policyholders' account balances resulting from the reinsurance of variable and fixed indexed annuities and fixed annuities with a guaranteed lifetime withdrawal income benefit was $9.8 billion. See Note 11 for additional information regarding this reinsurance arrangement.

Basis of Presentation

On January 1, 2023, the Company adopted ASU 2018-12, Financial Services— Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, which provided new authoritative guidance impacting the accounting and disclosure requirements for long-duration insurance and investment contracts issued by the Company. See “Adoption of ASU 2018-12” below for additional information regarding this adoption, including the impacts to the Company’s 2022 and 2021 financial statements from implementing the new accounting standard as well as the transition impacts recorded as of January 1, 2021. See Note 2 for additional details regarding the key policy changes effected by this ASU and updated accounting policies resulting from the adoption of this ASU for all periods presented in the Consolidated Financial Statements.

The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Consolidated Financial Statements include the accounts of Pruco Life and entities over which the Company exercises control, including majority-owned subsidiaries. Intercompany balances and transactions have been eliminated.

B-11

Adoption of ASU 2018-12

In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts which provides new authoritative guidance impacting the accounting and disclosure requirements for long-duration insurance and investment contracts issued by the Company. The Company adopted this guidance, effective January 1, 2023, using the modified retrospective transition method, where permitted, for changes to the liability for future policy benefits and DAC and related balances, and using the retrospective transition method, as required, for market risk benefits. The Company applied the guidance as of the transition date of January 1, 2021 and retrospectively adjusted prior period amounts shown in the 2023 financial statements to reflect the new guidance.

The following tables present amounts as originally reported for 2022 and 2021, the effect upon those amounts from the adoption of the new guidance under ASU 2018-12, and the adjusted amounts that are reflected in the Consolidated Financial Statements included herein.

Consolidated Statements of Financial Position:

December 31, 2022
IMPACTED LINES ONLYAs Originally ReportedEffect of
Change		As Currently Reported
(in thousands)
Deferred policy acquisition costs$6,616,097 $314,328 $6,930,425 
Reinsurance recoverables34,561,825 2,534,737 37,096,562 
Deferred sales inducements275,574 105,930 381,504 
Income tax assets1,873,740 (178,989)1,694,751 
Market risk benefit assets0 1,393,237 1,393,237 
Other assets1,327,393 4,034 1,331,427 
       TOTAL ASSETS$189,299,841 $4,173,277 $193,473,118 
Policyholders’ account balances$41,748,241 $164,295 $41,912,536 
Future policy benefits23,204,533 (2,375,500)20,829,033 
Market risk benefit liabilities0 5,521,601 5,521,601 
Other liabilities3,407,156 190,217 3,597,373 
       Total liabilities184,936,310 3,500,613 188,436,923 
Retained earnings / (accumulated deficit)(95,583)(898,571)(994,154)
Accumulated other comprehensive income (loss)(1,581,300)1,571,235 (10,065)
       Total equity4,363,531 672,664 5,036,195 
TOTAL LIABILITIES AND EQUITY$189,299,841 $4,173,277 $193,473,118 





B-12

Consolidated Statements of Operations and Comprehensive Income (Loss):
Year Ended December 31, 2022
IMPACTED LINES ONLYAs Originally ReportedEffect of
Change		As Currently Reported
(in thousands)
REVENUES
Premiums$274,783 $(9,575)$265,208 
Policy charges and fee income1,731,957 (501,356)1,230,601 
Other income (loss)(661,860)10,391 (651,469)
Realized investment gains (losses), net1,041,435 (705,053)336,382 
Change in value of market risk benefits, net of related hedging gain (loss)0 (700,581)(700,581)
TOTAL REVENUES3,554,498 (1,906,174)1,648,324 
BENEFITS AND EXPENSES
Policyholders’ benefits609,392 (151,019)458,373 
Change in estimates of liability for future policy benefits0 55,099 55,099 
Interest credited to policyholders’ account balances517,488 (72,273)445,215 
Amortization of deferred policy acquisition costs857,385 (337,109)520,276 
General, administrative and other expenses1,154,229 2,235 1,156,464 
TOTAL BENEFITS AND EXPENSES3,138,494 (503,067)2,635,427 
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURE416,004 (1,403,107)(987,103)
Income tax expense (benefit)(882)(294,653)(295,535)
INCOME (LOSS) FROM OPERATIONS BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURE416,886 (1,108,454)(691,568)
NET INCOME (LOSS)$341,749 $(1,108,454)$(766,705)
Other comprehensive income (loss), before tax:
  Net unrealized investment gains (losses)
(2,430,238)176,201 (2,254,037)
  Interest rate remeasurement of future policy benefits0 310,353 310,353 
  Gain (loss) from changes in non-performance risk on market risk benefits0 1,440,305 1,440,305 
Total(2,439,575)1,926,859 (512,716)
Less: Income tax expense (benefit) related to other comprehensive income (loss)(510,840)404,643 (106,197)
Other comprehensive income (loss), net of taxes(1,928,735)1,522,216 (406,519)
Comprehensive income (loss)$(1,586,986)$413,762 $(1,173,224)
B-13

Year Ended December 31, 2021
IMPACTED LINES ONLYAs Originally ReportedEffect of
Change		As Currently Reported
(in thousands)
REVENUES
Premiums$203,676 $(19,218)$184,458 
Policy charges and fee income1,529,757 (229,662)1,300,095 
Other income (loss)267,208 (4,788)262,420 
Realized investment gains (losses), net(5,295,406)4,908,512 (386,894)
Change in value of market risk benefits, net of related hedging gain (loss)0 (4,222,530)(4,222,530)
TOTAL REVENUES(2,542,353)432,314 (2,110,039)
BENEFITS AND EXPENSES
Policyholders’ benefits655,910 (573,200)82,710 
Change in estimates of liability for future policy benefits0 27,008 27,008 
Interest credited to policyholders’ account balances(114,585)(36,804)(151,389)
Amortization of deferred policy acquisition costs342,118 (16,523)325,595 
General, administrative and other expenses(523,925)151 (523,774)
TOTAL BENEFITS AND EXPENSES359,518 (599,368)(239,850)
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF OPERATING JOINT VENTURE(2,901,871)1,031,682 (1,870,189)
Income tax expense (benefit)(691,439)216,653 (474,786)
INCOME (LOSS) FROM OPERATIONS BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURE(2,210,432)815,029 (1,395,403)
NET INCOME (LOSS)$(2,209,730)$815,029 $(1,394,701)
Other comprehensive income (loss), before tax:
  Net unrealized investment gains (losses)
(247,176)36,690 (210,486)
  Interest rate remeasurement of future policy benefits0 37,274 37,274 
  Gain (loss) from changes in non-performance risk on market risk benefits0 (435,232)(435,232)
Total(251,067)(361,268)(612,335)
Less: Income tax expense (benefit) related to other comprehensive income (loss)(52,374)(75,867)(128,241)
Other comprehensive income (loss), net of taxes(198,693)(285,401)(484,094)
Comprehensive income (loss)$(2,408,423)$529,628 $(1,878,795)


B-14

Consolidated Statements of Cash Flows:
Year Ended December 31, 2022
IMPACTED LINES ONLYAs Originally ReportedEffect of
Change		As Currently Reported
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$341,749 $(1,108,454)$(766,705)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Policy charges and fee income(78,754)210,690 131,936 
Interest credited to policyholders’ account balances517,488 (72,273)445,215 
Realized investment (gains) losses, net(1,041,435)705,053 (336,382)
Change in value of market risk benefits, net of related hedging (gains) losses0 700,581 700,581 
Change in:
Future policy benefits and other insurance liabilities2,407,887 1,335,893 3,743,780 
Reinsurance recoverables(1,181,692)(1,072,598)(2,254,290)
Deferred policy acquisition costs(105,194)(337,109)(442,303)
Income taxes(40,095)(294,674)(334,769)
Other, net1,635,056 (67,109)1,567,947 
Cash flows from (used in) operating activities$1,824,964 $0 $1,824,964 



Year Ended December 31, 2021
IMPACTED LINES ONLYAs Originally ReportedEffect of
Change		As Currently Reported
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(2,209,730)$815,029 $(1,394,701)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Policy charges and fee income(21,763)187,438 165,675 
Interest credited to policyholders’ account balances(114,585)(36,804)(151,389)
Realized investment (gains) losses, net5,295,406 (4,908,512)386,894 
Change in value of market risk benefits, net of related hedging (gains) losses0 4,222,530 4,222,530 
Change in:
Future policy benefits and other insurance liabilities2,080,967 (249,447)1,831,520 
Reinsurance recoverables(1,304,306)169,623 (1,134,683)
Deferred policy acquisition costs(3,926,121)(141,825)(4,067,946)
Income taxes(1,082,459)240,352 (842,107)
Other, net1,674,972 (298,384)1,376,588 
Cash flows from (used in) operating activities$(883,941)$0 $(883,941)
B-15

The following tables detail the January 1, 2021 transition adjustments by providing a rollforward of the ending reported balances as of December 31, 2020 to the opening balances as of January 1, 2021 for retained earnings, accumulated other comprehensive income (“AOCI”) and the impacted insurance-related balances.
January 1, 2021
Retained Earnings
(in thousands)
Balance after-tax, prior to transition $1,772,398 
Reclassification of market risk benefits non-performance risk to accumulated other comprehensive income(1)
(722,837)
Updates to certain universal life contract liabilities(2)(116,120)
Other(3)72,950 
Total pre-tax adjustments(766,007)
Tax impacts160,861 
Balance after-tax, after transition
$1,167,252 
(1)    Reflects the cumulative impact of changes in the fair value of market risk benefits (“MRBs”) non-performance risk (“NPR”) from the date of contract issuance to January 1, 2021. These amounts were previously recorded in retained earnings but are now reflected in AOCI under the new guidance.
(2)    Reflects the impact on additional insurance reserves ("AIR") and other related balances primarily related to the no-lapse guarantee features on certain universal life contracts. For additional information, see Note 2.
(3)    Primarily reflects the reassessment of deferred reinsurance gains ("DRG") and losses ("DRL").


January 1, 2021
Accumulated Other Comprehensive Income
(in thousands)
Balance after-tax, prior to transition$546,128 
Interest rate remeasurement of future policy benefits
(196,526)
Reclassification of market risk benefits non-performance risk to accumulated other comprehensive income(1)722,837 
Unwinding amounts related to unrealized investment gains and losses(2)(102,042)
Change in operating joint ventures(753)
Total pre-tax adjustments423,516 
Tax impacts(89,096)
Balance after-tax, after transition$880,548 
(1)    Reflects the cumulative impact of changes in NPR on the fair value of market risk benefits from the date of contract issuance to January 1, 2021. These amounts were previously recorded in retained earnings but are now reflected in AOCI under the new guidance.
(2)    Primarily reflects amounts related to DAC and other balances as unrealized investment gains or losses no longer impact the amortization pattern of such balances under the new guidance. Also includes the impacts from updates to reserves and other related balances for certain universal life contracts. For additional information, see Note 2.

January 1, 2021
Deferred Policy Acquisition Costs
Term LifeVariable/Universal LifeTotal
(in thousands)
Balance prior to transition$462,098 $1,971,838 $2,433,936 
Unwinding amounts related to unrealized investment gains and losses0 74,702 74,702 
Other(1)1 (15,557)(15,556)
Balance after transition$462,099 $2,030,983 $2,493,082 
(1)    Represents miscellaneous model refinements.

B-16

January 1, 2021
Deferred Reinsurance Losses(1)
Variable AnnuitiesTerm LifeVariable/Universal LifeTotal
(in thousands)
Balance prior to transition$118,579 $87,932 $27,167 $233,678 
Unwinding amounts related to unrealized investment gains and losses14,804 0 0 14,804 
Effect of change in reserve basis to market risk benefits141,032 0 0 141,032 
Effect of change in SOP 03-1 reserve basis0 0 (27,167)(27,167)
Balance after transition$274,415 $87,932 $0 $362,347 
(1)    Deferred reinsurance losses are included in “Other assets”.

January 1, 2021
Deferred Reinsurance Gains(1)
Variable/Universal Life
(in thousands)
Balance prior to transition$134,213 
Effect of change in SOP 03-1 reserve basis40,046 
Balance after transition$174,259 
(1)    Deferred reinsurance gains are included in “Other liabilities”.

January 1, 2021
Benefit Reserves(1)
Term LifeLife Insurance - TaiwanOther(2)Total
(in thousands)
Balance prior to transition$6,674,490 $1,592,329 $219,744 $8,486,563 
Changes in cash flow assumptions and other activity(259)43,233 (7,283)35,691 
Balance after transition, at original discount rate6,674,231 1,635,562 212,461 8,522,254 
Cumulative changes in discount rate assumptions2,432,010 3,316,991 27,818 5,776,819 
Balance after transition, at current discount rate9,106,241 4,952,553 240,279 14,299,073 
Less: Reinsurance recoverable8,536,200 4,952,553 239,874 13,728,627 
Balance after transition, net of reinsurance recoverable$570,041 $0 $405 $570,446 
(1)    Benefit reserves, excluding amounts for reinsurance recoverable, are included in "Future policy benefits". For additional information on the liability for
    future policy benefits, see Note 8.
(2)    Other includes fixed annuities and retirement products.

January 1, 2021
Deferred Profit Liability(1)
Life Insurance - TaiwanOther(2)Total
(in thousands)
Balance prior to transition$49,127 $1,689 $50,816 
Changes in benefit reserves(6,671)8,521 1,850 
Balance after transition42,456 10,210 52,666 
Less: Reinsurance recoverable42,456 10,210 52,666 
Balance after transition, net of reinsurance recoverable$0 $0 $0 
(1)    Deferred profit liability ("DPL"), excluding amounts for reinsurance recoverable, is included in "Future policy benefits". For additional information regarding the liability for future policy benefits, see Note 8.
(2)    Other includes fixed annuities and retirement products.

B-17

January 1, 2021
Additional Insurance Reserves(1)
Variable/Universal LifeVariable AnnuitiesTotal
(in thousands)
Balance prior to transition$9,363,585 $588,311 $9,951,896 
Unwinding amounts related to unrealized investment gains and losses(1,426,811)(53,889)(1,480,700)
Balance prior to transition, excluding amounts related to unrealized investment gains and losses7,936,774 534,422 8,471,196 
Reclassification of future policy benefits additional insurance reserves to market risk benefits0 (534,422)(534,422)
Updates to certain universal life contract liabilities(2)
1,771,341 0 1,771,341 
Balance after transition, excluding amounts related to unrealized investment gains and losses9,708,115 0 9,708,115 
Amounts related to unrealized investment gains and losses after transition1,169,972 0 1,169,972 
Balance after transition10,878,087 0 10,878,087 
Less: Reinsurance recoverable10,685,150 0 10,685,150 
Balance after transition, net of reinsurance recoverable$192,937 $0 $192,937 
(1)    AIR, excluding amounts for reinsurance recoverable, are included in "Future policy benefits". For additional information regarding the liability for future policy benefits, see Note 8.
(2)    For additional information regarding updates to reserves and other related balances for certain universal life contracts, see Note 2.

January 1, 2021
Unearned Revenue Reserves(1)
Variable/Universal Life
(in thousands)
Balance prior to transition$1,377,669 
Unwinding amounts related to unrealized investment gains and losses and other activity367,599 
Balance after transition1,745,268 
Less: Reinsurance recoverable751,517 
Balance after transition, net of reinsurance recoverable$993,751 
(1)    Unearned revenue reserves ("URR") are included in "Policyholders' account balances". For additional information regarding the liability for policyholders' account balances, see Note 9.

January 1, 2021
Market Risk Benefits(1)
Variable Annuities
(in thousands)
Liability for guaranteed benefits recorded at fair value, prior to transition$13,227,814 
Additional insurance reserves to be reclassed to market risk benefits, prior to transition, excluding amounts related to unrealized investment gains and losses534,422 
Total liability prior to transition13,762,236 
Change in reserve basis to market risk benefits framework(184,693)
Market risk benefits after transition, at current non-performance risk value13,577,543 
Less: Reinsured market risk benefits13,589,575 
Market risk benefits after transition, net of reinsurance(12,032)
Market risk benefits after transition, at contract inception non-performance risk value14,300,380 
Cumulative change in non-performance risk722,837 
Market risk benefits after transition, at current non-performance risk value$13,577,543 
(1)    For additional information regarding market risk benefits, see Note 10.

B-18

January 1, 2021
Cost of Reinsurance(1)
Variable/Universal Life
(in thousands)
Balance prior to transition$602,294 
Unwinding amounts related to unrealized investment gains and losses(246,899)
Balance prior to transition, excluding amounts related to unrealized investment gains and losses355,395 
Impact from updates to certain universal life contract liabilities(2) 81,920 
Balance after transition, excluding amounts related to unrealized investment gains and losses437,315 
Amounts related to unrealized investment gains and losses after transition191,098 
Balance after transition$628,413 
(1)    Cost of reinsurance is included in "Other liabilities".
(2)    For additional information regarding updates to reserves and other related balances for certain universal life contracts, see Note 2.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining future policy benefits; policyholders' account balances and reinsurance related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products; market risk benefits; the valuation of investments including derivatives, the measurement of allowance for credit losses, and the recognition of other-than-temporary impairments; reinsurance recoverables; any provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

Reclassifications

Certain amounts in prior periods have been reclassified for reasons unrelated to the adoption of ASU 2018-12 to conform to the current period presentation.













B-19

2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS

ASSETS

Fixed maturities, available-for-sale, at fair value ("AFS debt securities") includes bonds, notes and redeemable preferred stock that are carried at fair value. See Note 5 for additional information regarding the determination of fair value. The purchased cost of fixed maturities is adjusted for amortization of premiums and accretion of discounts to maturity or, if applicable, call date.

AFS debt securities, where fair value is below amortized cost, are reviewed quarterly to determine whether the amortized cost basis of the security is recoverable. For mortgage-backed and asset-backed AFS debt securities, a credit impairment will be recognized in earnings as an allowance for credit losses and reported in “Realized investment gains (losses), net,” to the extent the amortized cost exceeds the net present value of projected future cash flows (the “net present value”) for the security. However, the credit impairment recorded cannot exceed the difference between the amortized cost and fair value of the respective security. The net present value used to measure a credit impairment is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the AFS debt security at the date of acquisition. Once the Company has deemed all or a portion of the amortized cost uncollectible, the allowance is removed from the balance sheet by writing down the amortized cost basis of the AFS debt security. Any amount of an AFS debt security’s change in fair value not recorded as an allowance for credit losses will be recorded in Other Comprehensive Income (loss) (“OCI”).

For all other AFS debt securities, qualitative factors are first considered including, but not limited to, the extent of the decline and the reasons for the decline in value (e.g., credit events, currency or interest-rate related, including general credit spread widening), and the financial condition of the issuer. If analysis of these qualitative factors results in the security needing to be impaired, a credit impairment will be recognized and measured using the same process for mortgage-backed and asset-backed AFS debt securities.

When an AFS debt security's fair value is below amortized cost and the Company has the intent to sell the AFS debt security, or it is more likely than not the Company will be required to sell the AFS debt security before its anticipated recovery, the amortized cost basis of the AFS debt security is written down to fair value and any previously recognized allowance is reversed. The write-down is reported in "Realized investment gains (losses), net".

Interest income, including amortization of premium and accretion of discount, are included in “Net investment income” under the effective yield method. Prepayment premiums are also included in “Net investment income”.

For high credit quality mortgage-backed and asset-backed AFS debt securities (those rated AA or above), the amortized cost and effective yield of the securities are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to “Net investment income” in accordance with the retrospective method.

For mortgage-backed and asset-backed AFS debt securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is purchased with credit deterioration or an allowance is currently recorded for the respective security. If an investment is impaired, any changes in the estimated timing and amount of cash flows will be recorded as the credit impairment, as opposed to a yield adjustment. If the asset is purchased with credit deterioration (or previously impaired), the effective yield will be adjusted if there are favorable changes in cash flows subsequent to the allowance being reduced to zero.

For mortgage-backed and asset-backed AFS debt securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. These assumptions can significantly impact income recognition, unrealized gains and loss recorded in OCI, and the amount of impairment recognized in earnings. The payment priority of the respective security is also considered. For all other AFS debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security’s position within the capital structure of the issuer.
B-20


Fixed maturities, trading, at fair value ("Trading debt securities") includes debt securities that are carried at fair value. See Note 5 for additional information regarding the determination of fair value. Realized and unrealized gains and losses for these investments are reported in “Other income (loss),” and interest income from these investments is reported in “Net investment income”.

Equity securities, at fair value consists of common stock and mutual fund shares carried at fair value. Realized and unrealized gains and losses on these investments are reported in “Other income (loss),” and dividend income is reported in “Net investment income” on the ex-dividend date.

Policy loans represents funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in “Net investment income” at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.

Short-term investments primarily consists of highly liquid debt instruments with a maturity of twelve months or less and greater than three months when purchased. These investments are generally carried at fair value or amortized cost that approximates fair value and include certain money market investments, funds managed similar to regulated money market funds, short-term debt securities issued by government sponsored entities and other highly liquid debt instruments.

Commercial mortgage and other loans consist of commercial mortgage loans and agricultural property loans. Commercial mortgage and other loans held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses and net of any current expected credit loss ("CECL") allowance. Certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans, and certain unfunded mortgage loan commitments where the Company cannot unconditionally cancel the commitment) are also subject to a CECL allowance. See Note 16 for additional information.

Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. Interest income, and the amortization of the related premiums or discounts, are included in “Net investment income” under the effective yield method. Prepayment fees are also included in “Net investment income.”

The CECL allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets or off-balance sheet credit exposures. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts.

The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, other collateralized and uncollateralized loans. For commercial mortgage and agricultural mortgage loans, the allowance is calculated using an internally developed CECL model that pools together loans that share similar risk characteristics. Similar risk characteristics used to create the pools include, but are not limited to, vintage, maturity, credit rating, and collateral type.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions, and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate. Information about certain key inputs is detailed below.

B-21

Key factors in determining the internal credit ratings for commercial mortgage and agricultural mortgage loans include loan-to-value and debt-service-coverage ratios. Other factors include amortization, loan term, and estimated market value growth rate and volatility for the property type and region. The loan-to-value ratio compares the carrying amount of the loan to the fair value of the underlying property or properties collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the carrying amount of the loan exceeds the collateral value. A loan-to-value ratio less than 100% indicates an excess of collateral value over the carrying amount of the loan. The debt service coverage ratio is a property’s net operating income as a percentage of its debt service payments. Debt service coverage ratios less than 1.0 indicates that property operations do not generate enough income to cover the loan’s current debt payments. A debt service coverage ratio greater than 1.0 indicates an excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company’s periodic review of the commercial mortgage loan and agricultural property loan portfolios, which includes an internal appraisal of the underlying collateral value. The Company’s periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company’s commercial mortgage and agricultural loan portfolios.

Annual expected loss rates are based on historical default and loss experience factors. Using average lives, the annual expected loss rates are converted into life-of-loan loss expectations.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. The change in allowance is reported in “Realized investment gains (losses), net”. As it relates to unfunded commitments that are in scope of this guidance, the CECL allowance is reported in “Other liabilities”, and the change in the allowance is reported in “Realized investment gains (losses), net”.

The CECL allowance for other collateralized and uncollateralized loans (e.g., corporate loans) carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans. Additions to or releases of the allowance are reported in “Realized investment gains (losses), net.”

Once the Company has deemed a portion of the amortized cost to be uncollectible, the uncollectible portion of allowance is removed from the balance sheet by writing down the amortized cost basis of the loan. The carrying amount of the loan is not adjusted for subsequent recoveries in value.

Interest received on loans that are past due is either applied against the principal or reported as net investment income based on the Company’s assessment as to the collectability of the principal. The Company defines “past due” as principal or interest not collected at least 30 days past the scheduled contractual due date. See Note 3 for additional information about the Company’s past due loans.

The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged against interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established.

Commercial mortgage and other loans are occasionally restructured. These restructurings generally include one or more of the following: full or partial payoffs outside of the original contract terms; changes to interest rates; extensions of maturity; or additions or modifications to covenants. Additionally, the Company may accept assets in full or partial satisfaction of the debt. Effective January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosure, on a prospective basis. This ASU eliminates the accounting guidance for Troubled Debt Restructurings (“TDR”) for creditors and requires all loan restructurings to follow the modification guidance in ASC 310-20.

B-22

Prior to the adoption of ASU 2022-02, when restructurings occurred, they were evaluated individually to determine whether the restructuring or modification constituted a TDR as defined by authoritative accounting guidance. If the borrower was experiencing financial difficulty and the Company granted a concession, the restructuring, including those that involved a partial payoff or the receipt of assets in full satisfaction of the debt was deemed to be a TDR. If a loan modification was a TDR, the CECL allowance of the loan was remeasured using the modified terms and the loan's original effective yield.

Post adoption of ASU 2022-02, all restructurings are evaluated under the modification guidance in ASC 310-20. When a loan is modified, the Company evaluates whether the restructuring results in a continuation of the existing loan or a new loan. For modifications that result in a continuation of the existing loan, the CECL allowance of the loan is remeasured using the modified terms, including the loan’s post-modification effective yield, and the allowance is adjusted accordingly.

For modifications that result in a new loan, any CECL allowance is reversed and a direct write-down of the loan is recorded for the amount of the allowance, and any additional loss, net of recoveries, or any gain is recorded for the difference between the fair value of the new loan and the recorded investment in the loan. The new loan is evaluated prospectively for credit impairment based on the CECL allowance process noted above.

Other invested assets consist of the Company’s non-coupon investments in limited partnerships and limited liability companies ("LPs/LLCs"), other than operating joint ventures, as well as derivative assets. LPs/LLCs interests are accounted for using either the equity method of accounting, or at fair value. The Company’s income from investments in LPs/LLCs accounted for using the equity method, other than the Company’s investments in operating joint ventures, is included in “Net investment income”. The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. In applying the equity method (including assessment for OTTI), the Company uses financial information provided by the investee, generally on a one to three-month lag. For the investments reported at fair value with changes in fair value reported in current earnings, the associated realized and unrealized gains and losses are reported in “Other income (loss)”.

Realized investment gains (losses) are computed using the specific identification method. Realized investment gains and losses are generated from numerous sources, including the sales of fixed maturity securities, investments in joint ventures and limited partnerships and other types of investments, as well as changes to the allowance for credit losses recognized in earnings. Realized investment gains and losses also reflect fair value changes on commercial mortgage loans carried at fair value, and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment. See “Derivative Financial Instruments” below for additional information regarding the accounting for derivatives.

Cash and cash equivalents includes cash on hand, amounts due from banks, certain money market investments, funds managed similar to regulated money market funds, other debt instruments with maturities of three months or less when purchased, other than cash equivalents that are included in "Fixed maturities, available-for-sale, at fair value,” and receivables related to securities purchased under agreements to resell (see also "Securities sold under agreements to purchase" below.) The Company also engages in overnight borrowing and lending of funds with Prudential Financial and affiliates which are considered cash and cash equivalents. These assets are generally carried at fair value or amortized cost which approximates fair value.

Deferred policy acquisition costs represents costs directly related to the successful acquisition of new and renewal insurance and annuity business. Such DAC primarily includes commissions, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully acquired contracts. In each reporting period, previously capitalized DAC is amortized and included in “Amortization of deferred policy acquisition costs”. Upon the adoption of ASU 2018-12, the carrying amount of DAC for long-duration contracts is no longer subject to recoverability testing.

DAC for most long-duration contracts is amortized on a constant-level basis at a grouped contract level over the expected life of the underlying insurance contracts. Contracts are grouped consistent with the groupings used to estimate the liability for future policy benefits (or other related balances) for the corresponding contracts. Since contracts within a grouping may be of different sizes, contracts within a group are weighted to achieve appropriate amortization and to ensure that DAC is derecognized when a policy is no longer in force. The constant-level basis used to weight contracts within a grouping and amortize DAC is generally defined as follows:

•Life insurance contracts – DAC associated with life insurance contracts is generally amortized in proportion to the initial face amount of life insurance in force. This is applicable to traditional and universal life insurance.

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•Payout annuity contracts – DAC associated with payout annuity contracts is amortized in proportion to annual benefit payments.

•Deferred annuity contracts – DAC associated with fixed and variable deferred annuity contracts is amortized in proportion to deposits.

For single premium immediate annuities without life contingencies, acquisition expenses are deferred and amortized over the expected life of the contracts using the interest method.

Current period DAC amortization reflects the impact of changes in actual insurance in force during the period and changes in future assumptions effected as of the end of the quarter, where applicable. The Company typically updates actuarial assumptions annually in the second quarter, (see "Annual Assumptions Review" below), unless a material change is observed in an interim period that is indicative of a long-term trend. Generally, the Company does not expect trends to change significantly in the short-term and, to the extent these trends may change, the Company expects such changes to be gradual over the long-term.

Assumptions used for DAC are consistent with those used in estimating the liability for future policy benefits (or any other related balance) for the corresponding contract. Determining the level of aggregation and actuarial assumptions used in projecting in force terminations requires judgment. Internal criteria are developed to determine the level of aggregation by considering both qualitative and quantitative materiality thresholds.

The assumptions used in projecting in force terminations are mortality, mortality improvement, and lapse assumptions. These assumptions are generally based on the Company’s experience, industry experience and/or other factors, as applicable. For variable deferred annuity contracts, lapse rates are adjusted at the contract level based on the in-the-moneyness of the living benefits and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply.

For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. If policyholders surrender traditional life insurance policies in exchange for life insurance policies that do not have fixed and guaranteed terms, the Company immediately charges to expense the remaining unamortized DAC on the surrendered policies. For other internal replacement transactions, except those that involve the addition of a non-integrated contract feature that does not change the existing base contract, the unamortized DAC is immediately charged to expense if the terms of the new policies are not substantially similar to those of the former policies. If the new terms are substantially similar to those of the earlier policies, the DAC is retained with respect to the new policies and amortized over the expected life of the new policies. See Note 6 for additional information regarding DAC.

Accrued investment income primarily includes accruals of interest and dividend income from investments that have been earned but not yet received.

Reinsurance recoverables include corresponding receivables associated with reinsurance arrangements with affiliates and third-party reinsurers, and are reported on the Consolidated Statements of Financial Position net of the CECL allowance. Reinsurance recoverables also include assumed modified coinsurance arrangements which generally reflect the value of the invested assets retained by the cedant and the associated asset returns. Modified coinsurance recoverables contain an embedded derivative (bifurcated and accounted for separately from the host contract) that is presented together with the derivative embedded in the modified coinsurance payables as one compound derivative. For additional information about these arrangements see Note 11.

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The CECL allowance considers the credit quality of the reinsurance counterparty and is generally determined based on the probability of default and loss given default assumptions, after considering any applicable collateral arrangements. The CECL allowance does not apply to reinsurance recoverables with affiliated counterparties under common control. Additions to or releases of the allowance are reported in “Policyholders’ benefits.” Prior to the adoption of this standard, an allowance for credit losses for reinsurance recoverables was established only when it was deemed probable that a reinsurer may fail to make payments to us in a timely manner. Reinsurance premiums, commissions, expense reimbursements, benefits and reserves related to reinsured long-duration contracts under coinsurance arrangements are accounted for over the life of the underlying reinsured contracts using assumptions consistent with those used to account for the underlying contracts. For reinsurance of in force blocks of non-participating traditional and limited-payment contracts, the current value of the direct liability as of inception of the reinsurance agreement is used to calculate the reinsurance recoverable and cost of reinsurance such that there is no immediate other comprehensive income or loss from recognition of the reinsurance recoverable at inception. Consistent with the direct liability, the reinsurance recoverable for non-participating traditional and limited-payment contracts is remeasured each period using current single A rates with the effect on the liability resulting from such updates recorded in "Interest rate remeasurement of future policy benefits" in OCI. For reinsurance of limited-payment contracts, the Company establishes a cost of reinsurance asset relating to the direct DPL and amortizes this balance through “Premiums” using the same methodology and assumptions used to amortize the direct DPL.

For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference between the fair value of the net consideration exchanged and the net liabilities ceded related to the underlying reinsured contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. This initial net cost of reinsurance is deferred and amortized into income over the remaining life of the reinsured policies on a basis consistent with the methodologies and assumptions used for amortizing DAC. This initial net cost of reinsurance may result in a deferred reinsurance gain which is recorded in "Other liabilities" and amortized through "Other income (loss)", or a deferred reinsurance loss which is recorded in "Other assets" and amortized through "General, administrative and other expenses".

Consistent with direct contracts, reinsurance agreements may also include features that meet the definition of an MRB and, if so, are accounted for at fair value. The fair value of direct or assumed MRBs reflects the Company's NPR, while the fair value of ceded MRBs reflects the counterparty credit risk of the reinsurer. Changes in the fair value of ceded MRBs, including the impact of changes in counterparty credit risk, are recorded in net income in "Change in value of market risk benefits, net of related hedging gain (loss)".

Coinsurance arrangements contrast with the Company’s yearly renewable term ("YRT") arrangements, where only mortality risk is transferred to the reinsurer and premiums are paid to the reinsurer to reinsure that risk. The mortality risk that is reinsured under YRT arrangements represents the difference between the stated death benefits in the underlying reinsured contracts and the corresponding reserves or account value carried by the Company on those same contracts. The premiums paid to the reinsurer are based upon negotiated amounts, not on the actual premiums paid by the underlying contractholders to the Company. As YRT arrangements are usually entered into by the Company with the expectation that the contracts will be in force for the lives of the underlying policies, they are considered to be long-duration reinsurance contracts. The cost of reinsurance for universal life products is generally recognized based on the gross assessments of the underlying direct policies. The cost of reinsurance for term insurance products is generally recognized in proportion to direct premiums over the life of the underlying policies.

Market risk benefit assets represents MRBs in an asset position and are presented separately from MRBs in a liability position. See “Market risk benefit liabilities” below. MRB assets also reflect ceded MRBs resulting from reinsurance of the Company's Prudential Defined Income ("PDI") traditional variable annuity contracts. See Note 11 for additional information regarding the reinsurance of PDI.

Deferred Sales Inducements are amounts that are credited to a policyholders’ account balance primarily as an inducement to purchase fixed and/or variable deferred annuity contracts. The Company defers sales inducements and amortizes them over the expected life of the policy using the same methodology, factors and assumptions used to amortize DAC. The Company records amortization of DSI in “Interest credited to policyholders’ account balances.” Unlike DAC, DSI are considered contractual cash flows and, as a result, are subject to periodic recoverability testing. See Note 6 for additional information regarding DSI.

Income tax assets primarily represents the net deferred tax asset and the Company’s estimated taxes receivable for the current year and open audit years.

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The Company is a member of the federal income tax return of Prudential Financial and primarily files separate company state and local tax returns. Pursuant to the tax allocation arrangement with Prudential Financial, total federal income tax expense is determined on a separate company basis. Members record tax benefits to the extent tax losses or tax credits are recognized in the consolidated federal tax provision.

Items required by tax regulations to be included in the tax return may differ from the items reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements may be different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in the Company’s tax return, and some differences are temporary, reversing over time, such as valuation of insurance reserves. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years for which the Company has already recorded the tax benefit in the Company’s Consolidated Statements of Operations. Deferred tax liabilities generally represent tax expense recognized in the Company’s financial statements for which payment has been deferred, or expenditures for which the Company has already taken a deduction in the Company’s tax return but have not yet been recognized in the Company’s financial statements.

Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. The application of U.S. GAAP requires the Company to evaluate the recoverability of the Company’s deferred tax assets and establish a valuation allowance if necessary to reduce the Company’s deferred tax assets to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. See Note 12 for a discussion of factors considered when evaluating the need for a valuation allowance.

U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process. First, the Company determines whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. The Company measures the tax position as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date.

The Company’s liability for income taxes includes a liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by the Internal Revenue Service ("IRS") or other taxing jurisdictions. Audit periods remain open for review until the statute of limitations has passed. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards (“tax attributes”), the statute of limitations does not close, to the extent of these tax attributes, until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. See Note 12 for additional information regarding income taxes.

Other assets consists primarily of deposit assets related to a reinsurance agreement entered into with a third-party reinsurer during 2021 using deposit accounting under U.S. GAAP, see Note 11 for additional information. Included in these deposit assets are amounts representing fair value of embedded derivative instruments associated with the index-linked features of certain annuity products. For additional information regarding the valuation of these embedded derivatives, see Note 5. Also included are premiums due, deferred loss on reinsurance which is amortized over the expected life of the reinsured contracts on a constant-level basis, receivables resulting from sales of securities that had not yet settled at the balance sheet date, prepaid tax expenses, and the Company’s investments in operating joint ventures. Investments in operating joint ventures are generally accounted for under the equity method. The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary.

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Separate account assets represents segregated funds that are invested for certain policyholders, and other customers. The assets consist primarily of equity securities, fixed maturities, real estate-related investments, real estate mortgage loans, short-term investments and derivative instruments and are reported at fair value. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. 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. The investment income and realized investment gains or losses from separate account assets generally accrue to the policyholders and are not included in the Company’s results of operations. Mortality, policy administration and surrender charges assessed against the accounts are included in “Policy charges and fee income”. Asset administration fees charged to the accounts are included in “Asset administration fees”. Seed money that the Company invests in separate accounts is reported in the appropriate general account asset line. Investment income and realized investment gains or losses from seed money invested in separate accounts accrue to the Company and are included in the Company’s results of operations. See Note 7 for additional information regarding separate account arrangements with contractual guarantees. See also “Separate account liabilities” below.

LIABILITIES

Future policy benefits primarily consists of the present value of expected future payments to or on behalf of policyholders, where the timing and amount of such payments depend on policyholder mortality or morbidity, less the present value of expected future net premiums (where net premiums are gross premiums multiplied by the Net-To-Gross ("NTG") ratio discussed below). The liability for future policy benefits is accrued over time as premium revenue is recognized. See Note 8 for additional information regarding future policy benefits.

The reserving methodology used for non-participating traditional and limited-payment contracts include the following:

•Cash Flow Assumptions. In measuring the liability for future policy benefits, the net premium valuation methodology is utilized. Under this methodology, a liability for future policy benefits is established using current best estimate insurance assumptions and interest rate assumptions locked-in at contract issuance date. The NTG ratio is calculated as the ratio of the present value of expected policy benefits and non-level claim settlement expenses divided by the present value of expected gross premiums. The NTG ratio is applied to gross premiums, as premium revenue is recognized, to determine net premiums. The liability is then determined as the present value of expected future policy benefits and non-level claim settlement expenses less the present value of expected future net premiums. For purposes of liability measurement, contracts are grouped into cohorts based primarily on issue year and major product line.

The NTG ratio is generally updated quarterly for actual experience and annually in the second quarter of each year for future cash flow assumption updates during the Company’s annual assumptions review process unless a material change is observed in an interim period that is indicative of a long-term trend (see “Annual Assumptions Review” below), with the exception of claim settlement expense assumptions which the Company has made an entity-wide election to lock-in as of contract issuance. The NTG ratio is subject to a retrospective unlocking method whereby the Company updates its best estimate of cash flows expected over the life of the cohort using actual historical experience and updated future cash flow assumptions. These updated cash flows are used to calculate the revised NTG ratio, which is used to derive an updated liability for future policy benefits as of the beginning of the current reporting period, discounted at the original contract issuance discount rate. The updated liability for future policy benefit amount as of the beginning of the quarter is then compared to the carrying amount of the liability as of that same date, before the updates for actual experience or future cash flow assumptions, to determine the current period change in liability estimate. This current period change in the liability is the liability remeasurement gain or loss that is recorded through current period earnings in “Change in estimates of liability for future policy benefits”. In subsequent periods, the revised NTG ratio is used to measure the liability for future policy benefits, subject to future revisions.

If a cohort is in a loss position where the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and non-level claim settlement expenses, the NTG ratio is capped at 100%. In these instances, all changes in expected benefits resulting from both actual experience deviations and changes in future assumptions are reflected immediately. While the liability for future policy benefits cannot be less than zero (i.e., a contra-liability) at the cohort level and thus the balance is floored at zero (i.e., “flooring”), the NTG ratio may be negative. This would be the case whereby conditions have improved such that the present value of future net premiums plus the existing liability for future policy benefits as of the valuation date exceed the present value of expected future policy benefits and non-level claim settlement expenses. In this case, the negative NTG ratio would be applied going forward to gross premiums received, effectively amortizing the gain into income and reducing the liability over time.
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In addition, for limited-payment contracts, the liability for future policy benefits also includes a Deferred Profit Liability representing gross premiums received in excess of net premiums and is generally recognized in revenue in a constant relationship with insurance in force for life contracts or with the amount of expected future benefit payments for annuity contracts. The DPL is subject to a retrospective unlocking adjustment consistent with the liability for future policy benefits discussed above. The DPL cannot be less than zero (i.e., a contra-liability) at the cohort level and thus the balance is floored at zero (i.e., “flooring”).

For contracts issued prior to January 1, 2021, the modified retrospective transition method was used to transition to ASU 2018-12. Under this method, the transition date of January 1, 2021 serves as the new issue date of the contracts in force for purposes of retrospectively unlocking the NTG ratio and DPL as described above.

•Discount Rate Assumption. The locked-in discount rate is generally based on expected investment returns at contract inception for contracts issued prior to January 1, 2021 and the upper medium grade fixed income corporate instrument yield (i.e., global single A) at contract inception for contracts issued on or after January 1, 2021. The discount rate in effect at contract inception is locked-in for the calculation of the NTG ratio and accretion of interest cost on the liability through net income. However, for balance sheet remeasurement purposes, the discount rate is updated using the current single A rate at each reporting period, with the effect on the liability resulting from such update recorded in “Interest rate remeasurement of future policy benefits" in OCI.

The methodology used in constructing the single A discount rate curve for discounting cash flows used to calculate the liability for future policy benefits is intended to be reflective of the characteristics of the applicable insurance liabilities. The single A discount rate curve is developed by reference to upper medium grade (low credit risk) fixed income instrument yields that reflect the duration characteristics of the applicable insurance liabilities. The single A discount curve for the United States and foreign economies, such as Japan, with observable corporate A spreads, is developed using government bond rates, plus globally equivalent public corporate A spreads in the observable periods. The definition of upper medium grade is based on Moody’s definition which includes the spectrum of A (i.e., A- to A+). The rate used in foreign operations (with the exception of certain emerging markets, as discussed below) is based on the equivalent of a single A rate from a global rating agency for corporate bonds issued in the same currency and country in which the insurance contract is written. Liquidity is considered in defining the observable period and linear extrapolation is performed to the Company's ultimate long-term economic assumptions. See “Annual Assumptions Review” below for further discussion regarding the Company’s long-term economic assumption setting process.

The Company’s liability for future policy benefits also includes net liabilities for guaranteed benefits related to certain long-duration life contracts, such as no-lapse guarantee contract features (AIR liability), for which a liability is established when associated assessments are recognized (which include investment margin on policyholders' account balances in the general account and all policy charges including charges for administration, mortality, expense, surrender, and other charges). This liability is established using current best estimate assumptions and is based on the ratio of the present value of total expected excess payments (i.e., payments in excess of account value) over the life of the contract divided by the present value of total expected assessments (i.e., benefit ratio). Any adjustments to this liability related to net unrealized gains (losses) on securities classified as available-for-sale are included in AOCI.

For universal life type contracts and participating contracts, the Company performs premium deficiency tests using best estimate assumptions as of the testing date. If the liabilities determined based on these best estimate assumptions are greater than the net reserves (i.e., GAAP reserves including URR, net of reinsurance and any DSI asset), the existing net reserves are adjusted by first reducing these assets by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than these asset balances for insurance contracts, the net reserves are increased by the excess through a charge to current period earnings included in "Policyholders' benefits". Since investment yields are used as the discount rate, the premium deficiency test is also performed using a discount rate based on the market yield (i.e., assuming what would be the impact if any unrealized gains (losses) were realized as of the testing date). In the event that by using the market yield a deficiency occurs, an adjustment is established for the deficiency and is included in AOCI.

In certain instances, for universal life type contracts and participating contracts, the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. In these situations, accounting standards require that an additional liability (Profits Followed by Losses or “PFL” liability) be recognized by an amount necessary to sufficiently offset the losses that would be recognized in later years. To date, the Company has not recorded a PFL liability on any such contracts.
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The Company’s liability for future policy benefits also includes a liability for unpaid claims and claim adjustment expenses. The Company does not establish claim liabilities until a loss has been incurred. However, unpaid claims and claim adjustment expenses include estimates of claims that the Company believes have been incurred but have not yet been reported as of the balance sheet date.

Policyholders’ account balances liability represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is primarily associated with the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance, as applicable. These policyholders’ account balances also include provision for benefits under non-life contingent payout annuities and certain unearned revenues. The unearned revenue liability represents policy charges for services to be provided in future periods. The charges are deferred as incurred and are generally amortized over the expected life of the contract using the same methodology, factors, and assumption used to amortize DAC. See Note 9 for additional information regarding policyholders’ account balances. Policyholders' account balances also include amounts representing the fair value of embedded derivative instruments associated with the index-linked feature of certain universal life and annuity products. For additional information regarding the valuation of these embedded derivatives, see Note 5.

Market risk benefit liabilities represents contracts or contract features that provide protection to the contractholder and exposes the Company to other than nominal capital market risk, primarily related to deferred annuities with guaranteed minimum benefits associated with annuities products including guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum income and withdrawal benefits (“GMIWB”). The benefits are accounted for using a fair value measurement framework. If a contract contains multiple market risk benefits, the benefits are bundled together and accounted for as a single compound market risk benefit. Market risk benefits in an asset position are presented separately from those in a liability position as there is no legal right of offset between contracts. The fair value of market risk benefits is calculated as the present value of expected future benefit payments to contractholders less the present value of expected future rider fees attributable to the market risk benefits. The fair value of market risk benefits is based on assumptions a market participant would use in valuing market risk benefits. For additional information regarding the valuation of market risk benefits, see Note 5. On a quarterly basis, changes in the fair value of market risk benefits are recorded in net income, net of related hedges, in "Change in value of market risk benefits, net of related hedging gain (loss)", except for the portion of the change attributable to changes in the Company’s NPR which is recorded in OCI. See Note 10 for additional information regarding market risk benefits.

Cash collateral for loaned securities represents liabilities to return cash proceeds from security lending transactions. Securities lending transactions are used primarily to earn spread income or to facilitate trading activity. As part of securities lending transactions, the Company transfers U.S. and foreign debt and equity securities, as well as U.S. government and government agency securities, and receives cash as collateral. Cash proceeds from securities lending transactions are primarily used to earn spread income, and are typically invested in cash equivalents, short-term investments or fixed maturities. Securities lending transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company’s securities lending transactions are with large brokerage firms and large banks. Income and expenses associated with securities lending transactions used to earn spread income are reported as "Net investment income".

Securities sold under agreements to repurchase represents liabilities associated with securities repurchase agreements that are used primarily to earn spread income. As part of securities repurchase agreements, the Company transfers U.S. government and government agency securities to a third-party, and receives cash as collateral. For securities repurchase agreements, the cash received is typically invested in cash equivalents, short-term investments or fixed maturities. Receivables associated with securities purchased under agreements to resell are generally reflected as cash equivalents. As part of securities resale agreements, the Company invests cash and receives as collateral U.S. government securities or other debt securities.

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Securities repurchase and resale agreements that satisfy certain criteria are treated as secured borrowing or secured lending arrangements. These agreements are carried at the amounts at which the securities will be subsequently resold or reacquired, as specified in the respective transactions. For securities purchased under agreements to resell, the Company’s policy is to take possession or control of the securities either directly or through a third-party custodian. These securities are valued daily, and additional securities or cash collateral is received, or returned, when appropriate to protect against credit exposure. Securities to be resold are the same, or substantially the same, as the securities received. The majority of these transactions are with large brokerage firms and large banks. For securities sold under agreements to repurchase, the market value of the securities to be repurchased is monitored, and additional collateral is obtained where appropriate, to protect against credit exposure. The Company obtains collateral in an amount at least equal to 95% of the fair value of the securities sold. Securities to be repurchased are the same, or substantially the same, as those sold. The majority of these transactions are with highly rated money market funds. Income and expenses related to these transactions executed within the insurance companies used to earn spread income are reported as “Net investment income.”

Other liabilities consists primarily of reinsurance payables associated with reinsurance arrangements that correspond to reinsurance receivables included above in “Reinsurance recoverables”. Also included is a funds withheld liability for assets retained under a reinsurance agreement that corresponds to the deposit assets above in "Other assets". For additional information about these arrangements see Note 11. Additionally other liabilities includes accrued expenses, technical overdrafts, payables resulting from purchases of securities that had not yet settled at the balance sheet date and deferred gain on reinsurance. The amortization method for deferred gain on reinsurance is amortized over the expected life of the reinsured contracts on a constant-level basis. Other liabilities may also include derivative instruments for which fair values are determined as described below under "Derivative Financial Instruments".

Separate account liabilities primarily represents the contractholders’ account balance in separate account assets and to a lesser extent borrowings of the separate account, and will be equal and offsetting to total separate account assets. See also “Separate account assets” above.

Short-term and long-term debt liabilities are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium and debt issuance costs. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Interest expense is generally presented within “General, administrative and other expenses” in the Company’s Consolidated Statements of Operations. Short-term debt is debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. The short-term debt caption may exclude short-term debt items for which the Company has the intent and ability to refinance on a long-term basis in the near term. See Note 15 for additional information regarding short-term and long-term debt.

Commitments and contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, they are included in the accrual. These accruals are generally reported in “Other liabilities”.

REVENUES AND BENEFITS AND EXPENSES
Insurance Revenue and Expense Recognition
Premiums from individual life products, other than universal and variable life contracts, are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future policy benefits and non-level claim settlement expenses) is generally deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized as described in "Future policy benefits" above.

Premiums from single premium immediate annuities with life contingencies are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium is generally deferred and recognized into revenue based on expected future benefit payments. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized as described in "Future policy benefits" above.

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Certain individual annuity contracts provide the contractholder a guarantee that the benefit received upon death or annuitization will be no less than a minimum prescribed amount. These benefits are generally accounted for as market risk benefits (see “Market risk benefits” above).

Amounts received from policyholders as payment for universal or variable individual life contracts, deferred fixed or variable annuities and other contracts without life contingencies are reported as deposits to “Policyholders’ account balances” and/or “Separate account liabilities.” Revenues from these contracts are reflected in “Policy charges and fee income” consisting primarily of fees assessed during the period against the policyholders’ account balances for mortality and other benefit charges, policy administration charges and surrender charges. In addition to fees, the Company earns investment income from the investment of deposits in the Company’s general account portfolio. Fees assessed that represent compensation to the Company for services to be provided in future periods and certain other fees are generally deferred and amortized into revenue over the life of the related contracts using the same methodology, factors, and assumption used to amortize DAC as described above. Benefits and expenses for these products include claims in excess of related account balances, expenses of contract administration, interest credited to policyholders’ account balances and amortization of DAC and DSI.

Policyholders’ account balances also includes amounts representing the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products where changes in the value of the embedded derivatives are recorded through "Realized investment gains (losses), net". For additional information regarding the valuation of these embedded derivatives, see Note 5.

Asset administration fees primarily include asset administration fee income received on contractholders’ account balances invested in The Prudential Series Funds, which are a portfolio of mutual fund investments related to the Company’s separate account products. Also, the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust ("AST") (see Note 15). In addition, the Company receives fees from contractholders’ account balances invested in funds managed by companies other than affiliates of Prudential Insurance. Asset administration fees are recognized as income when earned.

Other income (loss) includes realized and unrealized gains or losses from investments reported as “Fixed maturities, trading, at fair value”, “Equity securities, at fair value”, and “Other invested assets” that are measured at fair value.

Realized investment gains (losses), net includes realized gains or losses from sales and maturities of investments, changes to the allowance for credit losses, other impairments, fair value changes on mortgage loans where the fair value option has been elected, releases of Other Comprehensive Income and derivative gains or losses. The derivative gains or losses include the impact of maturities, terminations and changes in fair value of the derivative instruments, including embedded derivatives, and other hedging instruments.

OTHER ACCOUNTING POLICIES
Derivative Financial Instruments
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and NPR used in valuation models. Derivative financial instruments generally used by the Company include swaps, futures, forwards and options and may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties, while others are bilateral contracts between two counterparties. Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models.

Derivatives are used to manage the interest rate and currency characteristics of assets or liabilities. Additionally, derivatives may be used to reduce exposure to risks such as interest rate, credit, foreign currency and equity associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. As discussed in detail below and in Note 4, all realized and unrealized changes in fair value of derivatives are recorded in current earnings, with the exception of cash flow hedges. Cash flows from derivatives are reported in the operating, investing or financing activities sections in the Consolidated Statements of Cash Flows based on the nature and purpose of the derivative.

B-31

Derivatives are recorded either as assets, within “Other invested assets”, or as liabilities, within “Payables to parent and affiliates”, except for embedded derivatives which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with counterparties for which a master netting arrangement has been executed.

The Company designates derivatives as either (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); or (2) a derivative that does not qualify for hedge accounting.

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship.

The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions.

When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in AOCI until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the Consolidated Statements of Operations line item associated with the hedged item.

If it is determined that a derivative no longer qualifies as an effective cash flow hedge or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net”. The component of AOCI related to discontinued cash flow hedges is reclassified to the Consolidated Statements of Operations line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows.

When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, or because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net”. Any asset or liability that was recorded pursuant to recognition of the firm commitment is removed from the balance sheet and recognized currently in “Realized investment gains (losses), net”. Gains and losses that were in AOCI pursuant to the hedge of a forecasted transaction are recognized immediately in “Realized investment gains (losses), net”.

If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in “Realized investment gains (losses), net” without considering changes in the fair value of the economically associated assets or liabilities.

The Company is a party to financial instruments that contain derivative instruments that are “embedded” in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in “Realized investment gains (losses), net”. For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to carry the entire instrument at fair value and report it within "Other invested assets", or as liabilities, within “Payables to parent and affiliates” or "Other liabilities".

B-32

The Company sells variable annuity contracts that include optional living benefit features that may be treated from an accounting perspective as embedded derivatives. Effective April 1, 2016, the Company reinsured the variable annuity base contracts, along with the living benefit guarantees, to PALAC, excluding the PLNJ business, which was reinsured to Prudential Insurance, in each case under a coinsurance and modified coinsurance agreement. Effective July 1, 2021, the Company recaptured the risks related to its variable annuity base contracts, along with the living benefit guarantees, that had previously been reinsured to PALAC from April 1, 2016 through June 30, 2021. See Note 11 for additional information. The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value and included in “Future policy benefits" and “Reinsurance recoverables”. Additionally, changes in the fair value are determined using valuation models as described in Note 5 and are recorded in “Realized investment gains (losses), net".

Annual Assumptions Review

Annually, the Company performs a comprehensive review of the assumptions set for purposes of estimating future premiums, benefits, and other cash flows. Assumptions include those that are economic and those that are insurance related. Insurance related assumptions are based on the Company’s best estimates of future rates of mortality, morbidity, lapse, surrender, annuitization, expenses and other items. The Company generally looks to relevant Company experience as the primary basis for these assumptions. If relevant Company experience is not available or does not have sufficient credibility, the Company may look to experience of similar blocks of business, either in the Company or the industry. Mortality rate assumptions are generally based on Company experience, sometimes blending Company experience with an industry table where the Company experience alone is not sufficiently credible. The Company sets mortality and morbidity assumptions that vary by major type of business. Within type of business, rates vary by age and gender. The Company applies an adjustment for future mortality improvement, consistent with observed long-term trends of population mortality over time. Lapse and surrender assumptions are based on Company and industry experience, where available. The Company sets rates that vary by product type, taking into account features specific to the product.

As part of this review, the Company may update these assumptions and make refinements to its models based upon emerging experience, future expectations and other data, including any observable market data it feels is indicative of a long-term trend. These assumptions are generally updated annually, unless a material change is observed in an interim period that the Company feels is also indicative of a long-term trend. Generally, the Company does not expect trends to change significantly in the short-term and, to the extent these trends may change, it expects such changes to be gradual over the long-term.

The Company also performs a comprehensive review of the economic assumptions, including long-term interest rate assumptions and equity return assumptions that impact reserve calculations. The Company generally utilizes relevant economic outlook information and industry surveys as the primary basis for these assumptions, which may be used to project future rates of return on investments.

RECENT ACCOUNTING PRONOUNCEMENTS

Changes to U.S. GAAP are established by the FASB in the form of ASUs to the FASB Accounting Standards Codification ("ASC"). The Company considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the current fiscal year and/or those that have been issued but not yet adopted as of December 31, 2023, and as of the date of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.
B-33


Adoption of ASU 2018-12

Effective January 1, 2023, the Company adopted ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. Adoption of this ASU impacted, at least to some extent, the accounting and disclosure requirements for all long-duration insurance and investment contracts issued by the Company and had a significant financial impact on the Consolidated Financial Statements and disclosures. See Note 1 for additional information.

As of the January 1, 2021 transition date, the adoption of the standard resulted in a decrease to “Total equity” of $271 million, primarily from remeasuring in force contract liabilities using upper-medium grade fixed income instrument yields as of the transition date and from other changes in reserves. As of the January 1, 2023 adoption date, the impact amounted to an increase to "Total equity" of $673 million. The changes in the impacts from January 1, 2021 to January 1, 2023 primarily reflect the increase in market interest rates during 2021 and 2022.

The narrative description of the Company's significant accounting policies at the beginning of this Note reflects its policies as of December 31, 2023, including the policies associated with the adoption of ASU 2018-12. Outlined below are the key accounting policy changes effected by the ASU.

Key Accounting Policy Changes

Area of ChangeDescriptionMethod of adoptionEffect 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-payment insurance productsRequires 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.Effective January 1, 2023 using the modified retrospective transition method, which includes a cumulative effect adjustment to the balance sheet as of January 1, 2021 (the “transition date”). Under this method, the amendments to contracts in force were applied as of January 1, 2021 on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI
The impact upon transition reflects the impact on in force contract liabilities in instances where expected net premiums exceeded expected gross premiums at an issue-year cohort level as a result of updating to current best estimate cash flow assumptions as of the transition date. As a result of the modified retrospective transition method, the vast majority of the impact of updating cash flow assumptions to best estimates as of the transition date will be reflected in the pattern of earnings in subsequent periods. See Note 1 for additional information regarding the effect on the financial statements. Adoption of the standard also resulted in additional required disclosures. See Note 8 for additional information.
B-34

Area of ChangeDescriptionMethod of adoptionEffect on the financial statements or other significant matters
Discount rate assumption used to measure the liability for future policy benefits for non-participating traditional and limited-payment insurance productsRequires discount rate assumptions to be based on upper-medium grade fixed income instrument yields, which will be updated each quarter with the impact recorded through OCI. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the discount rate assumptions.As noted above, the guidance for the liability for future policy benefits was adopted effective January 1, 2023 using the modified retrospective transition method, which includes a cumulative effect adjustment to the balance sheet as of January 1, 2021. Under this method, for balance sheet remeasurement purposes, the liability for future policy benefits is remeasured using discount rates as of January 1, 2021 with the impact recorded as a cumulative effect adjustment to AOCI.
Adoption of the ASU resulted in a significant impact to AOCI as a result of remeasuring in force contract liabilities using current upper-medium grade fixed income instrument yields. This adjustment largely reflects the difference between discount rates locked-in at contract inception versus current discount rates. See Note 1 for additional information regarding the effect on the financial statements. Adoption of the standard also resulted in additional required disclosures. See Note 8 for additional information.
Amortization of deferred acquisition costs and other balancesRequires DAC and other balances, such as URR and DSI, to be amortized on a constant level basis over the expected term of the related contract, independent of expected profitability.Effective January 1, 2023 using the modified retrospective transition method, which includes a cumulative effect adjustment to the balance sheet as of January 1, 2021. Under this method, the amendments to contracts in force were applied as of January 1, 2021 on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI.
Adoption of the ASU did not have a significant impact on DAC and other balances upon transition, other than the impact of the removal of any related amounts in AOCI. See Note 1 for additional information regarding the effect on the financial statements. Adoption of the standard also resulted in additional required disclosures. See Note 6 for additional information.
Market Risk BenefitsRequires 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 MRB assets and liabilities separately on the Consolidated Statements of Financial Position. Changes in the fair value of market risk benefits are recorded in net income, except for the portion attributable to changes in an entity’s NPR, which is recognized in OCI. 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.Effective January 1, 2023 using the retrospective transition method, which includes a cumulative effect adjustment to the balance sheet as of January 1, 2021.
Adoption of the ASU resulted in an adjustment to retained earnings for the difference between the fair value and carrying value of benefits not measured at fair value prior to the adoption of the ASU (e.g., guaranteed minimum death benefits on variable annuities) and a reclass of the cumulative effect of changes in NPR from retained earnings to AOCI. See Note 1 for additional information regarding the effect on the financial statements. Adoption of the standard also resulted in additional required disclosures. See Note 10 for additional information.

B-35

In addition to the significant key accounting changes noted above, ASU 2018-12 also clarified the definition of assessments used to accrue additional insurance reserves and other related balances, primarily for no-lapse guarantee features on certain universal life contracts. Application of the new guidance changed the pattern of reserve recognition for these guarantees and resulted in an increase to the net contract liabilities related to these products at transition. See Note 1 for additional information regarding the effect on the financial statements.

ASU 2022-05, Financial Services – Insurance (Topic 944) Transition for Sold Contracts was issued on December 15, 2022, to amend the transition guidance in ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The amendment allows an insurance entity to make an accounting policy election to not apply ASU 2018-12 to contracts or legal entities sold or disposed of before the effective date, and in which the insurance entity has no significant continuing involvement with the derecognized contracts. An insurance entity is permitted to apply the policy election on a transaction by transaction basis to each sale or disposal transaction. An insurance entity is required to disclose whether it has chosen to apply this accounting policy election and provide a qualitative description of the sale or disposal transactions to which the accounting policy election is applied. The Company did not choose to apply this accounting policy election to any of its eligible sale or disposal transactions.

Other ASUs adopted as of December 31, 2023

The Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosure, effective January 1, 2023, on a prospective basis. This ASU eliminates the accounting guidance for TDR for creditors and adds enhanced disclosure requirements. Following adoption of the ASU, all loan refinancings and restructurings are subject to the modification guidance in ASC 310-20. The narrative description of the Company's significant accounting policies at the beginning of this Note reflects its policies as of December 31, 2023, including the policies associated with the adoption of ASU 2022-02. Adoption of the ASU did not have a significant impact on the Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements.

ASUs issued but not yet adopted as of December 31, 2023

StandardDescriptionEffective date and method of adoptionEffect on the financial statements or other significant matters
ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment DisclosuresThis ASU requires entities, including those with a single operating or reportable segment, to provide more detailed information about significant segment expenses that are regularly provided to the chief operating decision maker. The ASU also clarifies that all of the disclosures required in the guidance apply to all public entities, including those with a single operating or reportable segment.Effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, using the retrospective method.The Company is currently assessing the impact of the ASU on the Company's Consolidated Financial Statements and Notes to the Consolidated Financial Statements.
B-36

3. INVESTMENTS
Fixed Maturity Securities
The following tables set forth the composition of fixed maturity securities (excluding investments classified as trading), as of the dates indicated:
 December 31, 2023
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Allowance for Credit LossesFair
Value
 (in thousands)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$1,009,937 $38,858 $73,508 $0 $975,287 
Obligations of U.S. states and their political subdivisions789,856 5,288 18,517 0 776,627 
Foreign government bonds330,830 1,840 50,684 0 281,986 
U.S. public corporate securities10,159,089 98,047 760,274 950 9,495,912 
U.S. private corporate securities5,207,699 37,435 254,828 812 4,989,494 
Foreign public corporate securities1,809,347 12,658 115,673 238 1,706,094 
Foreign private corporate securities4,902,391 109,806 381,215 0 4,630,982 
Asset-backed securities(1)2,016,028 23,035 11,512 1 2,027,550 
Commercial mortgage-backed securities913,347 4,776 66,345 0 851,778 
Residential mortgage-backed securities(2)399,542 4,016 7,481 7 396,070 
Total fixed maturities, available-for-sale$27,538,066 $335,759 $1,740,037 $2,008 $26,131,780 
(1)    Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans and home equity.
(2)    Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

 December 31, 2022
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Allowance for Credit LossesFair
Value
 (in thousands)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$354,348 $300 $72,856 $0 $281,792 
Obligations of U.S. states and their political subdivisions654,884 4,275 30,959 0 628,200 
Foreign government bonds330,967 1,140 58,640 5 273,462 
U.S. public corporate securities7,414,790 21,299 992,145 0 6,443,944 
U.S. private corporate securities4,140,734 13,071 335,205 1,871 3,816,729 
Foreign public corporate securities1,539,172 2,455 163,384 21 1,378,222 
Foreign private corporate securities4,338,585 19,761 589,153 2,863 3,766,330 
Asset-backed securities(1)1,467,955 6,976 32,577 0 1,442,354 
Commercial mortgage-backed securities727,159 94 69,101 0 658,152 
Residential mortgage-backed securities(2)342,493 3,211 9,479 9 336,216 
Total fixed maturities, available-for-sale$21,311,087 $72,582 $2,353,499 $4,769 $19,025,401 

(1)    Includes credit-tranched securities collateralized by loan obligations, education loans, auto loans and home equity.
(2)    Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
B-37

The following tables set forth the fair value and gross unrealized losses on fixed maturity, available-for-sale securities without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the dates indicated:
 December 31, 2023
 Less Than Twelve MonthsTwelve Months or MoreTotal
 Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses
 (in thousands)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$98,174 $945 $214,889 $72,563 $313,063 $73,508 
Obligations of U.S. states and their political subdivisions83,729 293 218,375 18,224 302,104 18,517 
Foreign government bonds10,226 116 233,757 50,568 243,983 50,684 
U.S. public corporate securities782,904 10,009 5,201,353 750,265 5,984,257 760,274 
U.S. private corporate securities707,674 16,613 2,794,697 238,181 3,502,371 254,794 
Foreign public corporate securities92,955 1,063 948,963 114,169 1,041,918 115,232 
Foreign private corporate securities429,212 8,035 2,461,367 373,180 2,890,579 381,215 
Asset-backed securities208,970 1,761 532,814 9,750 741,784 11,511 
Commercial mortgage-backed securities42,621 298 580,931 66,047 623,552 66,345 
Residential mortgage-backed securities35,904 435 124,956 7,046 160,860 7,481 
  Total fixed maturities, available-for-sale$2,492,369 $39,568 $13,312,102 $1,699,993 $15,804,471 $1,739,561 

 December 31, 2022
 Less Than Twelve MonthsTwelve Months or MoreTotal
 Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses
 (in thousands)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$212,991 $46,928 $62,630 $25,928 $275,621 $72,856 
Obligations of U.S. states and their political subdivisions307,734 16,851 61,915 14,108 369,649 30,959 
Foreign government bonds139,577 19,435 111,371 39,205 250,948 58,640 
U.S. public corporate securities3,873,275 389,937 1,979,725 602,208 5,853,000 992,145 
U.S. private corporate securities2,506,932 157,853 948,686 177,352 3,455,618 335,205 
Foreign public corporate securities548,083 40,508 596,437 122,856 1,144,520 163,364 
Foreign private corporate securities1,772,413 199,124 1,479,608 390,029 3,252,021 589,153 
Asset-backed securities625,710 15,146 289,581 17,431 915,291 32,577 
Commercial mortgage-backed securities459,186 30,408 176,349 38,693 635,535 69,101 
Residential mortgage-backed securities129,721 9,220 1,294 259 131,015 9,479 
  Total fixed maturities, available-for-sale$10,575,622 $925,410 $5,707,596 $1,428,069 $16,283,218 $2,353,479 

B-38

As of December 31, 2023 and 2022, the gross unrealized losses on fixed maturity, available-for-sale securities without an allowance of $1,633.9 million and $2,164.1 million, respectively, related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $105.7 million and $189.4 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. As of December 31, 2023, the $1,700.0 million of gross unrealized losses of twelve months or more were concentrated in the Company’s corporate securities within the finance, consumer non-cyclical and utility sectors. As of December 31, 2022, the $1,428.1 million of gross unrealized losses of twelve months or more were concentrated in the Company's corporate securities within the finance, consumer non-cyclical and utility sectors.
In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at December 31, 2023. This conclusion was based on a detailed analysis of the underlying credit and cash flows on each security. Gross unrealized losses are primarily attributable to increases in interest rates, general credit spread widening and foreign currency exchange rate movements. As of December 31, 2023, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized cost basis.

The following table sets forth the amortized cost and fair value of fixed maturities, available-for-sale by contractual maturities, as of the date indicated:
 December 31, 2023
 Amortized CostFair Value
 (in thousands)
Fixed maturities, available-for-sale:
Due in one year or less$553,892 $546,321 
Due after one year through five years8,444,655 8,239,529 
Due after five years through ten years7,626,127 7,378,674 
Due after ten years7,584,475 6,691,858 
Asset-backed securities2,016,028 2,027,550 
Commercial mortgage-backed securities913,347 851,778 
Residential mortgage-backed securities399,542 396,070 
Total fixed maturities, available-for-sale$27,538,066 $26,131,780 
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed and residential mortgage-backed securities are shown separately in the table above as they do not have a single maturity date.
The following table sets forth the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on write-downs and the allowance for credit losses of fixed maturities, available-for-sale, for the periods indicated:
Years Ended December 31
202320222021
  (in thousands) 
Fixed maturities, available-for-sale:
Proceeds from sales(1)$460,596 $1,117,293 $790,331 
Proceeds from maturities/prepayments1,218,844 624,640 465,347 
Gross investment gains from sales and maturities11,482 5,647 14,972 
Gross investment losses from sales and maturities(43,078)(58,432)(16,674)
Write-offs recognized in earnings(2)(2,358)(20,600)(2)
(Addition to) release of allowance for credit losses2,761 (620)(1,810)

(1)Excludes activity from non-cash related proceeds due to the timing of trade settlements of $57.4 million, $(53.9) million and $(4.4) million for the years ended December 31, 2023, 2022 and 2021, respectively.
(2)Amounts represent write-downs of credit adverse securities and securities actively marketed for sale.

B-39

The following tables set forth the activity in the allowance for credit losses for fixed maturity available-for-sale securities, as of the dates indicated:
Year Ended December 31, 2023
U.S. Treasury Securities and Obligations of U.S. StatesForeign Government BondsU.S. and Foreign Corporate SecuritiesAsset-Backed SecuritiesCommercial Mortgage-Backed SecuritiesResidential Mortgage-Backed SecuritiesTotal
(in thousands)
Fixed maturities, available-for-sale:
Balance, beginning of period$0 $5 $4,755 $0 $0 $9 $4,769 
Additions to allowance for credit losses not previously recorded0 0 4,267 1 0 0 4,268 
Reductions for securities sold during the period0 (1)(5,118)0 0 (1)(5,120)
Additions (reductions) on securities with previous allowance0 (4)436 0 0 (1)431 
Write-downs charged against the allowance 0 0 (2,340)0 0 0 (2,340)
Balance, end of period$0 $0 $2,000 $1 $0 $7 $2,008 

Year Ended December 31, 2022
U.S. Treasury Securities and Obligations of U.S. StatesForeign Government BondsU.S. and Foreign Corporate SecuritiesAsset-Backed SecuritiesCommercial Mortgage-Backed SecuritiesResidential Mortgage-Backed SecuritiesTotal
(in thousands)
Fixed maturities, available-for-sale:
Balance, beginning of period$0 $11 $4,138 $0 $0 $0 $4,149 
Additions to allowance for credit losses not previously recorded0 329 12,700 0 0 7 13,036 
Reductions for securities sold during the period0 (96)(1,702)0 0 0 (1,798)
Reductions for securities with intent to sell0 (324)(16,666)0 0 0 (16,990)
Additions (reductions) on securities with previous allowance0 85 6,285 0 0 2 6,372 
Balance, end of period$0 $5 $4,755 $0 $0 $9 $4,769 

B-40

Year Ended December 31, 2021
U.S. Treasury Securities and Obligations of U.S. StatesForeign Government BondsU.S. and Foreign Corporate SecuritiesAsset-Backed SecuritiesCommercial Mortgage-Backed SecuritiesResidential Mortgage-Backed SecuritiesTotal
(in thousands)
Fixed maturities, available-for-sale:
Balance, beginning of period$0 $0 $2,339 $0 $0 $0 $2,339 
Additions to allowance for credit losses not previously recorded0 11 2,664 0 0 0 2,675 
Reductions for securities sold during the period0 0 (28)0 0 0 (28)
Additions (reductions) on securities with previous allowance0 0 (837)0 0 0 (837)
Balance, end of period$0 $11 $4,138 $0 $0 $0 $4,149 

See Note 2 for additional information about the Company's methodology for developing our allowance and expected losses.

For the year ended December 31, 2023, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to net reductions within the capital goods and utility sectors within corporate securities due to restructurings, partially offset by net additions within the finance sector within corporate securities due to adverse projected cashflows.
For the year ended December 31, 2022, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to net additions in the capital goods and utility sectors within private corporate securities due to adverse projected cash flows, partially offset by a net release on restructured private corporate securities within the communications and transportation sectors.
The Company did not have any fixed maturity securities purchased with credit deterioration as of both December 31, 2023 and 2022.
Fixed Maturities, Trading
The net change in unrealized gains (losses) from fixed maturities, trading still held at period end, recorded within “Other income (loss)” was $65.6 million, $(728.6) million and $156.1 million during the years ended December 31, 2023, 2022 and 2021, respectively.
Equity Securities
The net change in unrealized gains (losses) from equity securities still held at period end, recorded within “Other income (loss)” was $25.8 million, $(10.2) million and $2.1 million during the years ended December 31, 2023, 2022 and 2021, respectively.
B-41

Commercial Mortgage and Other Loans
The following table sets forth the composition of “Commercial mortgage and other loans” as of the dates indicated:
 December 31, 2023December 31, 2022
 Amount
(in thousands)		% of
Total		Amount
(in thousands)		% of
Total
Commercial mortgage and agricultural property loans by property type:
Apartments/Multi-Family$1,578,785 25.7 %$1,289,026 26.0 %
Hospitality102,952 1.7 104,177 2.1 
Industrial2,486,230 40.4 1,766,247 35.8 
Office604,611 9.8 590,897 11.9 
Other456,720 7.4 380,121 7.7 
Retail363,706 5.9 351,457 7.1 
Total commercial mortgage loans5,593,004 90.9 4,481,925 90.6 
Agricultural property loans562,046 9.1 467,018 9.4 
Total commercial mortgage and agricultural property loans6,155,050 100.0 %4,948,943 100.0 %
Allowance for credit losses(37,689)(20,263)
Net commercial mortgage and agricultural property loans6,117,361 4,928,680 
Other loans:
Other collateralized loans5,360 0 
     Total other loans 5,360 0 
     Net commercial mortgage and other loans$6,122,721 $4,928,680 

As of December 31, 2023, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States with the largest concentrations in California (28%), Texas (12%) and Colorado (5%) and included loans secured by properties in Europe (10%), Mexico (1%) and Australia (1%).
The following table sets forth the activity in the allowance for credit losses for commercial mortgage and other loans, as of the dates indicated: 
Commercial Mortgage LoansAgricultural Property LoansTotal
 (in thousands)
Balance at December 31, 2020$4,546 $6 $4,552 
Addition to (release of) allowance for expected losses1,301 98 1,399 
Balance at December 31, 20215,847 104 5,951 
Addition to (release of) allowance for expected losses13,818 494 14,312 
Balance at December 31, 202219,665 598 20,263 
Addition to (release of) allowance for expected losses17,093 333 17,426 
Balance at December 31, 2023$36,758 $931 $37,689 

See Note 2 for additional information about the Company's methodology for developing our allowance and expected losses.
For the year ended December 31, 2023, the net increase in the allowance for credit losses on commercial mortgage and other loans was primarily related to increases to the portfolio reserve to reflect declining market conditions and loan specific reserves, both within the office sector, as well as loan originations.

For the year ended December 31, 2022, the net increase in the allowance for credit losses on commercial mortgage and other loans was primarily related to loan originations and declining market conditions, partially offset by loan repayments and payoffs.
B-42

The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses as of the dates indicated:
December 31, 2023
Amortized Cost by Origination Year
20232022202120202019PriorTotal
(in thousands)
Commercial mortgage loans
Loan-to-Value Ratio:
0%-59.99%$249,037 $245,914 $482,718 $109,249 $265,053 $1,068,763 $2,420,734 
60%-69.99%675,153 355,984 449,878 172,721 225,803 206,237 2,085,776 
70%-79.99%218,015 133,343 255,299 77,812 20,924 86,806 792,199 
80% or greater0 47,555 73,702 3,817 16,508 152,713 294,295 
Total$1,142,205 $782,796 $1,261,597 $363,599 $528,288 $1,514,519 $5,593,004 
Debt Service Coverage Ratio:
Greater or Equal to 1.2x$1,038,315 $779,282 $1,261,597 $292,561 $497,407 $1,402,831 $5,271,993 
1.0 - 1.2x103,890 3,514 0 0 15,632 40,521 163,557 
Less than 1.0x0 0 0 71,038 15,249 71,167 157,454 
Total$1,142,205 $782,796 $1,261,597 $363,599 $528,288 $1,514,519 $5,593,004 
Agricultural property loans
Loan-to-Value Ratio:
0%-59.99%$73,774 $179,375 $132,042 $25,875 $15,824 $25,771 $452,661 
60%-69.99%47,489 56,210 0 0 0 0 103,699 
70%-79.99%5,686 0 0 0 0 0 5,686 
80% or greater0 0 0 0 0 0 0 
Total$126,949 $235,585 $132,042 $25,875 $15,824 $25,771 $562,046 
Debt Service Coverage Ratio:
Greater or Equal to 1.2x$126,949 $233,585 $130,353 $24,063 $15,824 $25,771 $556,545 
1.0 - 1.2x0 2,000 0 1,812 0 0 3,812 
Less than 1.0x0 0 1,689 0 0 0 1,689 
Total$126,949 $235,585 $132,042 $25,875 $15,824 $25,771 $562,046 

B-43

December 31, 2022
Amortized Cost by Origination Year
20222021202020192018PriorTotal
(in thousands)
Commercial mortgage loans
Loan-to-Value Ratio:
0%-59.99%$266,453 $262,095 $63,558 $222,638 $201,087 $894,646 $1,910,477 
60%-69.99%344,110 681,996 243,800 219,593 61,757 305,175 1,856,431 
70%-79.99%166,629 304,386 47,388 66,148 2,409 53,336 640,296 
80% or greater0 0 0 3,249 0 71,472 74,721 
Total$777,192 $1,248,477 $354,746 $511,628 $265,253 $1,324,629 $4,481,925 
Debt Service Coverage Ratio:
Greater or Equal to 1.2x$744,301 $1,248,477 $243,325 $452,626 $258,617 $1,203,807 $4,151,153 
1.0 - 1.2x32,891 0 83,655 26,558 6,636 45,742 195,482 
Less than 1.0x0 0 27,766 32,444 0 75,080 135,290 
Total$777,192 $1,248,477 $354,746 $511,628 $265,253 $1,324,629 $4,481,925 
Agricultural property loans
Loan-to-Value Ratio:
0%-59.99%$208,708 $133,126 $25,894 $16,053 $6,327 $20,700 $410,808 
60%-69.99%56,210 0 0 0 0 0 56,210 
70%-79.99%0 0 0 0 0 0 0 
80% or greater0 0 0 0 0 0 0 
Total$264,918 $133,126 $25,894 $16,053 $6,327 $20,700 $467,018 
Debt Service Coverage Ratio:
Greater or Equal to 1.2x$262,918 $133,126 $25,894 $16,053 $6,327 $20,700 $465,018 
1.0 - 1.2x2,000 0 0 0 0 0 2,000 
Less than 1.0x0 0 0 0 0 0 0 
Total$264,918 $133,126 $25,894 $16,053 $6,327 $20,700 $467,018 

See Note 2 for additional information about the Company’s commercial mortgage and other loans credit quality monitoring process.
The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status as of the dates indicated:
December 31, 2023
Current30-59 Days Past Due60-89 Days Past Due90 Days or More Past Due(1)Total LoansNon-Accrual Status(2)
(in thousands)
Commercial mortgage loans$5,593,004 $0 $0 $0 $5,593,004 $0 
Agricultural property loans562,046 0 0 0 562,046 1,301 
Other collateralized loans5,360 0 0 0 5,360 0
Total $6,160,410 $0 $0 $0 $6,160,410 $1,301 

(1)As of December 31, 2023, 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.

B-44

December 31, 2022
Current30-59 Days Past Due60-89 Days Past Due90 Days or More Past Due(1)Total LoansNon-Accrual Status(2)
(in thousands)
Commercial mortgage loans$4,481,925 $0 $0 $0 $4,481,925 $0 
Agricultural property loans465,689 0 1,329 0 467,018 0 
Total $4,947,614 $0 $1,329 $0 $4,948,943 $0 

(1)As of December 31, 2022, 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.

Loans on non-accrual status did not recognize any interest income and did not have a related allowance for credit losses for the year ended December 31, 2023.
For the years ended December 31, 2023 and 2022, there were $0.0 million and $27.6 million, respectively, of commercial mortgage loans acquired, other than those through direct origination. For the years ended December 31, 2023 and 2022, there were $0.0 million and $24.8 million, respectively, of commercial mortgage and other loans sold.
The Company did not have any commercial mortgage and other loans purchased with credit deterioration, as of both December 31, 2023 and 2022.

Other Invested Assets
The following table sets forth the composition of “Other invested assets”, as of the dates indicated:
December 31,
20232022
 (in thousands)
LPs/LLCs:
Equity method:
Private equity$333,863 $287,969 
Hedge funds720,360 576,595 
Real estate-related83,339 107,429 
Subtotal equity method1,137,562 971,993 
Fair value:
Private equity48,483 59,146 
Hedge funds137 396 
Real estate-related18,687 9,457 
Subtotal fair value67,307 68,999 
Total LPs/LLCs1,204,869 1,040,992 
Derivative instruments17,718 47,111 
Other(1)398 510 
Total other invested assets$1,222,985 $1,088,613 

(1)Assets consist of investments in separate account funds.

B-45

Equity Method Investments

The following tables set forth summarized combined financial information for significant LP/LLC interests accounted for under the equity method, including the Company’s investments in operating joint ventures. Changes between periods in the tables below reflect changes in the activities within the operating joint ventures and LPs/LLCs, as well as changes in the Company’s level of investment in such entities.
 December 31,
 20232022
 (in thousands)
STATEMENTS OF FINANCIAL POSITION
Total assets(1)$44,591,082 $67,721,613 
Total liabilities(2)$2,802,022 $12,174,133 
Partners’ capital41,789,060 55,547,480 
Total liabilities and partners’ capital$44,591,082 $67,721,613 
Total liabilities and partners’ capital included above$979,271 $815,783 
Equity in LP/LLC interests not included above216,205 214,442 
Carrying value$1,195,476 $1,030,225 
(1)Amount represents gross assets of each fund where the Company has a significant investment. These assets consist primarily of investments in real estate, investments in securities and other miscellaneous assets.
(2)Amount represents gross liabilities of each fund where the Company has a significant investment. These liabilities consist primarily of third-party-borrowed funds and other miscellaneous liabilities.
 Years Ended December 31,
 202320222021
 (in thousands)
STATEMENTS OF OPERATIONS
Total revenue(1)$3,465,807 $11,062,060 $11,031,051 
Total expenses(2)(979,287)(1,655,673)(2,044,942)
Net earnings (losses)$2,486,520 $9,406,387 $8,986,109 
Equity in net earnings (losses) included above$17,795 $(36,513)$62,173 
Equity in net earnings (losses) of LP/LLC interests not included above11,792 7,320 28,765 
Total equity in net earnings (losses)$29,587 $(29,193)$90,938 
(1)Amount represents gross revenue of each fund where the Company has a significant investment. This revenue consists of income from investments in real estate, investments in securities and other income.
(2)Amount represents gross expenses of each fund where the Company has a significant investment. These expenses consist primarily of interest expense, investment management fees, salary expenses and other expenses.
Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the dates indicated:
December 31,
20232022
(in thousands)
Fixed maturities$272,031 $187,628 
Equity securities220 349 
Commercial mortgage and other loans21,070 13,335 
Policy loans35,210 14,525 
Other invested assets43 48 
Short-term investments and cash equivalents5,264 3,750 
Total accrued investment income$333,838 $219,635 

There were no write-downs on accrued investment income for the years ended December 31, 2023 and 2022.
B-46

Net Investment Income
The following table sets forth “Net investment income” by investment type, for the periods indicated: 
Years Ended December 31,
202320222021
 (in thousands)
Fixed maturities, available-for-sale$1,139,581 $589,248 $299,607 
Fixed maturities, trading96,128 55,790 38,778 
Equity securities14,772 8,226 530 
Commercial mortgage and other loans231,994 119,358 63,548 
Policy loans48,118 21,189 69,602 
Other invested assets98,369 101,289 104,375 
Short-term investments and cash equivalents123,857 44,182 712 
Gross investment income1,752,819 939,282 577,152 
Less: investment expenses(77,297)(55,281)(26,917)
Net investment income$1,675,522 $884,001 $550,235 

The carrying value of non-income producing assets included $9.2 million in fixed maturities, available-for-sale and less than $1 million in fixed maturities trading as of December 31, 2023. Non-income producing assets represent investments that had not produced income for the twelve months preceding December 31, 2023.

Realized Investment Gains (Losses), Net 
The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:
Years Ended December 31,
202320222021
(in thousands)
Fixed maturities(1)$(31,193)$(74,005)$(3,514)
Commercial mortgage and other loans(17,854)(18,201)1,535 
Other invested assets36,246 (78,671)(2,737)
Derivatives(2)(3)(1,072,892)507,313 (382,531)
Short-term investments and cash equivalents2,033 (54)353 
Realized investment gains (losses), net(3)$(1,083,660)$336,382 $(386,894)
(1)Excludes fixed maturity securities classified as trading.
(2)Includes the impact of the 2021 Variable Annuities Recapture. See Note 1 for additional information.
(3)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

B-47

Net Unrealized Gains (Losses) on Investments within AOCI
The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated: 
December 31,
202320222021
(in thousands)
Fixed maturity securities, available-for-sale with an allowance$1,987 $4,371 $3,685 
Fixed maturity securities, available-for-sale without an allowance(1,406,265)(2,285,288)540,881 
Derivatives designated as cash flow hedges(1)11,934 138,627 39,896 
Affiliated notes(8,760)(13,189)73 
Other investments(2)(3)(1,089)(1,176)868 
Net unrealized gains (losses) on investments(3)$(1,402,193)$(2,156,655)$585,403 
(1)For more information on cash flow hedges, see Note 4.
(2)Includes net unrealized gains (losses) on certain joint ventures that are strategic in nature and are included in “Other assets.”
(3)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

Repurchase Agreements and Securities Lending
In the normal course of business, the Company sells securities under agreements to repurchase and enters into securities lending transactions. As of both December 31, 2023 and 2022, the Company had no repurchase agreements.
The following table sets forth the composition of “Cash collateral for loaned securities,” which represents the liability to return cash collateral received for the following types of securities loaned as of the dates indicated:
December 31, 2023December 31, 2022
Remaining Contractual Maturities of the AgreementsRemaining Contractual Maturities of the Agreements
Overnight & ContinuousUp to 30 DaysTotalOvernight & ContinuousUp to 30 DaysTotal
(in thousands)
Foreign government bonds$486 $0 $486 $506 $0 $506 
U.S. public corporate securities27,247 0 27,247 7,903 0 7,903 
Foreign public corporate securities13,101 0 13,101 12,873 0 12,873 
Equity securities177,476 0 177,476 65,468 0 65,468 
Total cash collateral for loaned securities(1)$218,310 $0 $218,310 $86,750 $0 $86,750 
(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

B-48

Securities Pledged, Restricted Assets and Special Deposits
The Company pledges as collateral investment securities it owns to unaffiliated parties through certain transactions, including securities lending, securities sold under agreements to repurchase, collateralized borrowings and postings of collateral with derivative counterparties. The following table sets forth the carrying value of investments pledged to third-parties and the carrying amount of the associated liabilities supported by the pledged collateral, as of the dates indicated:
December 31,
20232022
 (in thousands)
Pledged collateral:
Fixed maturity securities, available-for-sale$39,344 $20,553 
Equity securities172,995 63,895 
Total securities pledged$212,339 $84,448 
Liabilities supported by the pledged collateral:
Cash collateral for loaned securities$218,310 $86,750 
Total liabilities supported by the pledged collateral$218,310 $86,750 
In the normal course of its business activities, the Company accepts collateral that can be sold or repledged. The primary sources of this collateral are securities purchased under agreements to resell. As of December 31, 2023 and 2022, there were $25 million and $290 million, respectively, of collateral that could be sold or repledged.
As of December 31, 2023 and 2022, there were fixed maturities, available-for-sale of $3.6 million and $3.9 million, respectively, on deposit with governmental authorities or trustees as required by certain insurance laws.
4. DERIVATIVES AND HEDGING
Types of Derivative Instruments and Derivative Strategies
Interest Rate Contracts
Interest rate swaps, options, and futures are used by the Company to reduce risks from changes in interest rates, manage interest rate exposures arising from mismatches between assets and liabilities and to hedge against changes in their values it owns or anticipates acquiring or selling.
Swaps may be attributed to specific assets or liabilities or to a portfolio of assets or liabilities. Under interest rate swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed upon notional principal amount.
The Company also uses interest rate swaptions, caps and floors to manage interest rate risk. A swaption is an option to enter into a swap with a forward starting effective date. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. In an interest rate cap, the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price. Similarly, in an interest rate floor, the buyer receives payments at the end of each period in which the interest rate is below the agreed strike price. Swaptions, caps and floors are included in interest rate options.

In standardized exchange-traded interest rate futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced investments. The Company enters into exchange-traded futures with regulated futures commission's merchants who are members of a trading exchange.
Equity Contracts
Equity options, total return swaps, and futures are used by the Company to manage its exposure to the equity markets which impacts the value of assets and liabilities it owns or anticipates acquiring or selling.
Equity index options are contracts which will settle in cash based on differentials in the underlying indices at the time of exercise and the strike price. The Company uses combinations of purchases and sales of equity index options to hedge the effects of adverse changes in equity indices within a predetermined range.
B-49

Total return swaps are contracts whereby the Company agrees with counterparties to exchange, at specified intervals, the difference between the return on an asset (or market index) and London Inter-Bank Offered Rate ("LIBOR") or Secured Overnight Financing Rate (“SOFR”) plus an associated funding spread based on a notional amount. The Company generally uses total return swaps to hedge the effect of adverse changes in equity indices.

In standardized exchange-traded equity futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced equity indices. The Company enters into exchange-traded futures with regulated futures commission's merchants who are members of a trading exchange.
Foreign Exchange Contracts
Currency derivatives, including currency swaps and forwards, are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell.
Under currency forwards, the Company agrees with counterparties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company executes forward sales of the hedged currency in exchange for U.S. dollars at a specified exchange rate. The maturities of these forwards correspond with the future periods in which the non-U.S. dollar-denominated earnings are expected to be generated.
Under currency swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party.
Credit Contracts
The Company writes credit protection to gain exposure similar to investment in public fixed maturity cash instruments. With these credit derivatives the Company sells credit protection on a single name reference, or certain index reference, and in return receives a quarterly premium. This premium or credit spread generally corresponds to the difference between the yield on the referenced name (or an index’s referenced names) public fixed maturity cash instruments and swap rates, at the time the agreement is executed. If there is an event of default by the referenced name or one of the referenced names in the index, as defined by the agreement, then the Company is obligated to pay the referenced amount of the contract to the counterparty and receive in return the referenced defaulted security or similar security or (in the case of a credit default index) pay the referenced amount less the auction recovery rate.
In addition to selling credit protection, the Company purchases credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio.
Embedded Derivatives
The Company offers certain products (for example, indexed annuities and index-linked universal life) which may include features that are accounted for as embedded derivatives; related to certain of these derivatives, the Company has entered into reinsurance agreements with both affiliated and unaffiliated parties. Effective April 1, 2016, the Company entered into reinsurance agreements with PALAC and Prudential Insurance. The reinsurance agreement with PALAC was recaptured on July 1, 2021. Additionally, the Company has entered into a reinsurance agreement with an external counterparty, Union Hamilton Reinsurance, Ltd. ("Union Hamilton") effective April 1, 2015. See Note 11 for additional information on the reinsurance agreements.
Effective December 1, 2021, the Company entered into a reinsurance arrangement with FLIAC (previously named PALAC), which includes features that are accounted for as embedded derivatives. See Note 11 for additional information on the reinsurance arrangement.
These embedded derivatives and reinsurance agreements, also accounted for as derivatives, are carried at fair value and marked to market through “Realized investment gains (losses), net” based on the change in value of the underlying contractual guarantees, which are determined using valuation models, as described in Note 5.
B-50

Synthetic Guarantees
The Company sells synthetic guarantees in the form of stable value wrap guarantees on third-party banked owned life insurance contracts. The synthetic guarantees are issued in respect of assets that are owned by the third-party insurer, who invest the assets according to the contract terms agreed to with the Company. The contracts establish policyholder balances and credit interest thereon. The policyholder balances are supported by the underlying assets. In connection with certain policyholder-initiated withdrawals, the contract guarantees that after all underlying assets are liquidated, any remaining policyholder balances will be paid by the Company. These guarantees are accounted for as derivatives and recorded at fair value.
Primary Risks Managed by Derivatives
The table below provides a summary of the gross notional amount and fair value of derivative contracts by the primary underlying risks, excluding embedded derivatives and associated reinsurance recoverables. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account of the netting effects of master netting agreements and cash collateral.
 December 31, 2023December 31, 2022
Primary Underlying Risk/Instrument TypeGross
Notional		Fair ValueGross
Notional		Fair Value
AssetsLiabilitiesAssetsLiabilities
 (in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Currency/Interest Rate
Interest Rate Swaps$3,064 $0 $(238)$3,225 $0 $(316)
Foreign Currency Swaps2,274,636 121,243 (54,044)1,933,343 233,812 (10,462)
Total Derivatives Designated as Hedge Accounting Instruments$2,277,700 $121,243 $(54,282)$1,936,568 $233,812 $(10,778)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps$163,179,764 $6,605,817 $(17,820,436)$138,419,110 $6,757,890 $(17,092,749)
Interest Rate Futures1,332,600 3,055 (210)2,425,500 3,267 (201)
Interest Rate Options29,738,000 189,112 (969,718)8,368,000 123,168 (225,125)
Interest Rate Forwards1,458,000 741 (3,196)1,104,000 11,265 (12,359)
Foreign Currency
Foreign Currency Forwards744,576 1,772 (12,232)364,946 590 (10,423)
Credit
Credit Default Swaps643,280 7,727 0 47,450 346 0 
Currency/Interest Rate
Foreign Currency Swaps2,237,331 96,618 (31,294)2,289,170 194,412 (14,624)
Equity
Total Return Swaps15,049,993 418,084 (803,452)15,958,130 120,341 (175,104)
Equity Options49,247,510 1,600,335 (1,552,706)25,187,516 239,003 (1,112,196)
Futures418,973 1,232 (500)876,790 956 (513)
Synthetic GICs311,302 1 0 0 0 0 
Total Derivatives Not Qualifying as Hedge Accounting Instruments$264,361,329 $8,924,494 $(21,193,744)$195,040,612 $7,451,238 $(18,643,294)
Total Derivatives(1)(2)$266,639,029 $9,045,737 $(21,248,026)$196,977,180 $7,685,050 $(18,654,072)
(1)Excludes embedded derivatives which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $7,402 million and $3,351 million as of December 31, 2023 and 2022, respectively, primarily included in "Policyholders' account balances".
(2)Recorded in “Other invested assets” and “Payables to parent and affiliates” on the Consolidated Statements of Financial Position.

B-51

Offsetting Assets and Liabilities
The following table presents recognized derivative instruments (excluding embedded derivatives and associated reinsurance recoverables), and repurchase and reverse repurchase agreements that are offset in the Consolidated Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Consolidated Statements of Financial Position.
 December 31, 2023
 Gross
Amounts of
Recognized
Financial
Instruments		Gross
Amounts
Offset in the Consolidated
Statements of
Financial
Position		Net
Amounts
Presented in
the Consolidated Statements
of Financial
Position		Financial
Instruments/
Collateral(1)		Net Amount
 (in thousands)
Offsetting of Financial Assets:
Derivatives$9,045,718 $(9,028,019)$17,699 $0 $17,699 
Securities purchased under agreements to resell25,000 0 25,000 0 25,000 
Total Assets$9,070,718 $(9,028,019)$42,699 $0 $42,699 
Offsetting of Financial Liabilities:
Derivatives$21,248,026 $(18,596,679)$2,651,347 $(2,651,347)$0 
Securities sold under agreements to repurchase0 0 0 0 0 
Total Liabilities$21,248,026 $(18,596,679)$2,651,347 $(2,651,347)$0 

 December 31, 2022
 Gross
Amounts of
Recognized
Financial
Instruments		Gross
Amounts
Offset in the Consolidated
Statements of
Financial
Position		Net
Amounts
Presented in
the Consolidated Statements
of Financial
Position		Financial
Instruments/
Collateral(1)		Net Amount
 (in thousands)
Offsetting of Financial Assets:
Derivatives$7,685,050 $(7,637,939)$47,111 $0 $47,111 
Securities purchased under agreements to resell290,000 0 290,000 (290,000)0 
Total Assets$7,975,050 $(7,637,939)$337,111 $(290,000)$47,111 
Offsetting of Financial Liabilities:
Derivatives$18,654,072 $(16,568,912)$2,085,160 $(2,085,160)$0 
Securities sold under agreements to repurchase0 0 0 0 0 
Total Liabilities$18,654,072 $(16,568,912)$2,085,160 $(2,085,160)$0 
(1)Amounts exclude the excess of collateral received/pledged from/to the counterparty.

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above see “Credit Risk” below and Note 15. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset. For additional information on the Company’s accounting policy for securities repurchase and resale agreements, see Note 2 to the Consolidated Financial Statements.
B-52

Cash Flow Hedges
The primary derivative instruments used by the Company in its cash flow hedge accounting relationships are currency swaps and interest rate swaps. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, or equity derivatives in any of its cash flow hedge accounting relationships.
The following tables provide the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, excluding the offset of the hedged item in an effective hedge relationship.
  
Year Ended December 31, 2023
 Realized
Investment
Gains (Losses)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss)Net
Investment
Income		Other
Income
(Loss)		Change in AOCI
 (in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Interest Rate$2 $0 $(118)$0 $72 
Currency/Interest Rate(636)0 43,934 (26,206)(126,765)
Total cash flow hedges(634)0 43,816 (26,206)(126,693)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate25,329 (1,555,807)0 0 0 
Currency(16,012)0 0 0 0 
Currency/Interest Rate(102,238)0 0 (257)0 
Credit14,350 0 0 0 0 
Equity1,744,218 (821,996)0 0 0 
Embedded Derivatives(2,734,793)0 0 0 0 
Total Derivatives Not Qualifying as Hedge Accounting Instruments(1,069,146)(2,377,803)0 (257)0 
Total$(1,069,780)$(2,377,803)$43,816 $(26,463)$(126,693)

B-53

  
Year Ended December 31, 2022
 Realized
Investment
Gains (Losses) (1)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss) (1)Net
Investment
Income		Other
Income
(Loss)		Change in AOCI
 (in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Interest Rate$1 $0 $(8)$0 $(312)
Currency/Interest Rate7,636 0 36,734 34,070 99,043 
Total cash flow hedges7,637 0 36,726 34,070 98,731 
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate661,978 (5,230,085)0 0 0 
Currency18,952 0 0 0 0 
Currency/Interest Rate107,388 0 0 557 0 
Credit(15,904)0 0 0 0 
Equity40,076 1,050,139 0 0 0 
Embedded Derivatives(312,814)0 0 0 0 
Total Derivatives Not Qualifying as Hedge Accounting Instruments499,676 (4,179,946)0 557 0 
Total$507,313 $(4,179,946)$36,726 $34,627 $98,731 

 Year Ended December 31, 2021
 Realized
Investment
Gains (Losses) (1)		Change in Value of Market Risk Benefits, Net of Related Hedging Gain (Loss) (1)Net
Investment
Income		Other
Income
(Loss)		Change in AOCI
 (in thousands)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Interest Rate$2 $0 $47 $0 $(161)
Currency/Interest Rate1,357 0 15,983 11,119 48,169 
Total cash flow hedges1,359 0 16,030 11,119 48,008 
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate(53,626)33,029 0 0 0 
Currency2,006 0 0 0 0 
Currency/Interest Rate44,350 0 0 79 0 
Credit2,892 0 0 0 0 
Equity(299,798)(644,967)0 0 0 
Embedded Derivatives(79,714)0 0 0 0 
Total Derivatives Not Qualifying as Hedge Accounting Instruments(383,890)(611,938)0 79 0 
Total$(382,531)$(611,938)$16,030 $11,198 $48,008 
(1)Amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
B-54

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:
(in thousands)
Balance, December 31, 2020$(8,112)
Amount recorded in AOCI
Interest Rate(112)
Currency/Interest Rate76,628 
Total amount recorded in AOCI76,516 
Amount reclassified from AOCI to income
Interest Rate(49)
Currency/Interest Rate(28,459)
Total amount reclassified from AOCI to income(28,508)
Balance, December 31, 2021$39,896 
Amount recorded in AOCI
Interest Rate(319)
Currency/Interest Rate177,483 
Total amount recorded in AOCI177,164 
Amount reclassified from AOCI to income
Interest Rate7 
Currency/Interest Rate(78,440)
Total amount reclassified from AOCI to income(78,433)
Balance, December 31, 2022$138,627 
Amount recorded in AOCI
Interest Rate(44)
Currency/Interest Rate(109,673)
Total amount recorded in AOCI(109,717)
Amount reclassified from AOCI to income
Interest Rate116 
Currency/Interest Rate(17,092)
Total amount reclassified from AOCI to income(16,976)
Balance, December 31, 2023$11,934 

B-55

The changes in fair value of cash flow hedges are deferred in AOCI and are included in "Net unrealized investment gains (losses)" in the Consolidated Statements of Operations and Comprehensive Income (Loss); these amounts are then reclassified to earnings when the hedged item affects earnings. Using December 31, 2023 values, it is estimated that a pre-tax gain of $19 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending December 31, 2024.

The exposures the Company is hedging with these qualifying cash flow hedges include the variability of the payment or receipt of interest or foreign currency amounts on existing financial instruments.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging.

Credit Derivatives
Credit Derivatives, where the Company has written credit protection on certain index references, have outstanding notional amounts of $643 million and $47 million as of December 31, 2023 and 2022, respectively. These credit derivatives are reported at fair value as an asset of $8 million and $0 million as of December 31, 2023 and 2022, respectively. As of December 31, 2023 the notional amount of these credit derivatives had $542 million in NAIC 3 and $101 million in NAIC 6.
The Company has no exposure on purchased credit protection as of December 31, 2023 and 2022.
Counterparty Credit Risk
The Company is exposed to credit-related losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. The Company manages credit risk by entering into derivative transactions with regulated derivatives exchanges for exchange traded derivatives and its affiliate, Prudential Global Funding LLC (“PGF”), related to its OTC derivatives. PGF, in turn, manages its credit risk by: (i) entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties governed by master netting agreement, as applicable; (ii) trading through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.
Substantially all of the Company’s derivative agreements have zero thresholds which require daily full collateralization by the party in a liability position.
B-56

5. FAIR VALUE OF ASSETS AND LIABILITIES
Fair Value Measurement - Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1 - Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. The Company’s Level 1 assets and liabilities primarily include certain cash equivalents and short-term investments, equity securities, derivative contracts that trade on an active exchange market, separate account assets and other liabilities.
Level 2 - Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company’s Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not trade in active markets because they are not publicly available), certain cash equivalents (primarily commercial paper), short-term investments and certain OTC derivatives and embedded derivatives resulting from reinsurance.
Level 3 - Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value. The Company’s Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured OTC derivative contracts, contracts or contract features pertaining to living benefit features (market risk benefits) of the Company's variable annuity contracts and embedded derivatives associated with the index-linked features of certain universal life and annuity products.
B-57

Assets and Liabilities by Hierarchy Level - The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.
 December 31, 2023
Level 1Level 2Level 3Netting(1)Total
(in thousands)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$0 $975,287 $0 $$975,287 
Obligations of U.S. states and their political subdivisions0 776,627 0 776,627 
Foreign government bonds0 281,304 682 281,986 
U.S. corporate public securities0 9,495,912 0 9,495,912 
U.S. corporate private securities0 4,476,258 513,236 4,989,494 
Foreign corporate public securities0 1,698,965 7,129 1,706,094 
Foreign corporate private securities0 4,137,004 493,978 4,630,982 
Asset-backed securities(2)0 1,928,428 99,122 2,027,550 
Commercial mortgage-backed securities0 773,663 78,115 851,778 
Residential mortgage-backed securities0 396,070 0 396,070 
Subtotal0 24,939,518 1,192,262 26,131,780 
Market risk benefit assets0 0 2,367,243 2,367,243 
Fixed maturities, trading0 2,762,398 34,048 2,796,446 
Equity securities(3)790,346 11,285 28,709 830,340 
Short-term investments31,879 280,228 1,759 313,866 
Cash equivalents447,396 1,196,729 0 1,644,125 
Other invested assets(4)23,432 9,022,304 1 (9,028,019)17,718 
Other assets0 0 224,019 224,019 
Reinsurance recoverables0 0 69,745 69,745 
Receivables from parent and affiliates0 147,984 0 147,984 
Subtotal excluding separate account assets1,293,053 38,360,446 3,917,786 (9,028,019)34,543,266 
Separate account assets(5)(6)176,239 113,747,569 5,985 113,929,793 
Total assets$1,469,292 $152,108,015 $3,923,771 $(9,028,019)$148,473,059 
Market risk benefit liabilities$0 $0 $5,144,401 $$5,144,401 
Policyholders' account balances0 0 7,689,929 7,689,929 
Payables to parent and affiliates0 21,239,770 0 (18,588,647)2,651,123 
Other liabilities(7)8,032 6,340 0 (8,032)6,340 
Total liabilities$8,032 $21,246,110 $12,834,330 $(18,596,679)$15,491,793 
B-58

 December 31, 2022
 Level 1Level 2Level 3Netting(1)Total
 (in thousands)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$0 $281,792 $0 $$281,792 
Obligations of U.S. states and their political subdivisions0 628,200 0 628,200 
Foreign government bonds0 272,738 724 273,462 
U.S. corporate public securities0 6,443,944 0 6,443,944 
U.S. corporate private securities0 3,573,269 243,460 3,816,729 
Foreign corporate public securities0 1,371,354 6,868 1,378,222 
Foreign corporate private securities0 3,509,162 257,168 3,766,330 
Asset-backed securities(2)0 1,421,852 20,502 1,442,354 
Commercial mortgage-backed securities0 573,930 84,222 658,152 
Residential mortgage-backed securities0 336,216 0 336,216 
Subtotal0 18,412,457 612,944 19,025,401 
Market risk benefit assets(8)0 0 1,393,237 1,393,237 
Fixed maturities, trading0 1,936,159 0 1,936,159 
Equity securities108,076 6,403 28,593 143,072 
Short-term investments0 81,215 16,945 98,160 
Cash equivalents0 1,432,182 0 1,432,182 
Other invested assets(4)4,223 7,680,827 0 (7,637,939)47,111 
Other assets0 0 141,041 141,041 
Receivables from parent and affiliates0 148,075 0 148,075 
Subtotal excluding separate account assets112,299 29,697,318 2,192,760 (7,637,939)24,364,438 
Separate account assets(5)(6)102,243 108,682,425 4,645 108,789,313 
Total assets$214,542 $138,379,743 $2,197,405 $(7,637,939)$133,153,751 
Market risk benefit liabilities(8)$0 $0 $5,521,601 $$5,521,601 
Policyholders' account balances0 0 3,502,096 3,502,096 
Payables to parent and affiliates0 18,653,159 0 (16,568,242)2,084,917 
Other liabilities(7)899 (9,496)0 (670)(9,267)
Total liabilities$899 $18,643,663 $9,023,697 $(16,568,912)$11,099,347 

(1)“Netting” amounts represent cash collateral of $(9,569) million and $(8,931) million as of December 31, 2023 and 2022, respectively.
(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.
(3)Equity securities excluded from the fair value hierarchy include a fund for which fair value is measured at net asset value ("NAV") per share (or its equivalent) as a practical expedient. As of December 31, 2023, the fair value of this investment was $14.6 million.
(4)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 NAV per share (or its equivalent) as a practical expedient. At December 31, 2023 and 2022, the fair values of such investments were $67 million and $69 million, respectively.
(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 Consolidated Statements of Financial Position.
(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 a corporate owned life insurance fund, for which fair value is measured at NAV per share (or its equivalent). At December 31, 2023 and 2022, the fair value of such investments was $5,259 million and $5,262 million, respectively.
(7)Other liabilities includes embedded derivatives associated with reinsurance agreements.
(8)Amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

B-59

The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below.
Fixed Maturity Securities - The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices for each security are generally sourced from multiple pricing vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. The pricing hierarchy is updated for new financial products and recent pricing experience with various vendors. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Typical inputs used by these pricing services include but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, and/or estimated cash flow, prepayment speeds, and default rates. If the pricing information received from third-party pricing services is deemed not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service or classify the securities as Level 3. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2.
Internally-developed valuations or indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from the independent pricing services is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may override the information with an internally-developed valuation. As of December 31, 2023 and 2022, overrides on a net basis were not material. Pricing service overrides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy.
The Company conducts several specific price monitoring activities. Daily analyses identify price changes over predetermined thresholds defined at the financial instrument level. Various pricing integrity reports are reviewed on a daily and monthly basis to determine if pricing is reflective of market activity or if it would warrant any adjustments. Other procedures performed include, but are not limited to, reviews of third-party pricing services methodologies, reviews of pricing trends and back testing.
The fair values of private fixed maturities, which are originated by internal private asset managers, are primarily determined using discounted cash flow models. These models primarily use observable inputs that include Treasury or similar base rates plus estimated credit spreads to value each security. The credit spreads are obtained through a survey of private market intermediaries who are active in both primary and secondary transactions, and consider, among other factors, the credit quality and the reduced liquidity associated with private placements. Internal adjustments are made to reflect variation in observed sector spreads. Since most private placements are valued using standard market observable inputs and inputs derived from, or corroborated by, market observable data including, but not limited to observed prices and spreads for similar publicly or privately traded issues, they have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may incorporate significant unobservable inputs, which reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the price of a security, a Level 3 classification is made.
Equity Securities - Equity securities consist principally of investments in common and preferred stock of publicly traded companies, privately traded securities, as well as mutual fund shares. The fair values of most publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using discounted cash flow, earnings multiple and other valuation models that require a substantial level of judgment around inputs and therefore are classified within Level 3. The fair values of mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy.
Derivative Instruments - Derivatives are recorded at fair value either as assets, within “Other invested assets”, or as liabilities within “Payables to parent and affiliates” or "Other liabilities", except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, credit spreads, market volatility, expected returns, NPR, liquidity and other factors.
The Company's exchange-traded futures and options include treasury and equity futures. Exchange-traded futures and options are valued using quoted prices in active markets and are classified within Level 1 in the fair value hierarchy.
B-60

The majority of the Company’s derivative positions are traded in the OTC derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models that utilize actively quoted or observable market inputs from external market data providers, third-party pricing vendors and/or recent trading activity. The Company’s policy is to use mid-market pricing in determining its best estimate of fair value. The fair values of most OTC derivatives, including interest rate and cross-currency swaps, currency forward contracts and credit default swaps are determined using discounted cash flow models. The fair values of European style option contracts are determined using Black-Scholes option pricing models. These models’ key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, NPR, volatility and other factors.
The Company’s cleared interest rate swaps and credit derivatives linked to an index are valued using models that utilize actively quoted or observable market inputs, including SOFR, obtained from external market data providers, third-party pricing vendors and/or recent trading activity. These derivatives are classified as Level 2 in the fair value hierarchy.
Cash Equivalents and Short-Term Investments - Cash equivalents and short-term investments include money market instruments, commercial paper and other highly liquid debt instruments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The remaining instruments in this category are generally fair valued based on market observable inputs and these investments have primarily been classified within Level 2.
Separate Account Assets - Separate account assets include fixed maturity securities, treasuries, equity securities, real estate, mutual funds and commercial mortgage loans for which values are determined consistent with similar instruments described above under “Fixed Maturity Securities” and “Equity Securities”.
Receivables from Parent and Affiliates - Receivables from parent and affiliates carried at fair value include affiliated bonds within the Company’s legal entity where fair value is determined consistent with similar securities described above under “Fixed Maturity Securities” managed by affiliated asset managers.
Other Assets - Consists primarily of deposit assets related to reinsurance agreements using deposit accounting under U.S. GAAP, which include amounts representing the fair value of embedded derivative instruments associated with the index-linked features of certain annuity products. The methods and assumptions used to estimate the fair value are consistent with those described below in “Policyholders' account balances”.
Reinsurance Recoverables - Reinsurance recoverables primarily includes an embedded derivative associated with receivables from modified coinsurance arrangements.
Market Risk Benefits - As a result of the adoption of ASU 2018-12 in the first quarter of 2023, the Company is required to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value. Market risk benefit liabilities (or assets) represent contracts or contract features that provide protection to the contractholder and expose the insurance entity to other than nominal capital market risk, primarily related to deferred annuities with guaranteed minimum benefits in the annuities products including GMDB, GMIB, GMAB, GMWB and GMIWB. The benefits are bundled together and accounted for as single compound market risk benefits using a fair value measurement framework.
The fair value of these market risk benefits is calculated as the present value of expected future benefit payments to contractholders less the present value of expected future rider fees attributable to the market risk benefits. The fair value of these benefit features is based on assumptions a market participant would use in valuing market risk benefits. This methodology could result in either a liability or asset balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally-developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management’s judgment.

The significant inputs to the valuation models for these market risk benefits include capital market assumptions, such as interest rate levels and volatility assumptions, the Company’s market-perceived NPR, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the valuations, the assets and liabilities included in market risk benefits have been reflected within Level 3 in the fair value hierarchy.

B-61

Capital market inputs and actual policyholders’ account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets and volatility. In the risk neutral valuation, the initial swap curve drives the total return used to grow the policyholders’ account values. The Company’s discount rate assumption is based on the SOFR swap curve adjusted for an additional spread relative to SOFR to reflect the Company’s market-perceived 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 the Company issued 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.

Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually, and updated based upon company emerging experience and industry studies, future expectations and other data, including any observable market data. These assumptions are generally updated annually unless a material change that the Company feels is indicative of a long-term trend is observed in an interim period.
Policyholders' Account Balances - The liability for policyholders’ account balances is related to certain embedded derivative instruments associated with certain universal life and annuity products that provide policyholders with index-linked interest credited over contract specified term periods. The fair values of these liabilities are determined using discounted cash flow models which include capital market assumptions such as interest rates and equity index volatility assumptions, the Company’s market-perceived NPR and actuarially determined assumptions for mortality, lapses and projected hedge costs.
As there is no observable active market for these liabilities, the fair value is determined as the present value of account balances paid to policyholders in excess of contractually guaranteed minimums using option pricing techniques for index term periods that contain deposits as of the valuation date, and the expected option cost for future index term periods, where the terms of index crediting rates have not yet been declared by the Company. Premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows are also incorporated in the fair value of these liabilities. Since the valuation of these liabilities require the use of management’s judgment to determine these risk premiums and the use of unobservable inputs, these liabilities are reflected within Level 3 in the fair value hierarchy.
Capital market inputs, including interest rates and equity market volatility, and actual policyholders’ account values are updated each quarter. Actuarial assumptions are reviewed at least annually and updated based upon emerging experience, future expectations and other data, including any observable market data. Aside from these annual updates, assumptions are generally updated only if a material change is observed in an interim period that the Company believes is indicative of a long-term trend.
Other Liabilities - Other liabilities primarily includes an embedded derivative associated with certain funds withheld reinsurance arrangements that are described in Note 11. The fair value of the liability is determined based on the valuation of the underlying funds withheld assets identified to support the payable due to the applicable reinsurance counterparties.
B-62

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities - The tables below present quantitative information regarding significant internally-priced Level 3 assets and liabilities.
 December 31, 2023
 Fair Value    Valuation  
Techniques		Unobservable 
Inputs  		Minimum  MaximumWeighted
Average		Impact of 
Increase in Input on Fair Value(1)
 (in thousands)
Assets:
Corporate securities(2)$81,635 Discounted cash flowDiscount rate6.98 %20 %9.73 %Decrease
LiquidationLiquidation value63.62 %63.62 %63.62 %Increase
Commercial mortgage-backed securities$78,115 Discounted cash flowLiquidity premium0.60 %0.75 %0.71 %Decrease
Market risk benefit assets(4)$2,367,243 Discounted cash flowLapse rate(5)1 %20 %Increase
Spread over SOFR(6)0.41 %1.91 %Increase
Utilization rate(7)38 %95 %Decrease
Withdrawal rateSee table footnote (8) below.
Mortality rate(9)0 %15 %Increase
Equity volatility curve15 %25 %Decrease
Other assets$224,019 Discounted cash flowLapse rate(5)1 %80 %Increase
Spread over SOFR(6)0.41 %1.85 %Increase
Mortality rate(9)0 %23 %Increase
Equity volatility curve6 %25 %Decrease
Option Budget(11)(1)%7 %Decrease
Liabilities:
Market risk benefit liabilities(4)$5,144,401 Discounted cash flowLapse rate(5)1 %20 %Decrease
Spread over SOFR(6)0.41 %1.91 %Decrease
Utilization rate(7)38 %95 %Increase
Withdrawal rateSee table footnote (8) below.
Mortality rate(9)0 %15 %Decrease
Equity volatility curve15 %25 %Increase
Policyholders' account balances(10)$7,689,929 Discounted cash flowLapse rate(5)1 %80 %Decrease
Spread over SOFR(6)0.41 %1.85 %Decrease
Mortality rate(9)0 %23 %Decrease
Equity volatility curve6 %25 %Increase
Option Budget(11)(1)%7 %Increase

B-63

 December 31, 2022
 Fair ValueValuation 
Techniques		Unobservable 
Inputs   		MinimumMaximumWeighted
Average		Impact of 
Increase in Input on Fair Value(1)
 (in thousands)
Assets:
Corporate securities(2)$408,494 Discounted cash flowDiscount rate9.77 %20 %16.53 %Decrease
Market ComparablesEBITDA multiples(3)2.2 X23.5 X8.1 XIncrease
Market risk benefit assets(4)(12)$1,393,237 Discounted cash flowLapse rate(5)1 %20 %Increase
Spread over SOFR(6)0.50 %2.20 %Increase
Utilization rate(7)38 %95 %Decrease
Withdrawal rateSee table footnote (8) below.
Mortality rate(9)0 %15 %Increase
Equity volatility curve18 %26 %Decrease
Liabilities:
Market risk benefit liabilities(4)(12)$5,521,601 Discounted cash flowLapse rate(5)1 %20 %Decrease
Spread over SOFR(6)0.50 %2.20 %Decrease
Utilization rate(7)38 %95 %Increase
Withdrawal rateSee table footnote (8) below.
Mortality rate(9)0 %15 %Decrease
Equity volatility curve18 %26 %Increase
Policyholders' account balances(10)$3,502,096 Discounted cash flowLapse rate(5)1 %80 %Decrease
Spread over SOFR(6)0.22 %2.26 %Decrease
Mortality rate(9)0 %23 %Decrease
Equity volatility curve6 %30 %Increase
Option Budget(11)(2)%6 %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.
(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)Market risk benefits primarily represent fair value for all living benefit guarantees including accumulation, withdrawal and income benefits. Since the valuation methodology for these assets and 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.
(5)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 balances.
(6)The spread over the SOFR swap curve and the LIBOR swap curve represents the premium added to the proxy for the risk-free rate (SOFR or LIBOR, as applicable) 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 as of December 31, 2023 and 2022, respectively. 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 are insurance liabilities and are therefore senior to debt. Effective April 2023, the Company entered into an agreement with The Ohio National Life Insurance Company, now known as AuguStar Life Insurance Company ("AuguStar"), an affiliate of Constellation Insurance Holdings, Inc., to reinsure approximately $10 billion of account values of PDI traditional variable annuity contracts with guaranteed living benefits. See Note 11 for additional information regarding this transaction. As a result of this transaction, a ceded MRB asset balance was established to fair value the reinsurance reimbursements to the Company. The establishment of the fair value also required an estimate of NPR for AuguStar, which may differ from that of the Company's; however, the NPR spreads for AuguStar were developed using a methodology similar to that of the Company.

B-64

(7)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.
(8)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of December 31, 2023 and 2022, the minimum withdrawal rate assumption is 81% and 77%, respectively. As of December 31, 2023 and 2022, 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%.
(9)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 50 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.
(10)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.
(11)Option budget estimates the expected long-term cost of options used to hedge exposures associated with equity price and interest rate changes. The level of option budget determines future costs of the options, which impacts the growth in account value and the valuation of embedded derivatives.
(12)Amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

Interrelationships Between Unobservable Inputs - In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another, or multiple, inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:
Corporate Securities – The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. During weaker economic cycles, as the expectations of default increases, credit spreads widen, which results in a decrease in fair value.
Commercial Mortgage-backed Securities – Interrelationships may exist between the prepayment rate, the default rate and/or loss severity, depending on specific market conditions. In stronger economic cycles, prepayment rates are generally driven by underlying property appreciation and subsequent cash-out refinances, while default rates and loss severity may be lower. During weaker economic cycles, prepayment rates may decline, while default rates and loss severity increase. Generally, a change in the assumption used for the probability of default would be accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates. The impact of these factors on average life and economics varies with the deal structure and tranche subordination.
Market Risk Benefits – The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

B-65

Changes in Level 3 Assets and Liabilities - The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods (excluding MRBs disclosed in Note 10). When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.
Year Ended December 31, 2023(6)(7)
Fair Value, beginning of periodTotal realized and unrealized gains (losses)PurchasesSalesIssuancesSettlementsOther(1)Transfers into Level 3Transfers out of Level 3Fair Value, end of periodUnrealized gains (losses) for assets still held(2)
(in thousands)
Fixed maturities, available-for-sale:
Foreign government$724 $(42)$0 $0 $0 $0 $0 $0 $0 $682 $(53)
Corporate securities(3)507,496 85 567,936 (39,722)0 (130,688)3,129 117,671 (11,564)1,014,343 (973)
Structured securities(4)104,724 (4,442)241,159 (37)0 (2,147)(2,222)4,537 (164,335)177,237 (4,298)
Other assets:
Fixed maturities, trading0 1,083 36,284 0 0 0 2,931 0 (6,250)34,048 1,225 
Equity securities28,593 (928)2,531 0 0 0 (1,487)0 0 28,709 (928)
Other invested assets0 1 0 0 0 0 0 0 0 1 1 
Short-term investments16,945 2,573 4,922 0 0 (21,322)(1,359)0 0 1,759 0 
Other assets141,041 (40,062)145,922 0 0 (22,882)0 0 0 224,019 (62,944)
Reinsurance recoverables(5)0 (3,034)75,143 0 0 0 (2,364)0 0 69,745 (3,034)
Separate account assets4,645 408 2,216 (1,124)0 (160)0 0 0 5,985 406 
Liabilities:
Policyholders' account balances(5)(3,502,096)(2,641,436)0 0 (1,653,028)0 106,631 0 0 (7,689,929)(360,807)
B-66

Year Ended December 31, 2023(6)
Total realized and unrealized gains (losses)Unrealized gains (losses) for assets still held(2)
Realized investment gains (losses), netOther income (loss)Interest credited to policyholders' account balancesIncluded in other comprehensive income (loss)Net investment incomeRealized investment gains (losses), netOther income (loss)Interest credited to policyholders' account balancesIncluded in other comprehensive income (loss)
(in thousands)
Fixed maturities, available-for-sale$(2,081)$0 $0 $(2,808)$490 $(2,904)$0 $0 $(2,420)
Other assets:
Fixed maturities, trading0 1,080 0 0 3 0 1,225 0 0 
Equity securities0 (928)0 0 0 0 (928)0 0 
Other invested assets1 0 0 0 0 1 0 0 0 
Short-term investments1,857 0 0 (73)789 0 0 0 0 
Other assets(40,062)0 0 0 0 (62,944)0 0 0 
Reinsurance recoverables(3,034)0 0 0 0 (3,034)0 0 0 
Separate account assets0 0 408 0 0 0 0 406 0 
Liabilities:
Policyholders' account balances(2,641,436)0 0 0 0 (360,807)0 0 0 
Year Ended December 31, 2022(6)(7)
Fair Value, beginning of periodTotal realized and unrealized gains (losses)PurchasesSalesIssuancesSettlementsOther(1)Transfers into Level 3Transfers out of Level 3Fair Value, end of periodUnrealized gains (losses) for assets still held(2)
(in thousands)
Fixed maturities, available-for-sale:
Foreign government$150 $73 $501 $0 $0 $0 $0 $0 $0 $724 $69 
Corporate securities(3)385,634 (47,296)323,603 (62,827)0 (102,377)106,408 10,475 (106,124)507,496 (45,235)
Structured securities(4)173,944 (26,318)81,576 0 0 (1,993)0 0 (122,485)104,724 (28,489)
Other assets:
Equity securities12,472 (3,310)10,000 (230)0 0 9,661 0 0 28,593 (3,872)
Short-term investments0 114 18,046 0 0 (8,560)7,290 55 0 16,945 73 
Other assets72,937 44,096 49,677 0 0 (3,855)(21,814)0 0 141,041 47,951 
Separate account assets0 (70)7,715 (3,000)0 0 0 0 0 4,645 (70)
Liabilities:
Policyholders' account balances(5)(3,245,773)(409,912)0 0 (1,094,824)0 1,248,413 0 0 (3,502,096)(289,548)
B-67

Year Ended December 31, 2022(6)
Total realized and unrealized gains (losses)Unrealized gains (losses) for assets still held(2)
Realized investment gains (losses), netOther income (loss)Interest credited to policyholders' account balancesIncluded in other comprehensive income (loss)Net investment incomeRealized investment gains (losses), netOther income (loss)Interest credited to policyholders' account balancesIncluded in other comprehensive income (loss)
(in thousands)
Fixed maturities, available-for-sale$(16,829)$0 $0 $(56,470)$(242)$(14,416)$0 $0 $(59,239)
Other assets:
Equity securities0 (3,310)0 0 0 0 (3,872)0 0 
Short-term investments77 0 0 73 (36)0 0 0 73 
Other assets44,096 0 0 0 0 47,951 0 0 0 
Separate account assets0 0 (70)0 0 0 0 (70)0 
Liabilities:
Policyholders' account balances(409,912)0 0 0 0 (289,548)0 0 0 
Year Ended December 31, 2021(6)
Total realized and unrealized gains (losses)Unrealized gains (losses) for assets still held(2)
Realized investment gains (losses), netOther income (loss)Included in other comprehensive income (loss)Net investment incomeRealized investment gains (losses), netOther income (loss)Included in other comprehensive income (loss)
(in thousands)
Fixed maturities, available-for-sale$(832)$0 $(6,318)$388 $(1,778)$0 $(5,346)
Other assets:
Fixed maturities, trading0 46 0 0 0 46 0 
Equity securities0 709 0 0 0 709 0 
Short-term investments181 0 0 0 0 0 0 
Cash equivalents147 0 0 0 0 0 0 
Other assets1,258 0 0 0 359 0 0 
Liabilities:
Policyholders' account balances(78,321)0 0 0 5,476 0 0 

(1)"Other" largely represents non-cash moves related to novated variable indexed annuities under the reinsurance agreement with FLIAC. See Note 11 for more details regarding these transactions. In addition, for the prior year Policyholders' account balances represents an out of period adjustment related to certain portions of reinsurance activity that had been incorrectly recorded on the balance sheet during the fourth quarter of 2021.
(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 and commercial mortgage-backed securities.
(5)Purchases/issuances and settlements for Policyholders' account balances and Reinsurance recoverables are presented net in the rollforward.
(6)Effective January 1, 2021, Future policy benefits previously included in "Changes in Level 3 Assets and Liabilities" are now reported as Market Risk Benefits. See Note 10 for additional information.
(7)Excludes MRB assets of $2,367 million and $1,393 million and MRB liabilities of $5,144 million and $5,522 million as of December 31, 2023 and 2022, respectively. See Note 10 for additional information.

Nonrecurring Fair Value Measurements - The following tables represent information for assets measured at fair value on a nonrecurring basis. The fair value measurement is nonrecurring as these assets are measured at fair value only when there is a triggering event (e.g., an evidence of impairment). Assets included in the table are those that were impaired during the respective reporting periods and that are still held as of the reporting date. The estimated fair values for these amounts were determined using significant unobservable inputs (Level 3). For the years ended December 31, 2023 and 2021, there were no triggering events.
B-68

Years Ended December 31,
202320222021
(in thousands)
Equity in earnings of operating joint venture, net of taxes
Investment in joint venture$0 $(75,000)$0 
Gains (Losses):
Other invested assets$0 $(11,125)$0 
December 31, 2023December 31, 2022
(in thousands)
Carrying value after measurement as of period end:
Investment in joint venture(1)$0 $60,456 
(1)Reported carrying value includes value as of the measurement period of June 30, 2022 for "Investment in joint venture".
Fair Value of Financial Instruments
The tables below present the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.
 December 31, 2023
Fair ValueCarrying
Amount(1)
Level 1Level 2Level 3TotalTotal
 (in thousands)
Assets:
Commercial mortgage and other loans$0 $0 $5,918,386 $5,918,386 $6,122,721 
Policy loans0 0 1,472,677 1,472,677 1,472,677 
Short-term investments66,500 0 0 66,500 66,500 
Cash and cash equivalents470,668 24,999 0 495,667 495,667 
Accrued investment income0 333,838 0 333,838 333,838 
Reinsurance recoverables0 0 22,155 22,155 23,537 
Receivables from parent and affiliates0 184,599 0 184,599 184,599 
Other assets0 80,646 1,489,983 1,570,629 1,570,629 
Total assets$537,168 $624,082 $8,903,201 $10,064,451 $10,270,168 
Liabilities:
Policyholders’ account balances - investment contracts$0 $955,647 $5,396,885 $6,352,532 $6,368,061 
Cash collateral for loaned securities0 218,310 0 218,310 218,310 
Short-term debt to affiliates0 176,110 0 176,110 180,411 
Payables to parent and affiliates0 16,573 0 16,573 16,573 
Other liabilities0 2,121,861 32,423 2,154,284 2,154,283 
Total liabilities$0 $3,488,501 $5,429,308 $8,917,809 $8,937,638 
B-69

 December 31, 2022
  
Fair ValueCarrying
Amount(1)
 Level 1Level 2Level 3TotalTotal
 (in thousands)
Assets:
Commercial mortgage and other loans$0 $0 $4,602,177 $4,602,177 $4,928,680 
Policy loans0 0 505,367 505,367 505,367 
Short-term investments26,331 0 0 26,331 26,331 
Cash and cash equivalents675,445 290,000 0 965,445 965,445 
Accrued investment income0 219,635 0 219,635 219,635 
Reinsurance recoverables0 0 25,127 25,127 27,183 
Receivables from parent and affiliates0 76,846 0 76,846 76,846 
Other assets0 94,200 730,682 824,882 824,882 
Total assets$701,776 $680,681 $5,863,353 $7,245,810 $7,574,369 
Liabilities:
Policyholders’ account balances - investment contracts$0 $1,192,271 $3,141,000 $4,333,271 $4,351,945 
Cash collateral for loaned securities0 86,750 0 86,750 86,750 
Short-term debt to affiliates0 120,325 0 120,325 126,250 
Long-term debt to affiliates0 173,905 0 173,905 185,563 
Payables to parent and affiliates0 41,654 0 41,654 41,654 
Other liabilities0 1,269,615 33,250 1,302,865 1,302,866 
Total liabilities$0 $2,884,520 $3,174,250 $6,058,770 $6,095,028 
(1)Carrying values presented herein differ from those in the Company’s Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.
The fair values presented above have been determined by using available market information and by applying market valuation methodologies, as described in more detail below.
Commercial Mortgage and Other Loans
The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate or foreign government bond rate (for non-U.S. dollar-denominated loans) plus an appropriate credit spread for loans of similar quality, average life and currency. The quality ratings for these loans, a primary determinant of the credit spreads and a significant component of the pricing process, are based on an internally-developed methodology. Certain commercial mortgage loans are valued incorporating other factors, including the terms of the loans, the relative strength of the underlying collateral, the principal exit strategies for the loans, prevailing interest rates and credit risk.
Policy Loans
The Company's valuation technique for policy loans is to discount cash flows at the current policy loan coupon rate. Policy loans are fully collateralized by the cash surrender value of underlying insurance policies. As a result, the carrying value of the policy loans approximates the fair value.
Short-Term Investments, Cash and Cash Equivalents, Accrued Investment Income, Receivables from Parent and Affiliates
The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. These assets include: certain short-term investments, which are not securities, recorded at amortized cost; cash and cash equivalent instruments, accrued investment income.
Reinsurance Recoverables
Reinsurance recoverables include corresponding receivables associated with modified coinsurance arrangements and other reinsurance arrangements between the Company and related parties. See Note 11 for additional information about the Company's reinsurance arrangements.
B-70

Other Assets
Other assets primarily consists of deposit assets related to the reinsurance agreements with Pruco Life and a third-party reinsurer, which uses deposit accounting under U.S. GAAP. The deposit assets are adjusted as amounts are paid, consistent with the underlying contracts. Also included are other assets that meet the definition of financial instruments, including receivables such as unsettled trades and accounts receivable.
Policyholders’ Account Balances - Investment Contracts
Only the portion of policyholders’ account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities, payout annuities and other similar contracts without life contingencies, fair values are generally derived using discounted projected cash flows based on interest rates that are representative of the Company’s financial strength ratings, and hence reflect the Company’s NPR. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value.
Cash Collateral for Loaned Securities
Cash collateral for loaned securities represents the collateral received or paid in connection with loaning or borrowing securities. Due to the short-term nature of these transactions, the carrying value approximates fair value.
Debt
The fair value of short-term and long-term debt is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. These fair values consider the Company’s NPR. Discounted cash flow models predominately use market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities. For debt with a maturity of less than 90 days, the carrying value approximates fair value.
Other Liabilities and Payables to Parent and Affiliates
Other liabilities includes the funds withheld liability for assets retained under the reinsurance agreement that corresponds to the deposit assets above in "Other Assets". Also included are unsettled trades, drafts, and escrow deposits. Payables to parent and affiliates is primarily related to accrued expense payables. Due to the short term until settlement of most of these liabilities, the Company believes that carrying value approximates fair value.
B-71

6. DEFERRED POLICY ACQUISITION COSTS, DEFERRED REINSURANCE AND DEFERRED SALES INDUCEMENTS
Deferred Policy Acquisition Costs
The following table shows a rollforward for the lines of business that contain DAC balances, along with a reconciliation to the Company's total DAC balance: 
Fixed AnnuitiesVariable AnnuitiesTerm LifeVariable / Universal LifeTotal
 (in thousands)
Balance, January 1, 2021$0 $0 $462,099 $2,030,983 $2,493,082 
Capitalization576 32,590 168,760 653,864 855,790 
Amortization expense(1,008)(146,952)(53,775)(123,860)(325,595)
Other(1)84,913 3,921,094 0 24 4,006,031 
Balance, December 31, 202184,481 3,806,732 577,084 2,561,011 7,029,308 
Capitalization31,494 270,864 127,541 532,678 962,577 
Amortization expense(13,724)(341,142)(55,423)(109,987)(520,276)
Other(2)0 0 (365)(540,819)(541,184)
Balance, December 31, 2022102,251 3,736,454 648,837 2,442,883 6,930,425 
Capitalization117,851 241,136 159,000 576,920 1,094,907 
Amortization expense(22,165)(326,444)(63,949)(121,877)(534,435)
Other(3)0 (393,385)0 (1)(393,386)
Balance, December 31, 2023$197,937 $3,257,761 $743,888 $2,897,925 $7,097,511 
(1)    Includes the impact of the 2021 Variable Annuities Recapture as well as the assuming of DAC upon Affiliated reinsurance agreement with FLIAC within Fixed Annuities. See Note 1 and Note 11 for additional information.
(2)    Includes the impact of the reinsurance agreement with Lotus Re. See Note 11 for additional information.
(3)    Includes the impact of the reinsurance agreement with AuguStar. See Note 11 for additional information.
Deferred Reinsurance Losses

The following table shows a rollforward for the lines of business that contain DRL balances, along with a reconciliation to the Company's total DRL balance:

Variable AnnuitiesTerm LifeTotal
(in thousands)
Balance, January 1, 2021$274,415 $87,932 $362,347 
Amortization expense(14,847)(9,506)(24,353)
Other(4,991)0 (4,991)
Balance, December 31, 2021254,577 78,426 333,003 
Amortization expense(31,057)(9,048)(40,105)
Other(5)0 (5)
Balance, December 31, 2022223,515 69,378 292,893 
Amortization expense(29,403)(8,374)(37,777)
Other(1)0 (1)
Balance, December 31, 2023$194,111 $61,004 $255,115 


B-72

Deferred Reinsurance Gains

The following table shows a rollforward for the lines of business that contain DRG balances, along with a reconciliation to the Company's total DRG balance:
Fixed AnnuitiesVariable AnnuitiesVariable / Universal LifeTotal
(in thousands)
Balance, January 1, 2021$0 $0 $174,259 $174,259 
Amortization(657)0 (7,365)(8,022)
Other(1)78,795 0 7,704 86,499 
Balance, December 31, 202178,138 0 174,598 252,736 
Amortization(6,437)0 (79,952)(86,389)
Other(2)(13,803)0 1,340,312 1,326,509 
Balance, December 31, 202257,898 0 1,434,958 1,492,856 
Amortization(9,790)(15,612)(71,462)(96,864)
Other(3)(34)277,333 0 277,299 
Balance, December 31, 2023$48,074 $261,721 $1,363,496 $1,673,291 
(1)    Includes the impact of the 2021 Variable Annuities Recapture.
(2)    Includes $1,352 million deferred gain related to the reinsurance agreement with Lotus Re, entered into January 1, 2022.
(3)    Includes the impact of the reinsurance agreement with AuguStar. See Note 11 for additional information.

Deferred Sales Inducements

The following table shows a rollforward of DSI balances for variable annuity products, which is the only line of business that contains a DSI balance, along with a reconciliation to the Company's total DSI balance:

Variable Annuities
(in thousands)
Balance, January 1, 2021$0 
Capitalization167 
Amortization expense(17,885)
Other(1)432,337 
Balance, December 31, 2021414,619 
Capitalization676 
Amortization expense(33,791)
Balance, December 31, 2022381,504 
Capitalization1,514 
Amortization expense(31,625)
Other31 
Balance, December 31, 2023$351,424 
(1)    Includes the impact of the 2021 Variable Annuities Recapture.

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7. SEPARATE ACCOUNTS
The Company issues variable annuity and variable life insurance contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. Most variable annuity and variable life insurance contracts are offered with both separate and general account options. See Note 9 for additional information.
The assets supporting the variable portion of variable annuity and variable life insurance contracts are carried at fair value and reported as “Separate account assets” with an equivalent amount reported as “Separate account liabilities”. The liabilities related to the net amount at risk are reflected within future policy benefits or market risk benefits. Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in “Policy charges and fee income” and changes in liabilities for minimum guarantees are generally included in “Policyholders’ benefits” or “Realized investment gains (losses), net”.

Separate Account Assets

The aggregate fair value of assets, by major investment asset category, supporting separate accounts is as follows:

December 31, 2023December 31, 2022
(in thousands)
Asset Type:
U.S. Treasury securities and obligations of U.S. government authorities and agencies$2,954 $2,510 
 U.S. corporate securities9,504 8,702 
 Foreign corporate securities1,763 1,420 
Mortgage-backed securities186 276 
Mutual funds:
Equity72,614,821 67,144,660 
Fixed Income37,065,162 38,109,374 
Other4,101,661 3,441,016 
Equity securities104,159 49,260 
Other invested assets5,258,900 5,262,178 
Short-term investments2,126 1,237 
   Cash and cash equivalents27,249 30,613 
Total$119,188,485 $114,051,246 

For the periods ended December 31, 2023, 2022 and 2021, there were no transfers of assets, other than cash, from the general account to a separate account; therefore, no gains or losses were recorded.

B-74

Separate Account Liabilities
The balances of and changes in separate account liabilities as of and for the periods indicated are as follows:
Year Ended December 31, 2023
Variable AnnuitiesVariable LifeTotal
(in thousands)
Balance, beginning of period$91,785,447 $22,265,799 $114,051,246 
     Deposits440,707 2,745,751 3,186,458 
     Investment performance12,219,777 4,310,729 16,530,506 
     Policy charges(2,296,859)(829,539)(3,126,398)
     Surrenders and withdrawals(9,687,372)(347,955)(10,035,327)
     Benefit payments(73,791)(226,242)(300,033)
     Net transfers (to) from general account(1)(15,121)(1,175,575)(1,190,696)
     Other10,333 62,396 72,729 
Balance, end of period$92,383,121 $26,805,364 $119,188,485 
Cash surrender value(2)$91,201,190 $23,700,726 $114,901,916 
Year Ended December 31, 2022
Variable AnnuitiesVariable LifeTotal
(in thousands)
Balance, beginning of period$123,977,624 $25,820,204 $149,797,828 
Deposits658,695 2,275,000 2,933,695 
Investment performance(21,600,783)(4,270,091)(25,870,874)
Policy charges(2,513,831)(767,168)(3,280,999)
Surrenders and withdrawals(8,481,231)(339,931)(8,821,162)
Benefit payments(62,586)(278,140)(340,726)
Net transfers (to) from general account(206,269)(213,752)(420,021)
Other13,828 39,677 53,505 
Balance, end of period$91,785,447 $22,265,799 $114,051,246 
Cash surrender value(2)$90,208,083 $19,575,562 $109,783,645 
B-75

Year Ended December 31, 2021
Variable AnnuitiesVariable LifeTotal
(in thousands)
Balance, beginning of period$124,275,626 $21,464,796 $145,740,422 
Deposits669,497 2,397,739 3,067,236 
Investment performance13,179,092 3,482,547 16,661,639 
Policy charges(2,937,255)(703,264)(3,640,519)
Surrenders and withdrawals(11,147,772)(403,558)(11,551,330)
Benefit payments(74,953)(289,298)(364,251)
Net transfers (to) from general account3,449 (164,405)(160,956)
Other9,940 35,647 45,587 
Balance, end of period$123,977,624 $25,820,204 $149,797,828 
Cash surrender value(2)$121,847,584 $23,174,409 $145,021,993 
(1) Variable life includes $900 million of funding for a policy loan to an affiliated irrevocable trust. See Note 15 for additional information.
(2) Represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges.

8. LIABILITY FOR FUTURE POLICY BENEFITS
Liability for Future Policy Benefits primarily consists of the following sub-components, which are discussed in greater detail below.

•Benefit Reserves;
•Deferred Profit Liability; and
•Additional Insurance Reserves

In 2023, the Company recognized an immaterial impact to net income attributable to the actuarial assumption update for direct and assumed benefit reserves. Additionally, the Company recognized an unfavorable impact to net income attributable to the actuarial assumption update and other refinements for direct and assumed additional insurance reserves, primarily due to unfavorable model refinements, partially offset by favorable updates to economic assumptions, including expected future rates of returns on investments on universal life policies with secondary guarantees.

In 2022, the Company recognized an unfavorable impact to net income attributable to the actuarial assumption update for direct and assumed benefit reserves, primarily due to updates to mortality assumptions on individual term life insurance. Additionally, the Company recognized an unfavorable impact to net income attributable to the actuarial assumption update and other refinements for direct and assumed additional insurance reserves, primarily due to updates to policyholder behavior assumptions on universal life policies with secondary guarantees.

In 2021, the actuarial assumption update for direct and assumed benefit reserves and additional insurance reserves was immaterial.

B-76

Benefit Reserves

The balances of and changes in Benefit Reserves as of and for the periods indicated consist of the three tables presented below: Present Value of Expected Net Premiums rollforward, Present Value of Expected Future Policy Benefits rollforward, and Net Liability for Future Policy Benefits.

Year Ended December 31, 2023
Present Value of Expected Net Premiums
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, beginning of period$10,911,794 $0 $10,911,794 
Effect of cumulative changes in discount rate assumptions, beginning of period554,896 0 554,896 
Balance at original discount rate, beginning of period11,466,690 0 11,466,690 
Effect of assumption update(790)0 (790)
Effect of actual variances from expected experience and other activity(200,513)(989)(201,502)
Adjusted balance, beginning of period11,265,387 (989)11,264,398 
Issuances712,495 36,646 749,141 
Net premiums / considerations collected(1,345,514)(35,657)(1,381,171)
Interest accrual521,176 0 521,176 
Balance at original discount rate, end of period11,153,544 0 11,153,544 
Effect of cumulative changes in discount rate assumptions, end of period(225,711)0 (225,711)
Balance, end of period$10,927,833 $0 $10,927,833 

Year Ended December 31, 2023
Present Value of Expected Future Policy Benefits
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, beginning of period$17,835,251 $204,727 $18,039,978 
Effect of cumulative changes in discount rate assumptions, beginning of period962,035 24,876 986,911 
Balance at original discount rate, beginning of period18,797,286 229,603 19,026,889 
Effect of assumption update(1,044)0 (1,044)
Effect of actual variances from expected experience and other activity(263,243)6,991 (256,252)
Adjusted balance, beginning of period18,532,999 236,594 18,769,593 
Issuances712,495 36,646 749,141 
Interest accrual895,023 8,440 903,463 
Benefit payments(1,386,583)(33,287)(1,419,870)
Other adjustments3,844 (84)3,760 
Balance at original discount rate, end of period18,757,778 248,309 19,006,087 
Effect of cumulative changes in discount rate assumptions, end of period(331,571)(19,521)(351,092)
Balance, end of period$18,426,207 $228,788 $18,654,995 
Other, end of period1,765 
Total balance, end of period$18,656,760 

B-77

Year Ended December 31, 2023
Net Liability for Future Policy Benefits (Benefit Reserves)
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, end of period, pre-flooring$7,498,374 $228,788 $7,727,162 
Flooring impact, end of period44 0 44 
Balance, end of period, post-flooring7,498,418 228,788 7,727,206 
Less: Reinsurance recoverable6,817,488 18,489 6,835,977 
Balance after reinsurance recoverable, end of period, post-flooring$680,930 $210,299 $891,229 

Year Ended December 31, 2022
Present Value of Expected Net Premiums
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, beginning of period$12,485,056 $0 $12,485,056 
Effect of cumulative changes in discount rate assumptions, beginning of period(1,826,120)0 (1,826,120)
Balance at original discount rate, beginning of period10,658,936 0 10,658,936 
Effect of assumption update1,295,294 0 1,295,294 
Effect of actual variances from expected experience and other activity(112,661)(1,143)(113,804)
Adjusted balance, beginning of period11,841,569 (1,143)11,840,426 
Issuances439,874 30,469 470,343 
Net premiums / considerations collected(1,339,902)(29,326)(1,369,228)
Interest accrual525,149 0 525,149 
Balance at original discount rate, end of period11,466,690 0 11,466,690 
Effect of cumulative changes in discount rate assumptions, end of period(554,896)0 (554,896)
Balance, end of period$10,911,794 $0 $10,911,794 


Year Ended December 31, 2022
Present Value of Expected Future Policy Benefits
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, beginning of period$20,937,097 $237,065 $21,174,162 
Effect of cumulative changes in discount rate assumptions, beginning of period(3,607,275)(16,704)(3,623,979)
Balance at original discount rate, beginning of period17,329,822 220,361 17,550,183 
Effect of assumption update1,756,995 0 1,756,995 
Effect of actual variances from expected experience and other activity(206,175)(1,639)(207,814)
Adjusted balance, beginning of period18,880,642 218,722 19,099,364 
Issuances439,874 30,469 470,343 
Interest accrual888,525 7,836 896,361 
Benefit payments(1,416,823)(27,138)(1,443,961)
Other adjustments5,068 (286)4,782 
Balance at original discount rate, end of period18,797,286 229,603 19,026,889 
Effect of cumulative changes in discount rate assumptions, end of period(962,035)(24,876)(986,911)
Balance, end of period$17,835,251 $204,727 $18,039,978 
Other, end of period2,127 
Total balance, end of period$18,042,105 
B-78


Year Ended December 31, 2022
Net Liability for Future Policy Benefits (Benefit Reserves)
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, end of period, pre-flooring$6,923,457 $204,727 $7,128,184 
Flooring impact, end of period0 0 0 
Balance, end of period, post-flooring6,923,457 204,727 7,128,184 
Less: Reinsurance recoverable6,497,257 16,460 6,513,717 
Balance after reinsurance recoverable, end of period, post-flooring$426,200 $188,267 $614,467 


Year Ended December 31, 2021
Present Value of Expected Net Premiums
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, beginning of period$12,791,701 $0 $12,791,701 
Effect of cumulative changes in discount rate assumptions, beginning of period(2,461,823)0 (2,461,823)
Balance at original discount rate, beginning of period10,329,878 0 10,329,878 
Effect of assumption update39,089 0 39,089 
Effect of actual variances from expected experience and other activity246,712 0 246,712 
Adjusted balance, beginning of period10,615,679 0 10,615,679 
Issuances747,703 29,700 777,403 
Net premiums / considerations collected(1,193,642)(29,700)(1,223,342)
Interest accrual489,196 0 489,196 
Balance at original discount rate, end of period10,658,936 0 10,658,936 
Effect of cumulative changes in discount rate assumptions, end of period1,826,120 0 1,826,120 
Balance, end of period$12,485,056 $0 $12,485,056 


B-79

Year Ended December 31, 2021
Present Value of Expected Future Policy Benefits
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, beginning of period$21,897,943 $237,094 $22,135,037 
Effect of cumulative changes in discount rate assumptions, beginning of period(4,893,834)(27,090)(4,920,924)
Balance at original discount rate, beginning of period17,004,109 210,004 17,214,113 
Effect of assumption update40,236 0 40,236 
Effect of actual variances from expected experience and other activity268,005 (1,422)266,583 
Adjusted balance, beginning of period17,312,350 208,582 17,520,932 
Issuances747,703 29,700 777,403 
Interest accrual832,663 7,454 840,117 
Benefit payments(1,566,091)(25,328)(1,591,419)
Other adjustments3,197 (47)3,150 
Balance at original discount rate, end of period17,329,822 220,361 17,550,183 
Effect of cumulative changes in discount rate assumptions, end of period3,607,275 16,704 3,623,979 
Balance, end of period$20,937,097 $237,065 $21,174,162 
Other, end of period2,902 
Total balance, end of period$21,177,064 

Year Ended December 31, 2021
Net Liability for Future Policy Benefits (Benefit Reserves)
Term LifeFixed AnnuitiesTotal
(in thousands)
Balance, end of period, pre-flooring$8,452,041 $237,065 $8,689,106 
Flooring impact, end of period951 0 951 
Balance, end of period, post-flooring8,452,992 237,065 8,690,057 
Less: Reinsurance recoverable7,855,802 19,314 7,875,116 
Balance after reinsurance recoverable, end of period, post-flooring$597,190 $217,751 $814,941 

The following tables provide supplemental information related to the balances of and changes in Benefit Reserves included in the disaggregated tables above, on a gross (direct and assumed) basis, as of and for the periods indicated:
Year Ended December 31, 2023
Term LifeFixed Annuities
($ in thousands)
Undiscounted expected future gross premiums$21,871,767 $0
Discounted expected future gross premiums (at original discount rate)$15,027,611 $0
Discounted expected future gross premiums (at current discount rate)$14,748,999 $0
Undiscounted expected future benefits and expenses$29,118,532 $332,902
Interest accrual$373,845 $8,440
Gross premiums$1,804,955 $41,111
Weighted-average duration of the liability in years (at original discount rate)107
Weighted-average duration of the liability in years (at current discount rate)106
Weighted-average interest rate (at original discount rate)5.17 %3.70 %
Weighted-average interest rate (at current discount rate)4.99 %4.95 %
B-80

Year Ended December 31, 2022
Term LifeFixed Annuities
($ in thousands)
Undiscounted expected future gross premiums$22,223,836 $0 
Discounted expected future gross premiums (at original discount rate)$15,322,180 $0 
Discounted expected future gross premiums (at current discount rate)$14,587,657 $0 
Undiscounted expected future benefits and expenses$29,330,574 $306,286 
Interest accrual$363,375 $7,836 
Gross premiums$1,831,360 $32,105 
Weighted-average duration of the liability in years (at original discount rate)117
Weighted-average duration of the liability in years (at current discount rate)106
Weighted-average interest rate (at original discount rate)5.23 %3.60 %
Weighted-average interest rate (at current discount rate)5.39 %5.33 %
Year Ended December 31, 2021
Term LifeFixed Annuities
($ in thousands)
Undiscounted expected future gross premiums$24,005,621 $0 
Discounted expected future gross premiums (at original discount rate)$16,246,950 $0 
Discounted expected future gross premiums (at current discount rate)$19,102,730 $0 
Undiscounted expected future benefits and expenses$27,127,403 $293,095 
Interest accrual$343,467 $7,454 
Gross premiums$1,822,261 $35,672 
Weighted-average duration of the liability in years (at original discount rate)107
Weighted-average duration of the liability in years (at current discount rate)117
Weighted-average interest rate (at original discount rate)5.30 %3.47 %
Weighted-average interest rate (at current discount rate)2.55 %2.49 %
For additional information regarding observable market information and the techniques used to determine the interest rate assumptions seen above, see Note 2.
For non-participating traditional and limited-payment products, if a cohort is in a loss position where the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for the present value of expected future policy benefits and non-level claim settlement expenses, then the liability for future policy benefits is adjusted at that time, and thereafter such that all changes, both favorable and unfavorable, in expected benefits resulting from both actual experience deviations and changes in future assumptions are recognized immediately as a gain or loss.

In 2023, there was a $31 million gain in net income for non-participating traditional and limited-payment products, where net premiums exceeded gross premiums for certain issue-year cohorts, which was offset by a $30 million charge, reflecting the impact of ceded reinsurance on the affected cohorts.

In 2022, there was an $83 million charge to net income for non-participating traditional and limited-payment products, where net premiums exceeded gross premiums for certain issue-year cohorts, mostly offset by an $82 million gain, reflecting the impact of ceded reinsurance on the affected cohorts.

In 2021, there was an immaterial impact to net income for non-participating traditional and limited-payment products, where net premiums exceeded gross premiums for certain issue-year cohorts.
B-81

Deferred Profit Liability

The balances of and changes in Deferred Profit Liability for the years ended December 31, are as follows:

202320222021
Fixed Annuities
(in thousands)
Balance, beginning of period$18,193 $15,765 $9,959 
Effect of actual variances from expected experience and other activity(6,978)1,250 1,247 
Adjusted balance, beginning of period11,215 17,015 11,206 
Profits deferred5,191 2,511 5,823 
Interest accrual552 616 529 
Amortization(2,129)(1,909)(1,793)
Other adjustments(11)(40)0 
Balance, end of period14,818 18,193 15,765 
Less: Reinsurance recoverable1,365 1,684 1,726 
Balance after reinsurance recoverable$13,453 $16,509 $14,039 
    
The following table provides supplemental information related to the balances of and changes in Deferred Profit Liability, included in the disaggregated table above, on a gross (direct and assumed) basis, for the years ended December 31,:

202320222021
Fixed Annuities
(in thousands)
Revenue(1)$3,375 $(2,428)$(5,805)
Interest accrual552 616 529 
(1)Represents the gross premiums collected in changes in deferred profit liability.
B-82

Additional Insurance Reserves

AIR represents the additional liability for annuitization, death, or other insurance benefits, including GMDB and GMIB contract features, that are above and beyond the contractholder's account balance.

The following table shows a rollforward of AIR balances for variable and universal life products, for the years ended December 31,:
202320222021
(in thousands)
Balance, including amounts in AOCI, beginning of period, post-flooring$12,664,445 $11,660,527 $10,878,087 
Flooring impact and amounts in AOCI1,269,236 (896,931)(1,169,972)
Balance, excluding amounts in AOCI, beginning of period, pre-flooring13,933,681 10,763,596 9,708,115 
Effect of assumption update22,910 2,197,592 (1,243)
Effect of actual variances from expected experience and other activity34,021 (223,185)53,125 
Adjusted balance, beginning of period13,990,612 12,738,003 9,759,997 
Assessments collected(1)929,709 961,924 848,263 
Interest accrual486,253 433,631 344,789 
Benefits paid(294,199)(199,877)(189,453)
Balance, excluding amounts in AOCI, end of period, pre-flooring15,112,375 13,933,681 10,763,596 
Flooring impact and amounts in AOCI(831,583)(1,269,236)896,931 
Balance, including amounts in AOCI, end of period, post-flooring14,280,792 12,664,445 11,660,527 
Less: Reinsurance recoverable14,054,600 12,458,184 11,419,340 
Balance after reinsurance recoverable, including amounts in AOCI, end of period$226,192 $206,261 $241,187 
(1) Represents the portion of gross assessments required to fund the future policy benefits.


202320222021
($ in thousands)
Interest accrual$486,253 $433,631 $344,789 
Gross assessments$1,405,696 $1,367,796 $1,674,305 
Weighted-average duration of the liability in years (at original discount rate)222322
Weighted-average interest rate (at original discount rate)3.39 %3.37 %3.37 %


B-83

Future Policy Benefits Reconciliation

The following table presents the reconciliation of the ending balances from the above rollforwards, Benefit Reserves, Deferred Profit Liability and Additional Insurance Reserves including other liabilities, gross of related reinsurance recoverables, to the total liability for Future Policy Benefits as reported on the Company's Consolidated Statements of Financial Position for the years ended December 31,:
202320222021
(in thousands)
Benefit reserves, end of period, post-flooring$7,727,206 $7,128,184 $8,690,057 
Deferred profit liability, end of period, post-flooring14,818 18,193 15,765 
Additional insurance reserves, including amounts in AOCI, end of period, post-flooring14,280,792 12,664,445 11,660,527 
Subtotal of amounts disclosed above22,022,816 19,810,822 20,366,349 
Other Future policy benefits reserves(1)1,182,389 1,018,211 1,144,400 
Total Future policy benefits$23,205,205 $20,829,033 $21,510,749 
(1)Represents balances for which disaggregated rollforward disclosures are not required, including unpaid claims and claims expenses, and incurred but not reported and in course of settlement claim liabilities.


Revenue and Interest Expense

The following tables present revenue and interest expense related to Benefit Reserves, Deferred Profit Liability and Additional Insurance Reserves, as well as related revenue and interest expense not presented in the above supplemental tables, in the Company's Consolidated Statement of Operations for the periods indicated:

Year Ended December 31, 2023
Revenues(1)
Term LifeVariable/ Universal LifeFixed AnnuitiesTotal
(in thousands)
Benefit reserves$1,804,955 $0 $41,111 $1,846,066 
Deferred profit liability0 0 3,375 3,375 
Additional insurance reserves0 1,405,696 0 1,405,696 
Total$1,804,955 $1,405,696 $44,486 $3,255,137 

Year Ended December 31, 2022
Revenues(1)
Term LifeVariable/ Universal LifeFixed AnnuitiesTotal
(in thousands)
Benefit reserves$1,831,360 $0 $32,105 $1,863,465 
Deferred profit liability0 0 (2,428)(2,428)
Additional insurance reserves0 1,367,796 0 1,367,796 
Total$1,831,360 $1,367,796 $29,677 $3,228,833 

B-84

Year Ended December 31, 2021
Revenues(1)
Term LifeVariable/ Universal LifeFixed AnnuitiesTotal
(in thousands)
Benefit reserves$1,822,261 $0 $35,672 $1,857,933 
Deferred profit liability0 0 (5,805)(5,805)
Additional insurance reserves0 1,674,305 0 1,674,305 
Total$1,822,261 $1,674,305 $29,867 $3,526,433 
(1)Represents "Gross premiums" for benefit reserves; "Gross assessments" for additional insurance reserves; and "Revenue" for deferred profit liability.

Year Ended December 31, 2023
Interest Expense
Term LifeVariable/ Universal LifeFixed AnnuitiesTotal
(in thousands)
Benefit reserves$373,845 $0 $8,440 $382,285 
Deferred profit liability0 0 552 552 
Additional insurance reserves0 486,253 0 486,253 
Total$373,845 $486,253 $8,992 $869,090 

Year Ended December 31, 2022
Interest Expense
Term LifeVariable/ Universal LifeFixed AnnuitiesTotal
(in thousands)
Benefit reserves$363,375 $0 $7,836 $371,211 
Deferred profit liability0 0 616 616 
Additional insurance reserves0 433,631 0 433,631 
Total$363,375 $433,631 $8,452 $805,458 

Year Ended December 31, 2021
Interest Expense
Term LifeVariable/ Universal LifeFixed AnnuitiesTotal
(in thousands)
Benefit reserves$343,467 $0 $7,454 $350,921 
Deferred profit liability0 0 529 529 
Additional insurance reserves0 344,789 0 344,789 
Total$343,467 $344,789 $7,983 $696,239 

B-85

9. POLICYHOLDERS' ACCOUNT BALANCES

The balances of and changes in policyholders' account balances as of and for the periods ended are as follows:

Year Ended December 31, 2023
Fixed
Annuities		Variable AnnuitiesVariable Life / Universal LifeTotal
($ in thousands)
Balance, beginning of period$3,575,823 $16,432,032 $18,736,365 $38,744,220 
Deposits2,612,775 4,633,727 2,117,153 9,363,655 
Interest credited101,192 277,708 556,057 934,957 
Policy charges(8,438)(23,368)(1,810,644)(1,842,450)
Surrenders and withdrawals(229,843)(516,039)(845,436)(1,591,318)
Benefit payments(50,522)(30,461)(83,409)(164,392)
Net transfers (to) from separate account(1)0 15,121 1,175,575 1,190,696 
Change in market value and other adjustments(2)163,326 2,048,045 322,052 2,533,423 
Balance, end of period6,164,313 22,836,765 20,167,713 49,168,791 
Less: Reinsurance recoverables(3)4,746 569,844 12,830,700 13,405,290 
Policyholders' account balance net of reinsurance recoverables$6,159,567 $22,266,921 $7,337,013 $35,763,501 
Unearned revenue reserve3,741,426 
Other102,583 
Total Policyholders' account balance$53,012,800 
Weighted-average crediting rate2.08 %1.40 %2.86 %2.12 %
Net amount at risk(4)$15 $0 $323,508,432 $323,508,447 
Cash surrender value(5)$5,307,537 $20,490,433 $18,676,852 $44,474,822 

B-86


Year Ended December 31, 2022
Fixed Annuities(6)Variable AnnuitiesVariable Life / Universal LifeTotal
($ in thousands)
Balance, beginning of period$3,005,867 $11,465,411 $18,762,548 $33,233,826 
Deposits754,397 4,761,547 2,173,035 7,688,979 
Interest credited53,884 175,574 583,814 813,272 
Policy charges(5,118)(5,482)(1,795,879)(1,806,479)
Surrenders and withdrawals(68,343)(282,497)(873,034)(1,223,874)
Benefit payments(90,640)(35,042)(103,358)(229,040)
Net transfers (to) from separate account0 206,269 213,752 420,021 
Change in market value and other adjustments(2)(74,224)146,252 (224,513)(152,485)
Balance, end of period3,575,823 16,432,032 18,736,365 38,744,220 
Less: Reinsurance recoverables(3)5,724 323,981 12,896,517 13,226,222 
Policyholders' account balance net of reinsurance recoverables$3,570,099 $16,108,051 $5,839,848 $25,517,998 
Unearned revenue reserve3,067,336 
Other(6)100,980 
Total Policyholders' account balance$41,912,536 
Weighted-average crediting rate1.64 %1.26 %3.11 %2.26 %
Net amount at risk(4)$3 $0 $304,864,582 $304,864,585 
Cash surrender value(5)$2,968,033 $13,844,151 $17,137,744 $33,949,928 


Year Ended December 31, 2021
Fixed Annuities(6)Variable AnnuitiesVariable Life / Universal LifeTotal
($ in thousands)
Balance, beginning of period$379,981 $3,634,125 $18,363,958 $22,378,064 
Deposits396,377 725,701 2,523,000 3,645,078 
Interest credited1,181 94,453 508,391 604,025 
Policy charges(5,346)(1,941)(1,740,260)(1,747,547)
Surrenders and withdrawals(41,886)(208,224)(990,423)(1,240,533)
Benefit payments(87,897)(41,851)(132,586)(262,334)
Net transfers (to) from separate account0 (3,449)164,405 160,956 
Change in market value and other adjustments(2)2,363,457 7,266,597 66,063 9,696,117 
Balance, end of period3,005,867 11,465,411 18,762,548 33,233,826 
Less: Reinsurance recoverables(3)7,066 340,527 11,706,343 12,053,936 
Policyholders' account balance net of reinsurance recoverables$2,998,801 $11,124,884 $7,056,205 $21,179,890 
Unearned revenue reserve2,398,788 
Other(6)98,066 
Total Policyholders' account balance$35,730,680 
Weighted-average crediting rate0.07 %1.25 %2.74 %2.31 %
Net amount at risk(4)$0 $0 $309,431,313 $309,431,313 
Cash surrender value(5)$2,476,677 $11,250,816 $16,915,935 $30,643,428 


B-87


(1)    Variable life includes $900 million of funding for a policy loan to an affiliated irrevocable trust. See Note 15 for additional information.
(2)    Primarily relates to changes in the value of embedded derivative instruments associated with the indexed options of certain products. Includes $7,203 million related to assuming of policyholders' account balances with PALAC for the year ended December 31, 2021. See Note 1 for additional information.
(3)    The amount of recoverables related to reinsurance agreements that reduce the risk of the policyholders’ account balances gross liability.
(4)    The net amount at risk calculation includes both general and separate account balances.
(5)    Represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges.
(6)    Prior period amounts have been updated to conform to current period presentation.

The Company issues variable life and universal life insurance contracts which may also include a “no-lapse guarantee” where the Company contractually guarantees to the contractholder a death benefit even when the account value drops to zero, as long as the “no-lapse guarantee” premium is paid.

The net amount at risk is generally defined as the current death benefit in excess of the current account balance at the balance sheet date. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including contractholder mortality, contract lapses, and premium pattern, as well as interest rate and equity market returns.

The Company also issues annuity contracts that provide certain death benefit and/or living benefit guarantees and are accounted for as MRBs. See Note 10 for additional information, including the net amount at risk associated with these guarantees.

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums are as follows:

December 31, 2023
Range of Guaranteed Minimum
Crediting Rate(1)		At guaranteed minimum
1 - 50 bps above guaranteed minimum
51 - 150 bps above guaranteed minimum
Greater than 150 bps above guaranteed minimum
Total
(in thousands)
Fixed Annuities
Less than 1.00%
$105 $337 $994 $117,377 $118,813 
1.00% - 1.99%
487,191 73,393 234,487 79,713 874,784 
2.00% - 2.99%
301,132 469,276 562,347 16,881 1,349,636 
3.00% - 4.00%
29,131 0 0 0 29,131 
Greater than 4.00%
0 0 0 0 0 
Total$817,559 $543,006 $797,828 $213,971 $2,372,364 
Variable Annuities
Less than 1.00%
$908,097 $807,460 $18,083 $2 $1,733,642 
1.00% - 1.99%
214,377 2,061 1,060 0 217,498 
2.00% - 2.99%
23,323 4,071 4,135 0 31,529 
3.00% - 4.00%
903,953 9,245 33 0 913,231 
Greater than 4.00%
2,046 0 0 0 2,046 
Total$2,051,796 $822,837 $23,311 $2 $2,897,946 
Variable Life / Universal Life
Less than 1.00%
$0 $0 $0 $196,692 $196,692 
1.00% - 1.99%
201,121 0 2,588,458 528,155 3,317,734 
2.00% - 2.99%
28,061 1,445,439 2,789,520 260,651 4,523,671 
3.00% - 4.00%
3,956,631 2,217,133 1,107,726 0 7,281,490 
Greater than 4.00%
2,136,137 0 0 0 2,136,137 
Total$6,321,950 $3,662,572 $6,485,704 $985,498 $17,455,724 

B-88

December 31, 2022
Range of Guaranteed Minimum
Crediting Rate(1)		At guaranteed minimum
1 - 50 bps above guaranteed minimum
51 - 150 bps above guaranteed minimum
Greater than 150 bps above guaranteed minimum
Total
(in thousands)
Fixed Annuities(2)
Less than 1.00%
$0 $0 $0 $0 $0 
1.00% - 1.99%
521,189 73,554 248,881 83,415 927,039 
2.00% - 2.99%
208,420 000208,420 
3.00% - 4.00%
38,195 00038,195 
Greater than 4.00%
0 0000
Total$767,804 $73,554 $248,881 $83,415 $1,173,654 
Variable Annuities
Less than 1.00%
$1,008,763 $861,119 $18,744 $2 $1,888,628 
1.00% - 1.99%
243,223 2,257 1,294 0246,774 
2.00% - 2.99%
26,778 973 0027,751 
3.00% - 4.00%
1,070,958 2247001,073,205 
Greater than 4.00%
2,172 0002,172 
Total$2,351,894 $866,596 $20,038 $2 $3,238,530 
Variable Life / Universal Life
Less than 1.00%
$11,902 $0 $0 $0 $11,902 
1.00% - 1.99%
418,399 0 773,591 1,928,342 3,120,332 
2.00% - 2.99%
32,651 121,200 2,413,571 1,824,303 4,391,725 
3.00% - 4.00%
4,737,864 3,510 2,093,511 129,398 6,964,283 
Greater than 4.00%
2,145,123 0002,145,123 
Total$7,345,939 $124,710 $5,280,673 $3,882,043 $16,633,365 


B-89

December 31, 2021
Range of Guaranteed Minimum
Crediting Rate(1)		At guaranteed minimum
1 - 50 bps above guaranteed minimum
51 - 150 bps above guaranteed minimum
Greater than 150 bps above guaranteed minimum
Total
(in thousands)
Fixed Annuities(2)
Less than 1.00%
$0 $0 $0 $0 $0 
1.00% - 1.99%
9,470 0 0 0 9,470 
2.00% - 2.99%
213,321 0 0 0 213,321 
3.00% - 4.00%
42,418 0 0 0 42,418 
Greater than 4.00%
0 0 0 0 0 
Total$265,209 $0 $0 $0 $265,209 
Variable Annuities
Less than 1.00%
$1,070,567 $894,487 $19,207 $2 $1,984,263 
1.00% - 1.99%
267,409 1,627 00269,036 
2.00% - 2.99%
30,738 62 0030,800 
3.00% - 4.00%
1,150,448 0001,150,448 
Greater than 4.00%
2,415 0002,415 
Total$2,521,577 $896,176 $19,207 $2 $3,436,962 
Variable Life / Universal Life
Less than 1.00%
$18,091 $0 $0 $0 $18,091 
1.00% - 1.99%
380,144 0 0 2,537,887 2,918,031 
2.00% - 2.99%
10,227 0 3,735,376 552,995 4,298,598 
3.00% - 4.00%
4,793,734 2,048,590 343,129 53,673 7,239,126 
Greater than 4.00%
2,092,925 0002,092,925 
Total$7,295,121 $2,048,590 $4,078,505 $3,144,555 $16,566,771 

(1)     Excludes contracts without minimum guaranteed crediting rates, such as funds with indexed-linked crediting options.
(2)     Prior period amounts have been updated to conform to current period presentation.

Unearned Revenue Reserve

The balances of and changes in URR as of and for the periods ended are as follows:

Years Ended December 31,
202320222021
Variable Life / Universal Life
(in thousands)
Balance, beginning of period$3,067,336 $2,398,788 $1,745,269 
Unearned revenue827,960799,185 760,153
Amortization expense(153,779)(129,525)(106,634)
Other adjustments(91)(1,112)0
Balance, end of period3,741,426 3,067,336 2,398,788
Less: Reinsurance recoverables1,690,2551,542,900 939,798
Unearned revenue reserve net of reinsurance recoverables$2,051,171 $1,524,436 $1,458,990 



B-90

10. MARKET RISK BENEFITS

The following tables show a rollforward of MRB balances for variable annuity products, along with a reconciliation to the Company’s total net MRB positions as of the following dates:
Year Ended December 31, 2023
Variable AnnuitiesLess: Reinsured Market Risk BenefitsTotal, Net of Reinsurance
(in thousands)
Balance, beginning of period$4,550,625 $(422,261)$4,128,364 
Effect of cumulative changes in non-performance risk1,727,910 0 1,727,910 
Balance, beginning of period, before effect of changes in non-performance risk6,278,535 (422,261)5,856,274 
Attributed fees collected1,158,879 (246,747)912,132 
Claims paid(85,898)9,952 (75,946)
Interest accrual293,205 (53,016)240,189 
Actual in force different from expected79,030 (13,338)65,692 
Effect of changes in interest rates(1,438,873)455,062 (983,811)
Effect of changes in equity markets(1,845,207)180,953 (1,664,254)
Effect of assumption update330,769 (54,067)276,702 
Issuances29,433 7,680 37,113 
Other adjustments(1)(36,888)(635,011)(671,899)
Effect of changes in current period counterparty non-performance risk0 (146,999)(146,999)
Balance, end of period, before effect of changes in non-performance risk4,762,985 (917,792)3,845,193 
Effect of cumulative changes in non-performance risk(1,068,035)0 (1,068,035)
Balance, end of period$3,694,950 $(917,792)$2,777,158 

Year Ended December 31, 2022
Variable AnnuitiesLess: Reinsured Market Risk BenefitsTotal, Net of Reinsurance
(in thousands)
Balance, beginning of period$8,884,362 $(906,484)$7,977,878 
Effect of cumulative changes in non-performance risk287,605 0 287,605 
Balance, beginning of period, before effect of changes in non-performance risk9,171,967 (906,484)8,265,483 
Attributed fees collected1,249,956 (147,727)1,102,229 
Claims paid(64,406)3,456 (60,950)
Interest accrual143,483 (13,438)130,045 
Actual in force different from expected105,996 (9,968)96,028 
Effect of changes in interest rates(7,271,427)767,394 (6,504,033)
Effect of changes in equity markets3,103,563 (326,575)2,776,988 
Effect of assumption update(160,597)23,171 (137,426)
Effect of changes in current period counterparty non-performance risk0 187,910 187,910 
Balance, end of period, before effect of changes in non-performance risk6,278,535 (422,261)5,856,274 
Effect of cumulative changes in non-performance risk(1,727,910)0 (1,727,910)
Balance, end of period$4,550,625 $(422,261)$4,128,364 
B-91


Year Ended December 31, 2021
Variable AnnuitiesLess: Reinsured Market Risk BenefitsTotal, Net of Reinsurance
(in thousands)
Balance, beginning of period$13,577,543 $(13,589,575)$(12,032)
Effect of cumulative changes in non-performance risk722,837 0 722,837 
Balance, beginning of period, before effect of changes in non-performance risk14,300,380 (13,589,575)710,805 
Attributed fees collected1,368,434 (759,997)608,437 
Claims paid(29,401)14,648 (14,753)
Interest accrual24,824 (16,593)8,231 
Actual in force different from expected(19,290)22,687 3,397 
Effect of changes in interest rates(3,461,436)3,240,588 (220,848)
Effect of changes in equity markets(2,789,777)2,070,833 (718,944)
Effect of assumption update(221,767)221,767 0 
Other adjustments(1)0 8,223,470 8,223,470 
Effect of changes in current period counterparty non-performance risk0 (334,312)(334,312)
Balance, end of period, before effect of changes in non-performance risk9,171,967 (906,484)8,265,483 
Effect of cumulative changes in non-performance risk(287,605)0 (287,605)
Balance, end of period$8,884,362 $(906,484)$7,977,878 
(1)     Other adjustments for December 31, 2023 primarily includes $638 million related to the reinsurance transaction with AuguStar. See Note 11 for additional information. Other adjustments for December 31, 2021 includes the impact of the 2021 Variable Annuities Recapture. See Note 1 for additional information.

In 2023, the Company recognized an unfavorable impact to net income attributable to the actuarial assumption update for direct and assumed MRBs, primarily due to updates to policyholder behavior assumptions on certain variable annuities.

In 2022, the Company recognized a favorable impact to net income attributable to the actuarial assumption update for direct and assumed MRBs, primarily due to updates to mortality and policyholder behavior assumptions on certain variable annuities.

In 2021, the Company recognized a favorable impact to net income attributable to the actuarial assumption update for direct and assumed MRBs, primarily due to updates to long-term asset mix assumptions supporting claims on certain variable annuities.

The Company issues certain variable annuity insurance contracts where the Company contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract adjusted for any partial withdrawals plus a minimum return, and/or (2) the highest anniversary contract value on a specified date adjusted for any withdrawals. These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods.

The Company also issues indexed variable annuity contracts for which the return is tied to the return of specific indices where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract adjusted for any partial withdrawals upon death. In certain of these indexed variable annuity contracts, the Company also contractually guarantees to the contractholder withdrawal benefits payable during specific periods.

For guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, contract lapses and contractholder mortality.

B-92

For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, timing of annuitization, contract lapses and contractholder mortality.

For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance.

For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, interest rates, market volatility and contractholder behavior.

The following table presents accompanying information to the rollforward table above.
December 31, 2023December 31, 2022December 31, 2021
Variable Annuities
($ in thousands)
Net amount at risk(1)$9,041,651 $12,141,947 $2,566,157 
Weighted-average attained age of contractholders706866
(1)    For contracts with multiple benefit features, the highest net amount at risk for each contract is included.

The table below reconciles MRB asset and liability positions as of the following dates:
December 31, 2023December 31, 2022December 31, 2021
Variable Annuities
(in thousands)
Market risk benefit assets$2,367,243 $1,393,237 $1,786,565 
Market risk benefit liabilities5,144,401 5,521,601 9,764,443 
Net liability$2,777,158 $4,128,364 $7,977,878 
    

11. REINSURANCE
The Company participates in reinsurance with its affiliates Prudential Arizona Reinsurance Captive Company (“PARCC”), Prudential Arizona Reinsurance Term Company (“PAR Term”), Prudential Arizona Reinsurance Universal Company (“PAR U”), Prudential Universal Reinsurance Company ("PURC"), Prudential Term Reinsurance Company (“Term Re”), Gibraltar Universal Life Reinsurance Company ("GUL Re"), Dryden Arizona Reinsurance Term Company (“DART”), Lotus Re, PALAC, a former subsidiary of Prudential Financial that was sold to Fortitude on April 1, 2022, which is discussed in Note 1, and Prudential Life Insurance Company of Taiwan Inc. ("Prudential of Taiwan"), a subsidiary of Prudential Financial that was sold to a third-party on June 30, 2021, as discussed below. As of July 1, 2021, the Company recaptured the risks related to its business that had been previously reinsured to PALAC as a result of the 2021 Variable Annuities Recapture, which is discussed below and in Note 1. The Company also participates in reinsurance with its parent company Prudential Insurance, as well as third-parties. The reinsurance agreements provide risk diversification and additional capacity for future growth, limit the maximum net loss potential, manage statutory capital, and facilitate the Company's capital market hedging program. Life reinsurance is accomplished through various plans of reinsurance, primarily YRT and coinsurance. Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements. The Company believes a material reinsurance liability resulting from such inability of reinsurers to meet their obligations is unlikely.
B-93

Reserves related to reinsured long-duration contracts are accounted for using assumptions consistent with those used to account for the underlying contracts. Amounts recoverable from reinsurers for long-duration reinsurance arrangements are estimated in a manner consistent with the claim liabilities and policy benefits associated with the reinsured policies. Reinsurance policy charges and fee income ceded for universal life and variable annuity products are accounted for as a reduction of policy charges and fee income. Reinsurance premiums ceded for term insurance products are accounted for as a reduction of premiums.
Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on reinsurance are recorded within “Other assets” and the corresponding funds withheld liability for assets retained under these reinsurance agreements are recorded within “Other liabilities.” Balances associated with these agreements are included in the tables below.
"Change in value of market risk benefits, net of related hedging gain (loss)" include the impact of reinsurance agreements, particularly reinsurance agreements involving living benefit guarantees. The Company has entered into reinsurance agreements to transfer the risk related to the living benefit guarantees on variable annuities within the PLNJ business to Prudential Insurance. These reinsurance agreements are market risk benefits and have been accounted for in the same manner.
Reinsurance amounts included in the Company’s Consolidated Statements of Financial Position as of December 31, were as follows:

20232022
 (in thousands)
Reinsurance recoverables(1)$38,709,651 $37,096,562 
Policy loans(1,082,584)(1,011,112)
Deferred policy acquisition costs(1)(3,195,161)(3,343,270)
Deferred sales inducements(1)(35,313)(38,146)
Market risk benefit assets(1)1,165,378 543,177 
Other assets(1)1,897,410 1,146,794 
Policyholders’ account balances(1)5,977,108 7,157,639 
Future policy benefits(1)7,026,209 6,320,863 
Market risk benefit liabilities(1)249,538 120,916 
Other liabilities(1)4,397,862 2,891,433 
(1)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

Unaffiliated reinsurance amounts included in the table above and in the Company's Consolidated Statements of Financial Position as of December 31, were as follows:
20232022
(in thousands)
Deferred policy acquisition costs(1)$71,315 $111,379 
Market risk benefit assets(1)745,662 64,738 
Other assets1,795,422 1,034,000 
Policyholders' account balances(1)1,830,579 2,771,961 
Future policy benefits453 0 
Market risk benefit liabilities(1)131,594 40,731 
Other liabilities1,915,205 820,185 
(1)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.


B-94

Reinsurance recoverables by counterparty as of December 31, are broken out below:
20232022(1)
 (in thousands)
PAR U$15,722,061 $15,051,337 
PURC7,565,968 6,928,950 
PARCC2,304,270 2,437,589 
GUL Re3,211,899 3,124,697 
PAR Term2,101,004 2,040,599 
Prudential Insurance1,311,525 986,013 
Term Re2,080,564 1,830,197 
Lotus Re2,051,831 1,952,215 
DART744,043 578,462 
Unaffiliated1,616,486 2,166,503 
Total reinsurance recoverables$38,709,651 $37,096,562 
(1)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

Reinsurance amounts, included in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, were as follows:
202320222021
 (in thousands)
Premiums:
Direct(1)$1,853,184 $1,868,709 $1,903,865 
Assumed(61)776 162 
Ceded(1)(1,524,226)(1,604,277)(1,719,569)
Net premiums(1)328,897 265,208 184,458 
Policy charges and fee income:
Direct(1)2,995,595 3,034,193 3,348,259 
Assumed(1)604,311 594,622 565,814 
Ceded(1)(2,063,300)(2,398,214)(2,613,978)
Net policy charges and fee income(1)1,536,606 1,230,601 1,300,095 
Net investment income:
Direct1,700,684 920,674 555,404 
Assumed1,364 1,513 1,049 
Ceded(26,526)(38,186)(6,218)
Net investment income(2)1,675,522 884,001 550,235 
Asset administration fees:
Direct323,444 351,600 403,359 
Assumed0 0 0 
Ceded(90,494)(67,418)(201,182)
Net asset administration fees232,950 284,182 202,177 
Other income (loss):
Direct636,930 (731,796)227,035 
Assumed(475)271 (66)
Ceded(1)108,173 80,056 35,451 
Net other income(1)(2)744,628 (651,469)262,420 
B-95

202320222021
Realized investment gains (losses), net:
Direct(1)(1,195,753)497,016 (388,914)
Assumed(1)162,291 (244,000)12,592 
Ceded(1)(50,198)83,366 (10,572)
Realized investment gains (losses), net(1)(2)(1,083,660)336,382 (386,894)
Change in value of market risk benefits, net of related hedging gain (loss):
Direct(1)298,425 (181,260)9,096,963 
Assumed(2,199)0 0 
Ceded(1)(390,594)(519,321)(13,319,493)
Net change in value of market risk benefits, net of related hedging gain (loss)(1)(94,368)(700,581)(4,222,530)
Policyholders’ benefits (including change in reserves):
Direct(1)3,354,306 3,362,353 3,215,531 
Assumed(1)1,258,651 1,107,436 905,325 
Ceded(1)(4,109,168)(4,011,416)(4,038,146)
Net policyholders’ benefits (including change in reserves)(1)(2)503,789 458,373 82,710 
Change in estimates of liability for future policy benefits:
Direct(1)(18,361)1,716,983 99,202 
Assumed(1)8,644 679,863 (16,166)
Ceded(1)13,669 (2,341,747)(56,028)
Net change in estimates of liability for future policy benefits(1)3,952 55,099 27,008 
Interest credited to policyholders’ account balances:
Direct(1)918,327 805,411 525,038 
Assumed136,725 74,402 138,202 
Ceded(1)(399,607)(434,598)(814,629)
Net interest credited to policyholders’ account balances(1)655,445 445,215 (151,389)
Reinsurance expense allowances and general and administrative expenses, net of capitalization and amortization(1)(399,870)(150,374)(2,195,677)
(1)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
(2)Amounts include reinsurance agreements using the deposit method of accounting.
B-96

Unaffiliated reinsurance assumed and ceded amounts included in the table above and in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, were as follows:

202320222021
(in thousands)
Premiums:
Assumed(1)$(69)$149 $162 
Ceded(1)(70,169)(42,721)(26,143)
Policy charges and fee income:
Assumed1,563 2,113 0 
Ceded(143,764)(81,781)(65,451)
Net investment income(2):
Ceded23,023 10,802 687 
Asset administration fees:
Ceded(22,415)00
Other income (loss)(2):
Assumed(211)270 (68)
Ceded(1)37,526 3,243 0 
Realized investment gains (losses), net(2):
Assumed(1)162,291 778,620 0 
Ceded(1)(45,711)82,386 80,540 
Change in value of market risk benefits, net of related hedging gain (loss):
Assumed(1)(2,199)0 0 
Ceded(1)(186,996)(120,663)(130,654)
Policyholders' benefits (including change in reserves)(2):
Assumed804 2,566 429 
Ceded(1)(157,344)(94,402)(186,927)
Change in estimates of liability for future policy benefits:
Ceded(1)(1,367)(6,824)0 
Interest credited to policyholders' account balances:
Assumed16,243 (95,285)0 
(1)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
(2)Amounts include reinsurance agreements using the deposit method of accounting.
B-97

The gross and net amounts of life insurance face amount in force as of December 31, were as follows:
202320222021
 (in thousands)
Direct gross life insurance face amount in force$1,127,561,798 $1,093,610,227 $1,079,382,740 
Assumed gross life insurance face amount in force35,558,423 36,668,045 37,822,851 
Reinsurance ceded(1,027,473,705)(1,009,571,304)(992,635,327)
Net life insurance face amount in force$135,646,516 $120,706,968 $124,570,264 
Significant Affiliated Reinsurance Agreements
PAR U
Pruco Life reinsures an amount equal to 70% of all the risks associated with Universal Protector policies having no-lapse guarantees as well as certain of its universal policies, with effective dates prior to January 1, 2011.
Effective July 1, 2012, PLNJ reinsures an amount equal to 95% of all the risks associated with Universal Protector policies having no-lapse guarantees as well as certain of its universal policies, with effective dates through December 31, 2019, excluding those policies that are subject to principle-based reserving.
On January 2, 2013, Pruco Life began to assume guaranteed universal life ("GUL") business from Prudential Insurance in connection with the acquisition of the Hartford Life Business. The GUL business assumed from Prudential Insurance was subsequently retroceded to PAR U.
PALAC
Effective April 1, 2016, the Company entered into a reinsurance agreement to reinsure its variable annuity base contracts, along with the living benefit guarantees to PALAC, excluding the PLNJ business, which was reinsured to Prudential Insurance. This reinsurance agreement excluded business reinsured externally. As of December 31, 2020, the Company discontinued the sales of traditional variable annuities with guaranteed living benefit riders. This discontinuation had no impact on the reinsurance agreement between PALAC, Prudential Insurance, and the Company.
Effective July 1, 2021, the Company recaptured the risks related to its business, as discussed above, that had previously been reinsured to PALAC from April 1, 2016 through June 30, 2021. The recapture did not impact PLNJ, which continued to reinsure its business to Prudential Insurance. The product risks related to the previously reinsured business that were being managed in PALAC, were transferred to the Company. In addition, the living benefit hedging program related to the previously reinsured living benefit riders were being managed within the Company. See Note 1 for additional information.
On April 1, 2022, PALAC was sold to Fortitude as discussed in Note 1 and is no longer considered an affiliate of the Company.
PURC
Pruco Life reinsures an amount equal to 70% of all the risks associated with its Universal Protector policies having no-lapse guarantees as well as certain of its universal policies, with effective dates from January 1, 2011 through December 31, 2013, with PURC and 95% of all the risks associated with Universal Protector policies having no-lapse guarantees, as well as certain of its universal policies, with effective dates from January 1, 2014 through December 31, 2016.
PARCC
Prior to July 1, 2019, the Company reinsured 90% of the risks under its term life insurance policies, with effective dates prior to January 1, 2010 through an automatic coinsurance agreement with PARCC. Effective July 1, 2019, the Company amended the coinsurance agreement to increase the percentage from 90% to 100% of the policy risk amount reinsured. The amended agreement does not impact contracts issued by PLNJ, which remain at the original percentage.
GUL Re
Effective January 1, 2017, Pruco Life entered into an automatic coinsurance agreement with GUL Re to reinsure an amount equal to 95% of all the risks associated with Universal Protector policies having no-lapse guarantees, as well as certain of its universal policies, with effective dates on or after January 1, 2017 through December 31, 2019, excluding those policies that are subject to principle-based reserving.
Effective July 1, 2017, Pruco Life amended this agreement to include 30% of Universal Protector policies having no-lapse guarantees as well as certain of its universal policies with effective dates prior to January 1, 2014.
B-98

PAR Term
Prior to July 1, 2019, the Company reinsures 95% of the risks under its term life insurance policies with effective dates January 1, 2010 through December 31, 2013, through an automatic coinsurance agreement with PAR Term. Effective July 1, 2019, the Company amended the coinsurance agreement to increase the percentage from 95% to 100% of the policy risk amount reinsured. The amended agreement does not impact contracts issued by PLNJ, which remain at the original percentage.
Prudential of Taiwan
On January 31, 2001, Pruco Life transferred all of its assets and liabilities associated with its Taiwanese branch, including its Taiwanese insurance book of business, to Prudential of Taiwan. The mechanism used to transfer this block of business in Taiwan is referred to as a “full acquisition and assumption” transaction. Under this mechanism, Pruco Life is jointly liable with Prudential of Taiwan for two years from the giving of notice to all obligees for all matured obligations and for two years after the maturity date of not-yet-matured obligations. Prudential of Taiwan is also contractually liable, under indemnification provisions of the transaction, for any liabilities that may be asserted against Pruco Life.
The transfer of the insurance related assets and liabilities was accounted for as a long-duration coinsurance transaction under U.S. GAAP. Under this accounting treatment, the insurance related liabilities remain on the books of Pruco Life and an offsetting reinsurance recoverable is established. These assets and liabilities are denominated in U.S. dollars.
On August 11, 2020, Prudential International Insurance Holdings, Ltd. (“PIIH”), a subsidiary of Prudential Financial, entered into a Share Purchase Agreement with Taishin Financial Holding Co., Ltd. (the “Buyer”) pursuant to which PIIH has agreed to sell to the Buyer all of the issued and outstanding capital stock of Prudential of Taiwan. The Share Purchase Agreement contains customary warranties and covenants of PIIH and the Buyer. On June 30, 2021, PIIH completed the sale of Prudential of Taiwan to the Buyer. This resulted in the removal of the insurance related liabilities and offsetting reinsurance recoverables previously on the books of Pruco Life. The Buyer provided Pruco Life a backstop indemnification and Pruco Life provided a guarantee to stand ready to perform in the event of default by both Prudential of Taiwan and the Buyer. Refer to Note 16 for details on the guarantee.
Term Re
The Company reinsures 95% of the risks under its term life insurance policies, with effective dates on or after January 1, 2014 through December 31, 2017, through an automatic coinsurance agreement with Term Re.
Prudential Insurance
The Company has a YRT reinsurance agreement with Prudential Insurance and reinsures the majority of all mortality risks not otherwise reinsured. This agreement was terminated for new business effective January 1, 2020, with certain new business (primarily universal life policies) terminated as early as 2017. The Company now reinsures a portion of the mortality risk directly to third-party reinsurers and retains all of the non-reinsured portion of the mortality risk. Effective July 1, 2019, certain term life insurance policies were recaptured and subsequently reinsured to PARCC and PAR Term as noted above. As of January 1, 2022, most of the variable life insurance policies were recaptured resulting in a $305 million loss recorded through "Policy charges and fee income." Those policies were then reinsured to Lotus Re as mentioned below.
On January 2, 2013, Pruco Life began to assume GUL business from Prudential Insurance in connection with the acquisition of the Hartford Financial Services Group, Inc. ("Hartford Financial"). The GUL business assumed from Prudential Insurance was subsequently retroceded to PAR U. In May 2018, Hartford Financial sold a group of operating subsidiaries, which includes two of Prudential Insurance's counterparties to these reinsurance arrangements. There was no impact to the terms, rights or obligations of Prudential Insurance, or operation of these reinsurance arrangements, as a result of this change in control of such counterparties. Similarly, there was no impact to the Company's reinsurance arrangements with respect to such GUL business as a result of this change in control. In January 2021, there was a definitive agreement announced to subsequently sell the two counterparties mentioned above, which were then acquired by Sixth Street in July 2021. There was no impact to the terms, rights or obligations of the Company, or operation of these reinsurance arrangements, as a result of this change in control of such counterparties.
The Company has reinsured a group annuity contract with Prudential Insurance, in consideration for a single premium payment by the Company, providing reinsurance equal to 100% of all payments due under the contract.
B-99

Effective April 1, 2016, PLNJ entered into a reinsurance agreement to reinsure its variable annuity base contracts, along with the living benefit guarantees to Prudential Insurance. This reinsurance agreement covers new and in force business. Effective February 1, 2023, PLNJ began selling indexed variable annuities products, which is reinsured to Prudential Insurance through the existing reinsurance agreement. The reinsurance of the indexed variable annuities transfers all significant risks, including mortality risk, embedded in the reinsured contracts to Prudential Insurance. As a result of the agreement, reinsurance payables includes the ceded modified coinsurance arrangement, which reflects the value of the invested assets retained by the Company and the associated asset returns.
Lotus Re
Effective October 1, 2021, the Company entered into an automatic coinsurance agreement with Lotus Re to reinsure $32 million of liabilities associated with the risks associated with a portion of its variable life policies in the extended term policy status.
Effective January 1, 2022 the Company recaptured the risks that were previously ceded to Lotus Re from October 1, 2021 through December 31, 2021. Immediately thereafter, the Company entered into a reinsurance agreement with Lotus Re to cede 100% of the risks associated with a closed block of variable life business on a coinsurance and modified coinsurance basis including policies in the extended term policy status. The amount of the net liabilities associated with the transaction for coinsurance and modified coinsurance were $1,387 million and $14,037 million, respectively. As part of the consideration, the Company also ceded to Lotus Re $855 million of policy loan assets associated with the reinsured policies while receiving $820 million in cash from Lotus Re. As a result, the Company recorded a $1,352 million deferred gain, which will be recognized over the remaining life of the underlying policies. In tandem with the transaction, effective January 1, 2022, Lotus Re established an automatic YRT agreement with the Company to cede back a portion of the mortality risks associated with the reinsured policies for the purposes of the Company maintaining YRT reinsurance with external counterparties.
DART
Effective January 1, 2018, the Company entered into an automatic coinsurance agreement with DART to reinsure an amount equal to 95% of the risks associated with its term life insurance policies with effective dates on or after January 1, 2018 through December 31, 2019, excluding those policies that are subject to principle-based reserving.
Significant Third-Party Reinsurance Arrangements
AuguStar Life Insurance Company (Formerly Known as The Ohio National Life Insurance Company)
Effective April 1, 2023, the Company entered into an agreement with AuguStar, an affiliate of Constellation Insurance Holdings, Inc., to reinsure approximately $10 billion of account values of PDI traditional variable annuity contracts with guaranteed living benefits. This block represents approximately 10% of the Company’s remaining legacy in force traditional variable annuity block by account value. The Company ceded 100% of separate account liabilities under modified coinsurance and 100% of general account liabilities under coinsurance of its PDI traditional variable annuity contracts. The general account liabilities associated with PDI's guaranteed living and death benefits and the corresponding reinsurance of those liabilities are accounted for as market risk benefits. As a result of the transaction, the Company recognized a $277 million deferred reinsurance gain that will be amortized into income over the estimated remaining life of the reinsured policies.
FLIAC
Effective December 1, 2021, the Company entered into a reinsurance agreement with FLIAC under which the Company assumed all of FLIAC's indexed variable annuities under modified coinsurance. The reinsurance of the indexed variable annuities transfers all significant risks, including mortality risk, embedded in the reinsured contracts to the Company. As a result of the agreement, "Reinsurance recoverables" includes the assumed modified coinsurance receivable, which reflects the value of the invested assets retained by FLIAC and the associated asset returns. The Company also assumed via coinsurance all of FLIAC’s fixed indexed annuities and fixed annuities with a guaranteed lifetime withdrawal income feature, which are accounted for under deposit accounting. The reinsurance agreement offers the policyholders the opportunity to novate their contracts from FLIAC to the Company and any such novated contracts shall cease to be reinsured under this agreement. As of December 31, 2023, the total account value of contracts novated from FLIAC to the Company were $5.3 billion for indexed variable annuities contracts and $2.0 billion for fixed annuities and fixed indexed annuities contracts, which is approximately 80% of the total reinsured block.
B-100

Somerset Re
Effective October 1, 2021, the Company entered into a reinsurance agreement with Somerset Reinsurance Ltd. (“Somerset Re") to coinsure business, on a quota share funds withheld basis, related to fixed index annuities. Under the reinsurance agreement, the Company cedes to Somerset Re its quota share of the insurance liabilities with respect to the reinsured contracts. The deposit assets on reinsurance totaled $1,618 million and $828 million at December 31, 2023 and 2022, respectively. The funds withheld liabilities totaled $1,518 million and $705 million at December 31, 2023 and 2022, respectively.
Union Hamilton
Between April 1, 2015 and December 31, 2016, the Company, excluding its subsidiary, reinsured approximately 50% of the new business related to “highest daily” living benefits rider guarantees on HDI v.3.0 product, available with Prudential Premier® Retirement Variable Annuity, to Union Hamilton. This reinsurance remains in force for the duration of the underlying annuity contracts. New sales of HDI v.3.0 subsequent to December 31, 2016 are not covered by this external reinsurance agreement. As of December 31, 2023, $2.3 billion of HDI v.3.0 account values are reinsured to Union Hamilton.
12. INCOME TAXES
The following schedule discloses significant components of income tax expense (benefit) for each year presented:
Years Ended December 31,
202320222021
(in thousands)
Current tax expense (benefit):
U.S. federal$698,170 $(345,263)$440,649 
State and local14,550 4,479 5,002 
Total712,720 (340,784)445,651 
Deferred tax expense (benefit):
U.S. federal(1)(683,342)45,249 (920,437)
Total(683,342)45,249 (920,437)
Total income tax expense (benefit) on income (loss) before equity in earnings of operating joint ventures29,378 (295,535)(474,786)
Income tax expense (benefit) on equity in earnings of operating joint ventures(109)(193)(147)
Income tax expense (benefit) reported in equity related to:
Other comprehensive income (loss)(1)(5,627)(106,197)(128,241)
Total income tax expense (benefit)$23,642 $(401,925)$(603,174)
(1)    Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
Reconciliation of Expected Tax at Statutory Rates to Reported Income Tax Expense (Benefit)
The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% applicable for 2023, 2022 and 2021, and the reported income tax expense (benefit) are summarized as follows:
Years Ended December 31,
202320222021
($ in thousands)
Expected federal income tax expense (benefit)(1)$103,215 $(207,292)$(392,740)
Non-taxable investment income(42,730)(46,426)(48,662)
Tax credits(42,578)(47,544)(36,806)
Changes in tax law0 0 (3,644)
State tax (net of federal benefit)(2)11,495 3,538 3,952 
Other(2)(24)2,189 3,114 
Reported income tax expense (benefit)$29,378 $(295,535)$(474,786)
Effective tax rate(1)6.0 %29.9 %25.4 %
B-101

(1)    Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
(2)    Prior period amounts have been updated to conform to current period presentation.

The effective tax rate is the ratio of “Income tax expense (benefit)” divided by “Income (loss) from operations before income taxes and equity in earnings of operating joint venture.” The Company’s effective tax rate for fiscal years 2023, 2022 and 2021 was 6.0%, 29.9% and 25.4%, respectively. The following is a description of items that had a significant impact on the difference between the Company’s statutory U.S. federal income tax rate of 21% applicable for 2023, 2022 and 2021, and the Company’s effective tax rate during the periods presented:
Non-Taxable Investment Income. The U.S. Dividends Received Deduction (“DRD”) reduces the amount of dividend income subject to U.S. tax and is included in the non-taxable investment income shown in the table above. More specifically, the U.S. DRD constitutes $40 million of the total $43 million of 2023 non-taxable investment income, $44 million of the total $46 million of 2022 non-taxable investment income, and $46 million of the total $49 million of 2021 non-taxable investment income. The DRD for the current period was estimated using information from 2022, current year investment results, and current year’s equity market performance. The actual current year DRD can vary based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD.
Tax credits. These amounts primarily represent tax credits relating to foreign taxes withheld on the Company’s separate account investments.
Other. This line item represents reconciling items that are individually less than 5% of the computed expected federal income tax expense (benefit) and have therefore been aggregated for purposes of this reconciliation in accordance with relevant disclosure guidance.

Schedule of Deferred Tax Assets and Deferred Tax Liabilities
December 31,
20232022
 (in thousands)
Deferred tax assets:
Insurance reserves(1)$1,660,421 $1,235,687 
Investments(1)776,190 354,538 
Net unrealized loss on securities(1)296,749 481,989 
Other(1)4,723 2,801 
Deferred tax assets2,738,083 2,075,015 
Deferred tax liabilities:
Deferred policy acquisition cost(1)936,929 954,953 
Deferred sales inducements(1)72,791 80,116 
Deferred tax liabilities1,009,720 1,035,069 
Net deferred tax asset (liability)$1,728,363 $1,039,946 
(1)    Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized.
B-102

Changes in market conditions, including the significant rise in interest rates since the beginning of 2022, resulted in the recording of deferred tax assets related to net unrealized tax capital losses in the Company. When assessing recoverability of these deferred tax assets, the Company considers its ability and intent to hold the underlying securities to recovery in value, if necessary, as well as other factors as noted above. As of December 31, 2023, based on all available evidence, including capital loss carryback capacity, the Company concluded that the deferred tax assets related to the unrealized tax capital losses on the available-for-sale securities portfolios are, more likely than not, expected to be realized.
The Company had no valuation allowance as of December 31, 2023, and 2022. Adjustments to the valuation allowance will be made if there is a change in management’s assessment of the amount of deferred tax asset that is realizable.
The Company’s “Income (loss) from operations before income taxes and equity in earnings of operating joint venture” includes income from domestic operations of $492 million, $(987) million and $(1,870) million for the years ended December 31, 2023, 2022 and 2021, respectively.
Tax Audit and Unrecognized Tax Benefits
The Company’s liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the IRS or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to the liability for income taxes.
The Company had no unrecognized tax benefits as of December 31, 2023, 2022, and 2021. The Company does not anticipate any significant changes within the next twelve months to its total unrecognized tax benefits related to tax years for which the statute of limitations has not expired.
The Company classifies all interest and penalties related to tax uncertainties as income tax expense (benefit). The Company did not recognize tax related interest and penalties.
At December 31, 2023, the Company remains subject to examination in the U.S. for tax years 2014 through 2023.
The Company participates in the IRS’s Compliance Assurance Program. Under this program, the IRS assigns an examination team to review completed transactions as they occur in order to reach agreement with the Company on how they should be reported in the relevant tax returns. If disagreements arise, accelerated resolutions programs are available to resolve the disagreements in a timely manner.
B-103

13. EQUITY
Accumulated Other Comprehensive Income (Loss)
AOCI represents the cumulative OCI items that are reported separate from net income and detailed on the Consolidated Statements of Operations and Comprehensive Income (Loss). Net unrealized investment gains (losses) are described in further detail in Note 2, Note 8 (Interest rate remeasurement of Liability for Future Policy Benefits) and Note 10 (Gains (losses) from Changes in Nonperformance Risk on Market Risk Benefits). The balance of and changes in each component of AOCI as of and for the years ended December 31, are as follows:
 Accumulated Other Comprehensive Income (Loss)
 Foreign Currency
Translation
Adjustment		Net Unrealized
Investment Gains
(Losses)(1)		Interest Rate Remeasurement of Future Policy BenefitsGain (Loss) from Changes in Non-Performance Risk on Market Risk BenefitsTotal Accumulated
Other
Comprehensive
Income (Loss)
 (in thousands)
Balance, December 31, 2020$(7,797)$553,925 $0 $0 $546,128 
Cumulative effect of adoption of ASU 2018-120 (81,364)(155,255)571,039 334,420 
Change in OCI before reclassifications(2)(3,891)(185,492)37,274 (435,232)(587,341)
Amounts reclassified from AOCI0 (24,994)0 0 (24,994)
Income tax benefit (expense)(2)414 44,256 (7,828)91,399 128,241 
Balance, December 31, 2021(11,274)306,331 (125,809)227,206 396,454 
Change in OCI before reclassifications(2)(9,337)(2,249,609)310,351 1,440,307 (508,288)
Amounts reclassified from AOCI0 (4,428)0 0 (4,428)
Income tax benefit (expense)(2)604 473,231 (65,174)(302,464)106,197 
Balance, December 31, 2022(20,007)(1,474,475)119,368 1,365,049 (10,065)
Change in OCI before reclassifications2,419 677,735 (60,978)(659,875)(40,699)
Amounts reclassified from AOCI0 14,217 0 0 14,217 
Income tax benefit (expense)(497)(145,255)12,805 138,574 5,627 
Balance, December 31, 2023$(18,085)$(927,778)$71,195 $843,748 $(30,920)
(1)Includes cash flow hedges of $12 million, $139 million, and $40 million as of December 31, 2023, 2022 and 2021, respectively.
(2)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.
Reclassifications out of Accumulated Other Comprehensive Income (Loss) 
Years Ended December 31,
202320222021
 (in thousands)
Amounts reclassified from AOCI(1)(2):
Net unrealized investment gains (losses):
Cash flow hedges—Currency/Interest rate(3)$16,976 $78,433 $28,508 
Net unrealized investment gains (losses) on available-for-sale securities(31,193)(74,005)(3,514)
Total net unrealized investment gains (losses)(4)(14,217)4,428 24,994 
Total reclassifications for the period$(14,217)$4,428 $24,994 
(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 4 for additional information on cash flow hedges.
(4)See table below for additional information on unrealized investment gains (losses), including the impact on future policy benefits, policyholders’ account balances and other liabilities.
B-104

Net Unrealized Investment Gains (Losses)
Net unrealized investment gains (losses) on available-for-sale fixed maturity securities and certain other invested assets and other assets are included in the Company’s Consolidated Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from OCI those items that are included as part of “Net income (loss)” for a period that had been part of OCI in earlier periods. The amounts for the periods indicated below, split between amounts related to net unrealized investment gains (losses) on available-for-sale fixed maturity securities on which an allowance for credit losses has been recognized, and all other net unrealized investment gains (losses), are as follows:
Net Unrealized Investment Gains (Losses) on Available-for-Sale Fixed Maturity Securities on Which an Allowance for Credit Losses has been RecognizedNet Unrealized Gains (Losses) on All Other Investments(1)
Other Costs(2)		Future Policy
Benefits, Policyholders' Account Balances and Other Liabilities(3)
Income Tax
Benefit (Expense)		Accumulated
Other
Comprehensive
Income (Loss)
Related to Net
Unrealized
Investment
Gains (Losses)
 (in thousands)
Balance, December 31, 2020$0 $849,349 $1,200,048 $(1,348,231)$(147,241)$553,925 
Cumulative effect of adoption of ASU 2018-120 (1,000)(89,160)(12,880)21,677 (81,363)
Net investment gains (losses) on investments arising during the period2,951 (240,903)0 0 50,016 (187,936)
Reclassification adjustment for (gains) losses included in net income(8)(24,986)0 0 5,254 (19,740)
Reclassification due to allowance for credit losses recorded during the period742 (742)0 0 0 0 
Impact of net unrealized investment (gains) losses(4)0 0 (275,458)327,917 (11,014)41,445 
Balance, December 31, 20213,685 581,718 835,430 (1,033,194)(81,308)306,331 
Net investment gains (losses) on investments arising during the period(149)(2,737,481)0 0 574,760 (2,162,870)
Reclassification adjustment for (gains) losses included in net income831 (5,259)0 0 930 (3,498)
Reclassification due to allowance for credit losses recorded during the period4 (4)0 0 0 0 
Impact of net unrealized investment (gains) losses(4)0 0 (2,033,852)2,521,873 (102,459)385,562 
Balance, December 31, 20224,371 (2,161,026)(1,198,422)1,488,679 391,923 (1,474,475)
Net investment gains (losses) on investments arising during the period(4,482)744,727 0 0 (155,393)584,852 
Reclassification adjustment for (gains) losses included in net income(265)14,482 0 0 (2,984)11,233 
Reclassification due to allowance for credit losses recorded during the period2,363 (2,363)0 0 0 0 
Impact of net unrealized investment (gains) losses0 0 397,071 (459,581)13,122 (49,388)
Balance, December 31, 2023$1,987 $(1,404,180)$(801,351)$1,029,098 $246,668 $(927,778)
(1)Includes cash flow hedges. See Note 4 for information on cash flow hedges.
(2)"Other costs" primarily includes reinsurance recoverables and deferred reinsurance losses.
(3)"Other liabilities" primarily includes reinsurance payables.
(4)Prior period amounts reflect the implementation of ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts.

B-105

Noncontrolling interests

For certain subsidiaries, the Company owns a controlling interest that is less than 100% ownership of the subsidiary but must consolidate 100% of the subsidiary’s financial statements in accordance with U.S. GAAP. Noncontrolling interests represent the portion of equity ownership in a consolidated subsidiary that is not attributable to the Company.

14. STATUTORY NET INCOME AND SURPLUS AND DIVIDEND RESTRICTIONS
The Company is required to prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the Arizona Department of Insurance ("AZDOI"). It's subsidiary PLNJ is required to prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the New Jersey Department of Insurance and Banking. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes, and certain assets on a different basis.
The following table summarizes certain statutory financial information for the Company, including its subsidiary PLNJ, for the periods indicated:
Years Ended December 31,
202320222021
(in millions)
Statutory net income (loss)(1)$4,923 $3,317 $833 
Statutory capital and surplus(1)5,161 5,205 5,955 
(1) 2022 amounts include adjustments made to the audited statutory financial statements as of December 31, 2022.
The Company does not utilize prescribed or permitted practices that vary materially from the statutory accounting practices prescribed by the NAIC.
The Company is subject to Arizona law, which limits the amount of dividends that insurance companies can pay to stockholders without approval of the AZDOI. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the lesser of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. The Company must obtain approval from AZDOI prior to paying a dividend if the dividend, together with other dividend distributions made within the preceding twelve months, would exceed the lesser of 10% of statutory surplus or net gain from operations. Based on these limitations, there is no capacity to pay a dividend in 2024 without prior approval. In 2023, there was $1,400 million return of capital to Prudential Insurance. The Company did not pay dividends to Prudential Insurance in 2023, 2022 and 2021.

15. RELATED PARTY TRANSACTIONS
The Company has extensive transactions and relationships with Prudential Insurance and other affiliates. Although we seek to ensure that these transactions and relationships are fair and reasonable, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties.
Expense Charges and Allocations
The majority of the Company’s expenses are allocations or charges from Prudential Insurance or other affiliates. These expenses can be grouped into general and administrative expenses and agency distribution expenses.
The Company’s general and administrative expenses are charged to the Company using allocation methodologies based on business production processes. Management believes that the methodology is reasonable and reflects costs incurred by Prudential Insurance to process transactions on behalf of the Company. The Company operates under service and lease agreements whereby services of officers and employees, supplies, use of equipment and office space are provided by Prudential Insurance. The Company reviews its allocation methodology periodically which it may adjust accordingly. General and administrative expenses include allocations of stock compensation expenses related to a stock-based awards program and a deferred compensation program issued by Prudential Financial. The expense charged to the Company for the stock-based awards program was $1 million for each of the years ended December 31, 2023, 2022 and 2021. The expense charged to the Company for the deferred compensation program was $5 million, $5 million and $4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
B-106

The Company is charged for its share of employee benefit expenses. These expenses include costs for funded and non-funded, non-contributory defined benefit pension plans. Some of these benefits are based on final earnings and length of service while others are based on an account balance, which takes into consideration age, service and earnings during a career. The Company’s share of net expense for the pension plans was $13 million, $19 million and $14 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The Company is also charged for its share of the costs associated with welfare plans issued by Prudential Insurance. These expenses include costs related to medical, dental, life insurance and disability. The Company's share of net expense for the welfare plans was $14 million, $15 million and $13 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Prudential Insurance sponsors voluntary savings plans for its employee 401(k) plans. The plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4% of annual salary. The Company’s expense for its share of the voluntary savings plan was $7 million, $9 million and $5 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The Company is charged distribution expenses from Prudential’s proprietary nationwide sales organization, “Prudential Advisors” through a transfer pricing agreement, which is intended to reflect a market-based pricing arrangement. Prudential Advisors distributes Prudential life insurance, annuities, and investment products with proprietary and non-proprietary product options.
The Company pays commissions and certain other fees to Prudential Annuities Distributors, Inc. (“PAD”) in consideration for PAD’s marketing and underwriting of the Company’s annuity products. Commissions and fees are paid by PAD to broker-dealers who sell the Company’s annuity products. Commissions and fees paid by the Company to PAD were $587 million, $611 million and $379 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The Company is charged for its share of corporate expenses incurred by Prudential Financial to benefit its businesses, such as advertising, executive oversight, external affairs and philanthropic activity. The Company’s share of corporate expenses was $144 million, $105 million and $86 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Corporate-Owned Life Insurance
The Company has sold five Corporate Owned Life Insurance (“COLI”) policies to Prudential Insurance, and one to Prudential Financial. The cash surrender value included in separate accounts for these COLI policies was $4,156 million and $4,512 million as of December 31, 2023 and 2022, respectively. Fees related to these COLI policies were $50 million, $52 million and $56 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company reinsures the risk associated with these COLI policies to an affiliate reinsurer as part of a broader program related to variable insurance policies.
In May 2023, the Company funded a policy loan from the Prudential Financial COLI policy noted above in an amount of $900 million to an affiliated irrevocable trust, commonly referred to as a “rabbi trust”, which Prudential Financial created to support certain non-qualified retirement plans. The outstanding balance of the policy loan with the rabbi trust was $898 million as of December 31, 2023. Interest income related to the policy loan was $26 million for the year ended December 31, 2023.
Affiliated Investment Management Expenses
In accordance with an agreement with PGIM, Inc. ("PGIM"), the Company pays investment management expenses to PGIM who acts as investment manager to certain Company general account and separate account assets. Investment management expenses paid to PGIM related to this agreement were $53 million, $41 million and $20 million for the years ended December 31, 2023, 2022 and 2021, respectively. These expenses are recorded as “Net investment income” in the Consolidated Statements of Operations and Comprehensive Income.
Derivative Trades
In its ordinary course of business, the Company enters into OTC derivative contracts with an affiliate, PGF. For these OTC derivative contracts, PGF has a substantially equal and offsetting position with an external counterparty. See Note 4 for additional information.
The interest income to the Company from PGF related to affiliated cash collateral was $499 million and $137 million for the years ended December 31, 2023 and 2022, respectively, and are included in "Other income (loss)".
B-107

Joint Ventures
The Company has made investments in joint ventures with certain subsidiaries of Prudential Financial. "Other invested assets" includes $754 million and $606 million of investments in joint ventures as of December 31, 2023 and 2022, respectively. "Net investment income" related to these ventures includes gains(losses) of $5 million, $21 million and $39 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Affiliated Asset Administration Fee Income
The Company has a revenue sharing agreement with AST Investment Services, Inc. ("ASTISI") and PGIM Investments LLC ("PGIM Investments") whereby the Company receives fee income based on policyholders' separate account balances invested in the Advanced Series Trust. Income received from ASTISI and PGIM Investments related to this agreement was $274 million, $306 million and $374 million for the years ended December 31, 2023, 2022 and 2021, respectively. These revenues are recorded as “Asset administration fees” in the Consolidated Statements of Operations and Comprehensive Income.
The Company has a revenue sharing agreement with PGIM Investments, whereby the Company receives fee income based on policyholders’ separate account balances invested in The Prudential Series Fund. Income received from PGIM Investments related to this agreement was $38 million, $36 million and $21 million for the years ended December 31, 2023, 2022 and 2021, respectively. These revenues are recorded as “Asset administration fees” in the Consolidated Statements of Operations and Comprehensive Income.
Affiliated Notes Receivable
Affiliated notes receivable included in “Receivables from parent and affiliates” at December 31, were as follows:
Maturity DatesInterest Rates20232022
(in thousands)
U.S. dollar fixed rate notes2025-20270.00%-14.85 %$147,984 $148,076 
Total notes receivable - affiliated(1)$147,984 $148,076 
(1)All notes receivable may be called for prepayment prior to the respective maturity dates under specified circumstances.
The affiliated notes receivable shown above are classified as available-for-sale securities and other trading assets carried at fair value. The Company monitors the internal and external credit ratings of these loans and loan performance. The Company also considers any guarantees made by Prudential Insurance for loans due from affiliates.
Accrued interest receivable related to these loans was $1 million at both December 31, 2023 and 2022, and is included in “Other assets.” Revenues related to these loans was $3 million, $3 million and $4 million for the years ended December 31, 2023, 2022 and 2021, respectively, and are included in “Other income (loss).”

Affiliated Commercial Mortgage Loan
The affiliated commercial mortgage loan included in "Commercial mortgage and other loans" at December 31, was as follows:
Maturity DateInterest Rate20232022
(in thousands)
Affiliated Commercial Mortgage Loan20259.85%$71,038 $72,225 
This affiliated commercial mortgage loan was transferred from PALAC as part of the 2021 Variable Annuities Recapture. See Note 1 for details.
The commercial mortgage loan shown above is carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses, and net of an allowance for losses. The Company reviews the performance and credit quality of the commercial mortgage loan on an on-going basis.
Accrued interest receivable related to the loan was $0.5 million at both December 31, 2023 and 2022, and is included in "Accrued investment income". Revenues were $6.9 million, $4.6 million and $1.7 million for the years ended December 31, 2023, 2022, and 2021, respectively, and is included in "Net investment income."
B-108

Affiliated Asset Transfers
The Company participates in affiliated asset trades with parent and sister companies. Book and market value differences for trades with a parent and sister are recognized within "Additional paid-in capital" ("APIC") and "Realized investment gains (losses), net," respectively. The table below shows affiliated asset trades for the years ended December 31, 2023 and 2022.
AffiliateDateTransactionSecurity TypeFair
Value		Book ValueAPIC, Net
of Tax
Increase/
(Decrease)		Realized
Investment
Gain/
(Loss)
    (in thousands)
PALACJanuary 2022PurchaseFixed Maturities$4,432 $4,432 $0 $0 
PALACJanuary 2022PurchaseDerivatives$404 $404 $0 $0 
PALACFebruary 2022PurchaseFixed Maturities$128,909 $128,909 $0 $0 
PAR UApril 2022PurchaseFixed Maturities$48,970 $48,970 $0 $0 
Prudential InsuranceMay 2022PurchaseFixed Maturities$233,426 $241,128 $6,085 $0 
Prudential InsuranceJune 2022PurchaseFixed Maturities$88,754 $81,216 $(5,955)$0 
Prudential InsuranceJune 2022Transfer InFixed Maturities$52,089 $45,031 $(5,577)$0 
Prudential InsuranceJune 2022Transfer OutFixed Maturities$48,786 $58,984 $(8,057)$0 
PAR UJune 2022PurchaseCommercial Mortgage and Other Loans$6,492 $6,492 $0 $0 
PAR UJune 2022SaleCommercial Mortgage and Other Loans$14,853 $15,725 $0 $(872)
GUL ReJune 2022PurchaseCommercial Mortgage and Other Loans$13,551 $13,551 $0 $0 
GUL ReJune 2022SaleCommercial Mortgage and Other Loans$8,692 $9,033 $0 $(341)
PURCJune 2022PurchaseCommercial Mortgage and Other Loans$4,403 $4,403 $0 $0 
Prudential InsuranceJuly 2022Transfer InFixed Maturities$6,319 $7,230 $719 $0 
PAR UJuly 2022PurchaseFixed Maturities$16,284 $16,284 $0 $0 
Prudential InsuranceAugust 2022PurchaseFixed Maturities$155,823 $139,712 $(12,728)$0 
Vantage Casualty Insurance CoSeptember 2022PurchaseFixed Maturities$3,497 $3,497 $0 $0 
WH Warehouse LtdOctober 2022SaleFixed Maturities$26,536 $26,388 $0 $148 
PAR UNovember 2022PurchaseFixed Maturities$91,051 $91,051 $0 $0 
Prudential InsuranceDecember 2022PurchaseFixed Maturities$67,477 $71,369 $3,075 $0 
Prudential InsuranceJanuary 2023PurchaseFixed Maturities$48,329 $50,372 $1,614 $0 
Prudential InsuranceMarch 2023PurchaseFixed Maturities$7,175 $7,500 $256 $0 
PURCApril 2023PurchaseFixed Maturities$102,804 $102,804 $0 $0 
Term ReJune 2023PurchaseFixed Maturities$115,573 $115,573 $0 0
B-109

Prudential InsuranceJune 2023PurchaseFixed Maturities$4,298 $4,443 $114 $0 
Prudential InsuranceJune 2023PurchaseFixed Maturities$4,394 $4,494 $80 $0 
Prudential InsuranceJune 2023PurchaseFixed Maturities$19,453 $19,203 $(198)$0 
Prudential InsuranceJune 2023PurchaseFixed Maturities$14,452 $15,086 $502 $0 
Prudential InsuranceSeptember 2023PurchaseFixed Maturities$15,880 $15,801 $(62)$0 
Prudential InsuranceDecember 2023SaleCommercial Mortgage and Other Loans$762 $754 $0 $8 

Debt Agreements
The Company is authorized to borrow funds up to $7 billion from affiliates to meet its capital and other funding needs. The following table provides the breakout of the Company's short-term debt. There is no long-term debt to affiliates as of December 31, 2023.
AffiliateDate IssuedAmount of Notes - December 31, 2023Amount of Notes - December 31, 2022Interest 
Rate		Date of Maturity
(in thousands)
Prudential Insurance8/13/2021$0 $96,666 4.39 %12/15/2023
Prudential Insurance8/13/20210 29,000 4.39 %12/15/2023
Prudential Insurance8/13/202194,953 97,665 3.95 %6/20/2024
Prudential Insurance8/13/202137,981 39,066 3.95 %6/20/2024
Prudential Insurance8/13/202147,477 48,832 3.95 %6/20/2024
Prudential Funding LLC12/28/20220 138 4.73 %1/31/2023
Prudential Funding LLC12/29/20220 62 4.73 %1/31/2023
Prudential Funding LLC12/30/20220 384 4.73 %1/31/2023
Total Loans Payable to Affiliates(1)$180,411 $311,813 
(1)Includes $180 million of loans reclassified as current portion of long-term debt as of December 31, 2023.
Effective August 2021, the affiliated long-term debt was transferred to the Company from PALAC based on the market value of $324 million. The Company recorded a premium of $24 million which is amortized into earnings over the life of the loans.
The total interest expense to the Company related to affiliated loans and cash collateral with PGF was $17 million, $3 million and $0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
All debt outstanding as of December 31, 2023 and 2022 is that of Pruco Life.
Contributed Capital and Dividends
In February and December 2023, the Company received capital contributions in the amount of $405 million and $7 million, respectively, from Prudential Insurance. In March, June and September of 2022, the Company received capital contributions in the amount of $8 million, $3 million and $7 million, respectively, from Prudential Insurance. In January, July and December of 2021, the Company received capital contributions in the amounts of $106 million, $3,813 million and $457 million, respectively, from Prudential Insurance. The December 2021 capital contribution includes $167 million of invested assets related to the reinsurance agreement with PALAC.
In June, September, and December 2023, there was a $300 million, $650 million, and $450 million return of capital, respectively, to Prudential Insurance. In June 2021, there was a $34 million return of capital to Prudential Insurance associated with the financial guarantee related to the sale of Prudential of Taiwan. There was no return of capital in 2022.
In 2023, 2022 and 2021, the Company did not pay any dividends to Prudential Insurance.
Reinsurance with Affiliates
As discussed in Note 11, the Company participates in reinsurance transactions with certain affiliates.
B-110

16. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments
The Company has made commitments to fund commercial mortgage loans. As of December 31, 2023 and 2022, the outstanding balances on these commitments were $270 million and $333 million, respectively. These amounts include unfunded commitments that are not unconditionally cancellable. For related credit exposure, there was an allowance for credit losses of $0.3 million and $0.1 million as of December 31, 2023 and 2022, respectively, which is a change of $0.3 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively. The Company also made commitments to purchase or fund investments, mostly fund investments and private fixed maturities, some of which are contingent upon events or circumstances not under the Company’s control, including those at the discretion of the Company’s counterparties. The Company anticipates a portion of these commitments will ultimately be funded from its separate accounts. As of December 31, 2023 and 2022, $1,182 million and $582 million, respectively, of these commitments were outstanding. These amounts include unfunded commitments that are not unconditionally cancellable. There were no related charges for credit losses for both the years ended December 31, 2023 and 2022.
Guarantees
In July 2017, Pruco Life formed a joint venture with CT Corp to provide life insurance solutions in Indonesia. Pruco Life owns a 49% interest in the joint venture and has entered into a shareholders agreement with CT Corp that sets out their respective rights and obligations with respect to the joint venture. Among other things, the shareholders agreement obligates Pruco Life and CT Corp to provide capital to the joint venture, as necessary to comply with applicable law or to maintain a specified minimum amount of capital in the joint venture. This obligation is not limited to a maximum amount. Pruco Life does not expect to make any payments on this guarantee and is not carrying any liabilities associated with the guarantee.
Since 2001, Pruco Life entered into an arrangement with Prudential of Taiwan as discussed in Note 11. In June 2021, PIIH completed the sale of Prudential of Taiwan. As a result of the sale, Pruco Life has a financial guarantee to stand ready to perform in an event that both Prudential of Taiwan and the Buyer default and fail to perform their obligations to make payments to the policyholders. Pruco Life has a liability of $32 million and $33 million as of December 31, 2023 and 2022, respectively, which represents the fair value of the guarantee and is amortized in revenue over a period which approximates the life of the underlying insurance in force. Since this obligation is not subject to limitations, it is not possible to determine the maximum potential amount due under this guarantee.

Guarantees of Asset Values

December 31,
20232022
(in thousands)
Guaranteed value of third-party assets$311,302 $0 
Fair value of collateral supporting these assets$287,621 $0 
Asset (liability) associated with guarantee, carried at fair value $1 $0 

Certain contracts underwritten by Pruco Life include guarantees related to financial assets owned by the guaranteed party. These contracts are accounted for as derivatives and carried at fair value. The collateral supporting these guarantees is not reflected on the Consolidated Statements of Financial Position.
Contingent Liabilities
On an ongoing basis, the Company and its regulators review its operations including, but not limited to, sales and other customer interface procedures and practices, and procedures for meeting obligations to its customers and other parties. These reviews may result in the modification or enhancement of processes or the imposition of other action plans, including concerning management oversight, sales and other customer interface procedures and practices, and the timing or computation of payments to customers and other parties. In certain cases, if appropriate, the Company may offer customers or other parties remediation and may incur charges, including the cost of such remediation, administrative costs and regulatory fines.
The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements.
B-111

It is possible that the results of operations or the cash flows of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flows for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company’s financial position.
Litigation and Regulatory Matters
The Company is subject to legal and regulatory actions in the ordinary course of its business. Pending legal and regulatory actions include proceedings specific to the Company and proceedings generally applicable to business practices in the industry in which it operates. The Company is subject to class action lawsuits and other litigation involving a variety of issues and allegations involving sales practices, claims payments and procedures, premium charges, policy servicing and breach of fiduciary duty to customers. The Company is also subject to litigation arising out of its general business activities, such as its investments, contracts, leases and labor and employment relationships, including claims of discrimination and harassment, and could be exposed to claims or litigation concerning certain business or process patents. In addition, the Company, along with other participants in the businesses in which it engages, may be subject from time to time to investigations, examinations and inquiries, in some cases industry-wide, concerning issues or matters upon which such regulators have determined to focus. In some of the Company’s pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain.
The Company establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but the matter, if material, is disclosed. The Company estimates that as of December 31, 2023, the aggregate range of reasonably possible losses in excess of accruals established for those litigation and regulatory matters for which such an estimate currently can be made is less than $100 million. This estimate is not an indication of expected loss, if any, or the Company's maximum possible loss exposure on such matters. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews.
Individual Annuities and Individual Life
Moreland, Socorro v. PICA, et al.

In June 2020, a putative class action complaint entitled Socorro Moreland v. The Prudential Insurance Company of America; Pruco Life Insurance Company, was filed in the United States District Court for the Northern District of California, alleging that the Company failed to comply with California laws requiring that life insurance policies issued and delivered in California: (i) provide for a 60-day grace period pre-lapse during which a policy must stay in force; (ii) provide a 30-day written notice of pending lapse; and (iii) notify policyowners of their right to designate additional recipients for lapse notices. The complaint asserts claims for violation of California law, breach of contract, unfair competition, and bad faith violation of the implied covenant of good faith and fair dealing, and seeks unspecified damages, declaratory and injunctive relief. In August 2020, defendants filed an answer to the complaint and a motion to stay the action pending the California Supreme Court’s decision, in McHugh v. Protective Life Insurance, on the question of whether the California lapse statutes apply to policies that were in force when the statutes went into effect on January 1, 2013, or solely to policies issued after that date. The Moreland court granted defendants’ motion to stay in October 2020. Subsequently, in August 2021, the California Supreme Court in McHugh determined that the California lapse statutes apply to policies that were in force as of January 1, 2013. In October 2021, the Moreland court lifted the stay order. In December 2022, plaintiff filed a motion for class certification. In September 2023, the court issued an Order denying plaintiff’s class certification motion. In January 2024, the court issued a Joint Stipulation and Order dismissing the case with prejudice. This matter is now closed.

B-112

California Advocates for Nursing Home Reform v. The Prudential Insurance Company of America and Pruco Life Insurance Company, et al.

In January 2024, a putative class action complaint entitled California Advocates for Nursing Home Reform v. The Prudential Insurance Company of America and Pruco Life Insurance Company, et al., was filed in California Superior Court, Alameda County, alleging that the Company has failed to comply with California laws requiring that life insurance policies issued or delivered in California: (i) provide for a contractual 60-day grace period pre-lapse during which a policy must stay in force; (ii) provide policyholders and designees with notice of payment default within 30 days and a 30-day advance written notice of pending lapse; and (iii) notify policyholders annually of their right to designate additional recipients for lapse notices. The complaint asserts claims for violation of California’s Unfair Competition law and seeks unspecified damages along with declaratory and injunctive relief.

Regulatory
Variable Products
The Company has received regulatory inquiries and requests for information from state and federal regulators, including subpoenas from the U.S. Securities and Exchange Commission, concerning the appropriateness of variable product sales and replacement activity. The Company is cooperating with regulators and may become subject to additional regulatory inquiries and other actions related to this matter.
Summary
The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company’s results of operations or cash flows in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flows for such period. In light of the unpredictability of the Company’s litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company’s financial statements. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company’s financial statements.
B-113