v3.25.2
INVESTMENTS
 6 Months Ended
Jun. 30, 2025
Investments [Abstract]  
INVESTMENTS INVESTMENTS
Investment Holdings
The amortized cost and allowance for credit losses for the Company's investments in fixed maturity securities and the fair values of these investments as well as the fair value of the Company's investments in equity securities are shown in the following tables.
  
June 30, 2025
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities available-for-sale, carried at fair
  value through other comprehensive income:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$20,289 $0 $174 $2,935 $17,528 
Municipalities950 0 49 118 881 
Mortgage- and asset-backed securities338 0 3 30 311 
Public utilities2,861 0 165 183 2,843 
Sovereign and supranational359 0 9 11 357 
Banks/financial institutions5,771 0 214 420 5,565 
Other corporate5,755 0 445 438 5,762 
Total yen-denominated36,323 0 1,059 4,135 33,247 
  U.S. dollar-denominated:
U.S. government and agencies226 0 1 2 225 
Municipalities1,212 0 66 85 1,193 
Mortgage- and asset-backed securities4,065 0 171 69 4,167 
Public utilities4,378 0 350 155 4,573 
Sovereign and supranational58 0 20 0 78 
Banks/financial institutions3,930 0 371 39 4,262 
Other corporate19,708 0 2,031 738 21,001 
Total U.S. dollar-denominated33,577 0 3,010 1,088 35,499 
Other currencies:
Mortgage- and asset-backed securities47 0 1 0 48 
Public utilities57 0 1 0 58 
Other corporate
26 0 1 0 27 
Total other currencies
130 0 3 0 133 
Total securities available-for-sale$70,030 $0 $4,072 $5,223 $68,879 
  
December 31, 2024
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities available-for-sale, carried at fair
  value through other comprehensive income:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$19,409 $0 $465 $2,234 $17,640 
Municipalities869 0 65 79 855 
Mortgage- and asset-backed securities327 0 4 23 308 
Public utilities2,746 0 202 108 2,840 
Sovereign and supranational330 0 16 8 338 
Banks/financial institutions5,376 0 267 342 5,301 
Other corporate5,329 0 568 305 5,592 
Total yen-denominated34,386 0 1,587 3,099 32,874 
  U.S. dollar-denominated:
U.S. government and agencies208 0 1 3 206 
Municipalities1,167 0 65 53 1,179 
Mortgage- and asset-backed securities2,987 0 302 34 3,255 
Public utilities3,938 0 418 151 4,205 
Sovereign and supranational57 0 21 0 78 
Banks/financial institutions3,271 0 420 36 3,655 
Other corporate18,050 0 2,493 752 19,791 
Total U.S. dollar-denominated29,678 0 3,720 1,029 32,369 
Other currencies:
Other corporate25 0 1 0 26 
Total other currencies25 0 1 0 26 
Total securities available-for-sale$64,089 $0 $5,308 $4,128 $65,269 

  
June 30, 2025
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Net
Carrying
Amount		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities held-to-maturity, carried at
  amortized cost:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$16,720 $2 $16,718 $414 $272 $16,860 
Municipalities255 0 255 10 0 265 
Public utilities35 0 35 0 1 34 
Sovereign and supranational412 3 409 21 0 430 
Other corporate17 0 17 1 0 18 
Total yen-denominated17,439 5 17,434 446 273 17,607 
Total securities held-to-maturity$17,439 $5 $17,434 $446 $273 $17,607 
  
December 31, 2024
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Net
Carrying
Amount		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities held-to-maturity, carried at
  amortized cost:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$15,311 $2 $15,309 $759 $9 $16,059 
Municipalities235 0 235 22 0 257 
Public utilities32 0 32 1 0 33 
Sovereign and supranational377 3 374 31 0 405 
Other corporate16 0 16 2 0 18 
Total yen-denominated15,971 5 15,966 815 9 16,772 
Total securities held-to-maturity$15,971 $5 $15,966 $815 $9 $16,772 

June 30,
2025		December 31,
2024
(In millions)Fair ValueFair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated$538 $484 
U.S. dollar-denominated344 312 
Total equity securities$882 $796 

The methods of determining the fair values of the Company's investments in fixed maturity securities and equity securities are described in Note 5.

During the first six months of 2025 and 2024, respectively, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at June 30, 2025, were as follows:
(In millions)
Amortized
Cost (1)
Fair
Value
Available-for-sale:
Due in one year or less$1,382 $1,481 
Due after one year through five years8,612 9,422 
Due after five years through 10 years16,665 17,423 
Due after 10 years38,921 36,027 
Mortgage- and asset-backed securities4,450 4,526 
Total fixed maturity securities available-for-sale$70,030 $68,879 
Held-to-maturity:
Due in one year or less$35 $35 
Due after one year through five years45 46 
Due after five years through 10 years9,256 9,647 
Due after 10 years8,098 7,879 
Total fixed maturity securities held-to-maturity$17,434 $17,607 
(1) Net of allowance for credit losses
Economic maturities are used for certain debt instruments with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates.

Investment Concentrations

The Company's process for investing in credit-related investments begins with an independent approach to underwriting each issuer's fundamental credit quality. The Company evaluates independently those factors that it believes could influence an issuer's ability to make payments under the contractual terms of the Company's instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). The Company further evaluates the investment considering broad business and portfolio management objectives, including asset/liability needs, portfolio diversification, and expected income.

Investment exposures that individually exceeded 10% of shareholders' equity were as follows:
June 30, 2025December 31, 2024
(In millions)Credit
Rating		Amortized
Cost		Fair
Value		Credit
Rating		Amortized
Cost		Fair
Value
Japan National Government(1)
A+$36,029$33,508A+$33,822$32,844
(1) Japan Government Bonds (JGBs) or JGB-backed securities
Net Investment Gains and Losses

Information regarding pretax net gains and losses from investments is as follows:
  
Three Months Ended June 30,Six Months Ended June 30,
(In millions)2025202420252024
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales$5 $6 $119 $40 
Gross losses from sales(98)(27)(333)(309)
Foreign currency gains (losses)79 71 240 487 
Other investments:
Gross gains (losses) from sales and redemptions11 5 12 10 
Total sales and redemptions(3)55 38 228 
Equity securities98 

11 37 87 
Real estate owned impairments(6)0 (6)0 
Credit losses:
Fixed maturity securities held-to-maturity0 0 0 0 
Commercial mortgage and other loans(61)(21)(114)(28)
Loan commitments2 2 0 3 
Reinsurance recoverables and other1 0 1 5 
Total credit losses(58)(19)(113)(20)
Derivatives and other:
Derivative gains (losses)23 (275)(22)(490)
Foreign currency gains (losses)(475)924 (1,318)1,842 
Total derivatives and other(452)649 (1,340)1,352 
Total net investment gains (losses)$(421)$696 $(1,384)$1,647 

During the second quarter of 2025, the Company recognized an impairment loss of $6 million on an office-type real estate owned (REO) property classified as held-and-used for the production of income. The impairment was based on the Company's evaluation of a material adverse change in occupancy and resulted in an estimated fair value of the REO property of $12 million. The fair value was based on expected future cash flows utilizing inputs classified as Level 3 under the fair value guidance in ASC 820.
The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $101 million. The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the three-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $15 million.

The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $47 million. The unrealized holding gains, net of losses, recorded as a component of net investment gains and losses for the six-month period ended June 30, 2024 that relate to equity securities held at the June 30, 2024 reporting date were $70 million.
Unrealized Investment Gains and Losses
Effect on Shareholders’ Equity
The net effect on shareholders’ equity of unrealized gains and losses from fixed maturity securities was as follows:
(In millions)June 30,
2025		December 31,
2024
Unrealized gains (losses) on securities available-for-sale$(1,151)$1,180 
Deferred income taxes(677)(1,156)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities$(1,828)$24 

Gross Unrealized Loss Aging
The following tables show the fair values and gross unrealized losses of the Company's available-for-sale investments for the periods ended June 30, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.
  
June 30, 2025
  
TotalLess than 12 months12 months or longer
(In millions)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Fixed maturity securities available-
   for-sale:
U.S. government and
    agencies:
U.S. dollar-denominated$108 $2 $73 $0 $35 $2 
Japan government and
    agencies:
Yen-denominated11,469 2,935 5,838 288 5,631 2,647 
Municipalities:
U.S. dollar-denominated650 85 88 5 562 80 
Yen-denominated341 118 88 9 253 109 
Mortgage- and asset-
    backed securities:
U.S. dollar-denominated1,578 69 1,182 41 396 28 
Yen-denominated214 30 23 0 191 30 
Public utilities:
U.S. dollar-denominated1,911 155 1,045 30 866 125 
Yen-denominated1,048 183 211 10 837 173 
Sovereign and supranational:
Yen-denominated48 11 0 0 48 11 
Banks/financial institutions:
U.S. dollar-denominated1,065 39 890 16 175 23 
Yen-denominated3,759 420 655 16 3,104 404 
Other corporate:
U.S. dollar-denominated7,675 738 3,823 105 3,852 633 
Yen-denominated 2,190 438 566 34 1,624 404 
Total$32,056 $5,223 $14,482 $554 $17,574 $4,669 
  
December 31, 2024
  
TotalLess than 12 months12 months or longer
(In millions)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Fixed maturity securities available-
   for-sale:
U.S. government and
    agencies:
U.S. dollar-denominated$106 $3 $59 $1 $47 $2 
Japan government and
    agencies:
Yen-denominated8,136 2,234 2,070 57 6,066 2,177 
Municipalities:
U.S. dollar-denominated666 53 67 3 599 50 
Yen-denominated341 79 96 2 245 77 
Mortgage- and asset-
    backed securities:
U.S. dollar-denominated567 34 173 2 394 32 
Yen-denominated196 23 12 0 184 23 
Public utilities:
U.S. dollar-denominated1,570 151 699 19 871 132 
Yen-denominated1,020 108 368 11 652 97 
Sovereign and supranational:
Yen-denominated47 8 0 0 47 8 
Banks/financial institutions:
U.S. dollar-denominated625 36 376 7 249 29 
Yen-denominated3,197 342 471 22 2,726 320 
Other corporate:
U.S. dollar-denominated6,097 752 2,036 59 4,061 693 
Yen-denominated1,733 305 289 14 1,444 291 
Total$24,301 $4,128 $6,716 $197 $17,585 $3,931 

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's available-for-sale securities have been primarily related to general market factors such as changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For available-for-sale securities in an unrealized loss position, the Company performs detailed analyses to identify whether the drivers of the decline in fair value are due to general market factors, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company‘s resources to the review and monitoring of securities with real credit-related concerns that could impact ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market-related, the Company performs a more focused review of the related issuers' specific credit profile.

For corporate issuers, the Company evaluates their assets and business profile, including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.
Assuming no credit-related factors develop, unrealized gains and losses on available-for-sale securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its available-for-sale investments in the sectors shown in the table above have the ability to service their obligations to the Company. Further, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

However, if the Company identifies certain available-for-sale securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors, an allowance for credit losses is recognized. Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of June 30, 2025. Refer to the Allowance for Credit Losses section below for additional information.

As of June 30, 2025 and December 31, 2024, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

Commercial Mortgage and Other Loans

The Company classifies its transitional real estate loans (TREs), commercial mortgage loans (CMLs), middle market loans (MMLs), and other loans as held-for-investment and includes them in the commercial mortgage and other loans line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for credit losses.

The following table reflects the composition of the carrying value for commercial mortgage and other loans by property type as of the periods presented.
June 30, 2025December 31, 2024
(In millions)Amortized
Cost		% of
Total		Amortized
Cost		% of
Total
Commercial Mortgage and other loans:
Transitional real estate loans:
Office$1,246 11.7 %$1,361 12.1 %
Retail314 2.9 349 3.1 
Apartments/Multi-Family1,881 17.7 2,201 19.6 
Industrial100 .9 117 1.1 
Hospitality525 4.9 556 5.0 
Other292 2.7 318 2.8 
Total transitional real estate loans4,358 40.8 4,902 43.7 
Commercial mortgage loans:
Office294 2.8 300 2.7 
Retail210 2.0 214 1.9 
Apartments/Multi-Family559 5.3 572 5.1 
Industrial413 3.9 436 3.9 
Other14 .1 15 .1 
Total commercial mortgage loans1,490 14.1 1,537 13.7 
Middle market loans4,355 40.9 4,423 39.4 
Other loans445 4.2 362 3.2 
Total commercial mortgage and other loans$10,648 100.0 %$11,224 100.0 %
Allowance for credit losses(384)(355)
Total net commercial mortgage and other loans$10,264 $10,869 
CMLs and TREs are secured by properties entirely within the U.S. (with the largest concentrations in California (20%), Texas (14%) and Florida (10%)). MMLs are issued only to companies domiciled within the U.S. and Canada.
Transitional Real Estate Loans

TREs are relatively short-term floating rate commercial mortgage loans that are secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date.

As of June 30, 2025, the Company had $175 million in outstanding commitments to fund TREs. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

CMLs are typically fixed rate loans on commercial real estate with partial repayment of principal over the life of the loan with the remaining outstanding principal being repaid upon maturity. This loan portfolio is generally considered higher quality investment grade loans.

Middle Market Loans

MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade.

As of June 30, 2025, the Company had commitments of approximately $646 million to fund future MMLs. These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

Other Loans

Other loans are primarily infrastructure loans. Infrastructure loans are typically senior secured, financing operating portfolios of renewable and conventional energy generation assets characterized by predictable, often contractual cash flows for loan repayment. The infrastructure loan portfolio weighted average rating is investment grade.

As of June 30, 2025, the Company had commitments of approximately $1 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

Credit Quality Indicators

For TREs, the Company’s key credit quality indicators include performance of the loan and loan-to-value (LTV), which is calculated by dividing the current outstanding loan balance by the estimated property value, primarily using values at origination. Given that TREs involve properties undergoing a repositioning of their commercial profile, LTV provides the most insight into the credit risk of the loan. The Company monitors the performance of the loans periodically, but not less frequently than quarterly. The monitoring process also focuses on higher risk loans, which include those that are delinquent or for which foreclosure or deed in lieu of foreclosure is anticipated.

For CMLs, the Company’s key credit quality indicators include LTV and debt service coverage ratios (DSCR). DSCR is the most recently available net operating income of the underlying property compared to the required debt service of the loan.

For MMLs and held-to-maturity fixed maturity securities, the Company’s key credit quality indicator is credit ratings. The Company’s held-to-maturity portfolio is composed of investment grade securities that are senior unsecured instruments, while its MMLs generally have below-investment-grade ratings but are typically senior secured instruments. The Company monitors the credit ratings periodically, but not less frequently than quarterly.

For other loans, the Company’s key credit quality indicator is credit ratings. The Company monitors these credit ratings periodically, but not less frequently than quarterly.
The following tables present as of June 30, 2025 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and credit quality indicator.
Transitional Real Estate Loans
(In millions)20252024202320222021PriorTotal
Loan-to-Value Ratio:
0%-59.99%$0 $0 $0 $370 $391 $10 $771 
60%-69.99%0 0 77 419 442 400 1,338 
70%-79.99%0 0 14 772 625 44 1,455 
80% or greater0 0 0 186 297 311 794 
Total$0 $0 $91 $1,747 $1,755 $765 $4,358 
Current-period gross
  writeoffs:		$0 $0 $0 $5 $0 $24 $29 
Commercial Mortgage Loans
(In millions)20252024202320222021PriorTotalWeighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%$0 $0 $32 $0 $247 $1,010 $1,289 2.68
60%-69.99%0 0 0 0 25 53 78 2.14
70%-79.99%0 0 0 0 0 8 8 1.48
80% or greater0 12 0 0 0 103 115 0.76
Total$0 $12 $32 $0 $272 $1,174 $1,490 2.50
Weighted Average DSCR0.001.132.490.003.042.39
Current-period gross
  writeoffs:		$0 $0 $0 $0 $0 $0 $0 
Middle Market Loans
(In millions)20252024202320222021PriorRevolving LoansTotal
Credit Ratings:
BBB$13 $37 $30 $0 $71 $106 $11 $268 
BB233 466 37 385 349 620 77 2,167 
B46 181 46 257 460 475 31 1,496 
CCC17 5 0 9 62 194 20 307 
CC0 0 0 14 0 0 1 15 
C and lower0 0 0 0 16 80 6 102 
Total$309 $689 $113 $665 $958 $1,475 $146 $4,355 
Current-period gross
  writeoffs:		$0 $0 $0 $0 $17 $39 $0 $56 
Other Loans
(In millions)20252024202320222021PriorRevolving LoansTotal
Credit Ratings:
A$40 $0 $0 $74 $0 $0 $0 $114 
AA0 0 0 8 3 0 0 11 
BBB5 217 72 26 0 0 0 320 
BB0 0 0 0 0 0 0 0 
Total$45 $217 $72 $108 $3 $0 $0 $445 
Current-period gross
  writeoffs:		$0 $0 $0 $0 $0 $0 $0 $0 
Past Due and Nonaccrual Loans

The following tables present an aging of past due and nonaccrual loans at amortized cost, before allowance for credit losses, as of the periods presented.
June 30, 2025
(In millions)Current Less Than
90 Days
Past Due
90 Days
or More
 Past Due(1)
Total Past
Due		Total
Loans		Nonaccrual
Status
Transitional real estate loans$3,808 $142 $408 $550 $4,358 $408 
Commercial mortgage loans1,490 0 0 0 1,490 0 
Middle market loans4,273 23 59 82 4,355 59 
Other loans445 0 0 0 445 0 
Total$10,016 $165 $467 $632 $10,648 $467 
(1) As of June 30, 2025, there were no loans that were 90 days or more past due that continued to accrue interest.

December 31, 2024
(In millions)Current Less Than
90 Days
Past Due
90 Days
or More
 Past Due(1)
Total Past
Due		Total
Loans		Nonaccrual
Status
Transitional real estate loans$4,364 $195 $343 $538 $4,902 $378 
Commercial mortgage loans1,537 0 0 0 1,537 0 
Middle market loans4,295 63 65 128 4,423 108 
Other loans362 0 0 0 362 0 
Total$10,558 $258 $408 $666 $11,224 $486 
(1) As of December 31, 2024, there were no loans that were 90 days or more past due that continued to accrue interest.
For the three-month period ended June 30, 2025, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. For the six-month period ended June 30, 2025, the Company recognized $1 million of interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. For the three- and six-month periods ended June 30, 2024, the Company recognized no interest income for TREs, CMLs, MMLs, or other loans on nonaccrual status. Of these loans, TREs with an amortized cost of $45 million and $140 million had no credit loss allowance as of June 30, 2025 and December 31, 2024, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost. As of June 30, 2025, no MMLs were on nonaccrual status without an allowance for credit loss. As of December 31, 2024, MMLs with an amortized cost of $5 million were on nonaccrual status without an allowance for credit losses.
Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first six months of 2025 and 2024. The types of modifications granted may include interest rate reductions, principal forgiveness, other-than-insignificant payment delays, term extensions or a combination of these types of modifications. The amount, timing, and extent of modifications granted are considered in determining any credit loss allowance recorded.

Loans that have both been modified and are paid or written off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below.
The following tables present the amortized cost basis of modified loans to borrowers experiencing financial difficulty and the financial effect of the modifications, disaggregated by loan classification and type of modification.
Three Months Ended
June 30, 2025
(In millions)
Amortized Cost (1)
% of TotalFinancial Effect
Transitional Real Estate Loans:
Term extension$128 3.1 %
Term extension of 22 months on average
Term extension and interest rate reduction152 3.7 
Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%
Middle Market Loans:
Principal forgiveness$4 .1 %
Reduction in the amortized cost basis of $0.3 million
Principal forgiveness and term
  extension		25 .6 
Reduction in the amortized cost basis of $34 million and term extension of 30 months on average
(1) Net of allowance for credit losses
Three Months Ended
June 30, 2024
(In millions)
Amortized Cost (1)
% of TotalFinancial Effect
Transitional Real Estate Loans:
Other-than-insignificant payment
  delays and interest rate
  reduction
$121 2.2 %
Delay in payments of 31 months on average and reduction in the weighted-average contractual interest rate from 8.1% to 7.8%
(1) Net of allowance for credit losses
Six Months Ended
June 30, 2025
(In millions)
Amortized Cost (1)
% of TotalFinancial Effect
Transitional Real Estate Loans:
Term extension$159 3.9 %
Term extension of 20 months on average
Term extension and interest rate reduction152 3.7 
Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%
Middle Market Loans:
Principal forgiveness$6 .1 %
Reduction in the amortized cost basis of $4 million
Term extension33 .8 
Term extension of six months on average
Other-than-insignificant
  payment delays		28 .7 
Delay in principal and interest payments of 35 months on average
Principal forgiveness and term
  extension		25 .6 
Reduction in the amortized cost basis of $34 million and term extension of 30 months on average
(1) Net of allowance for credit losses
Six Months Ended
June 30, 2024
(In millions)
Amortized Cost (1)
% of TotalFinancial Effect
Transitional Real Estate Loans:
Other-than-insignificant payment
  delays and interest rate
  reduction
$332 6.0 %
Delay in payments of 44 months on average and reduction in the weighted-average contractual interest rate from 8.2% to 7.3%
(1) Net of allowance for credit losses

Additionally, an immaterial percentage of MMLs were modified in the form of principal forgiveness during each of the three- and six-month periods ended June 30, 2024. The modifications resulted in forgiveness of principal of $15 million, resulting in a remaining amortized cost of $2 million as of June 30, 2024.
The following table presents an aging of loans that received modifications in the 12 months preceding the period presented, at amortized cost.
June 30, 2025
(In millions)Current Less Than
90 Days
Past Due		90 Days
or More
Past Due		Nonaccrual
Status
Transitional real estate loans$592 $0 $60 $60 
Middle market loans106 1 0 0 
Total$698 $1 $60 $60 
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Loans that were granted a modification in the past 12 months, as of June 30, 2025 and 2024, and subsequently defaulted in the three- and six-month periods ended June 30, 2025 and 2024, were immaterial.
As of June 30, 2025, the Company had $12 million of outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification, compared with $14 million as of December 31, 2024.

Allowance for Credit Losses

The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset. For held-to-maturity securities, MMLs, and MML commitments, the Company groups assets by credit ratings, industry, and country.

The Company groups CMLs and TREs and respective loan commitments by property type, property location and the property’s LTV and DSCR. On a quarterly basis, CMLs and TREs within a portfolio segment that share similar risk characteristics are pooled for calculation of credit loss allowance. On an ongoing basis, TREs, CMLs and other loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable), are evaluated individually for credit loss. For example, the credit loss allowance for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of the collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the credit loss allowance as a component of net investment gains (losses) in the consolidated statements of earnings.

The credit allowance for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses. The Company’s methodology for estimating credit losses utilizes the contractual maturity date of the financial asset, adjusted when necessary to reflect the expected timing of repayment (such as prepayment options, renewal options, call options, or extension options). The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity securities and MMLs. The Company reverts to historical loss information over one year, following the two-year forecast period. For the CML and TRE portfolio, the Company applies reasonable and supportable forecasts of macroeconomic variables as well as national and local real-estate market factors to estimate future credit losses where the market factors revert back to historical levels over time with the period being dependent on current market conditions, projected market conditions and difference in the current and historical market levels for each factor. The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

The Company’s held-to-maturity portfolio includes Japan Government and Agency securities of $16.6 billion amortized cost as of June 30, 2025 that meet the requirements for zero-credit-loss expectation and therefore these asset classes have been excluded from the current expected credit loss measurement.
An investment in an available-for-sale security may be impaired if the fair value falls below amortized cost. The Company regularly reviews its available-for-sale portfolio for declines in fair value. The Company's available-for-sale impairment model focuses on the ultimate collection of the cash flows from its investments and whether the Company has the intent to sell or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. The determination of the amount of impairments under this model is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective securities. Such evaluations and assessments are revised as conditions change and new information becomes available.

When determining the Company's intention to sell a security prior to recovery of its amortized cost basis, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings. The Company performs ongoing analyses of its liquidity needs, which includes cash flow testing of its policy liabilities, debt maturities, projected dividend payments, and other cash flow and liquidity needs.

The Company’s methodology for estimating credit losses for available-for-sale securities utilizes the discounted cash flow model, based on past events, current market conditions and future economic conditions, as well as industry analysis and credit ratings of the securities. In addition, the Company evaluates the specific issuer’s probability of default and expected recovery of its position in the event of default based on the underlying financial condition and assets of the borrower as well as seniority and/or security of other debt holders in the issuer when developing management’s best estimate of expected cash flows.

The following table presents the roll forward of the allowance for credit losses by portfolio segment for loans and by accounting classification for securities.
(In millions)Transitional
Real Estate
Loans		Commercial
Mortgage
Loans		Middle
Market
Loans		Other Loans
and Loan
Commitments		Held-to-
Maturity
Securities		Available-
for-Sale
Securities		Total
Three Months Ended June 30, 2025:
Balance at March 31, 2025
$(203)$(15)$(150)$(19)$(5)$0 $(392)
(Addition to) release of allowance
   for credit losses
(45)3 (19)2 0 0 (59)
Writeoffs, net of recoveries5 0 42 0 0 0 47 
Change in foreign exchange0 0 0 0 0 0 0 
Balance at June 30, 2025
$(243)$(12)$(127)$(17)$(5)$0 $(404)
Three Months Ended June 30, 2024:
Balance at March 31, 2024
$(114)$(19)$(99)$(15)$(5)$0 $(252)
(Addition to) release of allowance
   for credit losses
(24)2 1 2 0 0 (19)
Writeoffs, net of recoveries15 0 0 0 0 0 15 
Change in foreign exchange0 0 0 0 0 0 0 
Balance at June 30, 2024 (2)
$(123)$(17)$(98)$(13)$(5)$0 $(256)
Six Months Ended June 30, 2025:
Balance at December 31, 2024
$(199)$(14)$(140)$(17)$(5)$0 $(375)
(Addition to) release of allowance
   for credit losses
(73)2 (43)0 0 0 (114)
Writeoffs, net of recoveries29 0 56 0 0 0 85 
Change in foreign exchange0 0 0 0 0 0 0 
Balance at June 30, 2025
$(243)$(12)$(127)$(17)$(5)$0 $(404)
Six Months Ended June 30, 2024:
Balance at December 31, 2023
$(112)$(16)$(146)$(16)$(5)$0 $(295)
(Addition to) release of allowance
   for credit losses
(26)(1)(2)3 0 0 (26)
Writeoffs, net of recoveries15 0 50 0 0 0 65 
Change in foreign exchange0 0 0 0 0 0 0 
Balance at June 30, 2024
$(123)$(17)$(98)$(13)$(5)$0 $(256)
As of June 30, 2025, the Company identified TREs with an amortized cost of $136 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions. As of June 30, 2025, the Company established a credit allowance of $20 million related to these loans.
Other Investments

The table below reflects the composition of the carrying value for other investments as of the periods presented.
(In millions)June 30,
2025		December 31,
2024
Other investments:
Policy loans$221 $203 
Short-term investments (1)
2,375 1,599 
Limited partnerships (2)
3,745 3,435 
Real estate owned964 682 
Other40 39 
Total other investments$7,345 $5,958 
(1) Includes securities lending collateral
(2) Includes tax credit investments and asset classes such as private equity and real estate funds

The Parent Company invests in partnerships that specialize in rehabilitating historic structures or the installation of solar equipment in order to receive federal historic rehabilitation and solar tax credits. These investments are classified as limited partnerships and included in other investments in the consolidated balance sheets. The change in value of each investment is recorded as a reduction to net investment income. Tax credits generated by these investments are recorded as an income tax benefit in the consolidated statements of earnings.
REO consists of office buildings or other commercial properties obtained through foreclosure or deed in lieu of foreclosure of certain of the Company’s TREs. As of June 30, 2025 and December 31, 2024, all REO was classified as held-and-used for the production of income, which is carried at cost less accumulated depreciation. Depreciation expense was $8 million and $3 million for the three-month periods and $14 million and $4 million for the six-month periods ended June 30, 2025 and 2024, respectively. Additionally, as of June 30, 2025 and December 31, 2024, accumulated depreciation was $28 million and $14 million, respectively.
The Company had $2.4 billion and $2.8 billion in outstanding commitments to fund investments in limited partnerships, which included $2.1 billion and $2.1 billion of unfunded commitments related to VIEs that are non-consolidated as of June 30, 2025 and December 31, 2024, respectively.

Variable Interest Entities (VIEs)

In the normal course of its activities, the Company invests in legal entities that are VIEs. The Company's variable interests in VIEs are limited to the debt and equity instruments issued by them. With the exception of commitments to limited partnerships and to certain loan investments made in the normal course of business, the Company has not provided any direct or contingent obligations to fund the limited activities of these VIEs, or support related to the limited activities of these VIEs, and does not have any intention to do so in the future, nor has it provided any direct or indirect financial guarantees.

The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments, and in certain cases, to any unfunded commitments held in the VIE.

For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature.

VIEs - Consolidated

If the Company determines that it is the VIE’s primary beneficiary, it consolidates the VIE. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company except to the extent of the unfunded commitments referenced above, as the Company’s obligation to each VIE is limited to the amount of its committed investment.

The following table presents the carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.
Investments in Consolidated Variable Interest Entities
(In millions)June 30,
2025		December 31,
2024
Assets:
Fixed maturity securities, available-for-sale$3,675 $3,428 
Commercial mortgage and other loans8,207 8,693 
Other investments (1)
2,220 2,176 
Other assets (2)
45 53 
Total assets of consolidated VIEs$14,147 $14,350 
Liabilities:
Other liabilities (2)
$589 $604 
Total liabilities of consolidated VIEs$589 $604 
(1) Consists entirely of alternative investments in limited partnerships, which represent VIEs where the Company is not the primary beneficiary and, therefore, are not consolidated
(2) Consists entirely of derivatives

The Company is the sole investor in the consolidated VIEs listed in the table above. The Company invests in fixed maturity securities issued by VIEs that in turn hold U.S. dollar-denominated fixed maturity securities coupled with foreign currency swap agreements. The weighted-average lives of the Company's investments in these VIEs are very similar to the underlying collateral held by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps and utilizing the cash flows from these securities to service the VIEs' debt. Neither the Company nor any of its creditors are able to obtain the underlying collateral of these VIEs unless there is an event of default or other specified event. The Company is not a direct counterparty to the foreign currency swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. These consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and foreign currency swap contracts, if applicable. The underlying collateral assets and funding of these consolidated VIEs are generally static in nature.

Investments in Unit Trust Structures

The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships. As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S. GAAP. The limited partnership investments are comprised of private equity and real estate funds. The Company's loss exposure to these VIEs is limited to its original investments, together with any unfunded portion of the Company's commitments made in the normal course of business to fund certain loan investments and limited partnership investments, as described in the Commercial Mortgage and Other Loans and Other Investments sections of this note. Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs.

VIEs - Not Consolidated
The table below reflects the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported.
Investments in Variable Interest Entities Not Consolidated
(In millions)June 30,
2025		December 31,
2024
Assets:
Fixed maturity securities, available-for-sale$7,121 $6,243 
Other investments (1)
1,367 1,124 
Total investments in VIEs not consolidated$8,488 $7,367 
(1) Consists entirely of alternative investments in limited partnerships

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations issued by the VIEs. These fixed maturity securities include structured securities, primarily asset-backed securities. The Company's involvement in the related VIEs is limited to that of a passive investor in asset-backed securities issued by the VIEs. The Company also invests in fixed maturity debt securities issued by VIEs that are the
primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the VIE entity or the right to receive benefits from the entity that could be significant to the entity. As such, the Company is not the primary beneficiary of these VIEs and therefore is not required to consolidate them.

The Company also holds equity investments in limited partnerships that have been determined to be VIEs. These partnerships primarily invest in private equity and real estate funds. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment and any unfunded commitments. As described in the Other Investments section of this note, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to unconsolidated VIEs. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as other investments in the consolidated balance sheets.

Securities Lending and Pledged Securities

The Company lends fixed maturity securities and, from time to time, public equity securities to financial institutions in short-term securities lending transactions. These short-term securities lending arrangements increase investment income with minimal risk. The Company receives cash or other securities as collateral for such loans. The Company's securities lending policy requires that the fair value of the securities received as collateral be 102% or more of the fair value of the loaned securities and that unrestricted cash received as collateral be 100% or more of the fair value of the loaned securities. The securities loaned continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected in the consolidated financial statements.

Details of collateral by loaned security type and remaining maturity of the agreements were as follows:
Securities Lending Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
June 30, 2025December 31, 2024
(In millions)
Overnight
and
Continuous(1)
Up to 30
days		30-90 daysTotal
Overnight
and
Continuous(1)
Up to 30
days		Total
Securities lending
  transactions:
Fixed maturity securities:
Japan government and agencies$0 $3,837 $1,035 $4,872 $0 $1,027 $1,027 
Public utilities27 0 0 27 34 0 34 
Banks/financial institutions145 0 0 145 193 0 193 
Other corporate723 0 0 723 783 0 783 
          Total borrowings$895 $3,837 $1,035 $5,767 $1,010 $1,027 $2,037 
Gross amount of recognized liabilities for securities
   lending transactions		$5,767 $2,037 
(1) The related loaned security, under the Company's U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $1.5 billion and $3.0 billion at June 30, 2025 and December 31, 2024, respectively, which may not be sold or re-pledged, unless the counterparty is in default. Such securities collateral is not reflected on the consolidated financial statements.
The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of June 30, 2025, and December 31, 2024, respectively.
Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.