v3.25.4
Insurance and Reinsurance Contract Assets and Liabilities
 12 Months Ended
Dec. 31, 2025
Insurance Contracts [Abstract]  
Insurance and Reinsurance Contract Assets and Liabilities Insurance and Reinsurance Contract Assets and LiabilitiesComposition
Portfolios of insurance contracts that are assets and those that are liabilities, and portfolios of reinsurance contracts that are
assets and those that are liabilities, are presented separately in the Consolidated Statements of Financial Position. The
components of net insurance and reinsurance contract liabilities are shown below. The composition of insurance contract assets
and liabilities, and reinsurance contract held assets and liabilities by the reporting segment is as follows.
Insurance contract assets and liabilities
2025
2024
As at December 31,
Insurance
contract
assets
Insurance
contract
liabilities
Insurance
contract
liabilities for
account of
segregated
fund holders
Net
insurance
contract
liabilities
Insurance
contract
assets
Insurance
contract
liabilities
Insurance
contract
liabilities for
account of
segregated
fund holders
Net
insurance
contract
liabilities
Asia
$(161)
$170,754
$29,895
$200,488
$(53)
$154,222
$26,367
$180,536
Canada
(33)
84,517
38,218
122,702
(32)
82,459
38,099
120,526
U.S.
-
157,867
60,893
218,760
-
161,484
62,079
223,563
Corporate and Other
-
(908)
-
(908)
(6)
(897)
-
(903)
Insurance contract balances
(194)
412,230
129,006
541,042
(91)
397,268
126,545
523,722
Assets for insurance acquisition cash flows
-
(698)
-
(698)
(11)
(867)
-
(878)
Total
$(194)
$411,532
$129,006
$540,344
$(102)
$396,401
$126,545
$522,844
Reinsurance contract held assets and liabilities
2025
2024
As at December 31,
Assets
Liabilities
Net
reinsurance
contract held
assets
Assets
Liabilities
Net
reinsurance
contract held
assets
Asia
$8,959
$(2,986)
$5,973
$9,204
$(2,394)
$6,810
Canada
6,626
(263)
6,363
7,021
(262)
6,759
U.S.
45,559
(25)
45,534
43,043
(13)
43,030
Corporate and Other
(263)
1
(262)
(253)
-
(253)
Total
$60,881
$(3,273)
$57,608
$59,015
$(2,669)
$56,346
As at December 31,
2025
2024
Net insurance contract held liabilities
$540,344
$522,844
Net reinsurance contract held assets
(57,608)
(56,346)
Net insurance and reinsurance contract held liabilities
$482,736
$466,498
Movements in Carrying Amounts of Insurance and Reinsurance Contracts
The following tables present the movements in the net carrying amounts of insurance contracts issued and reinsurance contracts
held during the year for the Company and for each reporting segment. The changes include amounts that are recognized in
income and OCI, and movements due to cash flows.
There are two types of tables presented:
•Tables which analyze movements in the net assets or liabilities for remaining coverage and for incurred claims separately
and reconcile them to the relevant Consolidated Statements of Income and Consolidated Statements of Comprehensive
Income line items.
•Tables which analyze movements of contracts by measurement components including estimates of the present value of
future cash flows, risk adjustment and CSM.
Total
Insurance contracts – Analysis by remaining coverage and incurred claims
The following tables present the movements in the net assets or liabilities for insurance contracts issued, showing the amounts
for remaining coverage and the amounts for incurred claims and assets for insurance acquisition cash flows for the years ended
December 31, 2025 and 2024.
Liabilities for remaining 
coverage
Liabilities for incurred claims
Excluding loss
component
Loss
component
Products not
under PAA
PAA
Estimates of
PV of future
cash flows
PAA Risk
adjustment
for non-
financial risk
Assets for
insurance
acquisition
cash flows
Total
Opening insurance contract assets
$(153)
$5
$56
$1
$-
$(11)
$(102)
Opening insurance contract liabilities
377,600
2,023
5,698
11,256
691
(867)
396,401
Opening insurance contract liabilities for account of
segregated fund holders
126,545
-
-
-
-
-
126,545
Net opening balance, January 1, 2025
503,992
2,028
5,754
11,257
691
(878)
522,844
Insurance revenue
Expected incurred claims and other insurance service
expenses
(15,284)
-
-
-
-
-
(15,284)
Change in risk adjustment for non-financial risk expired
(1,401)
-
-
-
-
-
(1,401)
CSM recognized for services provided
(3,130)
-
-
-
-
-
(3,130)
Recovery of insurance acquisition cash flows
(1,907)
-
-
-
-
-
(1,907)
Contracts under PAA
(7,166)
-
-
-
-
-
(7,166)
(28,888)
-
-
-
-
-
(28,888)
Insurance service expense
Incurred claims and other insurance service expenses
-
(137)
14,823
7,565
227
-
22,478
Losses and reversal of losses on onerous contracts
(future service)
-
393
-
-
-
-
393
Changes to liabilities for incurred claims (past service)
-
-
67
(2,595)
(155)
-
(2,683)
Amortization of insurance acquisition cash flows
2,903
-
-
-
-
-
2,903
Net impairment of assets for insurance acquisition cash
flows
-
-
-
-
-
-
-
2,903
256
14,890
4,970
72
-
23,091
Investment components and premium refunds
(20,812)
-
18,071
2,741
-
-
-
Insurance service result
(46,797)
256
32,961
7,711
72
-
(5,797)
Insurance finance (income) expenses
22,608
58
176
546
24
-
23,412
Effects of movements in foreign exchange rates
(13,914)
(85)
(185)
(32)
-
14
(14,202)
Total changes in income and OCI
(38,103)
229
32,952
8,225
96
14
3,413
Cash flows
Premiums and premium tax received
61,722
-
-
-
-
-
61,722
Claims and other insurance service expenses paid,
including investment components
-
-
(32,582)
(7,794)
-
-
(40,376)
Insurance acquisition cash flows
(9,749)
-
-
-
-
-
(9,749)
Total cash flows
51,973
-
(32,582)
(7,794)
-
-
11,597
Allocation from assets for insurance acquisition cash
flows to groups of insurance contracts
(137)
-
-
-
-
137
-
Acquisition cash flows incurred in the year
-
-
-
-
-
29
29
Movements related to insurance contract liabilities for
account of segregated fund holders
2,461
-
-
-
-
-
2,461
Net closing balance
520,186
2,257
6,124
11,688
787
(698)
540,344
Closing insurance contract assets
(259)
9
56
-
-
-
(194)
Closing insurance contract liabilities
391,439
2,248
6,068
11,688
787
(698)
411,532
Closing insurance contract liabilities for account of
segregated fund holders
129,006
-
-
-
-
-
129,006
Net closing balance, December 31, 2025
$520,186
$2,257
$6,124
$11,688
$787
$(698)
$540,344
Insurance finance (income) expenses (“IFIE”)
Insurance finance (income) expenses, per disclosure above
$23,412
Reclassification of derivative OCI to IFIE – cash flow hedges
(9)
Reclassification of derivative (income) loss changes to IFIE – fair value hedge
2,093
Insurance finance (income) expenses, per disclosure in note 6 (f)
$25,496
Insurance contracts – Analysis by remaining coverage and incurred claims (continued)
Liabilities for remaining
coverage
Liabilities for incurred claims
Excluding loss
component
Loss
component
Products not
under PAA
PAA
Estimates of
PV of future
cash flows
PAA Risk
adjustment
for non-
financial risk
Assets for
insurance
acquisition
cash flows
Total
Opening insurance contract assets
$(201)
$-
$56
$-
$-
$-
$(145)
Opening insurance contract liabilities
351,045
1,092
5,609
10,445
625
(820)
367,996
Opening insurance contract liabilities for account of
segregated fund holders
114,143
-
-
-
-
-
114,143
Net opening balance, January 1, 2024
464,987
1,092
5,665
10,445
625
(820)
481,994
Insurance revenue
Expected incurred claims and other insurance service
expenses
(14,340)
-
-
-
-
-
(14,340)
Change in risk adjustment for non-financial risk expired
(1,414)
-
-
-
-
-
(1,414)
CSM recognized for services provided
(2,697)
-
-
-
-
-
(2,697)
Recovery of insurance acquisition cash flows
(1,351)
-
-
-
-
-
(1,351)
Contracts under PAA
(6,790)
-
-
-
-
-
(6,790)
(26,592)
-
-
-
-
-
(26,592)
Insurance service expense
Incurred claims and other insurance service expenses
-
(105)
13,855
7,423
224
-
21,397
Losses and reversal of losses on onerous contracts
(future service)
-
882
-
-
-
-
882
Changes to liabilities for incurred claims (past service)
-
-
(12)
(2,391)
(202)
-
(2,605)
Amortization of insurance acquisition cash flows
2,148
-
-
-
-
-
2,148
Net impairment of assets for insurance acquisition cash
flows
-
-
-
-
-
-
-
2,148
777
13,843
5,032
22
-
21,822
Investment components and premium refunds
(23,554)
-
20,835
2,719
-
-
-
Insurance service result
(47,998)
777
34,678
7,751
22
-
(4,770)
Insurance finance (income) expenses
2,645
44
(85)
689
44
-
3,337
Effects of movements in foreign exchange rates
24,962
115
272
29
-
(21)
25,357
Total changes in income and OCI
(20,391)
936
34,865
8,469
66
(21)
23,924
Cash flows
Premiums and premium tax received
55,437
-
-
-
-
-
55,437
Claims and other insurance service expenses paid,
including investment components
-
-
(34,776)
(7,657)
-
-
(42,433)
Insurance acquisition cash flows
(8,287)
-
-
-
-
-
(8,287)
Total cash flows
47,150
-
(34,776)
(7,657)
-
-
4,717
Allocation from assets for insurance acquisition cash
flows to groups of insurance contracts
(156)
-
-
-
-
156
-
Acquisition cash flows incurred in the year
-
-
-
-
-
(193)
(193)
Movements related to insurance contract liabilities for
account of segregated fund holders
12,402
-
-
-
-
-
12,402
Net closing balance
503,992
2,028
5,754
11,257
691
(878)
522,844
Closing insurance contract assets
(153)
5
56
1
-
(11)
(102)
Closing insurance contract liabilities
377,600
2,023
5,698
11,256
691
(867)
396,401
Closing insurance contract liabilities for account of
segregated fund holders
126,545
-
-
-
-
-
126,545
Net closing balance, December 31, 2024
$503,992
$2,028
$5,754
$11,257
$691
$(878)
$522,844
Insurance finance (income) expenses
Insurance finance (income) expenses, per disclosure above
$3,337
Reclassification of derivative OCI to IFIE – cash flow hedges
(52)
Reclassification of derivative (income) loss changes to IFIE – fair value hedge
3,346
Insurance finance (income) expenses, per disclosure in note 6 (f)
$6,631
Insurance contracts – Analysis by measurement components
The following tables present the movements in the net assets or liabilities for insurance contracts issued, showing estimates of
the present value of future cash flows, risk adjustment, CSM and assets for insurance acquisition cash flows for the years ended
December 31, 2025 and 2024.
CSM
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Assets for
insurance
acquisition
cash flows
Total
Opening GMM and VFA insurance contract assets
$(490)
$144
$100
$148
$-
$(98)
Opening GMM and VFA insurance contract liabilities
334,706
22,160
18,907
7,610
(61)
383,322
Opening PAA insurance contract net liabilities
13,201
691
-
-
(817)
13,075
Opening insurance contract liabilities for account of segregated
fund holders
126,545
-
-
-
-
126,545
Net opening balance, January 1, 2025
473,962
22,995
19,007
7,758
(878)
522,844
CSM recognized for services provided
-
-
(2,175)
(955)
-
(3,130)
Change in risk adjustment for non-financial risk for risk expired
-
(1,418)
-
-
-
(1,418)
Experience adjustments
(551)
-
-
-
-
(551)
Changes that relate to current services
(551)
(1,418)
(2,175)
(955)
-
(5,099)
Contracts initially recognized during the year
(5,322)
1,102
3
4,298
-
81
Changes in estimates that adjust the CSM
(3,412)
867
1,432
1,113
-
-
Changes in estimates that relate to losses and reversal of losses
on onerous contracts
329
3
-
-
-
332
Changes that relate to future services
(8,405)
1,972
1,435
5,411
-
413
Adjustments to liabilities for incurred claims
81
(15)
-
-
-
66
Changes that relate to past services
81
(15)
-
-
-
66
Insurance service result
(8,875)
539
(740)
4,456
-
(4,620)
Insurance finance (income) expenses
21,158
1,238
241
193
-
22,830
Effects of movements in foreign exchange rates
(12,220)
(1,054)
(579)
(274)
-
(14,127)
Total changes in income and OCI
63
723
(1,078)
4,375
-
4,083
Total cash flows
10,436
-
-
-
-
10,436
Allocation from assets for insurance acquisition cash flows to
groups of insurance contracts
(6)
-
-
-
6
-
Acquisition cash flows incurred in the year
-
-
-
-
(5)
(5)
Change in PAA balance
245
101
-
-
179
525
Movements related to insurance contract liabilities for account of
segregated fund holders
2,461
-
-
-
-
2,461
Net closing balance
487,161
23,819
17,929
12,133
(698)
540,344
Closing GMM and VFA insurance contract assets
(474)
92
87
100
1
(194)
Closing GMM and VFA insurance contract liabilities
345,183
22,935
17,842
12,033
(61)
397,932
Closing PAA insurance contract net liabilities
13,446
792
-
-
(638)
13,600
Closing insurance contract liabilities for account of segregated
fund insurance holders
129,006
-
-
-
-
129,006
Net closing balance, December 31, 2025
$487,161
$23,819
$17,929
$12,133
$(698)
$540,344
Insurance finance (income) expenses
Insurance finance (income) expenses, per disclosure above
$22,830
Reclassification of derivative OCI to IFIE – cash flow hedges
(9)
Reclassification of derivative (income) loss changes to IFIE – fair value hedge
1,908
PAA items:
PAA IFIE
582
PAA Reclassification of derivative OCI to IFIE – cash flow hedges
-
PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge
185
Insurance finance (income) expenses, per disclosure in note 6 (f)
$25,496
Insurance contracts – Analysis by measurement components (continued)
CSM
Estimates of
PV of future
cash flows
Risk
adjustment
for non-
financial risk
Fair value
Other
Assets for
insurance
acquisition
cash flows
Total
Opening GMM and VFA insurance contract assets
$(416)
$141
$32
$99
$-
$(144)
Opening GMM and VFA insurance contract liabilities
310,807
22,697
17,381
4,592
(59)
355,418
Opening PAA insurance contract net liabilities
12,712
626
-
-
(761)
12,577
Opening insurance contract liabilities for account of segregated fund
holders
114,143
-
-
-
-
114,143
Net opening balance, January 1, 2024
437,246
23,464
17,413
4,691
(820)
481,994
CSM recognized for services provided
-
-
(2,097)
(600)
-
(2,697)
Change in risk adjustment for non-financial risk for risk expired
-
(1,430)
-
-
-
(1,430)
Experience adjustments
(532)
-
-
-
-
(532)
Changes that relate to current services
(532)
(1,430)
(2,097)
(600)
-
(4,659)
Contracts initially recognized during the year
(4,043)
952
2
3,193
-
104
Changes in estimates that adjust the CSM
(459)
(1,866)
2,388
(63)
-
-
Changes in estimates that relate to losses and reversal of losses on
onerous contracts
770
7
-
-
-
777
Changes that relate to future services
(3,732)
(907)
2,390
3,130
-
881
Adjustments to liabilities for incurred claims
(8)
(4)
-
-
-
(12)
Changes that relate to past services
(8)
(4)
-
-
-
(12)
Insurance service result
(4,272)
(2,341)
293
2,530
-
(3,790)
Insurance finance (income) expenses
2,317
(59)
233
121
-
2,612
Effects of movements in foreign exchange rates
21,946
1,866
1,068
416
-
25,296
Total changes in income and OCI
19,991
(534)
1,594
3,067
-
24,118
Total cash flows
3,840
-
-
-
-
3,840
Allocation from assets for insurance acquisition cash flows to
groups of insurance contracts
(6)
-
-
-
6
-
Acquisition cash flows incurred in the year
-
-
-
-
(8)
(8)
Change in PAA balance
489
65
-
-
(56)
498
Movements related to insurance contract liabilities for account of
segregated fund holders
12,402
-
-
-
-
12,402
Net closing balance
473,962
22,995
19,007
7,758
(878)
522,844
Closing GMM and VFA insurance contract assets
(490)
144
100
148
-
(98)
Closing GMM and VFA insurance contract liabilities
334,706
22,160
18,907
7,610
(61)
383,322
Closing PAA insurance contract net liabilities
13,201
691
-
-
(817)
13,075
Closing insurance contract liabilities for account of segregated fund
insurance holders
126,545
-
-
-
-
126,545
Net closing balance, December 31, 2024
$473,962
$22,995
$19,007
$7,758
$(878)
$522,844
Insurance finance (income) expenses
Insurance finance (income) expenses, per disclosure above
$2,612
Reclassification of derivative OCI to IFIE – cash flow hedges
(52)
Reclassification of derivative (income) loss changes to IFIE – fair value hedge
3,333
PAA items:
PAA IFIE
725
PAA Reclassification of derivative OCI to IFIE – cash flow hedges
-
PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge
13
Insurance finance (income) expenses, per disclosure in note 6 (f)
$6,631
Reinsurance contracts held – Analysis by remaining coverage and incurred claims
The following tables present the movements in the net assets or liabilities for reinsurance contracts held, showing assets for
remaining coverage and amounts recoverable on incurred claims arising from business ceded to reinsurers for the years ended
December 31, 2025 and 2024.
Assets (liabilities) for
remaining coverage
Assets (liabilities) for incurred claims
Excluding loss
recovery
component
Loss recovery
component
Products not
under PAA
PAA
Estimates of
PV of future
cash flows
PAA Risk
adjustment for
non-financial
risk
Total
Opening reinsurance contract held assets
$50,723
$631
$7,395
$252
$14
$59,015
Opening reinsurance contract held liabilities
(2,692)
5
44
(26)
-
(2,669)
Net opening balance, January 1, 2025
48,031
636
7,439
226
14
56,346
Changes in income and OCI
Allocation of reinsurance premium paid
(8,451)
-
-
-
-
(8,451)
Amounts recoverable from reinsurers
Recoveries of incurred claims and other insurance service
expenses
-
(41)
6,397
623
-
6,979
Recoveries and reversals of recoveries of losses on onerous
underlying contracts
-
187
-
-
-
187
Adjustments to assets for incurred claims
-
-
31
(16)
(1)
14
Insurance service result
(8,451)
146
6,428
607
(1)
(1,271)
Investment components and premium refunds
(1,815)
-
1,815
-
-
-
Net expenses from reinsurance contracts
(10,266)
146
8,243
607
(1)
(1,271)
Net finance (income) expenses from reinsurance contracts
2,912
22
(183)
3
1
2,755
Effect of changes in non-performance risk of reinsurers
12
-
-
-
-
12
Effects of movements in foreign exchange rates
(2,650)
(31)
(312)
-
-
(2,993)
Contracts measured under PAA
-
-
-
-
-
-
Total changes in income and OCI
(9,992)
137
7,748
610
-
(1,497)
Cash flows
Premiums paid(1)
11,915
-
-
-
-
11,915
Amounts received
-
-
(8,538)
(618)
-
(9,156)
Total cash flows
11,915
-
(8,538)
(618)
-
2,759
Net closing balance
49,954
773
6,649
218
14
57,608
Closing reinsurance contract held assets
53,327
765
6,522
253
14
60,881
Closing reinsurance contract held liabilities
(3,373)
8
127
(35)
-
(3,273)
Net closing balance, December 31, 2025
$49,954
$773
$6,649
$218
$14
$57,608
(1)The Company recorded $5.2 billion (2024 – $18.6 billion) reinsurance contract held assets from reinsurance transactions which closed during the year. Refer to
note 6 (m).
Assets (liabilities) for
remaining coverage
Assets (liabilities) for incurred claims
Excluding loss
recovery
component
Loss recovery
component
Products not
under PAA
PAA
Estimates of
PV of future
cash flows
PAA Risk
adjustment for
non-financial
risk
Total
Opening reinsurance contract held assets
$35,079
$246
$7,035
$275
$16
$42,651
Opening reinsurance contract held liabilities
(2,634)
2
(136)
(63)
-
(2,831)
Net opening balance, January 1, 2024
32,445
248
6,899
212
16
39,820
Changes in income and OCI
Allocation of reinsurance premium paid
(7,709)
-
-
-
-
(7,709)
Amounts recoverable from reinsurers
Recoveries of incurred claims and other insurance service
expenses
-
(32)
6,002
607
1
6,578
Recoveries and reversals of recoveries of losses on onerous
underlying contracts
-
372
-
-
-
372
Adjustments to assets for incurred claims
-
-
11
(14)
(7)
(10)
Insurance service result
(7,709)
340
6,013
593
(6)
(769)
Investment components and premium refunds
(1,939)
-
1,939
-
-
-
Net expenses from reinsurance contracts
(9,648)
340
7,952
593
(6)
(769)
Net finance (income) expenses from reinsurance contracts
(1,859)
12
4
3
4
(1,836)
Effect of changes in non-performance risk of reinsurers
(58)
-
-
-
-
(58)
Effects of movements in foreign exchange rates
4,021
36
575
-
-
4,632
Contracts measured under PAA
-
-
-
-
-
-
Total changes in income and OCI
(7,544)
388
8,531
596
(2)
1,969
Cash flows
Premiums paid(1)
23,130
-
-
-
-
23,130
Amounts received
-
-
(7,991)
(582)
-
(8,573)
Total cash flows
23,130
-
(7,991)
(582)
-
14,557
Net closing balance
48,031
636
7,439
226
14
56,346
Closing reinsurance contract held assets
50,723
631
7,395
252
14
59,015
Closing reinsurance contract held liabilities
(2,692)
5
44
(26)
-
(2,669)
Net closing balance, December 31, 2024
$48,031
$636
$7,439
$226
$14
$56,346
(1)The Company recorded $5.2 billion (2024 – $18.6 billion) reinsurance contract held assets from reinsurance transactions which closed during the year. Refer to
note 6 (m).
Reinsurance contracts held – Analysis by measurement components
The following tables present the movements in the net assets or liabilities for reinsurance contracts held, showing estimates of
the present value of future cash flows, risk adjustment and CSM for the years ended December 31, 2025 and 2024.
CSM
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Total
Opening reinsurance contract held assets
$50,275
$5,442
$2,619
$389
$58,725
Opening reinsurance contract held liabilities
(3,308)
333
(112)
445
(2,642)
Opening PAA reinsurance contract net assets
249
14
-
-
263
Net opening balance, January 1, 2025
47,216
5,789
2,507
834
56,346
CSM recognized for services received
-
-
(216)
(208)
(424)
Change in risk adjustment for non-financial risk for risk expired
-
(515)
-
-
(515)
Experience adjustments
(497)
-
-
-
(497)
Changes that relate to current services
(497)
(515)
(216)
(208)
(1,436)
Contracts initially recognized during the year
(1,080)
825
(2)
305
48
Changes in recoveries of losses on onerous underlying contracts that adjust the
CSM
-
-
(9)
(19)
(28)
Changes in estimates that adjust the CSM
(253)
(26)
(201)
480
-
Changes in estimates that relate to losses and reversal of losses on onerous
contracts
166
-
-
-
166
Changes that relate to future services
(1,167)
799
(212)
766
186
Adjustments to liabilities for incurred claims
31
-
-
-
31
Changes that relate to past services
31
-
-
-
31
Insurance service result
(1,633)
284
(428)
558
(1,219)
Insurance finance (income) expenses from reinsurance contracts
2,176
447
69
59
2,751
Effects of changes in non-performance risk of reinsurers
11
-
-
-
11
Effects of movements in foreign exchange rates
(2,630)
(257)
(85)
(20)
(2,992)
Total changes in income and OCI
(2,076)
474
(444)
597
(1,449)
Total cash flows
2,732
-
-
-
2,732
Change in PAA balance
(21)
-
-
-
(21)
Net closing balance
47,851
6,263
2,063
1,431
57,608
Closing reinsurance contract held assets
51,618
5,902
2,223
863
60,606
Closing reinsurance contract held liabilities
(3,995)
347
(160)
568
(3,240)
Closing PAA reinsurance contract net assets
228
14
-
-
242
Net closing balance, December 31, 2025
$47,851
$6,263
$2,063
$1,431
$57,608
CSM
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Total
Opening reinsurance contract held assets
$38,156
$3,685
$565
$(51)
$42,355
Opening reinsurance contract held liabilities
(4,384)
1,305
116
173
(2,790)
Opening PAA reinsurance contract net assets
239
16
-
-
255
Net opening balance, January 1, 2024
34,011
5,006
681
122
39,820
CSM recognized for services received
-
-
(62)
(259)
(321)
Change in risk adjustment for non-financial risk for risk expired
-
(536)
-
-
(536)
Experience adjustments
(265)
-
-
-
(265)
Changes that relate to current services
(265)
(536)
(62)
(259)
(1,122)
Contracts initially recognized during the year
(1,826)
1,261
2
620
57
Changes in recoveries of losses on onerous underlying contracts that adjust the
CSM
-
-
110
32
142
Changes in estimates that adjust the CSM
(1,577)
(290)
1,657
210
-
Changes in estimates that relate to losses and reversal of losses on onerous
contracts
171
1
-
-
172
Changes that relate to future services
(3,232)
972
1,769
862
371
Adjustments to liabilities for incurred claims
11
-
-
-
11
Changes that relate to past services
11
-
-
-
11
Insurance service result
(3,486)
436
1,707
603
(740)
Insurance finance (income) expenses from reinsurance contracts
(1,858)
(62)
16
62
(1,842)
Effects of changes in non-performance risk of reinsurers
(58)
-
-
-
(58)
Effects of movements in foreign exchange rates
4,069
411
103
47
4,630
Total changes in income and OCI
(1,333)
785
1,826
712
1,990
Total cash flows
14,528
-
-
-
14,528
Change in PAA balance
10
(2)
-
-
8
Net closing balance
47,216
5,789
2,507
834
56,346
Closing reinsurance contract held assets
50,275
5,442
2,619
389
58,725
Closing reinsurance contract held liabilities
(3,308)
333
(112)
445
(2,642)
Closing PAA reinsurance contract net assets
249
14
-
-
263
Net closing balance, December 31, 2024
$47,216
$5,789
$2,507
$834
$56,346
Segment
Carrying balance by measurement components
The following tables present the carrying balances of net assets or liabilities for insurance contracts issued and reinsurance
contracts held by measurement components, by reporting segment for the years ended December 31, 2025 and 2024.
Insurance contracts issued
Excluding contracts applying
the PAA
Contracts applying the PAA
CSM
As at December 31, 2025
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Assets for
insurance
acquisition
cash flows
Total insurance
contract
liabilities
(assets)
Asia
$169,388
$9,352
$1,295
$4
$10,892
$9,557
$(71)
$200,417
Canada
102,070
3,425
11,951
788
3,306
1,162
(627)
122,075
U.S.
203,209
10,263
-
-
3,874
1,414
-
218,760
Corporate and Other
(952)
(13)
200
-
(143)
-
-
(908)
$473,715
$23,027
$13,446
$792
$17,929
$12,133
$(698)
$540,344
Excluding contracts applying
the PAA
Contracts applying the PAA
CSM
As at December 31, 2024
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Assets for
insurance
acquisition
cash flows
Total insurance
contract
liabilities
(assets)
Asia
$153,801
$7,630
$1,497
$3
$11,338
$6,267
$(290)
$180,246
Canada
100,296
3,351
11,452
688
3,986
753
(588)
119,938
U.S.
207,665
11,337
-
-
3,823
738
-
223,563
Corporate and Other
(1,001)
(14)
252
-
(140)
-
-
(903)
$460,761
$22,304
$13,201
$691
$19,007
$7,758
$(878)
$522,844
Reinsurance contracts held
Excluding contracts applying
the PAA
Contracts applying the PAA
CSM
As at December 31, 2025
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Total
reinsurance
contract
liabilities
(assets)
Asia
$3,282
$1,598
$(8)
$-
$687
$414
$5,973
Canada
4,471
1,635
236
14
(193)
200
6,363
U.S.
39,983
3,023
-
-
1,711
817
45,534
Corporate and Other
(113)
(7)
-
-
(142)
-
(262)
$47,623
$6,249
$228
$14
$2,063
$1,431
$57,608
Excluding contracts applying
the PAA
Contracts applying the PAA
CSM
As at December 31, 2024
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Estimates of
PV of future
cash flows
Risk
adjustment for
non-financial
risk
Fair value
Other
Total
reinsurance
contract
liabilities
(assets)
Asia
$4,462
$1,580
$-
$-
$627
$141
$6,810
Canada
4,308
1,561
248
13
426
203
6,759
U.S.
38,295
2,641
-
1
1,603
490
43,030
Corporate and Other
(98)
(7)
1
-
(149)
-
(253)
$46,967
$5,775
$249
$14
$2,507
$834
$56,346
Insurance Revenue by Transition Method
The following tables provide information as a supplement to the insurance revenue disclosures in note 6 (b).
For the year ended December 31, 2025
Asia
Canada
U.S.
Other
Total
Contracts under the fair value method
$2,666
$3,343
$11,424
$(14)
$17,419
Contracts under the full retrospective method
490
62
158
-
710
Other contracts
3,809
6,420
430
100
10,759
Total
$6,965
$9,825
$12,012
$86
$28,888
For the year ended December 31, 2024
Asia
Canada
U.S.
Other
Total
Contracts under the fair value method
$2,629
$3,322
$10,975
$(14)
$16,912
Contracts under the full retrospective method
489
62
141
-
692
Other contracts
2,691
5,912
287
98
8,988
Total
$5,809
$9,296
$11,403
$84
$26,592
Effect of New Business Recognized in the Year
The following tables present components of new business for insurance contracts issued for the years presented.
Asia
Canada
U.S.
Total
As at December 31, 2025
Non-
Onerous
Onerous
Non-
Onerous
Onerous
Non-
Onerous
Onerous
Non-
Onerous
Onerous
New business insurance contracts
Estimates of present value of cash outflows
$32,414
$554
$7,075
$86
$5,181
$569
$44,670
$1,209
Insurance acquisition cash flows
5,951
117
1,080
20
1,018
121
8,049
258
Claims and other insurance service
expenses payable
26,463
437
5,995
66
4,163
448
36,621
951
Estimates of present value of cash inflows
(36,561)
(540)
(7,675)
(88)
(5,769)
(568)
(50,005)
(1,196)
Risk adjustment for non-financial risk
741
26
147
14
146
28
1,034
68
Contractual service margin
3,406
-
453
-
442
-
4,301
-
Amount included in insurance contract
liabilities for the year
$-
$40
$-
$12
$-
$29
$-
$81
Asia
Canada
U.S.
Total
As at December 31, 2024
Non-
Onerous
Onerous
Non-
Onerous
Onerous
Non-
Onerous
Onerous
Non-
Onerous
Onerous
New business insurance contracts
Estimates of present value of cash outflows
$26,508
$1,019
$5,386
$193
$3,439
$958
$35,333
$2,170
Insurance acquisition cash flows
4,764
147
860
40
802
211
6,426
398
Claims and other insurance service
expenses payable
21,744
872
4,526
153
2,637
747
28,907
1,772
Estimates of present value of cash inflows
(29,664)
(1,002)
(5,876)
(203)
(3,841)
(960)
(39,381)
(2,165)
Risk adjustment for non-financial risk
600
27
117
26
136
46
853
99
Contractual service margin
2,556
-
373
-
266
-
3,195
-
Amount included in insurance contract
liabilities for the year
$-
$44
$-
$16
$-
$44
$-
$104
The following tables present components of new business for reinsurance contracts held portfolios for the years presented.
As at December 31, 2025
Asia
Canada
U.S.
Total
New business reinsurance contracts
Estimates of present value of cash outflows
$(2,316)
$(713)
$(6,373)
$(9,402)
Estimates of present value of cash inflows
2,032
626
5,664
8,322
Risk adjustment for non-financial risk
140
79
606
825
Contractual service margin
164
15
124
303
Amount included in reinsurance assets for the year
$20
$7
$21
$48
As at December 31, 2024
Asia
Canada
U.S.
Total
New business reinsurance contracts
Estimates of present value of cash outflows
$(7,144)
$(6,153)
$(7,519)
$(20,816)
Estimates of present value of cash inflows
6,950
5,876
6,164
18,990
Risk adjustment for non-financial risk
189
68
1,004
1,261
Contractual service margin
21
217
384
622
Amount included in reinsurance assets for the year
$16
$8
$33
$57
Expected Recognition of Contractual Service Margin
The following tables present expectations for the timing of recognition of CSM in income in future years.
As at December 31, 2025
Less than
1 year
1 to 5
years
5 to 10
years
10 to 20
years
More than
20 years
Total
Canada
Insurance contracts issued
$414
$1,301
$1,061
$1,031
$661
$4,468
Reinsurance contracts held
11
39
23
3
(83)
(7)
425
1,340
1,084
1,034
578
4,461
U.S.
Insurance contracts issued
548
1,736
1,370
1,180
454
5,288
Reinsurance contracts held
(315)
(961)
(708)
(533)
(11)
(2,528)
233
775
662
647
443
2,760
Asia
Insurance contracts issued
1,978
6,370
4,944
4,592
2,565
20,449
Reinsurance contracts held
(101)
(416)
(305)
(166)
(113)
(1,101)
1,877
5,954
4,639
4,426
2,452
19,348
Corporate
Insurance contracts issued
(11)
(38)
(37)
(43)
(14)
(143)
Reinsurance contracts held
12
60
48
19
3
142
1
22
11
(24)
(11)
(1)
Total
$2,536
$8,091
$6,396
$6,083
$3,462
$26,568
As at December 31, 2024
Less than
1 year
1 to 5
years
5 to 10
years
10 to 20
years
More than
20 years
Total
Canada
Insurance contracts issued
$426
$1,347
$1,116
$1,173
$677
$4,739
Reinsurance contracts held
(53)
(150)
(126)
(144)
(156)
(629)
373
1,197
990
1,029
521
4,110
U.S.
Insurance contracts issued
474
1,510
1,194
1,023
360
4,561
Reinsurance contracts held
(278)
(835)
(569)
(381)
(30)
(2,093)
196
675
625
642
330
2,468
Asia
Insurance contracts issued
1,527
5,006
2,861
2,815
5,396
17,605
Reinsurance contracts held
(72)
(295)
(194)
(58)
(149)
(768)
1,455
4,711
2,667
2,757
5,247
16,837
Corporate
Insurance contracts issued
(10)
(36)
(35)
(42)
(17)
(140)
Reinsurance contracts held
13
67
59
11
(1)
149
3
31
24
(31)
(18)
9
Total
$2,027
$6,614
$4,306
$4,397
$6,080
$23,424
Investment Income and Insurance Finance Income and Expenses
For the year ended December 31, 2025
Insurance
contracts
Non-
insurance(1)
Total
Investment return
Investment-related income
$15,938
$3,134
$19,072
Net gains (losses) on financial assets at FVTPL
7,044
145
7,189
Unrealized gains (losses) on FVOCI assets
1,561
521
2,082
Impairment and recovery (loss) on financial assets
(80)
(26)
(106)
Investment expenses
(633)
(709)
(1,342)
Interest on required surplus
670
(670)
-
Total investment return
24,500
2,395
26,895
Portion recognized in income (expenses)
22,113
1,834
23,947
Portion recognized in OCI
2,387
561
2,948
Insurance finance income (expenses) from insurance contracts issued and effect of
movement in exchange rates
Interest accreted to insurance contracts
(11,309)
31
(11,278)
Due to changes in interest rates and other financial assumptions
(3,596)
20
(3,576)
Changes in fair value of underlying items of direct participation contracts
(9,875)
-
(9,875)
Effects of risk mitigation option
1,199
-
1,199
Net foreign exchange income (expenses)
(147)
-
(147)
Hedge accounting offset from insurance contracts issued
149
-
149
Reclassification of derivative OCI to IFIE – cash flow hedges
9
-
9
Reclassification of derivative income (loss) changes to IFIE – fair value hedge
(2,093)
-
(2,093)
Other
116
-
116
Total insurance finance income (expenses) from insurance contracts issued
(25,547)
51
(25,496)
Effect of movements in foreign exchange rates
156
-
156
Total insurance finance income (expenses) from insurance contracts issued and effect of
movement in foreign exchange rates
(25,391)
51
(25,340)
Portion recognized in income (expenses), including effects of exchange rates
(22,710)
29
(22,681)
Portion recognized in OCI, including effects of exchange rates
(2,681)
22
(2,659)
Reinsurance finance income (expenses) from reinsurance contracts held and effect of
movement in foreign exchange rates
Interest accreted to insurance contracts
2,370
-
2,370
Due to changes in interest rates and other financial assumptions
620
(2)
618
Changes in risk of non-performance of reinsurers
12
-
12
Other
(234)
-
(234)
Total reinsurance finance income (expenses) from reinsurance contracts held
2,768
(2)
2,766
Effect of movements in foreign exchange rates
(422)
-
(422)
Total reinsurance finance income (expenses) from reinsurance contracts held and effect of
movement in foreign exchange rates
2,346
(2)
2,344
Portion recognized in income (expenses), including effects of foreign exchange rates
1,694
-
1,694
Portion recognized in OCI, including effects of exchange rates
652
(2)
650
Decrease (increase) in investment contract liabilities
(2)
(549)
(551)
Total net investment income (loss), insurance finance income (expenses) and reinsurance
finance income (expenses)
1,453
1,895
3,348
Amounts recognized in income (expenses)
1,095
1,314
2,409
Amounts recognized in OCI
358
581
939
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
For the year ended December 31, 2024
Insurance
contracts
Non-
insurance(1)
Total
Investment return
Investment-related income
$14,214
$3,268
$17,482
Net gains (losses) on financial assets at FVTPL
1,788
63
1,851
Unrealized gains (losses) on FVOCI assets
5,590
(6,803)
(1,213)
Impairment and recovery (loss) on financial assets
137
(28)
109
Investment expenses
(644)
(704)
(1,348)
Interest on required surplus
672
(672)
-
Total investment return
21,757
(4,876)
16,881
Portion recognized in income (expenses)
16,489
2,622
19,111
Portion recognized in OCI
5,268
(7,498)
(2,230)
Insurance finance income (expenses) from insurance contracts issued and effect of
movement in exchange rates
Interest accreted to insurance contracts
(10,283)
26
(10,257)
Due to changes in interest rates and other financial assumptions
10,199
(67)
10,132
Changes in fair value of underlying items of direct participation contracts
(5,231)
-
(5,231)
Effects of risk mitigation option
1,755
-
1,755
Net foreign exchange income (expenses)
(2)
-
(2)
Hedge accounting offset from insurance contracts issued
(128)
-
(128)
Reclassification of derivative OCI to IFIE – cash flow hedges
52
-
52
Reclassification of derivative income (loss) changes to IFIE – fair value hedge
(3,346)
-
(3,346)
Other
394
-
394
Total insurance finance income (expenses) from insurance contracts issued
(6,590)
(41)
(6,631)
Effect of movements in foreign exchange rates
(1,417)
-
(1,417)
Total insurance finance income (expenses) from insurance contracts issued and effect of
movement in foreign exchange rates
(8,007)
(41)
(8,048)
Portion recognized in income (expenses), including effects of exchange rates
(16,252)
33
(16,219)
Portion recognized in OCI, including effects of exchange rates
8,245
(74)
8,171
Reinsurance finance income (expenses) from reinsurance contracts held and effect of
movement in foreign exchange rates
Interest accreted to insurance contracts
2,135
-
2,135
Due to changes in interest rates and other financial assumptions
(3,886)
4
(3,882)
Changes in risk of non-performance of reinsurers
(57)
-
(57)
Other
(88)
-
(88)
Total reinsurance finance income (expenses) from reinsurance contracts held
(1,896)
4
(1,892)
Effect of movements in foreign exchange rates
243
-
243
Total reinsurance finance income (expenses) from reinsurance contracts held and effect of
movement in foreign exchange rates
(1,653)
4
(1,649)
Portion recognized in income (expenses), including effects of foreign exchange rates
1,133
-
1,133
Portion recognized in OCI, including effects of exchange rates
(2,786)
4
(2,782)
Decrease (increase) in investment contract liabilities
(6)
(498)
(504)
Total net investment income (loss), insurance finance income (expenses) and reinsurance
finance income (expenses)
12,091
(5,411)
6,680
Amounts recognized in income (expenses)
1,364
2,157
3,521
Amounts recognized in OCI
10,727
(7,568)
3,159
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
The following tables present Investment income and insurance finance income and expenses recognized in income or expenses
or other comprehensive income, by reporting segments for the years ended December 31, 2025 and December 31, 2024.
Insurance and reinsurance contracts
For the year ended December 31, 2025
Asia
Canada
U.S.
Corporate
Non-
insurance(1)
Total
Total investment return
Portion recognized in income (expenses)
$11,551
$4,216
$6,319
$27
$1,834
$23,947
Portion recognized in OCI
(21)
(52)
2,461
(1)
561
2,948
11,530
4,164
8,780
26
2,395
26,895
Total insurance finance income (expenses) from insurance
contracts issued and effect of movement in foreign
exchange rates
Portion recognized in income (expenses), including effects of
exchange rates
(9,458)
(4,354)
(8,894)
(4)
29
(22,681)
Portion recognized in OCI, including effects of exchange rates
(168)
1,009
(3,522)
-
22
(2,659)
(9,626)
(3,345)
(12,416)
(4)
51
(25,340)
Total reinsurance finance income (expenses) from
reinsurance contracts held and effect of movement in
foreign exchange rates
Portion recognized in income (expenses), including effects of
foreign exchange rates
(104)
251
1,542
5
-
1,694
Portion recognized in OCI, including effects of exchange rates
(305)
(463)
1,420
-
(2)
650
(409)
(212)
2,962
5
(2)
2,344
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
Insurance and reinsurance contracts
For the year ended December 31, 2024
Asia
Canada
U.S.
Corporate
Non-
insurance(1)
Total
Total investment return
Portion recognized in income (expenses)
$7,994
$3,529
$4,943
$23
$2,622
$19,111
Portion recognized in OCI
801
5,876
(1,411)
2
(7,498)
(2,230)
8,795
9,405
3,532
25
(4,876)
16,881
Total insurance finance income (expenses) from insurance
contracts issued and effect of movement in foreign
exchange rates
Portion recognized in income (expenses), including effects of
exchange rates
(7,334)
(3,650)
(5,278)
10
33
(16,219)
Portion recognized in OCI, including effects of exchange rates
(977)
473
8,749
-
(74)
8,171
(8,311)
(3,177)
3,471
10
(41)
(8,048)
Total reinsurance finance income (expenses) from
reinsurance contracts held and effect of movement in
foreign exchange rates
Portion recognized in income (expenses), including effects of
foreign exchange rates
604
347
185
(3)
-
1,133
Portion recognized in OCI, including effects of exchange rates
(168)
59
(2,677)
-
4
(2,782)
436
406
(2,492)
(3)
4
(1,649)
(1)Non-insurance includes consolidations and eliminations of transactions between operating segments.
Significant Judgements and EstimatesFulfilment Cash Flows
Fulfilment cash flows have three major components:
•Estimate of future cash flows
•An adjustment to reflect the time value of money and the financial risk related to future cash flows if not included in the
estimate of future cash flows
•A risk adjustment for non-financial risk
The determination of insurance fulfilment cash flows involves the use of estimates and assumptions. A comprehensive review of
valuation assumptions and methods is performed annually. The review reduces the Company’s exposure to uncertainty by
ensuring assumptions for liability risks remain appropriate. This is accomplished by monitoring experience and updating
assumptions which represent a best estimate of expected future experience and margins that are appropriate for the risks
assumed. While the assumptions selected represent the Company’s current best estimates and assessment of risk, the ongoing
monitoring of experience and the changes in the economic environment are likely to result in future changes to the actuarial
assumptions, which could materially impact the insurance contract liabilities.
Method used to measure insurance and reinsurance contract fulfilment cash flows
The Company primarily uses deterministic projections using best estimate assumptions to determine the present value of future
cash flows. For product features such as universal life minimum crediting rates guarantees, participating life zero dividend floor
implicit guarantees and variable annuities guarantees, the Company developed a stochastic approach to capture the asymmetry
of the risk.
Determination of assumptions used
For the deterministic projections, assumptions are made with respect to mortality, morbidity, rates of policy termination, operating
expenses and certain taxes. Actual experience is monitored to ensure that assumptions remain appropriate and assumptions are
changed as warranted. Assumptions are discussed in more detail in the following table.
  Nature of factors and assumption methodology
  Risk management
  Nature of factors and assumption methodology
  Risk management
The Company reviews actuarial methods and assumptions on an annual basis. If changes are made to non-economic
assumptions, the impact based on locked-in economic assumptions would adjust the contractual service margin for general
model and VFA contracts if there is any remaining contractual service margin for the group of policies where the change was
made. This amount would then be recognized in income over the period of service provided. Changes could also impact net
income and other comprehensive income to the extent that the contractual service margin has been depleted, or discount rates
are different than the locked-in rates used to quantify changes to the contractual service margin.
Determination of Discretionary Changes
The terms of some contracts measured under the GMM give the Company discretion over the cash flows to be paid to the
policyholders, either in timing or amount. Changes in discretionary cash flows are regarded as relating to future service and
accordingly adjust the CSM if there is any remaining CSM for the group of policies where the change was made. The Company
determines how to identify a change in discretionary cash flows by specifying the basis on which it expects to determine its
commitment under the contract; for example, based on a fixed interest rate or on returns that vary based on specified asset
returns. This determination is specified at the inception of the contract.
Discount Rates
Insurance contract cash flows for non-participating business are discounted using risk-free yield curves adjusted by an illiquidity
premium to reflect the liquidity characteristics of the liabilities. Cash flows that vary based on returns of underlying items are
adjusted to reflect their variability under these adjusted yield curves. Each yield curve is interpolated between the spot rate at the
last observable market data point and an ultimate spot rate, which reflects the long-term real interest rate plus inflation
expectations.
For participating business, insurance contract cash flows that vary based on the return of underlying items are discounted at
rates reflecting that variability.
For insurance contracts with cash flows that vary with the return of underlying items and where the present value is measured by
stochastic modelling, cash flows are both projected and discounted at scenario-specific rates, calibrated on average to be the
risk-free yield curves adjusted for liquidity.
The spot rates used for discounting liability cash flows are presented in the following tables and include illiquidity premiums
determined with reference to net asset spreads indicative of the liquidity characteristics of the liabilities by geography.
December 31, 2025
Currency
Liquidity category
Observable
years
Ultimate year
1 year
5 years
10 years
20 years
30 years
Ultimate
Canada
CAD
Illiquid
30
70
2.89%
3.85%
4.94%
5.36%
6.10%
4.40%
Somewhat liquid(1)
30
70
2.87%
3.82%
4.85%
5.39%
6.05%
4.40%
U.S.
USD
Illiquid
30
70
3.74%
4.37%
5.65%
6.47%
6.41%
5.15%
Somewhat liquid(1)
30
70
3.85%
4.42%
5.55%
6.47%
6.40%
5.03%
Japan
JPY
Somewhat liquid(1)
30
70
1.18%
1.93%
2.60%
3.59%
4.38%
1.60%
Hong Kong
HKD
Illiquid
15
55
2.39%
3.48%
4.57%
4.38%
4.02%
3.70%
December 31, 2024
Currency
Liquidity category
Observable
years
Ultimate year
1 year
5 years
10 years
20 years
30 years
Ultimate
Canada
CAD
Illiquid
30
70
3.46%
3.93%
4.86%
5.00%
5.32%
4.40%
Somewhat liquid(1)
30
70
3.44%
3.89%
4.76%
4.98%
5.21%
4.40%
U.S.
USD
Illiquid
30
70
4.48%
5.05%
6.01%
6.33%
6.15%
5.15%
Somewhat liquid(1)
30
70
4.56%
5.09%
5.91%
6.33%
6.14%
5.03%
Japan
JPY
Somewhat liquid(1)
30
70
0.82%
1.17%
1.55%
2.33%
2.97%
1.60%
Hong Kong
HKD
Illiquid
15
55
3.73%
4.36%
5.23%
4.70%
4.17%
3.70%
(1)Somewhat liquid refers to liquidity level that is between liquid and illiquid. It is higher liquidity than illiquid and lower liquidity than liquid.
Amounts presented in income for policies where changes in assumptions that relate to financial risk do not have a substantial
impact on amounts paid to policyholders reflect discount rates locked in beginning with the adoption of IFRS 17 or locked in at
issue for later insurance contracts. These policies include term insurance, guaranteed whole life insurance, and health products
including critical illness and long-term care. For policies where changes in assumptions to financial risk have a substantial impact
on amounts paid to policyholders, discount rates are updated as future cash flows change due to changes in financial risk, so
that the amount presented in income from future changes in financial variables is $nil. These policies include adjustable universal
life contracts. Impacts from differences between current period rates and discount rates used to determine income are presented
in other comprehensive income.
Risk Adjustment and Confidence Level used to determine Risk Adjustment
Risk adjustment for non-financial risk represents the compensation the Company requires for bearing the uncertainty about the
amount and timing of the cash flows that arises from non-financial risk as the Company fulfils insurance contracts. The risk
adjustment process considers insurance, lapse and expense risks, includes both favourable and unfavourable outcomes, and
reflects diversification benefits from the insurance contracts issued.
The Company estimates the risk adjustment using a margin approach. This approach applies a margin for adverse deviation,
typically in terms of a percentage of best estimate assumptions, where future cash flows are uncertain. The resulting cash flows
are discounted at rates consistent with the best estimate cash flows to arrive at the total risk adjustment. The ranges for these
margins are set by the Company and reviewed periodically.
The risk adjustment for non-financial risk for insurance contracts corresponds to a 90 – 95% confidence level for all segments.
Investment Component, Investment-return Service and Investment-related Service
The Company identifies the investment component, investment-return service (contract without direct participation features) and
investment-related service (contract with direct participation features) of a contract as part of the product governance process.
Investment components are amounts that are to be paid to the policyholder under all circumstances. Investment components are
excluded from insurance revenue and insurance service expenses.
Investment-return services and investment-related services are investment services rendered as part of an insurance contract
and are part of the insurance contract services provided to the policyholder.
Relative Weighting of the Benefit Provided by Insurance Coverage, Investment-return Service and Investment-
related Service
The contractual service margin is released into income, when insurance contract services are provided, by using coverage units.
Coverage units represent the quantity of service (insurance coverage, investment-return and investment-related services)
provided and are determined by considering the benefit provided under the contract and its expected coverage duration. When
the relative size of the investment-related service coverage or the investment-return service coverage unit is disproportionate
compared to the insurance service coverage unit, or vice versa, the Company must determine a relative weighting of the services
to reflect the delivery of each of those services. The Company identifies the coverage units as part of the product governance
process and did not identify contracts where such weighting was required.
Sensitivity of Insurance Contract Liabilities to Changes in Non-economic Assumptions
The following tables present information on how reasonably possible changes in assumptions made by the Company on
insurance contracts’ non-economic risk variables and certain economic risk variables impact contractual service margin, net
income attributed to shareholders, other comprehensive income attributed to shareholders, and total comprehensive income
attributed to shareholders. For non-economic risk variables, the impacts are shown separately gross and net of the impacts of
reinsurance contracts held. The method used for deriving sensitivity information and significant assumptions made did not
change from the previous period.
The analysis is based on a simultaneous change in assumptions across all businesses and holds all other assumptions constant.
In practice, experience for each assumption will frequently vary by geographic market and business, and assumption updates
are specifically made on a business and geographic basis. Actual results can differ materially from these estimates for a variety
of reasons including the interaction among these factors when more than one changes, actual experience differing from the
assumptions, changes in business mix, effective tax rates, and the general limitations of the Company’s internal models.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to non-
economic assumptions(1)
As at December 31, 2025
CSM net of NCI
Net income attributed to
shareholders
Other comprehensive
income attributed to
shareholders
Total comprehensive
income attributed to
shareholders
(post-tax except CSM)
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Policy related assumptions
2% adverse change in future mortality rates(2),(3),(5)
Portfolios where an increase in rates increases
insurance contract liabilities
$(700)
$(200)
$(700)
$(200)
$100
$-
$(600)
$(200)
Portfolios where a decrease in rates increases
insurance contract liabilities
(300)
(400)
200
(100)
100
100
300
-
5% adverse change in future morbidity rates(4),(5),(6)
(incidence and termination)
(2,200)
(1,800)
(3,000)
(2,500)
600
500
(2,400)
(2,000)
10% change in future policy termination rates(3),(5)
Portfolios where an increase in rates increases
insurance contract liabilities
(900)
(800)
(100)
(100)
(200)
(200)
(300)
(300)
Portfolios where a decrease in rates increases
insurance contract liabilities
(800)
(600)
(700)
(400)
500
300
(200)
(100)
5% increase in future expense levels
(600)
(600)
(100)
(100)
100
100
-
-
As at December 31, 2024
CSM net of NCI
Net income attributed to
shareholders
Other comprehensive
income attributed to
shareholders
Total comprehensive
income attributed to
shareholders
(post-tax except CSM)
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Policy related assumptions
2% adverse change in future mortality rates(2),(3),(5)
Portfolios where an increase in rates increases
insurance contract liabilities
$(700)
$(200)
$(700)
$(300)
$200
$100
$(500)
$(200)
Portfolios where a decrease in rates increases
insurance contract liabilities
(100)
(600)
-
-
100
200
100
200
5% adverse change in future morbidity rates(4),(5),(6)
(incidence and termination)
(2,200)
(1,800)
(3,000)
(2,700)
700
600
(2,300)
(2,100)
10% change in future policy termination rates(3),(5)
Portfolios where an increase in rates increases
insurance contract liabilities
(700)
(600)
(100)
(100)
(200)
(200)
(300)
(300)
Portfolios where a decrease in rates increases
insurance contract liabilities
(900)
(700)
(700)
(400)
400
300
(300)
(100)
5% increase in future expense levels
(600)
(600)
(100)
(100)
100
100
-
-
(1)The participating policy funds are largely self-supporting and experience gains or losses would generally result in changes to future dividends reducing the direct
impact on the CSM and shareholder income.
(2)An increase in mortality rates will generally increase insurance contract liabilities for life insurance contracts, whereas a decrease in mortality rates will generally
increase insurance contract liabilities for policies with longevity risk such as payout annuities.
(3)The sensitivity is measured for each direct insurance portfolio net of the impacts of any reinsurance held on the policies within that portfolio to determine if the
overall insurance contract liabilities increased.
(4)No amounts related to morbidity risk are included for policies where the insurance contract liability provides only for claims costs expected over a short period,
generally less than one year, such as Group Life and Health.
(5)The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any offsets from the Company’s ability to contractually raise premium rates
in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting
from the sensitivity.
(6)This includes a 5% deterioration in incidence rates and a 5% deterioration in claim termination rates.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to non-
economic assumptions on Long Term Care(1)
As at December 31, 2025
CSM net of NCI
Net income attributed
to shareholders
Other comprehensive
income attributed to
shareholders
Total comprehensive
income attributed to
shareholders
(post-tax except CSM)
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Policy related assumptions
2% adverse change in future mortality rates(2),(3)
$(300)
$(300)
$-
$-
$-
$-
$-
$-
5% adverse change in future morbidity incidence rates(2),(3)
(1,500)
(1,300)
(400)
(300)
200
200
(200)
(100)
5% adverse change in future morbidity claims termination
rates(2),(3)
(1,500)
(1,300)
(1,200)
(1,000)
400
400
(800)
(600)
10% adverse change in future policy termination rates(2),(3)
(400)
(300)
-
-
-
-
-
-
5% increase in future expense levels(3)
(100)
(100)
-
-
-
-
-
-
As at December 31, 2024
CSM net of NCI
Net income attributed
to shareholders
Other comprehensive
income attributed to
shareholders
Total comprehensive
income attributed to
shareholders
(post-tax except CSM)
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Policy related assumptions
2% adverse change in future mortality rates(2),(3)
$(300)
$(300)
$-
$-
$-
$-
$-
$-
5% adverse change in future morbidity incidence rates(2),(3)
(1,400)
(1,300)
(500)
(400)
200
200
(300)
(200)
5% adverse change in future morbidity claims termination
rates(2),(3)
(1,400)
(1,300)
(1,300)
(1,100)
500
400
(800)
(700)
10% adverse change in future policy termination rates(2),(3)
(400)
(400)
-
-
100
100
100
100
5% increase in future expense levels(3)
(100)
(100)
-
-
-
-
-
-
(1)The potential impacts on CSM were translated from US$ at 1.3707 (2024 – 1.4382) and the potential impacts on net income attributed to shareholders, OCI
attributed to shareholders and total comprehensive income attributed to shareholders were translated from US$ at 1.3939 (2024 – 1.3987).
(2)The impacts of the sensitivities on LTC for morbidity, mortality and lapse do not assume any offsets from the Company’s ability to contractually raise premium rates
in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting
from the sensitivities.
(3)The impact of favourable changes to all the sensitivities is relatively symmetrical.
Potential impact on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders arising from changes to certain
economic financial assumptions used in the determination of insurance contract liabilities(1)
As at December 31, 2025
(post-tax except CSM)
CSM net of
NCI
Net income
attributed to
shareholders
Other comprehensive
income attributed to
shareholders
Total comprehensive
income attributed to
shareholders
Financial assumptions
10 basis point reduction in ultimate spot rate
$(300)
$-
$(200)
$(200)
50 basis point increase in interest rate volatility(2)
(100)
-
-
-
50 basis point increase in non-fixed income return volatility(2)
(100)
-
-
-
As at December 31, 2024
(post-tax except CSM)
CSM net of
NCI
Net income
attributed to
shareholders
Other comprehensive
income attributed to
shareholders
Total comprehensive
income attributed to
shareholders
Financial assumptions
10 basis point reduction in ultimate spot rate  
$(300)
$-
$(200)
$(200)
50 basis point increase in interest rate volatility(2)
(100)
-
-
-
50 basis point increase in non-fixed income return volatility(2)
(100)
-
-
-
(1)Note that the impact of these assumptions is not linear.
(2)Used in the determination of insurance contract liabilities with financial guarantees. This includes universal life minimum crediting rate guarantees, participating life
zero dividend floor implicit guarantees, and variable annuities guarantees, where a stochastic approach is used to capture the asymmetry of the risk.
Review of Actuarial Methods and Assumptions
The Company performs a comprehensive review of actuarial methods and assumptions annually. The review is designed to
reduce the Company’s exposure to uncertainty by ensuring assumptions for liability risks remain appropriate. This is
accomplished by monitoring experience and updating assumptions that represent a best estimate of expected future experience,
and maintaining a risk adjustment that is appropriate for the risks assumed. While the assumptions selected represent the
Company’s best estimates and assessment of risk, the ongoing monitoring of experience and changes in the economic
environment are likely to result in future changes to the actuarial assumptions, which could materially impact the insurance
contract liabilities. The changes implemented from the review are generally implemented in the third quarter of each year, though
updates may be made outside the third quarter in certain circumstances.
2025 Review of Actuarial Methods and Assumptions
The completion of the 2025 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash
flows of $605, excluding the portion related to non-controlling interests. These updates resulted in a decrease in pre-tax net
income attributed to shareholders of $244 ($216 post-tax), a decrease in pre-tax net income attributed to participating
policyholders of $88 ($67 post-tax), an increase in CSM of $1,080, a decrease in pre-tax other comprehensive income attributed
to shareholders of $52 ($73 post-tax), and a decrease in pre-tax other comprehensive income attributed to participating
policyholders of $91 ($70 post-tax).
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows(1)
For the year ended December 31, 2025
Total
Hong Kong health insurance product reserving approach
$(463)
Methodology and other updates
(207)
Lapse and policyholder behaviour updates
181
Long-term care triennial review
(77)
Mortality and morbidity updates
(39)
Impact of updates to actuarial methods and assumptions, on pre-tax fulfilment cash flows
$(605)
(1)Excludes the portion related to non-controlling interests of $116. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $(489).
Impact of updates to actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net
income attributed to participating policyholders, OCI and CSM(1)
For the year ended December 31, 2025
Total
Portion recognized in pre-tax net income (loss) attributed to:
Participating policyholders
$(88)
Shareholders
(244)
(332)
Portion increasing (decreasing) CSM
1,080
Portion recognized in pre-tax OCI attributed to:
Participating policyholders
(91)
Shareholders
(52)
(143)
Impact of updates to actuarial methods and assumptions, pre-tax
$605
(1)Excludes the portion related to non-controlling interests of $(116). The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $489.
Hong Kong health insurance product reserving approach
An update to the pricing philosophy on certain health insurance products in Hong Kong led to a change in the IFRS 17
measurement model from the Premium Allocation Approach to the General Measurement Model, which requires all future cash
flows to be included in the fulfilment cash flows, amounting to a decrease in pre-tax fulfilment cash flows of $463.
Methodology and other updates
Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $207.
The decrease was mainly driven by annual yield and parameter updates to the Company’s valuation models for participating
products in Asia and Canada. This was partially offset by various other valuation models updates in the U.S. to non-participating
products that netted to a residual increase in fulfilment cash flows.
Lapse and policyholder behaviour updates
Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of $181.
The increase was mainly driven by the review of lapse assumptions in Singapore as well as other smaller updates. The
Singapore update reflected higher lapse experience on the Company’s index-linked and universal life products. This was partially
offset by the impact of the lapse review on term insurance products in Canada.
Long-term care triennial review
U.S. Insurance completed a comprehensive long-term care (“LTC”) experience study. The review included all aspects of claim
assumptions, as well as the progress on future premium increases and approved premium increases in excess of prior
assumptions. The impact of the LTC review was a decrease in pre-tax fulfilment cash flows of $77.
The overall experience study led to a $1.9 billion (US$1.4 billion) increase in pre-tax fulfilment cash flows for claim costs
following a review of morbidity, mortality and lapse assumptions. This was mainly driven by higher utilization of benefits due to
the impact of higher inflation in the cost-of-care, and also reflects the benefit of in-force management initiatives related to fraud,
waste and abuse programs. The impact from utilization was partially offset by updates to reflect higher terminations. The impacts
of updating incidence, active life mortality1, lapse and other refinements were all relatively small.
The review of assumed future premium increases resulted in a $1.5 billion (US$1.1 billion) decrease in pre-tax fulfilment cash
flows. This reflects expected future net premium increases that are due to the outstanding amounts from prior state filings as well
as to the Company’s 2025 review of morbidity, mortality, and lapse assumptions. Since the last triennial review in 2022, the
Company has received actual premium increase approvals of $3.2 billion pre-tax (US$2.3 billion pre-tax) on a present value
basis. This exceeds the amount of premium increases the Company assumed in the pre-tax fulfilment cash flows by $0.5 billion
(US$0.3 billion) at that time.
Mortality and morbidity updates
Mortality and morbidity updates resulted in a decrease in pre-tax fulfilment cash flows of $39.
The decrease was mainly driven by a morbidity study of group long-term disability benefits in Canada related to claim
termination, partially offset by other items that netted to a modest residual increase in fulfilment cash flows.
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to
shareholders, CSM and OCI by segment
The impact of updates to actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of
$382. The decrease was primarily driven by the impact of annual updates to the Company’s valuation models for participating
products, the lapse review on term insurance products as well as the review of morbidity assumptions for group long-term
disability benefits. These updates resulted in an increase in pre-tax net income attributed to shareholders of $80 ($58 post-tax),
an increase in CSM of $348, and an increase in pre-tax other comprehensive income attributed to shareholders of $98 ($71 post-
tax).
The impact of updates to actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows
of $179. The increase was primarily driven by a number of valuation model updates, partially offset by the impact of the LTC
triennial review. These updates resulted in a decrease in pre-tax net income attributed to shareholders of $298 ($235 post-tax),
an increase in CSM of $43, and an increase in pre-tax other comprehensive income attributed to shareholders of $75 ($60 post-
tax).
The impact of updates to actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of
$418. The decrease was primarily driven by the impact of the change in the IFRS 17 measurement model on certain health
insurance products in Hong Kong and the impact of annual updates to the Company’s valuation models for participating
products, partly offset by a review of lapse assumptions for certain products in Singapore. These updates resulted in a decrease
in pre-tax net income attributed to shareholders of $26 ($39 post-tax), an increase in CSM of $704, and a decrease in pre-tax
other comprehensive income attributed to shareholders of $224 ($203 post-tax).
The impact of updates to actuarial methods and assumptions in Corporate and Other (which includes the Company’s property
and casualty reinsurance businesses, run-off insurance operations including variable annuities and health, and consolidation
adjustments including intercompany eliminations) resulted in an increase in pre-tax fulfilment cash flows of $16. These updates
resulted in no impact to pre-tax or post-tax net income attributed to shareholders, a decrease in CSM of $15 and a decrease in
pre-tax other comprehensive income attributed to shareholders of $1 ($1 post-tax).
2024 Review of Actuarial Methods and Assumptions
The completion of the 2024 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash
flows of $174, excluding the portion related to non-controlling interests. These updates resulted in a decrease in pre-tax net
income attributed to shareholders of $250 ($199 post-tax), an increase in pre-tax net income attributed to participating
policyholders of $29 ($21 post-tax), a decrease in CSM of $421, an increase in pre-tax other comprehensive income attributed to
shareholders of $771 ($632 post-tax), and an increase in pre-tax other comprehensive income attributed to participating
policyholders of $45 ($32 post-tax).
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows(1)
For the year ended December 31, 2024
Total
Lapse and policyholder behaviour updates
$620
Reinsurance contract and other risk adjustment review
427
Expense updates
(406)
Financial related updates
(386)
Mortality and morbidity updates
(273)
Methodology and other updates
(156)
Impact of updates to actuarial methods and assumptions, on pre-tax fulfilment cash flows
$(174)
(1)Excludes the portion related to non-controlling interests of $(215) The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $(389).
Impact of updates to actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net
income attributed to participating policyholders, OCI and CSM(1)
For the year ended December 31, 2024
Total
Portion recognized in net income (loss) attributed to:
Participating policyholders
$29
Shareholders
(250)
(221)
Portion increasing (decreasing) CSM
(421)
Portion recognized in OCI attributed to:
Participating policyholders
45
Shareholders
771
816
Impact of updates to actuarial methods and assumptions, pre-tax
$174
(1)Excludes the portion related to non-controlling interests of $215. The impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows,
including the portion related to non-controlling interests, would be $389.
Lapse and policyholder behaviour updates
Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of $620.
The increase was primarily driven by a detailed review of the lapse assumptions for the Company’s non-participating products in
its U.S. life insurance business and its International High Net Worth business in Asia segment. For U.S. protection products,
lapse rates declined during the COVID-19 pandemic and continue to remain low, while for U.S. indexed universal life, U.S. bank-
owned life insurance, and Asia’s International High Net Worth business, lapse rates increased due to the impact of higher short-
term interest rates. The Company updated its lapse assumptions to reflect these experience trends. The ultimate lapse rates for
products with no-lapse guarantees were not changed.
Reinsurance contract and other risk adjustment review
The review of the Company’s reinsurance contracts and risk adjustment, excluding changes that were a direct result of other
assumption updates, resulted in an increase in pre-tax fulfilment cash flows of $427.
The increase was driven by updates to the Company’s reinsurance contract fulfilment cash flows to reflect current reinsurance
market conditions and the resulting expected cost on older U.S. mortality reinsurance, partially offset by updates to the
Company’s risk adjustment methodology in North America related to non-financial risk.
The Company’s overall risk adjustment continues to be within the 90 – 95% confidence level.
Expense updates
Expense updates resulted in a decrease in pre-tax fulfilment cash flows of $406.
The decrease was driven by a detailed review of the Company’s global expenses, including investment expenses. The Company
aligned them with its current cost structure and included the impact of changes in classification of certain expenses from directly
attributable to non-directly attributable.
Financial related updates
Financial related updates resulted in a decrease in pre-tax fulfilment cash flows of $386.
The decrease was driven by a review of the discount rates used in the valuation of the Company’s non-participating business,
which included increases to ultimate risk-free rates in the U.S. to align with historical averages, as well as updates to parameters
used to determine illiquidity premiums. This was partially offset by refinements to crediting rate projections on certain U.S.
universal life products.
Mortality and morbidity updates
Mortality and morbidity updates resulted in a decrease in pre-tax fulfilment cash flows of $273.
The decrease was driven by morbidity updates to health insurance products in Hong Kong to reflect lower hospital claims on
certain business that the Company accounts for under the general measurement model, partially offset by updates to mortality
and morbidity assumptions on critical illness products in Hong Kong to reflect emerging experience.
Methodology and other updates
Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $156.
The decrease was driven by the impact of annual updates to the Company’s valuation models for participating products in Asia
and Canada reflecting higher interest rates during the year, partially offset by various other smaller items that netted to an
increase in fulfilment cash flows.
Impact of updates to actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to
shareholders, CSM and OCI by segment
The impact of updates to actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of
$266. The decrease was primarily driven by updates to the risk adjustment methodology related to non-financial risks and the
review of the discount rates used in the valuation of non-participating business. These updates resulted in an increase in pre-tax
net income attributed to shareholders of $3 ($2 post-tax), an increase in CSM of $222, and a decrease in pre-tax other
comprehensive income attributed to shareholders of $15 ($10 post-tax).
The impact of updates to actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows
of $895. The increase was primarily driven by the net impact of updates to the Company’s reinsurance contract fulfilment cash
flows and risk adjustment methodology related to non-financial risks, a detailed review of the lapse assumptions in its life
insurance business, and refinements to its crediting rate projections on certain universal life products, partially offset by a review
of the discount rates used in the valuation of non-participating business. These updates resulted in a decrease in pre-tax net
income attributed to shareholders of $256 ($202 post-tax), a decrease in CSM of $1,228, and an increase in pre-tax other
comprehensive income attributed to shareholders of $589 ($466 post-tax).
The impact of updates to actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of
$818. The decrease was primarily driven by the impact of morbidity updates to certain health insurance products in Hong Kong
to reflect emerging experience, updates from the Company’s detailed review of global expenses, including investment expenses,
as well as the impact of annual updates to its valuation models for participating products, partially offset by a review of lapse
assumptions for the International High Net Worth business. These updates resulted in a decrease in pre-tax net income
attributed to shareholders of $4 ($5 post-tax), an increase in CSM of $591, and an increase in pre-tax other comprehensive
income attributed to shareholders of $213 ($190 post-tax).
The impact of updates to actuarial methods and assumptions in Corporate and Other (which includes the Company’s property
and casualty reinsurance businesses, run-off insurance operations including variable annuities and health, and consolidation
adjustments including intercompany eliminations) resulted in an increase in pre-tax fulfilment cash flows of $15. These updates
resulted in an increase in pre-tax net income attributed to shareholders of $7 ($6 post-tax), a decrease in CSM of $6, and a
decrease in pre-tax other comprehensive income attributed to shareholders of $16 ($14 post-tax).
Composition of Underlying Items
The following sets out the composition and fair value of the underlying items supporting the Company’s liabilities for direct
participation contracts as at the dates presented.
Participating Policies
As at December 31,
2025
2024
Underlying assets
Debt securities
$60,128
$54,238
Public equities
26,460
19,846
Mortgages
4,934
4,535
Private placements
9,699
8,398
Real estate
5,179
4,525
Other(1)
33,070
31,952
Total
$139,470
$123,494
(1)Other for participating life insurance contracts include derivatives, reinsurance contract held assets, and other invested assets.
Variable Annuities and Unit-Linked
The Company also issues variable annuities and unit-linked contracts that are accounted for as insurance contracts with direct
participating features. The fair value of underlying assets is reported in insurance contract liabilities for the account of segregated
fund holders and includes investments in segregated funds of $69,473, and $25,264 (2024 – $72,061, and $18,771) for variable
annuities and unit-linked, respectively.
Asset for Insurance Acquisition Cash Flow
The following table presents the expected future derecognition of asset for insurance acquisition cash flow as at the dates
presented.
2025
2024
As at December 31,
Less than
1 year
1 to 5
years
More than
5 years
Total
Less than
1 year
1 to 5
years
More than
5 years
Total
Asia
$18
$36
$17
$71
$65
$168
$57
$290
Canada
73
223
331
627
72
213
303
588
Total
$91
$259
$348
$698
$137
$381
$360
$878
Insurance and Reinsurance Contracts Contractual Obligations – Maturity Analysis and Amounts Payable on
Demand
The tables below represent the maturities of the insurance contract and reinsurance contract held liabilities as at the dates
presented.
As at December 31, 2025
Payments due by period
Less than 1
year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
Over 5 years
Total
Insurance contract liabilities(1)
$3,783
$4,167
$8,129
$11,588
$14,676
$1,396,865
$1,439,208
Reinsurance contract held liabilities(1)
254
535
460
429
386
(11,008)
(8,944)
As at December 31, 2024
Payments due by period
Less than 1
year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
Over 5 years
Total
Insurance contract liabilities(1)
$4,223
$3,711
$6,266
$8,741
$12,644
$1,348,354
$1,383,939
Reinsurance contract held liabilities(1)
250
395
530
419
373
(11,450)
(9,483)
(1)Insurance contract liabilities cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities,
annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future
premiums on in-force contracts and exclude amounts from insurance contract liabilities for account of segregated fund holders. These estimated cash flows are
based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted. Reinsurance contract held
liabilities cash flows include estimates related to the timing and payment of future reinsurance premiums offset by recoveries on in-force reinsurance agreements.
Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value.
The amounts from insurance contract liabilities that are payable on demand are set out below as at the dates presented.
2025
2024
As at December 31,
Amounts
payable on
demand
Carrying
amount
Amounts
payable on
demand
Carrying
amount
Asia
$133,552
$163,678
$121,197
$131,829
Canada
34,530
55,492
31,100
53,224
U.S.
46,824
66,328
48,918
66,524
Total
$214,906
$285,498
$201,215
$251,577
The amounts payable on demand represent the policyholders’ cash and / or account values less applicable surrender fees as at
the time of the reporting date. Segregated fund insurance liabilities for account of segregated fund holders are excluded from the
amounts payable on demand and the carrying amount.
Reinsurance Transactions
Agreement with Reinsurance Group of America
On November 20, 2024, the Company announced it entered into an agreement with Reinsurance Group of America,
Incorporated (“RGA”) to reinsure policies from the U.S. LTC and U.S. structured settlement legacy blocks. Under the terms of the
transaction, the Company retained responsibility for the administration of the policies, with no intended impact to policyholders.
The transaction was structured as a 75% quota share for both the LTC and structured settlements blocks.
The transaction closed on January 2, 2025, with an effective date of January 1, 2025, with the Company transferring invested
assets of $5.4 billion and reinsuring insurance contract liabilities of $5.2 billion. The Company recognized a reinsurance
contractual service margin of $201.
Agreement with RGA Life Reinsurance Company of Canada
On March 25, 2024, the Company announced it entered into an agreement with RGA Life Reinsurance Company of Canada
(“RGA Canada”) to reinsure policies from its Canadian universal life block. Under the terms of the transaction, the Company
retained responsibility for the administration of the policies, with no intended impact to policyholders. The transaction was
structured as coinsurance with a 100% quota share.
The transaction closed on April 2, 2024, with the Company transferring invested assets measured at FVOCI of $5.5 billion and
reinsuring insurance contract liabilities of $5.4 billion. The Company recognized a reinsurance contractual service margin of
$213.
Agreement with Global Atlantic Financial Group
On December 11, 2023, the Company announced it entered into agreements with Global Atlantic Financial Group Ltd. (“GA”) to
reinsure policies from the U.S. long-term care (“LTC”), U.S. structured settlements, and Japan whole life legacy blocks. Under
the terms of the transaction, the Company retained responsibility for the administration of the policies, with no intended impact to
policyholders. The transaction was structured as coinsurance of an 80% quota share for the LTC block and 100% quota shares
for the other blocks.
The transaction closed on February 22, 2024, with the Company transferring invested assets measured at FVOCI of $13.4 billion
and reinsuring insurance and investment contract net liabilities of $13.2 billion. The Company recognized a reinsurance
contractual service margin of $308 and financial assets of $134.