v3.25.4
Risk Management (Tables)
 12 Months Ended
Dec. 31, 2025
Disclosure of credit risk exposure [line items]  
Summary of Market Risks and Risk Management Strategies
Risk Management Strategy
Key Market & Liquidity Risk
Public
Equity Risk
Interest Rate
and Spread Risk
ALDA
Risk
Foreign Currency
Exchange Risk
Liquidity Risk
Product design and pricing
ü
ü
ü
ü
ü
Dynamic hedging
ü
ü
ü
ü
Macro equity risk hedging
ü
ü
ü
Asset liability management
ü
ü
ü
ü
ü
Foreign currency exchange management
ü
ü
Liquidity risk management
ü
Summary of Investment Categories for Variable Contracts with Guarantees Variable contracts with guarantees, including variable annuities and variable life, are invested at the policyholder’s discretion
subject to contract limitations, in various fund types within the segregated fund accounts and other investments. The account
balances by investment category are set out below.
As at December 31,
2025
2024
Investment category
Equity funds
$51,919
$51,457
Balanced funds
36,889
37,381
Bond funds
8,528
9,017
Money market funds
1,794
1,712
Other debt investments
2,074
2,082
Total
$101,204
$101,649
Summary of Potential Immediate Impact on Contractual Service Margin, Other Comprehensive Income to Shareholders and Total Comprehensive Income to Shareholders Potential impacts on contractual service margin, net income attributed to shareholders, other comprehensive income
attributed to shareholders, and total comprehensive income attributed to shareholders of an immediate parallel change
in interest rates, corporate spreads or swap spreads relative to current rates(1),(2),(3)
As at December 31, 2025
Interest rates
Corporate spreads
Swap spreads
(post-tax except CSM)
-50bp
+50bp
-50bp
+50bp
-20bp
+20bp
CSM
$200
$(300)
$(200)
$100
$-
$-
Net income attributed to shareholders
100
(100)
-
-
100
(100)
Other comprehensive income attributed to shareholders
(100)
100
100
-
(300)
300
Total comprehensive income attributed to shareholders
-
-
100
-
(200)
200
As at December 31, 2024
Interest rates
Corporate spreads
Swap spreads
(post-tax except CSM)
-50bp
+50bp
-50bp
+50bp
-20bp
+20bp
CSM
$100
$(200)
$-
$(100)
$-
$-
Net income attributed to shareholders
100
(100)
100
(100)
100
(100)
Other comprehensive income attributed to shareholders
(100)
200
(200)
300
(100)
100
Total comprehensive income attributed to shareholders
-
100
(100)
200
-
-
(1)See “Caution related to sensitivities” above.
(2)Estimates include changes to the net actuarial gains/losses with respect to the Company’s pension obligations as a result of changes in interest rates.
(3)Includes guaranteed insurance and annuity products, including variable annuity contracts as well as adjustable benefit products where benefits are generally
adjusted as interest rates and investment returns change, a portion of which have minimum credited rate guarantees. For adjustable benefit products subject to
minimum rate guarantees, the sensitivities are based on the assumption that credited rates will be floored at the minimum.
Summary of Potential Immediate Impacts on Contractual Service Margin, Net Income Attributed to Shareholders, Other Comprehensive Income Attributed to Shareholders, and Total Comprehensive Income Attributed to Shareholders from Changes in ALDA Market Values Potential immediate impacts on contractual service margin, net income attributed to shareholders, other
comprehensive income attributed to shareholders, and total comprehensive income attributed to shareholders from
changes in ALDA market values(1)
As at
December 31, 2025
December 31, 2024
(post-tax except CSM)
-10%
+10%
-10%
+10%
CSM excluding NCI
$(200)
$200
$(200)
$200
Net income attributed to shareholders(2)
(2,200)
2,200
(2,500)
2,500
Other comprehensive income attributed to shareholders
(200)
200
(200)
200
Total comprehensive income attributed to shareholders
(2,400)
2,400
(2,700)
2,700
(1)See “Caution related to sensitivities” above.
(2)Net income attributed to shareholders includes core earnings and the items excluded from core earnings.
Summary of Gross Carrying Amount of Financial Instruments Subject to Credit Exposure Credit Quality
The following tables present financial instruments subject to credit exposure, without considering any collateral held or other
credit enhancements, and other significant credit risk exposures from loan commitments, with allowances, presenting separately
Stage 1, Stage 2, and Stage 3 credit risk profiles. For each asset type presented in the table, amortized cost and FVOCI financial
instruments are presented together. Amortized cost financial instruments are shown gross of the allowance for credit losses,
which is shown separately. FVOCI financial instruments are shown at fair value with the allowance for credit losses shown
separately.
As at December 31, 2025
Stage 1
Stage 2
Stage 3
Total
Debt securities, measured at FVOCI
Investment grade
$203,241
$1,187
$-
$204,428
Non-investment grade
3,993
477
-
4,470
Total carrying value
207,234
1,664
-
208,898
Allowance for credit losses
221
43
-
264
Debt securities, measured at amortized cost
Investment grade
1,137
-
-
1,137
Non-investment grade
-
-
-
-
Total
1,137
-
-
1,137
Allowance for credit losses
1
-
-
1
Total carrying value, net of allowance
1,136
-
-
1,136
Private placements, measured at FVOCI
Investment grade
43,803
309
-
44,112
Non-investment grade
5,527
979
211
6,717
Total carrying value
49,330
1,288
211
50,829
Allowance for credit losses
108
82
194
384
Commercial mortgages, measured at FVOCI
AAA
244
-
-
244
AA
7,961
-
-
7,961
A
13,720
-
-
13,720
BBB
5,106
645
-
5,751
BB
63
730
-
793
B and lower
-
20
100
120
Total carrying value
27,094
1,395
100
28,589
Allowance for credit losses
42
38
34
114
Commercial mortgages, measured at amortized cost
AAA
-
-
-
-
AA
-
-
-
-
A
223
-
-
223
BBB
-
-
-
-
BB
-
-
-
-
B and lower
166
8
1
175
Total
389
8
1
398
Allowance for credit losses
1
-
1
2
Total carrying value, net of allowance
388
8
-
396
Residential mortgages, measured at amortized cost
Performing
25,361
1,379
-
26,740
Non-performing
-
-
50
50
Total
25,361
1,379
50
26,790
Allowance for credit losses
4
2
1
7
Total carrying value, net of allowance
25,357
1,377
49
26,783
Loans to Bank clients, measured at amortized cost
Performing
2,629
105
-
2,734
Non-performing
-
-
4
4
Total
2,629
105
4
2,738
Allowance for credit losses
1
1
1
3
Total carrying value, net of allowance
2,628
104
3
2,735
Other invested assets, measured at FVOCI
Investment grade
-
-
-
-
Non-investment grade
383
-
-
383
Total carrying value
383
-
-
383
Allowance for credit losses
21
-
-
21
Other invested assets, measured at amortized cost
Investment grade
4,266
-
-
4,266
Non-investment grade
-
-
-
-
Total
4,266
-
-
4,266
Allowance for credit losses
1
-
-
1
Total carrying value, net of allowance
4,265
-
-
4,265
Loan commitments
Allowance for credit losses
10
1
1
12
Total carrying value, net of allowance
$317,815
$5,836
$363
$324,014
As at December 31, 2024
Stage 1
Stage 2
Stage 3
Total
Debt securities, measured at FVOCI
Investment grade
$197,840
$1,338
$-
$199,178
Non-investment grade
5,625
363
-
5,988
Total carrying value
203,465
1,701
-
205,166
Allowance for credit losses
228
42
-
270
Debt securities, measured at amortized cost
Investment grade
1,496
-
-
1,496
Non-investment grade
-
-
-
-
Total
1,496
-
-
1,496
Allowance for credit losses
1
-
-
1
Total carrying value, net of allowance
1,495
-
-
1,495
Private placements, measured at FVOCI
Investment grade
41,796
721
-
42,517
Non-investment grade
5,004
1,133
148
6,285
Total carrying value
46,800
1,854
148
48,802
Allowance for credit losses
126
127
123
376
Commercial mortgages, measured at FVOCI
AAA
205
-
-
205
AA
7,234
-
-
7,234
A
14,035
-
-
14,035
BBB
5,679
873
-
6,552
BB
11
663
-
674
B and lower
-
21
71
92
Total carrying value
27,164
1,557
71
28,792
Allowance for credit losses
41
39
55
135
Commercial mortgages, measured at amortized cost
AAA
-
-
-
-
AA
-
-
-
-
A
225
15
-
240
BBB
-
-
-
-
BB
-
-
-
-
B and lower
112
5
5
122
Total
337
20
5
362
Allowance for credit losses
1
1
-
2
Total carrying value, net of allowance
336
19
5
360
Residential mortgages, measured at amortized cost
Performing
22,870
1,151
-
24,021
Non-performing
-
-
41
41
Total
22,870
1,151
41
24,062
Allowance for credit losses
3
2
1
6
Total carrying value, net of allowance
22,867
1,149
40
24,056
Loans to Bank clients, measured at amortized cost
Performing
2,265
38
-
2,303
Non-performing
-
-
10
10
Total
2,265
38
10
2,313
Allowance for credit losses
1
1
1
3
Total carrying value, net of allowance
2,264
37
9
2,310
Other invested assets, measured at FVOCI
Investment grade
-
-
-
-
Non-investment grade
389
-
-
389
Total carrying value
389
-
-
389
Allowance for credit losses
22
-
-
22
Other invested assets, measured at amortized cost
Investment grade
4,302
-
-
4,302
Non-investment grade
-
-
-
-
Total
4,302
-
-
4,302
Allowance for credit losses
2
-
-
2
Total carrying value, net of allowance
4,300
-
-
4,300
Loan commitments
Allowance for credit losses
9
1
1
11
Total carrying value, net of allowance
$309,080
$6,317
$273
$315,670
Summary of Allowance for Credit Losses by Stage Allowance for Credit Losses
The following tables provide details on the allowance for credit losses by stage as at and for the years ended December 31, 2025
and 2024.
As at December 31, 2025
Stage 1
Stage 2
Stage 3
Total
Balance, beginning of year
$434
$213
$181
$828
Net re-measurement due to transfers
4
(31)
27
-
Transfer to stage 1
11
(11)
-
-
Transfer to stage 2
(7)
7
-
-
Transfer to stage 3
-
(27)
27
-
Net originations, purchases, disposals and repayments
59
(11)
(97)
(49)
Changes to risk, parameters, and models
(72)
(1)
117
44
Foreign exchange and other adjustments
(15)
(3)
4
(14)
Balance, end of year
$410
$167
$232
$809
As at December 31, 2024
Stage 1
Stage 2
Stage 3
Total
Balance, beginning of year
$483
$209
$237
$929
Net re-measurement due to transfers
4
(22)
18
-
Transfer to stage 1
12
(12)
-
-
Transfer to stage 2
(7)
7
-
-
Transfer to stage 3
(1)
(17)
18
-
Net originations, purchases, disposals and repayments
36
(8)
(159)
(131)
Changes to risk, parameters, and models
(107)
21
81
(5)
Foreign exchange and other adjustments
18
13
4
35
Balance, end of year
$434
$213
$181
$828
Summary of Macroeconomic Variables Used to Measure Allowance for Credit Losses Significant Judgements and Estimates
The following tables show certain key macroeconomic variables used to estimate the ECL allowances by market. For the base
case, upside and downside scenarios, the projections are provided for the next 12 months and then for the remaining forecast
period, which represents a medium-term view.
Base case scenario
Upside scenario
Downside scenario 1
Downside scenario 2
As at December 31, 2025
Current
quarter
Next 12
months
Ensuing 4
years
Next 12
months
Ensuing 4
years
Next 12
months
Ensuing 4
years
Next 12
months
Ensuing 4
years
Canada
Gross Domestic Product (GDP), in
U.S. $ billions
$2,020
0.6%
1.9%
2.6%
1.9%
(4.1)%
2.2%
(7.2)%
2.2%
Unemployment rate
7.2%
7.1%
6.3%
6.5%
5.6%
8.5%
8.0%
9.5%
9.7%
NYMEX Light Sweet Crude Oil, in
U.S. dollars, per barrel
$61
$62
$66
$67
$67
$47
$60
$39
$54
U.S.
Gross Domestic Product (GDP), in
U.S. $ billions
$23,998
2.1%
2.4%
3.8%
2.4%
(2.2)%
2.7%
(4.1)%
2.6%
Unemployment rate
4.4%
4.6%
4.3%
3.9%
3.6%
7.2%
6.1%
7.7%
8.2%
7-10 Year BBB U.S. Corporate Index
5.3%
5.9%
6.1%
5.7%
6.0%
6.4%
5.8%
7.0%
5.7%
Japan
Gross Domestic Product (GDP), in
JPY billions
¥564,072
0.2%
0.8%
2.2%
1.0%
(4.1)%
1.1%
(7.4)%
1.7%
Unemployment rate
2.5%
2.5%
2.2%
2.4%
2.1%
3.0%
2.9%
3.2%
3.5%
Hong Kong
Unemployment rate
4.1%
4.0%
3.2%
3.6%
2.9%
5.1%
4.1%
5.5%
4.8%
Hang Seng Index
26,454
(1.3)%
1.0%
8.9%
0.7%
(26.0)%
6.7%
(41.9)%
10.2%
China
Gross Domestic Product (GDP), in
CNY billions
¥119,732
4.7%
4.1%
7.2%
4.3%
(2.3)%
4.6%
(5.1)%
3.9%
FTSE Xinhua A200 Index
11,186
3.7%
3.6%
18.6%
1.6%
(28.0)%
10.3%
(37.8)%
12.1%
Base case scenario
Upside scenario
Downside scenario 1
Downside scenario 2
As at December 31, 2024
Current
quarter
Next 12
months
Ensuing 4
years
Next 12
months
Ensuing 4
years
Next 12
months
Ensuing 4
years
Next 12
months
Ensuing 4
years
Canada
Gross Domestic Product (GDP), in
U.S. $ billions
$1,983
1.8%
2.0%
3.3%
2.3%
(2.0)%
2.3%
(3.9)%
2.2%
Unemployment rate
6.7%
6.8%
6.3%
6.5%
5.8%
8.1%
8.2%
8.5%
10.0%
NYMEX Light Sweet Crude Oil, in
U.S. dollars, per barrel
$76
$75
$72
$79
$74
$59
$66
$50
$61
U.S.
Gross Domestic Product (GDP), in
U.S. $ billions
$23,534
2.1%
2.2%
3.6%
2.3%
(2.0)%
2.7%
(4.2)%
2.5%
Unemployment rate
4.2%
4.1%
4.0%
3.3%
3.3%
7.3%
6.1%
7.8%
8.1%
7-10 Year BBB U.S. Corporate Index
5.5%
6.1%
6.1%
5.9%
6.2%
5.4%
5.6%
6.0%
5.4%
Japan
Gross Domestic Product (GDP), in
JPY billions
¥563,281
0.9%
0.7%
2.8%
0.8%
(3.6)%
1.0%
(7.1)%
1.6%
Unemployment rate
2.5%
2.5%
2.2%
2.4%
2.1%
3.1%
2.9%
3.2%
3.5%
Hong Kong
Unemployment rate
3.0%
2.9%
3.0%
2.5%
2.7%
4.1%
3.8%
4.6%
4.6%
Hang Seng Index
19,448
7.0%
4.1%
18.1%
3.7%
(19.7)%
9.9%
(37.0)%
13.5%
China
Gross Domestic Product (GDP), in
CNY billions
¥114,931
4.0%
4.1%
6.5%
4.3%
(3.0)%
4.6%
(5.7)%
3.9%
FTSE Xinhua A200 Index
10,938
(0.6)%
4.8%
13.8%
2.8%
(31.1)%
11.7%
(40.5)%
13.5%
(IV)
Summary of Estimated Expected Credit Losses From All Macroeconomic Scenarios Sensitivity to Changes in Economic Assumptions
The following table shows the ECL allowance balance which resulted from all four macroeconomic scenarios (including the more
heavily-weighted best estimate base case scenario, one upside and two downside scenarios) weighted by probability of
occurrence and shows an ECL allowance resulting from only the base case scenario.
As at December 31,
2025
2024
Probability-weighted ECL
$809
$828
Baseline ECL
$611
$629
Difference – in amount
$198
$199
Difference – in percentage
24.47%
24.03%
Summary of Effect of Conditional Master Netting and Similar Arrangements The following tables present the effect of conditional master netting and similar arrangements. Similar arrangements may include
global master repurchase agreements, global master securities lending agreements, and any related rights to financial collateral
pledged or received.
Related amounts not set off in the
Consolidated Statements of Financial
Position
As at December 31, 2025
Gross amounts
of financial
instruments(1)
Amounts subject to
an enforceable
master netting
arrangement or
similar agreements
Financial and
cash collateral
pledged
(received)(2)
Net amounts
including
financing
entity(3)
Net amounts
excluding
financing
entity
Financial assets
Derivative assets
$9,955
$(6,700)
$(2,694)
$561
$561
Securities lending
1,800
-
(1,800)
-
-
Reverse repurchase agreements
957
-
(957)
-
-
Total financial assets
$12,712
$(6,700)
$(5,451)
$561
$561
Financial liabilities
Derivative liabilities
$(15,024)
$6,700
$8,228
$(96)
$(39)
Repurchase agreements
(193)
-
193
-
-
Total financial liabilities
$(15,217)
$6,700
$8,421
$(96)
$(39)
Related amounts not set off in the
Consolidated Statements of Financial
Position
As at December 31, 2024
Gross amounts
of financial
instruments(1)
Amounts subject to
an enforceable
master netting
arrangement or
similar agreements
Financial and
cash collateral
pledged
(received)(2)
Net amounts
including
financing
entity(3)
Net amounts
excluding
financing
entity
Financial assets
Derivative assets
$9,048
$(6,633)
$(1,986)
$429
$429
Securities lending
1,021
-
(1,021)
-
-
Reverse repurchase agreements
1,594
(569)
(1,025)
-
-
Total financial assets
$11,663
$(7,202)
$(4,032)
$429
$429
Financial liabilities
Derivative liabilities
$(15,026)
$6,633
$8,305
$(88)
$(15)
Repurchase agreements
(668)
569
99
-
-
Total financial liabilities
$(15,694)
$7,202
$8,404
$(88)
$(15)
(1)Financial assets and liabilities include accrued interest of $334 and $677 respectively (2024 – $388 and $779 respectively).
(2)Financial and cash collateral exclude over-collateralization. As at December 31, 2025, the Company was over-collateralized on OTC derivative assets, OTC
derivative liabilities, securities lending and reverse repurchase agreements and repurchase agreements in the amounts of $403, $1,699, $154 and $nil
respectively (2024 – $641, $2,472, $35 and $nil respectively). As at December 31, 2025, collateral pledged (received) does not include collateral-in-transit on OTC
instruments or initial margin on exchange-traded contracts or cleared contracts.
(3)Includes derivative contracts entered between the Company and its unconsolidated financing entity. The Company does not exchange collateral on derivative
contracts entered with this entity. Refer to note 17.
Summary of the Effect of Unconditional Netting The following tables
present the effect of unconditional netting.
As at December 31, 2025
Gross amounts
of financial
instruments
Amounts subject to
an enforceable
netting arrangement
Net amounts of
financial
instruments
Credit linked note(1)
$1,349
$(1,349)
$-
Variable surplus note
(1,349)
1,349
-
As at December 31, 2024
Gross amounts
of financial
instruments
Amounts subject to
an enforceable
netting arrangement
Net amounts of
financial
instruments
Credit linked note(1)
$1,392
$(1,392)
$-
Variable surplus note
(1,392)
1,392
-
(1)As at December 31, 2025 and 2024, the Company had no fixed surplus notes outstanding. Refer to note 18 (g).
Summary of Debt Securities and Private Placements Portfolio by Sector and Industry Explanatory The following table presents the Company’s debt securities and private placements portfolio by sector and industry.
2025
2024
As at December 31,
Carrying
value
% of total
Carrying
value
% of total
Government and agency
$87,734
34%
$88,376
34%
Utilities
45,795
17%
45,812
18%
Financial
39,342
15%
38,656
15%
Consumer
34,815
13%
31,529
12%
Energy
16,932
6%
15,840
6%
Industrial
24,840
9%
24,233
9%
Other
16,438
6%
15,843
6%
Total
$265,896
100%
$260,289
100%
Summary of Geographic Concentration of Insurance and Investment Contract Liabilities, Including Embedded Derivatives The geographic concentration of the Company’s insurance and investment contract liabilities, including embedded derivatives, is
shown below. The disclosure is based on the countries in which the business is written.
As at December 31, 2025
Insurance
contract
liabilities
Investment
contract
liabilities
Reinsurance
assets
Net liabilities
U.S. and Canada
$339,534
$327,754
$(53,885)
$613,403
Asia and Other
200,810
18,631
(5,497)
213,944
Total
$540,344
$346,385
$(59,382)
$827,347
As at December 31, 2024
Insurance
contract
liabilities
Investment
contract
liabilities
Reinsurance
assets
Net liabilities
U.S. and Canada
$342,146
$305,563
$(52,055)
$595,654
Asia and Other
180,698
17,378
(6,294)
191,782
Total
$522,844
$322,941
$(58,349)
$787,436
Asset classes and individual investment risks  
Disclosure of credit risk exposure [line items]  
Schedule of Risk Concentrations
As at December 31,
2025
2024
Debt securities and private placements rated as investment grade BBB or higher(1)
96%
96%
Government debt securities as a per cent of total debt securities
39%
40%
Government private placements as a per cent of total private placements
8%
9%
Highest exposure to a single non-government debt security or private placement issuer
$1,033
$1,121
Largest single issuer as a per cent of the total equity portfolio
2%
2%
Income producing commercial office properties (2025 – 34% of real estate, 2024 – 35%)
$4,312
$4,696
Largest concentration of mortgages and real estate(2) – Ontario, Canada (2025 – 29%, 2024 – 28%)
$20,199
$19,052
(1)Investment grade debt securities and private placements include 39% rated A, 24% rated AA and 7% rated AAA (2024 – 37%, 17% and 15%) investments based
on external ratings where available.
(2)Mortgages and real estate investments are diversified geographically and by property type.
AA  
Disclosure of credit risk exposure [line items]  
Summary of Credit Default Swap Protection Sold The following tables present details of the credit default swap protection sold by type of contract and external agency rating for
the underlying reference security.
As at December 31, 2025
Notional
amount(1)
Fair value
Weighted
average
maturity
(in years)(2)
Single name CDS(3),(4) – Corporate debt
AA
$22
$-
2
A
65
1
2
BBB
22
-
1
Total single name CDS
$109
$1
2
Total CDS protection sold
$109
$1
2
As at December 31, 2024
Notional
amount(1)
Fair value
Weighted
average
maturity
(in years)(2)
Single name CDS(3),(4) – Corporate debt
AA
$23
$1
3
A
68
1
3
BBB
23
-
2
Total single name CDS
$114
$2
3
Total CDS protection sold
$114
$2
3
(1)Notional amounts represent the maximum future payments the Company would have to pay its counterparties assuming a default of the underlying credit and zero
recovery on the underlying issuer obligations.
(2)The weighted average maturity of the CDS is weighted based on notional amounts.
(3)Ratings are based on S&P where available followed by Moody’s, Morningstar DBRS, and Fitch. If no rating is available from a rating agency, an internally
developed rating is used.
(4)The Company held no purchased credit protection as at December 31, 2025 and 2024.
IFRS 7  
Disclosure of credit risk exposure [line items]  
Summary of Significant Financial Liabilities Maturity of financial liabilities
As at December 31, 2025
Less than
1 year
1 to 3
years
3 to 5
years
Over 5
years
Total
Long-term debt(1)
$1,741
$958
$-
$4,986
$7,685
Capital instruments(1)
-
-
-
6,990
6,990
Derivatives
2,270
1,746
875
9,456
14,347
Deposits from Bank clients(2)
17,462
4,441
2,804
-
24,707
Lease liabilities
101
138
49
46
334
(1)The amounts shown above are net of the related unamortized deferred issue costs.
(2)Carrying value and fair value of deposits from Bank clients as at December 31, 2025 were $24,707 and $24,945, respectively (2024 – $22,063 and $22,270,
respectively). Fair value is determined by discounting contractual cash flows, using market interest rates currently offered for deposits with similar terms and
conditions. All deposits from Bank clients were categorized in Level 2 of the fair value hierarchy (2024 – Level 2).
Summary of Variable Annuity and Segregated Fund Investment-Related Guarantees Gross and Net of Reinsurance Variable annuity and segregated fund guarantees, net of reinsurance
2025
2024
As at December 31,
Guarantee
value(1)
Fund value
Net amount at
risk(1),(2),(3)
Guarantee
value(1)
Fund value
Net amount at
risk(1),(2),(3)
Guaranteed minimum income benefit
$3,142
$2,534
$708
$3,628
$2,780
$918
Guaranteed minimum withdrawal benefit
29,664
31,071
2,643
33,473
33,539
3,339
Guaranteed minimum accumulation benefit
18,908
19,208
55
18,987
19,097
70
Gross living benefits(4)
51,714
52,813
3,406
56,088
55,416
4,327
Gross death benefits(5)
7,892
19,924
486
8,612
19,851
644
Total gross of reinsurance
59,606
72,737
3,892
64,700
75,267
4,971
Living benefits reinsured
20,518
21,932
2,351
23,768
23,965
3,016
Death benefits reinsured
3,058
2,620
195
3,430
2,776
289
Total reinsured
23,576
24,552
2,546
27,198
26,741
3,305
Total, net of reinsurance
$36,030
$48,185
$1,346
$37,502
$48,526
$1,666
(1)Guarantee Value and Net Amount at Risk in respect of guaranteed minimum withdrawal business in Canada and the U.S. reflect the time value of money of these
claims.
(2)Amount at risk (in-the-money amount) is the excess of guarantee values over fund values on all policies where the guarantee value exceeds the fund value. For
guaranteed minimum death benefit, the amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance and
assumes that all claims are immediately payable. In practice, guaranteed death benefits are contingent and only payable upon the eventual death of policyholders
if fund values remain below guarantee values. For guaranteed minimum withdrawal benefit, the amount at risk assumes that the benefit is paid as a lifetime
annuity commencing at the earliest contractual income start age. These benefits are also contingent and only payable at scheduled maturity/income start dates in
the future, if the policyholders are still living and have not terminated their policies and fund values remain below guarantee values. For all guarantees, the amount
at risk is floored at zero at the single contract level.
(3)The amount at risk net of reinsurance at December 31, 2025 was $1,346 (December 31, 2024 – $1,666) of which: US$244 (December 31, 2024 – US$293) was
on the Company’s U.S. business, $835 (December 31, 2024 – $1,021) was on the Company’s Canadian business, US$80 (December 31, 2024 – US$100) was on
the Company’s Japan business, and US$49 (December 31, 2024 – US$56) was related to Asia (other than Japan) and the Company’s run-off reinsurance
business.
(4)Where a policy includes both living and death benefits, the guarantee in excess of the living benefit is included in the death benefit category as outlined in footnote
5.
(5)Death benefits include stand-alone guarantees and guarantees in excess of living benefit guarantees where both death and living benefits are provided on a
policy.
Summary of Potential Immediate Impact on Net Income Attributed to Shareholders by Changes to Public Equity Returns Explanatory Potential immediate impact on net income attributed to shareholders arising from changes to public equity returns(1)
Net income attributed to shareholders
As at December 31, 2025
-30%
-20%
-10%
+10%
+20%
+30%
Underlying sensitivity
Variable annuity and segregated fund guarantees(2)
$(1,790)
$(1,070)
$(490)
$400
$750
$1,050
General fund equity investments(3)
(1,320)
(880)
(440)
440
870
1,310
Total underlying sensitivity before hedging
(3,110)
(1,950)
(930)
840
1,620
2,360
Impact of macro and dynamic hedge assets(4)
650
390
170
(130)
(240)
(330)
Net potential impact on net income attributed to
shareholders after impact of hedging and before impact
of reinsurance
(2,460)
(1,560)
(760)
710
1,380
2,030
Impact of reinsurance
1,110
670
310
(270)
(490)
(700)
Net potential impact on net income attributed to
shareholders after impact of hedging and
reinsurance
$(1,350)
$(890)
$(450)
$440
$890
$1,330
Net income attributed to shareholders
As at December 31, 2024
-30%
-20%
-10%
+10%
+20%
+30%
Underlying sensitivity
Variable annuity and segregated fund guarantees(2)
$(2,050)
$(1,240)
$(560)
$470
$860
$1,190
General fund equity investments(3)
(1,240)
(820)
(400)
390
780
1,180
Total underlying sensitivity before hedging
(3,290)
(2,060)
(960)
860
1,640
2,370
Impact of macro and dynamic hedge assets(4)
720
430
190
(150)
(260)
(360)
Net potential impact on net income attributed to
shareholders after impact of hedging and before impact
of reinsurance
(2,570)
(1,630)
(770)
710
1,380
2,010
Impact of reinsurance
1,320
810
370
(320)
(590)
(830)
Net potential impact on net income attributed to
shareholders after impact of hedging and
reinsurance
$(1,250)
$(820)
$(400)
$390
$790
$1,180
(1)See “Caution related to sensitivities” above.
(2)For variable annuity contracts measured under the VFA approach, the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation
option applies. The Company has elected to apply risk mitigation and therefore, a portion of the impact is reported in net income attributed to shareholders instead
of adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted, the full impact is reported in net income attributed to shareholders.
(3)This impact for general fund equity investments includes general fund investments supporting the Company’s insurance contract liabilities, investment in seed
money investments (in segregated and mutual funds made by Global WAM segment), and the impact on insurance contract liabilities related to the projected
future fee income on variable universal life and other unit-linked products. The impact does not include any potential impact on public equity weightings. The
participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in equity
markets.
(4)Includes the impact of assumed rebalancing of equity hedges in the macro and dynamic hedging program. The impact of dynamic hedging represents the impact
of equity hedges offsetting 95% of the dynamically hedged variable annuity liability movement that occurs as a result of market changes, but does not include any
impact in respect of other sources of hedge accounting ineffectiveness (e.g., fund tracking, realized volatility and equity, and interest rate correlations different from
expected among other factors).
Summary of Potential Immediate Impact on Contractual Service Margin, Other Comprehensive Income to Shareholders and Total Comprehensive Income to Shareholders Potential immediate impact on contractual service margin, other comprehensive income to shareholders and total
comprehensive income to shareholders from changes to public equity market values(1),(2)
As at December 31, 2025
-30%
-20%
-10%
+10%
+20%
+30%
Variable annuity and segregated fund guarantees
reported in CSM
$(2,970)
$(1,820)
$(840)
$730
$1,390
$1,980
Impact of risk mitigation - hedging(3)
870
510
220
(180)
(320)
(430)
Impact of risk mitigation - reinsurance(3)
1,400
850
390
(330)
(630)
(890)
VA net of risk mitigation
(700)
(460)
(230)
220
440
660
General fund equity
(1,410)
(910)
(440)
440
880
1,300
Contractual service margin (pre-tax)
$(2,110)
$(1,370)
$(670)
$660
$1,320
$1,960
Other comprehensive income attributed to
shareholders (post-tax)(4)
$(920)
$(620)
$(300)
$300
$580
$860
Total comprehensive income attributed to
shareholders (post-tax)
$(2,270)
$(1,510)
$(750)
$740
$1,470
$2,190
As at December 31, 2024
-30%
-20%
-10%
+10%
+20%
+30%
Variable annuity and segregated fund guarantees
reported in CSM
$(3,420)
$(2,110)
$(970)
$840
$1,580
$2,250
Impact of risk mitigation - hedging(3)
940
560
250
(190)
(350)
(470)
Impact of risk mitigation - reinsurance(3)
1,670
1,020
470
(400)
(740)
(1,050)
VA net of risk mitigation
(810)
(530)
(250)
250
490
730
General fund equity
(1,140)
(740)
(370)
370
750
1,110
Contractual service margin (pre-tax)
$(1,950)
$(1,270)
$(620)
$620
$1,240
$1,840
Other comprehensive income attributed to
shareholders (post-tax)(4)
$(840)
$(560)
$(280)
$270
$530
$790
Total comprehensive income attributed to
shareholders (post-tax)
$(2,090)
$(1,380)
$(680)
$660
$1,320
$1,970
(1)See “Caution related to sensitivities” above.
(2)This estimate assumes that the performance of the dynamic hedging program would not completely offset the gain/loss from the dynamically hedged variable
annuity and segregated fund guarantee liabilities. It assumes that the hedge assets are based on the actual position at the period end, and that equity hedges in
the dynamic program offset 95% of the hedged variable annuity liability movement that occurs as a result of market changes.
(3)For variable annuity contracts measured under VFA, the impact of financial risk and changes in interest rates adjusts CSM, unless the risk mitigation option
applies. The Company has elected to apply risk mitigation and therefore a portion of the impact is reported in net income attributed to shareholders instead of
adjusting the CSM. If the CSM for a group of variable annuity contracts is exhausted, the full impact is reported in net income attributed to shareholders.
(4)The impact of financial risk and changes to interest rates for variable annuity contracts is not expected to generate sensitivity in Other Comprehensive Income.