v3.26.1
Derivative Instruments
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
The Company’s business model includes the acceptance, monitoring and mitigation of risk. Specifically, the Company considers, among other factors, exposures to equity market and interest rate movements, foreign exchange rates and other asset or liability prices. The Company uses derivative instruments to mitigate or reduce these risks in accordance with established policies and goals. The Company’s derivative holdings, while effective in managing defined risks, are not structured to meet accounting requirements to be designated as hedging instruments. As a result, freestanding derivatives are carried at fair value with changes recorded in net gains (losses) on derivatives and investments.

During the third quarter of 2025, the Company began utilizing derivative instruments to economically hedge the equity market exposure related to the Company’s non-qualified voluntary deferred compensation plans. These derivative instruments are not designated as accounting hedges and are carried at fair value with gains or losses reported as a component of operating costs and other expenses, net of deferrals in the Condensed Consolidated Income Statement. See Item 8. Financial Statements and Supplementary Data - Note 20 - Benefit Plans of the Notes to Consolidated Financial Statements included in our 2025 Annual Report for further details on our non-qualified deferred compensation plans.

A summary of the aggregate contractual or notional amounts and fair values of the Company’s freestanding and embedded derivative instruments are as follows (in millions):

March 31, 2026
Contractual/AssetsLiabilitiesNet
NotionalFairFairFair Value
Amount (1)
ValueValueAsset (Liability)
Freestanding derivatives
Cross-currency swaps$1,595 $140 $100 $40 
Equity index futures (2)
45,209 — — — 
Equity index put options 20,000 361 — 361 
Interest rate swaps - cleared (2)
3,695 — — — 
Interest rate futures (2)
19,195 — — — 
Total return swaps3,516 69 37 32 
Bond forwards8,284 112 89 23 
Total freestanding derivatives101,494 682 226 456 
Embedded derivatives
Fixed index annuity embedded derivatives (3)
N/A— 818 (818)
Registered index linked annuity embedded derivatives (3)
N/A— 5,499 (5,499)
Total embedded derivativesN/A— 6,317 (6,317)
Derivatives related to funds withheld under reinsurance treaties
Cross-currency swaps158 12 — 12 
Cross-currency forwards754 7 12 (5)
Funds withheld embedded derivative (4)
N/A1,765 — 1,765 
Total derivatives related to funds withheld under reinsurance treaties912 1,784 12 1,772 
Total$102,406 $2,466 $6,555 $(4,089)

(1) The notional amount for swaps and swaptions represents the stated principal balance used as a basis for calculating payments. The contractual amount for futures and options represents the market exposure of open positions.
(2) Variation margin is considered settlement resulting in the netting of cash received/paid for variation margin against the fair value of the trades.
(3) Included within other contract holder funds on the Condensed Consolidated Balance Sheets. The non-performance risk adjustment is included in the balance above.
(4) Included within funds withheld payable under reinsurance treaties on the Condensed Consolidated Balance Sheets.
December 31, 2025
Contractual/AssetsLiabilitiesNet
NotionalFairFairFair Value
Amount (1)
ValueValueAsset (Liability)
Freestanding derivatives
Cross-currency swaps$1,379 $133 $114 $19 
Equity index futures (2)
43,905 — — — 
Equity index put options 16,500 114 — 114 
Interest rate swaps - cleared (2)
2,485 — — — 
Interest rate futures (2)
21,874 — — — 
Total return swaps3,544 22 43 (21)
Bond forwards8,143 161 78 83 
Total freestanding derivatives97,830 430 235 195 
Embedded derivatives
Fixed index annuity embedded derivatives (3)
N/A— 863 (863)
Registered index linked annuity embedded derivatives (3)
N/A— 6,043 (6,043)
Total embedded derivativesN/A— 6,906 (6,906)
Derivatives related to funds withheld under reinsurance treaties
Cross-currency swaps158 11 1 10 
Cross-currency forwards1,133 7 21 (14)
Funds withheld embedded derivative (4)
N/A1,752 — 1,752 
Total derivatives related to funds withheld under reinsurance treaties1,291 1,770 22 1,748 
Total$99,121 $2,200 $7,163 $(4,963)
(1) The notional amount for swaps and swaptions represents the stated principal balance used as a basis for calculating payments. The contractual amount for futures, forwards, and options represents the market exposure of open positions.
(2) Variation margin is considered settlement resulting in the netting of cash received/paid for variation margin against the fair value of the trades.
(3) Included within other contract holder funds on the Condensed Consolidated Balance Sheets. The non-performance risk adjustment is included in the balance above.
(4) Included within funds withheld payable under reinsurance treaties on the Condensed Consolidated Balance Sheets.
The following table reflects the results of the Company’s derivatives, including gains (losses) and change in fair value of freestanding derivative instruments and embedded derivatives (in millions):

Three Months Ended March 31,
20262025
Derivatives excluding funds withheld under reinsurance treaties and non-qualified voluntary deferred compensation plan
Cross-currency swaps$18 $27 
Equity index futures(433)147 
Equity index put options23 108 
Interest rate swaps24 28 
Interest rate futures(106)476 
Total return swaps107 112 
Bond forwards(67)115 
Fixed index annuity embedded derivatives6 (1)
Registered index linked annuity embedded derivatives758 397 
Total net gains (losses) on derivative instruments excluding derivative instruments related to funds withheld under reinsurance treaties330 1,409 
Derivatives related to funds withheld under reinsurance treaties
Cross-currency swaps2 1 
Cross-currency forwards2 (18)
Funds withheld embedded derivative14 (201)
Total net gains (losses) on derivative instruments related to funds withheld under reinsurance treaties18 (218)
Total net gains (losses) on derivative instruments including derivative instruments related to funds withheld under reinsurance treaties$348 $1,191 
Derivatives related to non-qualified voluntary deferred compensation plan
Equity index futures$(6)$— 
Total return swaps(3)— 
Total operating costs and other expenses related to non-qualified voluntary deferred compensation plan$(9)$— 

All the Company’s trade agreements for freestanding, over-the-counter derivatives contain credit downgrade provisions that allow a party to assign or terminate derivative transactions if the counterparty’s credit rating declines below an established limit.

At March 31, 2026 and December 31, 2025, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $209 million and $151 million, respectively, and held collateral was $487 million and $130 million, respectively, related to these agreements.

At March 31, 2026 and December 31, 2025, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $92 million and $237 million, respectively, and provided collateral was $119 million and $295 million, respectively, related to these agreements.

If all of the downgrade provisions had been triggered at March 31, 2026 and December 31, 2025, in aggregate, the Company would have had to disburse $278 million and nil, respectively, and would have been allowed to claim $27 million and $79 million, respectively.

The Company pledged collateral of $1,625 million and $1,403 million as of March 31, 2026 and December 31, 2025, respectively, for initial margin related to uncleared margin for over-the-counter derivatives and exchange-traded futures. Variation margin on exchange traded futures is settled through the netting of cash paid/received for variation margin against the fair value of the trades.
The Company purchases equity options for which option premium payments are deferred (deferred premium options). The deferred premiums, along with interest incurred thereon, are payable at contract termination. During three months ended March 31, 2026 and 2025, the Company deferred option premiums totaling $223 million and nil, respectively. The purchase of these options is a non-cash transaction. Upon maturity, payment of the deferred premium is reported as a cash flow from financing activities.

Offsetting Assets and Liabilities

The Company’s derivative instruments, repurchase agreements and securities lending agreements are subject to master netting arrangements and collateral arrangements. A master netting arrangement with a counterparty creates a right of offset for amounts due to and due from that same counterparty that is enforceable in the event of a default or bankruptcy. The Company recognizes amounts subject to master netting arrangements on a gross basis within the Condensed Consolidated Balance Sheets.

The following tables present the gross and net information about the Company’s financial instruments subject to master netting arrangements (in millions):

March 31, 2026
Gross
Amounts
Recognized		Gross
Amounts
Offset in the Condensed
Consolidated
Balance Sheets		Net Amounts
Presented in
the Condensed Consolidated
Balance Sheets
Gross Amounts Not Offset
in the Condensed Consolidated Balance Sheets
Financial
Instruments (1)
Cash
Collateral
Securities
Collateral (2)
Net
Amount
Financial Assets:
Freestanding derivative assets$701 $— $701 $492 $159 $48 $2 
Financial Liabilities:
Freestanding derivative liabilities$238 $— $238 $146 $4 $55 $33 
Derivative deferred premium payable346 — 346 346 — — — 
Securities lending54 — 54 — 54 — — 
Repurchase agreements451 — 451 — — 451 — 
Repurchase agreements - collateral upgrade1,482 (1,482)— — — — — 
Total financial liabilities$2,571 $(1,482)$1,089 $492 $58 $506 $33 
(1) Represents the amount that could be offset under master netting or similar arrangements that management elects not to offset on the Condensed Consolidated Balance Sheets.
(2) Excludes initial margin amounts for exchange-traded derivatives.
December 31, 2025
Gross
Amounts
Recognized		Gross
Amounts
Offset in the
Condensed Consolidated
Balance Sheets		Net Amounts
Presented in
the Condensed Consolidated
Balance Sheets
Gross Amounts Not Offset
in the Condensed Consolidated Balance Sheets
Financial
Instruments (1)
Cash
Collateral
Securities
Collateral (2)
Net
Amount
Financial Assets:
Freestanding derivative assets$448 $— $448 $297 $73 $53 $25 
Financial Liabilities:
Freestanding derivative liabilities$257 $— $257 $20 $12 $221 $4 
Derivative deferred premium payable277 — 277 277 — — — 
Securities lending35 — 35 — 35 — — 
Repurchase agreements1,001 — 1,001 — — 1,001 — 
Repurchase agreements - collateral upgrade1,498 (1,498)— — — — — 
Total financial liabilities$3,068 $(1,498)$1,570 $297 $47 $1,222 $4 
(1) Represents the amount that could be offset under master netting or similar arrangements that management elects not to offset on the Condensed Consolidated Balance Sheets.
(2) Excludes initial margin amounts for exchange-traded derivatives.

In the above tables, the amounts of assets or liabilities presented in the Company’s Condensed Consolidated Balance Sheets are offset first by financial instruments that have the right of offset under master netting or similar arrangements with any remaining amount reduced by the amount of cash and securities collateral. The actual amount of collateral may be greater than amounts presented in the tables. The above tables exclude:
•net embedded derivative liabilities of $6,317 million and $6,906 million as of March 31, 2026 and December 31, 2025, respectively, as these derivatives are not subject to master netting arrangements; and
•the funds withheld embedded derivative asset (liability) of $1,765 million and $1,752 million at March 31, 2026 and December 31, 2025, respectively.