v3.26.1
INVESTMENTS
 3 Months Ended
Mar. 31, 2026
Investments [Abstract]  
INVESTMENTS INVESTMENTS
Investment Holdings
The amortized cost and allowance for credit losses for the Company's investments in fixed maturity securities and the fair values of these investments as well as the fair value of the Company's investments in equity securities are presented in the following tables.
  
March 31, 2026
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities available-for-sale, carried at fair
  value through other comprehensive income:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$17,439 $0 $27 $4,099 $13,367 
Municipalities838 0 2 163 677 
Mortgage- and asset-backed securities417 0 1 43 375 
Public utilities2,467 0 85 204 2,348 
Sovereign and supranational323 0 6 20 309 
Banks/financial institutions5,374 0 139 554 4,959 
Other corporate5,346 0 277 632 4,991 
Total yen-denominated32,204 0 537 5,715 27,026 
  U.S. dollar-denominated:
U.S. government and agencies207 0 1 3 205 
Municipalities1,180 0 82 61 1,201 
Mortgage- and asset-backed securities4,410 0 245 40 4,615 
Public utilities4,241 0 438 127 4,552 
Sovereign and supranational58 0 18 0 76 
Banks/financial institutions3,788 0 480 33 4,235 
Other corporate19,250 0 2,621 679 21,192 
Total U.S. dollar-denominated33,134 0 3,885 943 36,076 
Other currencies:
Mortgage- and asset-backed securities43 0 4 0 47 
Public utilities51 0 3 0 54 
Other corporate
24 0 1 0 25 
Total other currencies
118 0 8 0 126 
Total securities available-for-sale$65,456 $0 $4,430 $6,658 $63,228 
  
December 31, 2025
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities available-for-sale, carried at fair
  value through other comprehensive income:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$18,063 $0 $41 $3,727 $14,377 
Municipalities856 0 5 145 716 
Mortgage- and asset-backed securities297 0 1 38 260 
Public utilities2,519 0 123 174 2,468 
Sovereign and supranational330 0 7 13 324 
Banks/financial institutions5,382 0 170 477 5,075 
Other corporate5,438 0 357 534 5,261 
Total yen-denominated32,885 0 704 5,108 28,481 
  U.S. dollar-denominated:
U.S. government and agencies230 0 2 2 230 
Municipalities1,185 0 83 54 1,214 
Mortgage- and asset-backed securities3,854 0 239 35 4,058 
Public utilities4,292 0 465 107 4,650 
Sovereign and supranational57 0 21 0 78 
Banks/financial institutions3,672 0 518 21 4,169 
Other corporate18,967 0 2,740 597 21,110 
Total U.S. dollar-denominated32,257 0 4,068 816 35,509 
Other currencies:
Mortgage- and asset-backed securities44 0 4 0 48 
Public utilities52 0 4 0 56 
Other corporate25 0 2 0 27 
Total other currencies121 0 10 0 131 
Total securities available-for-sale$65,263 $0 $4,782 $5,924 $64,121 

  
March 31, 2026
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Net
Carrying
Amount		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities held-to-maturity, carried at
  amortized cost:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$15,137 $1 $15,136 $12 $971 $14,177 
Municipalities230 0 230 0 13 217 
Public utilities31 0 31 0 4 27 
Sovereign and supranational342 3 339 2 8 333 
Other corporate16 0 16 0 1 15 
Total yen-denominated15,756 4 15,752 14 997 14,769 
Total securities held-to-maturity$15,756 $4 $15,752 $14 $997 $14,769 
  
December 31, 2025
(In millions)Amortized
Cost		Allowance
for Credit
Losses		Net
Carrying
Amount		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities held-to-maturity, carried at
  amortized cost:
Fixed maturity securities:
  Yen-denominated:
Japan government and agencies$15,461 $2 $15,459 $81 $713 $14,827 
Municipalities235 0 235 0 6 229 
Public utilities32 0 32 0 3 29 
Sovereign and supranational381 3 378 6 9 375 
Other corporate16 0 16 0 0 16 
Total yen-denominated16,125 5 16,120 87 731 15,476 
Total securities held-to-maturity$16,125 $5 $16,120 $87 $731 $15,476 

March 31,
2026		December 31,
2025
(In millions)Fair ValueFair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated
$618 $609 
U.S. dollar-denominated233 278 
Total equity securities$851 $887 

For additional information on the Company's valuation methodology for fixed maturity and equity securities, see Note 5.

During the first three months of 2026 and 2025, respectively, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at March 31, 2026, were as follows:
(In millions)
Amortized
Cost (1)
Fair
Value
Available-for-sale:
Due in one year or less$1,674 $1,744 
Due after one year through five years7,813 8,682 
Due after five years through 10 years15,925 16,516 
Due after 10 years35,174 31,249 
Mortgage- and asset-backed securities4,870 5,037 
Total fixed maturity securities available-for-sale$65,456 $63,228 
Held-to-maturity:
Due in one year or less$0 $0 
Due after one year through five years2,819 2,824 
Due after five years through 10 years5,788 5,755 
Due after 10 years7,145 6,190 
Total fixed maturity securities held-to-maturity$15,752 $14,769 
(1) Net of allowance for credit losses
Economic maturities are used for certain fixed maturity securities with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates.

Investment Concentrations

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

Investment exposures that individually exceeded 10% of shareholders' equity were as follows:
March 31, 2026December 31, 2025
(In millions)Credit
Rating		Amortized
Cost		Fair
Value		Credit
Rating		Amortized
Cost		Fair
Value
Japan National Government(1)
A+$31,756$26,885A+$32,618$28,434
(1) Japan Government Bonds (JGBs) or JGB-backed securities
Net Investment Gains and Losses

Information regarding pretax net investment gains and losses was as follows:
  
Three Months Ended March 31,
(In millions)20262025
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales$1 $114 
Gross losses from sales(141)(235)
Foreign currency gains (losses)126 161 
Other investments:
Gross gains (losses) from sales and redemptions(2)1 
Total sales and redemptions(16)41 
Equity securities(14)(61)
Real estate owned impairments(24)0 
Credit losses:
Fixed maturity securities held-to-maturity1 0 
Commercial mortgage and other loans(50)(53)
Loan commitments2 (2)
Reinsurance recoverables and other(14)0 
Total credit losses(61)(55)
Derivatives and other:
Derivative gains (losses)(95)(45)
Foreign currency gains (losses)259 (843)
Total derivatives and other164 (888)
Total net investment gains (losses)$49 $(963)

For the three-month period ended March 31, 2026, the Company recognized impairment losses of $24 million on real estate owned (REO) properties classified as held-and-used for the production of income. The impairments were based on the Company's evaluation of a material adverse change in occupancy and resulted in an estimated fair value of the REO properties of $179 million. The fair value was based on expected future cash flows utilizing inputs classified as Level 3 under the fair value guidance in ASC 820.
The unrealized holding losses, net of gains, included in net investment gains and losses for the three-month period ended March 31, 2026 that relate to equity securities held at the March 31, 2026 reporting date were $30 million. The unrealized holding gains, net of losses, included in net investment gains and losses for the three-month period ended March 31, 2025 that relate to equity securities held at the March 31, 2025 reporting date were $55 million.
Unrealized Investment Gains and Losses
Effect on Shareholders’ Equity
The net effect on shareholders’ equity of unrealized gains and losses from fixed maturity securities was as follows:
(In millions)March 31,
2026		December 31,
2025
Unrealized gains (losses) on securities available-for-sale$(2,228)$(1,142)
Deferred income taxes(437)(667)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities$(2,665)$(1,809)
Gross Unrealized Loss Aging
The following tables present the fair values and gross unrealized losses of the Company's available-for-sale securities for the periods ended March 31, 2026 and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.
  
March 31, 2026
  
TotalLess than 12 months12 months or longer
(In millions)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Fixed maturity securities available-
   for-sale:
U.S. government and
    agencies:
U.S. dollar-denominated$166 $3 $130 $1 $36 $2 
Japan government and
    agencies:
Yen-denominated12,636 4,099 5,083 305 7,553 3,794 
Municipalities:
U.S. dollar-denominated612 61 92 6 520 55 
Yen-denominated487 163 222 13 265 150 
Mortgage- and asset-
    backed securities:
U.S. dollar-denominated1,022 40 674 7 348 33 
Yen-denominated314 43 152 3 162 40 
Public utilities:
U.S. dollar-denominated1,279 127 499 9 780 118 
Yen-denominated1,005 204 211 7 794 197 
Sovereign and supranational:
Yen-denominated262 20 224 8 38 12 
Banks/financial institutions:
U.S. dollar-denominated695 33 534 8 161 25 
Yen-denominated3,439 554 778 54 2,661 500 
Other corporate:
U.S. dollar-denominated5,644 679 2,158 31 3,486 648 
Yen-denominated 2,670 632 989 63 1,681 569 
Total$30,231 $6,658 $11,746 $515 $18,485 $6,143 
  
December 31, 2025
  
TotalLess than 12 months12 months or longer
(In millions)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Fixed maturity securities available-
   for-sale:
U.S. government and
    agencies:
U.S. dollar-denominated$37 $2 $0 $0 $37 $2 
Japan government and
    agencies:
Yen-denominated13,521 3,727 7,966 692 5,555 3,035 
Municipalities:
U.S. dollar-denominated630 54 8 0 622 54 
Yen-denominated520 145 234 6 286 139 
Mortgage- and asset-
    backed securities:
U.S. dollar-denominated547 35 217 5 330 30 
Yen-denominated183 38 9 1 174 37 
Public utilities:
U.S. dollar-denominated1,055 107 169 2 886 105 
Yen-denominated838 174 0 0 838 174 
Sovereign and supranational:
Yen-denominated276 13 236 0 40 13 
Banks/financial institutions:
U.S. dollar-denominated252 21 62 0 190 21 
Yen-denominated3,467 477 495 26 2,972 451 
Other corporate:
U.S. dollar-denominated4,535 597 620 5 3,915 592 
Yen-denominated2,395 534 640 33 1,755 501 
Total$28,256 $5,924 $10,656 $770 $17,600 $5,154 

Analysis of Securities in Unrealized Loss Positions

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

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

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

However, if the Company identifies certain available-for-sale securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors, an allowance for credit losses is recognized. Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of March 31, 2026. Refer to the Allowance for Credit Losses Methodology section below for additional information.

As of March 31, 2026 and December 31, 2025, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

Commercial Mortgage and Other Loans

The following table presents the composition of the carrying value for commercial mortgage and other loans by property type as of the periods presented.
March 31, 2026December 31, 2025
(In millions)Amortized
Cost		% of
Total		Amortized
Cost		% of
Total
Commercial mortgage and other loans:
Transitional real estate loans:
Office$1,232 12.1 %$1,229 12.1 %
Retail250 2.4 267 2.6 
Apartments/Multi-Family1,422 13.9 1,555 15.3 
Industrial75 .7 75 .7 
Hospitality521 5.1 522 5.1 
Other239 2.3 240 2.4 
Total transitional real estate loans3,739 36.5 3,888 38.2 
Commercial mortgage loans:
Office254 2.5 255 2.5 
Retail215 2.1 217 2.1 
Apartments/Multi-Family523 5.1 539 5.3 
Industrial423 4.1 427 4.2 
Other27 .3 14 .1 
Total commercial mortgage loans1,442 14.1 1,452 14.2 
Middle market loans4,498 44.0 4,404 43.2 
Other loans548 5.4 447 4.4 
Total commercial mortgage and other loans$10,227 100.0 %$10,191 100.0 %
Allowance for credit losses(457)(426)
Total net commercial mortgage and other loans$9,770 $9,765 

Commercial mortgage loans (CMLs) and transitional real estate loans (TREs) are secured by properties entirely within the U.S. (with the largest concentrations in California (22%), Texas (14%) and Florida (7%)). Middle market loans (MMLs) are issued only to companies domiciled within the U.S. and Canada.

Transitional Real Estate Loans

TREs are relatively short-term floating rate commercial mortgage loans that are secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date.
As of March 31, 2026, the Company had $131 million in outstanding commitments to fund TREs. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

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

Middle Market Loans

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

As of March 31, 2026, the Company had commitments of approximately $692 million to fund future MMLs. These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

Other Loans

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

As of March 31, 2026, the Company had commitments of approximately $1 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

Past Due and Nonaccrual Loans

The following tables present an aging of past due and nonaccrual loans at amortized cost, before allowance for credit losses, as of the periods presented.
March 31, 2026
(In millions)Current Less Than
90 Days
Past Due
90 Days
or More
 Past Due(1)
Total Past
Due		Total
Loans		Nonaccrual
Status
Transitional real estate loans$3,179 $94 $466 $560 $3,739 $576 
Commercial mortgage loans1,442 0 0 0 1,442 0 
Middle market loans4,367 33 98 131 4,498 98 
Other loans548 0 0 0 548 0 
Total$9,536 $127 $564 $691 $10,227 $674 
(1) As of March 31, 2026, there were no loans that were 90 days or more past due that continued to accrue interest.

December 31, 2025
(In millions)Current Less Than
90 Days
Past Due
90 Days
or More
 Past Due(1)
Total Past
Due		Total
Loans		Nonaccrual
Status
Transitional real estate loans$3,418 $0 $470 $470 $3,888 $545 
Commercial mortgage loans1,452 0 0 0 1,452 0 
Middle market loans4,263 58 83 141 4,404 98 
Other loans447 0 0 0 447 0 
Total$9,580 $58 $553 $611 $10,191 $643 
(1) As of December 31, 2025, there were no loans that were 90 days or more past due that continued to accrue interest.
For the three-month periods ended March 31, 2026 and 2025, the Company recognized $7 million and $1 million, respectively, of interest income on loans that were on nonaccrual status.
•Of these loans, TREs with an amortized cost of $83 million and $30 million had no credit loss allowance as of March 31, 2026 and December 31, 2025, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost.

•As of March 31, 2026 and December 31, 2025, MMLs with an amortized cost of $40 million and $36 million, respectively, were on nonaccrual status without an allowance for credit losses.
Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first three months of 2026 and 2025. The types of modifications granted may include interest rate reductions, principal forgiveness, other-than-insignificant payment delays, term extensions or a combination of these types of modifications. The amount, timing, and extent of modifications granted are considered in determining any allowance for credit loss recorded.

Loans that have both been modified and are paid or written off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below.
The following tables present the amortized cost basis of modified loans to borrowers experiencing financial difficulty and the financial effect of the modifications, disaggregated by loan classification and type of modification.
Three Months Ended
March 31, 2026
(In millions)
Amortized Cost (1)
% of TotalFinancial Effect
Middle market loans:
Principal forgiveness and term extension$5 .1 %
Reduction in the amortized cost basis of $11 million and term extension of 13 months on average
(1) Net of allowance for credit losses

Three Months Ended
March 31, 2025
(In millions)
Amortized Cost (1)
% of TotalFinancial Effect
Middle market loans:
Principal forgiveness$1 0.0 %
Reduction in the amortized cost basis of $3 million
Term extension33 1.0 
Term extension of six months on average
Other-than-insignificant
  payment delays		47 1.0 
Delay in principal and interest payments of 23 months on average
(1) Net of allowance for credit losses
The following tables present an aging of loans that received modifications in the 12 months preceding the period presented, at amortized cost.
March 31, 2026
(In millions)Current Less Than
90 Days
Past Due		90 Days
or More
Past Due		Nonaccrual
Status
Transitional real estate loans$263 $0 $43 $43 
Middle market loans68 9 0 0 
Total$331 $9 $43 $43 
March 31, 2025
(In millions)Current Less Than
90 Days
Past Due		90 Days
or More
Past Due		Nonaccrual
Status
Transitional real estate loans$347 $0 $0 $0 
Middle market loans96 0 0 20 
Total$443 $0 $0 $20 
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Loans that were granted a modification in the past 12 months, as of March 31, 2026 and 2025, and subsequently defaulted in the three-month periods ended March 31, 2026 and 2025, were immaterial.
As of March 31, 2026, the Company had no outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification in the current reporting period, compared with $15 million as of December 31, 2025.

Allowance for Credit Losses

The following table presents the roll forward of the allowance for credit losses by portfolio segment for loans and by accounting classification for securities.
(In millions)Transitional
Real Estate
Loans		Commercial
Mortgage
Loans		Middle
Market
Loans		Other Loans
and Loan
Commitments		Held-to-
Maturity
Securities		Available-
for-Sale
Securities		Total
Three Months Ended
  March 31, 2026:
Balance at December 31, 2025
$(277)$(9)$(138)$(17)$(5)$0 $(446)
(Addition to) release of allowance for
  credit losses
(17)3 (36)2 1 0 (47)
Writeoffs, net of recoveries8 0 11 0 0 0 19 
Change in foreign exchange0 0 0 0 0 0 0 
Balance at March 31, 2026
$(286)$(6)$(163)$(15)$(4)$0 $(474)
Three Months Ended
  March 31, 2025:
Balance at December 31, 2024
$(199)$(14)$(140)$(17)$(5)$0 $(375)
(Addition to) release of allowance for
  credit losses
(28)(1)(24)(2)0 0 (55)
Writeoffs, net of recoveries24 0 14 0 0 0 38 
Change in foreign exchange0 0 0 0 0 0 0 
Balance at March 31, 2025
$(203)$(15)$(150)$(19)$(5)$0 $(392)
As of March 31, 2026, the Company identified TREs with an amortized cost of $139 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions. As of March 31, 2026, the Company established an allowance for credit losses of $61 million related to these loans.

As of March 31, 2026, the Company's held-to-maturity portfolio includes Japan Government and Agency securities with an amortized cost of $15.0 billion that meet the requirements for zero-credit-loss expectation and therefore have been excluded from the measurement of the allowance for credit losses.
Allowance for Credit Losses Methodology

Available-for-sale Securities

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

An investment in an available-for-sale security may be impaired if the fair value falls below amortized cost. The Company regularly reviews its available-for-sale portfolio for declines in fair value. The Company's available-for-sale impairment model focuses on the ultimate collection of the cash flows from its investments and whether the Company has the intent to sell or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. The determination of the amount of impairments under this model is based upon the Company's periodic evaluation and
assessment of known and inherent risks associated with the respective securities. Such evaluations and assessments are revised as conditions change and new information becomes available.

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

Held-to-maturity Securities, Loan Receivables, and Loan Commitments

The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset. For held-to-maturity securities, MMLs, and MML commitments, the Company groups assets by industry, country, and key credit quality indicators. The Company groups CMLs and TREs and respective loan commitments by property type, property location and key credit quality indicators. On a quarterly basis, CMLs and TREs within a portfolio segment that share similar risk characteristics are pooled for the allowance calculation. On an ongoing basis, TREs, CMLs and other loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable), are evaluated individually for credit loss.

The allowance for credit losses for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities, and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses. The Company’s methodology for estimating credit losses utilizes the contractual maturity date of the financial asset, adjusted when necessary to reflect the expected timing of repayment (such as prepayment options, renewal options, call options, or extension options). The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity securities and MMLs. The Company reverts to historical loss information over one year, following the two-year forecast period.

For the CML and TRE portfolio, the Company applies reasonable and supportable forecasts of macroeconomic variables as well as national and local real-estate market factors to estimate future credit losses where the market factors revert back to historical levels over time with the period being dependent on current market conditions, projected market conditions and difference in the current and historical market levels for each factor.

For off-balance sheet credit exposure primarily attributable to loan commitments that are not unconditionally cancellable, the Company considers the contractual period of exposure to credit risk, the likelihood that funding will occur, the risk of loss, and the current conditions and expectations of future economic conditions to estimate the allowance for credit losses.
The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

Key Credit Quality Indicators

The Company’s key credit quality indicators used in the grouping of assets are outlined by investment type below.

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

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

•For other loans, the Company’s key credit quality indicator is credit ratings. The Company monitors these credit ratings periodically, but not less frequently than quarterly.

The following tables present as of March 31, 2026 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and key credit quality indicator.
Transitional Real Estate Loans
(In millions)20262025202420232022PriorTotal
Loan-to-Value Ratio:
0%-59.99%$0 $0 $0 $0 $317 $274 $591 
60%-69.99%0 0 0 27 394 854 1,275 
70%-79.99%0 0 0 14 628 462 1,104 
80% or greater63 0 0 0 155 551 769 
Total$63 $0 $0 $41 $1,494 $2,141 $3,739 
Current-period gross
  writeoffs:		$0 $0 $0 $0 $8 $0 $8 
Commercial Mortgage Loans
(In millions)20262025202420232022PriorTotalWeighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%$0 $11 $0 $32 $0 $1,182 $1,225 2.73
60%-69.99%13 20 0 0 0 63 96 2.02
70%-79.99%0 0 0 0 0 32 32 1.49
80% or greater0 0 12 0 0 77 89 1.05
Total$13 $31 $12 $32 $0 $1,354 $1,442 2.55
Weighted Average DSCR1.521.831.092.560.002.59
Current-period gross
  writeoffs:		$0 $0 $0 $0 $0 $0 $0 
Middle Market Loans
(In millions)20262025202420232022PriorRevolving LoansTotal
Credit Ratings:
BBB$0 $21 $55 $37 $0 $95 $10 $218 
BB164 388 533 73 312 805 67 2,342 
B0 248 132 45 253 690 37 1,405 
CCC0 25 3 0 34 300 31 393 
CC0 5 2 0 9 67 6 89 
C and lower6 0 0 0 0 40 5 51 
Total$170 $687 $725 $155 $608 $1,997 $156 $4,498 
Current-period gross
  writeoffs:		$0 $0 $0 $0 $0 $11 $0 $11 
Other Loans
(In millions)20262025202420232022PriorRevolving LoansTotal
Credit Ratings:
A$0 $0 $0 $0 $64 $0 $0 $64 
AA0 0 0 0 8 3 0 11 
BBB74 36 249 0 25 24 0 408 
BB0 0 0 65 0 0 0 65 
Total$74 $36 $249 $65 $97 $27 $0 $548 
Current-period gross
  writeoffs:		$0 $0 $0 $0 $0 $0 $0 $0 

Other Investments

The table below presents the composition of the carrying value for other investments as of the periods presented.
(In millions)March 31,
2026		December 31,
2025
Other investments:
Policy loans$205 $210 
Short-term investments (1)
2,616 1,373 
Limited partnerships (2)
4,226 4,109 
Real estate owned853 902 
Other37 28 
Total other investments$7,937 $6,622 
(1) Includes securities lending collateral
(2) Includes tax credit investments and asset classes such as private equity and real estate funds
As of March 31, 2026 and December 31, 2025, all REO was classified as held-and-used for the production of income. Depreciation expense on REO was $7 million and $6 million for the three-month periods ended March 31, 2026 and 2025, respectively. Additionally, as of March 31, 2026 and December 31, 2025, accumulated depreciation on REO was $46 million and $41 million, respectively.
The Company had $2.8 billion and $3.0 billion in outstanding commitments to fund investments in limited partnerships, which included $2.1 billion and $2.1 billion of unfunded commitments related to variable interest entities (VIEs) that are non-consolidated as of March 31, 2026 and December 31, 2025, respectively.
Variable Interest Entities

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

The Company's risk of loss related to its interests in any of its VIEs is typically limited to the carrying value of the related investments, and in certain cases, to any unfunded commitments held in the VIE. For certain reinsurance-related trusts, however, the Company is contractually obligated to contribute additional assets to maintain required collateral levels, potentially exposing the Company to losses exceeding the carrying value of the assets held in the trust.

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

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

The following table presents the carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

Investments in Consolidated Variable Interest Entities
(In millions)March 31,
2026		December 31,
2025
Assets: (1)
Fixed maturity securities available-for-sale$3,545 $3,636 
Commercial mortgage and other loans7,907 7,896 
Other investments (2)
2,331 2,320 
Other assets (3)
43 45 
Total assets of consolidated VIEs$13,826 $13,897 
Liabilities:
Other liabilities (3)
$806 $765 
Total liabilities of consolidated VIEs$806 $765 
(1) As of March 31, 2026, the Company's investments in consolidated VIEs also held cash and cash equivalents of $975 million, of which $709 million was restricted.
(2) Consists entirely of alternative investments in limited partnerships, which represent VIEs where the Company is not the primary beneficiary and therefore are not consolidated
(3) Consists entirely of derivatives

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

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

Reinsurance-Related Trust

In connection with an assumed reinsurance transaction, assets transferred by the ceding company were placed in a trust to collateralize the Company's obligations to the ceding company. Cash and other assets placed in the trust continue to be owned by the Company; however, their use is restricted based on the terms of the transaction. The trust is a VIE, and the Company consolidates the trust as its primary beneficiary.
VIEs - Not Consolidated
The table below presents the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported.
Investments in Variable Interest Entities Not Consolidated
(In millions)March 31,
2026		December 31,
2025
Assets:
Fixed maturity securities available-for-sale$7,206 $6,750 
Other investments (1)
1,721 1,603 
Total investments in VIEs not consolidated$8,927 $8,353 
(1) Consists entirely of alternative investments in limited partnerships

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

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

In the normal course of business, the Company enters into securities lending transactions. Details of the collateral by loaned security type and remaining maturity of the agreements were as follows:
Securities Lending Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
March 31, 2026December 31, 2025
(In millions)
Overnight
and
Continuous(1)
Up to 30
days		30-90 daysTotal
Overnight
and
Continuous(1)
Up to 30
days		30-90 daysTotal
Securities lending
  transactions:
Fixed maturity securities:
Japan government and agencies$0 $2,250 $2,810 $5,060 $0 $1,591 $1,329 $2,920 
Public utilities61 0 0 61 54 0 0 54 
Banks/financial institutions257 0 0 257 150 0 0 150 
Other corporate1,036 0 0 1,036 865 0 0 865 
          Total borrowings$1,354 $2,250 $2,810 $6,414 $1,069 $1,591 $1,329 $3,989 
Gross amount of recognized liabilities for securities
   lending transactions		$6,414 $3,989 
(1) The related loaned security, under the Company's U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.
In connection with securities lending, in addition to cash collateral received, the Company received from counterparties securities collateral of $327 million and $2.2 billion at March 31, 2026 and December 31, 2025, respectively, which may not be sold or re-pledged, unless the counterparty is in default. Such securities collateral is not reflected in the consolidated balance sheets.
The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of March 31, 2026, and December 31, 2025, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.

For additional information on the Company's investments and financial instruments, see the accompanying Notes 4 and 5 and Notes 1, 4 and 5 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.