v3.26.1
Derivatives
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
8. Derivatives
Accounting for Derivatives
See Notes 1 and 10 of the Notes to the Consolidated Financial Statements included in the 2025 Annual Report for a description of the Company’s accounting policies for derivatives and the fair value hierarchy for derivatives and the related valuation methodologies.
Types of Derivative Instruments and Derivative Strategies
The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to minimize its exposure to various market risks. Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). Commonly used derivative instruments include, but are not necessarily limited to:
•Interest rate derivatives: swaps, floors, caps, futures, options and forwards;
•Foreign currency exchange rate derivatives: forwards and swaps;
•Equity market derivatives: futures, options and total return swaps; and
•Credit derivatives: index reference credit default swaps.
For detailed information on these contracts and the related strategies, see Note 9 of the Notes to the Consolidated Financial Statements included in the 2025 Annual Report.
Primary Risks Managed by Derivatives
The primary underlying risk exposure, gross notional amount and estimated fair value of derivatives, excluding embedded derivatives, held were as follows at:
March 31, 2026
December 31, 2025
Primary Underlying Risk Exposure
Gross Notional Amount
Estimated Fair Value
Gross Notional Amount
Estimated Fair Value
Assets
Liabilities
Assets
Liabilities
(In millions)
Derivatives Designated as Hedging Instruments:
Cash flow hedges:
Interest rate swaps
Interest rate
$
500 
$
— 
$
— 
$
500 
$
— 
$
4 
Foreign currency swaps
Foreign currency exchange rate
3,697 
337 
58 
3,731 
266 
84 
Total qualifying hedges
4,197 
337 
58 
4,231 
266 
88 
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps
Interest rate
25,442 
125 
335 
18,366 
152 
253 
Interest rate floors
Interest rate
5,500 
— 
40 
8,000 
1 
48 
Interest rate caps
Interest rate
6,600 
12 
12 
6,100 
5 
16 
Interest rate options
Interest rate
38,700 
35 
400 
26,800 
12 
444 
Interest rate forwards
Interest rate
24,966 
106 
1,322 
23,598 
127 
1,317 
Foreign currency swaps
Foreign currency exchange rate
678 
89 
2 
587 
75 
4 
Foreign currency forwards
Foreign currency exchange rate
272 
1 
— 
303 
1 
— 
Credit default swaps — written
Credit
1,128 
19 
— 
468 
11 
— 
Equity futures
Equity market
3,041 
45 
42 
1,414 
6 
4 
Equity index options
Equity market
87,232 
3,466 
2,156 
69,495 
4,530 
1,362 
Equity total return swaps
Equity market
153,063 
4,204 
3,496 
145,209 
1,585 
1,698 
Total non-designated or non-qualifying derivatives
346,622 
8,102 
7,805 
300,340 
6,505 
5,146 
Total
$
350,819 
$
8,439 
$
7,863 
$
304,571 
$
6,771 
$
5,234 
The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items reported in net derivative gains (losses) were as follows:
Net Derivative Gains (Losses) Recognized for Derivatives
Net Derivative Gains (Losses) Recognized for Hedged Items
Net Investment Income
Policyholder Benefits and Claims
Amount of Gains (Losses) Deferred in AOCI
(In millions)
Three Months Ended March 31, 2026
Derivatives Designated as Hedging Instruments:
Cash flow hedges:
Interest rate
$
— 
$
— 
$
1 
$
— 
$
4 
Foreign currency exchange rate
(2)
— 
11 
— 
93 
Total cash flow hedges
(2)
— 
12 
— 
97 
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate
(190)
— 
— 
— 
— 
Foreign currency exchange rate
25 
(1)
— 
— 
— 
Credit
(1)
— 
— 
— 
— 
Equity market
(1,151)
— 
— 
— 
— 
Embedded
812 
— 
— 
— 
— 
Total non-qualifying hedges
(505)
(1)
— 
— 
— 
Total
$
(507)
$
(1)
$
12 
$
— 
$
97 
Three Months Ended March 31, 2025
Derivatives Designated as Hedging Instruments:
Cash flow hedges:
Interest rate
$
3 
$
— 
$
1 
$
1 
$
(7)
Foreign currency exchange rate
3 
(3)
13 
— 
(9)
Total cash flow hedges
6 
(3)
14 
1 
(16)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate
388 
— 
— 
— 
— 
Foreign currency exchange rate
(12)
5 
— 
— 
— 
Credit
(1)
— 
— 
— 
— 
Equity market
(1,242)
— 
— 
— 
— 
Embedded
1,177 
— 
— 
— 
— 
Total non-qualifying hedges
310 
5 
— 
— 
— 
Total
$
316 
$
2 
$
14 
$
1 
$
(16)
At March 31, 2026 and December 31, 2025, the Company held no qualified derivatives hedging exposure to future cash flows for forecasted asset purchases.
At March 31, 2026 and December 31, 2025, the balance in AOCI associated with cash flow hedges was $317 million and $219 million, respectively.
Credit Derivatives
In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation.
The estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps were as follows at:
March 31, 2026
December 31, 2025
Rating Agency Designation of Referenced Credit Obligations (1)
Estimated Fair Value of Credit Default Swaps
Maximum Amount of Future Payments under Credit Default Swaps
Weighted Average Years to Maturity (2)
Estimated Fair Value of Credit Default Swaps
Maximum Amount of Future Payments under Credit Default Swaps
Weighted Average Years to Maturity (2)
(Dollars in millions)
Aaa/Aa/A
$
1 
$
95 
1.6
$
2 
$
94 
1.8
Baa
18 
1,010 
4.9
8 
350 
5.0
Ba
— 23 
0.7
1 24 
1.0
Total
$
19 
$
1,128 
4.5
$
11 
$
468 
4.1
_______________
(1)The Company has written credit protection on index references. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.
(2)The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.
Counterparty Credit Risk
The Company may be exposed to credit-related losses in the event of counterparty nonperformance on derivative instruments. Generally, the credit exposure is the fair value at the reporting date less any collateral received from the counterparty.
The Company manages its credit risk by: (i) entering into derivative transactions with creditworthy counterparties governed by master netting agreements; (ii) trading through regulated exchanges and central clearing counterparties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.
See Note 9 for a description of the impact of credit risk on the valuation of derivatives.
The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
Gross Amounts Not Offset on the Consolidated Balance Sheets
Gross Amount Recognized
Financial Instruments (1)
Collateral Received/Pledged (2)
Net Amount
Securities Collateral Received/Pledged (3)
Net Amount After Securities Collateral
(In millions)
March 31, 2026
Derivative assets
$
8,799 
$
(6,226)
$
(1,383)
$
1,190 
$
(1,093)
$
97 
Derivative liabilities
$
8,207 
$
(6,226)
$
— 
$
1,981 
$
(1,981)
$
— 
December 31, 2025
Derivative assets
$
6,568 
$
(3,861)
$
(1,374)
$
1,333 
$
(1,330)
$
3 
Derivative liabilities
$
5,099 
$
(3,861)
$
— 
$
1,238 
$
(1,238)
$
— 
_______________
(1)Represents amounts subject to an enforceable master netting agreement or similar agreement.
(2)The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement.
(3)Securities collateral received from counterparties is not reported on the consolidated balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received.
The Company does not offset recognized derivative assets and liabilities subject to master netting agreements on the consolidated balance sheets except for derivative instruments executed with the same counterparty but under different credit support annexes. As of March 31, 2026, $1.5 billion of recognized derivative assets were offset by $1.5 billion of recognized derivative liabilities on the consolidated balance sheets.
The Company’s collateral arrangements generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. Certain of these arrangements also include credit-contingent provisions which permit the party with positive fair value to terminate the derivative at the current fair value or demand immediate full collateralization from the party in a net liability position, in the event that the financial strength or credit rating of the party in a net liability position falls below a certain level.
The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:
March 31, 2026
December 31, 2025
(In millions)
Estimated fair value of derivatives in a net liability position (1)
$
1,981 
$
1,238 
Estimated fair value of collateral provided (2):
Fixed maturity securities
$
4,998 
$
3,685 
_______________
(1)After taking into consideration the existence of netting agreements.
(2)Substantially all of the Company’s collateral arrangements provide for daily posting of collateral for the full value of the derivative contract. As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately. Additionally, the Company is required to pledge initial margin for certain new OTC-bilateral derivative transactions to third-party custodians.