v3.26.1
Derivatives
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
9. Derivatives
Accounting for Derivatives
See Note 1 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 Note 10 for information about the fair value hierarchy for derivatives.
Types of Derivative Instruments and Derivative Strategies
The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives. Commonly used derivative instruments include, but are not limited to:    
•Interest rate derivatives: swaps, total return swaps, caps, floors, futures, swaptions, forwards and synthetic GICs;
•Foreign currency exchange rate derivatives: swaps and forwards;
•Credit derivatives: purchased or written single name or index credit default swaps, and forwards; and
•Equity derivatives: index options, variance swaps, exchange-traded futures and total return swaps.        
For detailed information on these contracts and the related strategies, see Note 11 of the Notes to the Consolidated Financial Statements included in the 2025 Annual Report.
Primary Risks Managed by Derivatives
The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at:
March 31, 2026December 31, 2025
Primary Underlying Risk ExposureEstimated Fair ValueGross
Notional
Amount		Estimated Fair Value
Gross
Notional
Amount
AssetsLiabilitiesAssetsLiabilities
(In millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges:
Interest rate swapsInterest rate$4,283 $924 $644 $4,446 $923 $667 
Foreign currency swapsForeign currency exchange rate2,303 56 13 959 33 8 
Subtotal6,586 980 657 5,405 956 675 
Cash flow hedges:
Interest rate swapsInterest rate3,241 — 230 3,337 — 249 
Foreign currency swapsForeign currency exchange rate35,346 2,265 833 34,771 2,276 896 
Subtotal38,587 2,265 1,063 38,108 2,276 1,145 
Total qualifying hedges45,173 3,245 1,720 43,513 3,232 1,820 
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swapsInterest rate13,759 1,407 632 13,092 1,403 614 
Interest rate floorsInterest rate5,890 42 — 5,390 30 — 
Interest rate capsInterest rate12,950 65 — 12,950 46 — 
Interest rate futuresInterest rate87 — — 90 — — 
Interest rate optionsInterest rate19,541 96 66 20,368 99 85 
Synthetic GICsInterest rate3,146 — — 3,156 — — 
Foreign currency swapsForeign currency exchange rate4,012 283 63 3,770 240 106 
Foreign currency forwardsForeign currency exchange rate2,817 23 8 2,859 5 18 
Credit default swaps — purchasedCredit605 2 1 685 2 5 
Credit default swaps — writtenCredit11,692 145 1 6,619 101 1 
Equity futuresEquity market342 1 10 393 3 — 
Equity index optionsEquity market16,465 331 212 15,032 220 232 
Equity variance swapsEquity market5 — — 5 — — 
Equity total return swapsEquity market2,336 104 — 2,413 7 34 
Total non-designated or nonqualifying derivatives93,647 2,499 993 86,822 2,156 1,095 
Total$138,820 $5,744 $2,713 $130,335 $5,388 $2,915 
Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at either March 31, 2026 or December 31, 2025. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules, (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship, (iii) derivatives that economically hedge MRBs that do not qualify for hedge accounting because the changes in estimated fair value of the MRBs are already recorded in net income, and (iv) written credit default swaps and interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.
The Effects of Derivatives on the Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
The following table presents the interim condensed consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow, nonqualifying hedging relationships and embedded derivatives:
Three Months Ended March 31, 2026
Net
Investment
Income		Net
Investment
Gains
(Losses)		Net
Derivative
Gains
(Losses)		Policyholder
Benefits and
Claims
Interest Credited to PABs
OCI
(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)
$— $— N/A$(6)$(13)N/A
Hedged items
— — N/A2 13 N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)
(9)— N/A— (7)N/A
Hedged items
9 — N/A— 7 26 
Subtotal
— — N/A(4)— 26 
Gain (Loss) on Cash Flow Hedges:
Interest rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
N/AN/AN/AN/AN/A5 
Amount of gains (losses) reclassified from AOCI into income
1 1 — — — (2)
Foreign currency exchange rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
N/AN/AN/AN/AN/A142 
Amount of gains (losses) reclassified from AOCI into income
1 (211)— — — 210 
Foreign currency transaction gains (losses) on hedged items
— 210 — — — — 
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCIN/AN/AN/AN/AN/A— 
Subtotal
2 — — — — 355 
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)
— N/A49 N/AN/AN/A
Foreign currency exchange rate derivatives (1)
— N/A124 N/AN/AN/A
Credit derivatives — purchased (1)
— N/A3 N/AN/AN/A
Credit derivatives — written (1)
— N/A(48)N/AN/AN/A
Equity derivatives (1)
16 N/A51 N/AN/AN/A
Foreign currency transaction gains (losses) on hedged items
— N/A(29)N/AN/AN/A
Subtotal
16 N/A150 N/AN/AN/A
Earned income on derivatives
85 — 54 7 (38)— 
Synthetic GICsN/AN/A1 N/AN/AN/A
Embedded derivativesN/AN/A195 N/AN/AN/A
Total
$103 $— $400 $3 $(38)$381 
Three Months Ended March 31, 2025
Net Investment IncomeNet Investment Gains (Losses)Net Derivative Gains (Losses)Policyholder Benefits and Claims
Interest Credited to PABs
OCI
(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)
$— $— N/A$75 $37 N/A
Hedged items
— — N/A(79)(35)N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)
(10)— N/A— 36 N/A
Hedged items
10 — N/A— (36)N/A
Subtotal
— — N/A(4)2 N/A
Gain (Loss) on Cash Flow Hedges:
Interest rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
N/AN/AN/AN/AN/A64 
Amount of gains (losses) reclassified from AOCI into income
20 — — — — (20)
Foreign currency exchange rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
N/AN/AN/AN/AN/A120 
Amount of gains (losses) reclassified from AOCI into income
1 348 — — — (349)
Foreign currency transaction gains (losses) on hedged items
— (348)— — — — 
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCIN/AN/AN/AN/AN/A— 
Amount of gains (losses) reclassified from AOCI into income— — — — — — 
Subtotal
21 — — — — (185)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)
— N/A91 N/AN/AN/A
Foreign currency exchange rate derivatives (1)
— N/A(126)N/AN/AN/A
Credit derivatives — purchased (1)
— N/A(5)N/AN/AN/A
Credit derivatives — written (1)
— N/A(18)N/AN/AN/A
Equity derivatives (1)
17 N/A87 N/AN/AN/A
Foreign currency transaction gains (losses) on hedged items
— N/A63 N/AN/AN/A
Subtotal
17 N/A92 N/AN/AN/A
Earned income on derivatives
92 — 53 2 (39)— 
Synthetic GICsN/AN/A2 N/AN/AN/A
Embedded derivativesN/AN/A(193)N/AN/AN/A
Total
$130 $— $(46)$(2)$(37)$(185)
__________________
(1)Excludes earned income on derivatives.
Fair Value Hedges
The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities, and (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities.
The following table presents the balance sheet classification, carrying amount and cumulative fair value hedging adjustments for items designated and qualifying as hedged items in fair value hedges:
March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Balance Sheet Line ItemCarrying Amount of the
Hedged
Assets/(Liabilities)		Cumulative Amount
of Fair Value Hedging Adjustments
Included in the Carrying Amount of Hedged
Assets/(Liabilities) (1)
(In millions)
Fixed maturity securities AFS$1,346 $120 $— $— 
FPBs
$(2,473)$(2,509)$326 $319 
PABs
$(2,355)$(2,498)$105 $(35)
__________________
(1)Includes ($61) million and ($73) million of hedging adjustments on discontinued hedging relationships at March 31, 2026 and December 31, 2025, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities, (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and liabilities, (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments, and (iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments.
In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into income. These amounts were $5 million and $8 million for the three months ended March 31, 2026 and 2025, respectively.
At both March 31, 2026 and December 31, 2025, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed three years.
At March 31, 2026 and December 31, 2025, the balance in AOCI associated with cash flow hedges was $208 million and ($147) million, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
At March 31, 2026, the Company expected to reclassify $326 million of deferred net gains (losses) on derivatives in AOCI to earnings within the next 12 months.
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. Such credit derivatives are included within the effects of derivatives on the interim condensed consolidated statements of operations and comprehensive income (loss) table. 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 Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps.
The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at:
March 31, 2026December 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
Credit default swaps referencing indices$36 $3,777 1.1$45 $3,777 1.4
Subtotal36 3,777 1.145 3,777 1.4
Baa
Single name credit default swaps (3)— 15 2.2— 15 2.5
Credit default swaps referencing indices96 7,626 6.049 2,714 4.9
Subtotal96 7,641 6.049 2,729 4.9
Ba
Credit default swaps referencing indices1 25 0.71 24 1.0
Subtotal1 25 0.71 24 1.0
B
Credit default swaps referencing indices12 234 4.46 74 3.0
Subtotal12 234 4.46 74 3.0
Caa
Credit default swaps referencing indices(1)15 0.7(1)15 1.0
Subtotal(1)15 0.7(1)15 1.0
Total$144 $11,692 4.4$100 $6,619 2.8
__________________
(1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Global Ratings (“S&P”) and Fitch Ratings, Inc. 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.
(3)Single name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals.
Credit Risk on Freestanding Derivatives
The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.
The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties in jurisdictions in which it understands that close-out netting should be enforceable and establishing and monitoring exposure limits. The Company’s bilateral contracts between two counterparties (“OTC-bilateral”) derivative transactions are governed by International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, close-out netting permits the Company (subject to financial regulations such as the Orderly Liquidation Authority under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act) to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions and to apply collateral to the obligations, without application of the automatic stay, upon the counterparty’s bankruptcy. All of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives as required by applicable law.
The Company’s over-the-counter derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”) and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by brokers and central clearinghouses to such derivatives.
See Note 10 for a description of the impact of credit risk on the valuation of derivatives.
The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
March 31, 2026December 31, 2025
Derivatives Subject to a Master Netting Arrangement or a Similar ArrangementAssetsLiabilitiesAssetsLiabilities
(In millions)
Gross estimated fair value of derivatives:
OTC-bilateral (1)
$5,727 $2,737 $5,406 $2,897 
OTC-cleared (1)
114 4 66 11 
Exchange-traded
1 10 3 — 
Total gross estimated fair value of derivatives presented on the interim condensed consolidated balance sheets (1)
5,842 2,751 5,475 2,908 
Gross amounts not offset on the interim condensed consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral
(2,006)(2,006)(2,006)(2,006)
OTC-cleared
(2)(2)(5)(5)
Exchange-traded
(1)(1)— — 
Cash collateral: (3), (4)
OTC-bilateral
(1,966)— (1,620)— 
OTC-cleared
(93)— (56)— 
Securities collateral: (5)
OTC-bilateral
(1,733)(728)(1,772)(890)
OTC-cleared
— (2)— (5)
Exchange-traded
— (9)— — 
Net amount after application of master netting agreements and collateral
$41 $3 $16 $2 
__________________
(1)At March 31, 2026 and December 31, 2025, derivative assets included income (expense) accruals reported in accrued investment income or in other liabilities of $98 million and $87 million, respectively, and derivative liabilities included (income) expense accruals reported in accrued investment income or in other liabilities of $38 million and ($7) million, respectively.
(2)Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.
(3)Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the central clearinghouse treats variation margin as collateral, is included in cash and cash equivalents, short-term investments or in fixed maturity securities AFS, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.
(4)The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2026 and December 31, 2025, the Company received excess cash collateral of $34 million and $4 million, respectively, and provided excess cash collateral of $2 million and $3 million, respectively, which are not included in the table above due to the foregoing limitation.
(5)Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2026, none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities AFS on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2026 and December 31, 2025, the Company received excess securities collateral with an estimated fair value of $353 million and $336 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At March 31, 2026 and December 31, 2025, the Company provided excess securities collateral with an estimated fair value of $787 million and $798 million, respectively, for its OTC-bilateral derivatives, $481 million and $465 million, respectively, for its OTC-cleared derivatives, and $81 million and $93 million, respectively, for its exchange-traded derivatives, which is not included in the table above due to the foregoing limitation.
The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches a minimum transfer amount. The Company’s netting agreements for derivatives generally contain provisions that require the counterparty (or its guarantor, if applicable) to maintain specified minimum credit ratings above investment grade level from Moody’s, S&P or both. In those agreements, if the credit rating of the counterparty (or its guarantor, if applicable) were to fall below the applicable minimum rating, that counterparty would be in violation of these provisions, and the Company could terminate the transactions and demand immediate settlement and payment based on reasonable valuation of the derivatives. A significant portion of the Company’s netting agreements for derivatives grant similar rights to the counterparty to terminate the transactions and demand immediate settlement and payment if the Company’s financial strength rating were to fall below specified minimum levels above investment grade.
The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that were in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged.
March 31, 2026December 31, 2025
Derivatives
Subject to
Financial
Strength-Contingent
Provisions
Derivatives
Not Subject
to Financial
Strength-Contingent
Provisions
Total
Derivatives
Subject to
Financial
Strength-Contingent
Provisions
Derivatives
Not Subject
to Financial
Strength-Contingent
Provisions
Total
(In millions)
Estimated fair value of derivatives in a net liability position
$717 $14 $731 $881 $10 $891 
Estimated fair value of collateral provided:
Fixed maturity securities AFS$1,149 $14 $1,163 $1,279 $10 $1,289 
Embedded Derivatives
The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives.
The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:
Balance Sheet LocationMarch 31, 2026December 31, 2025
(In millions)
Embedded derivatives within asset host contracts:
Assumed on affiliated reinsuranceOther invested assets$49 $22 
Funds withheld on affiliated assumed reinsurance
Other invested assets(3)31 
Total$46 $53 
Embedded derivatives within liability host contracts:
Assumed on affiliated reinsurance
Other liabilities$— $53 
Funds withheld on affiliated ceded reinsurance
Other liabilities(353)(281)
Fixed annuities with equity indexed returns
PABs
140 67 
Funds withheld on unaffiliated ceded reinsurance
Other liabilities(83)(5)
Total
$(296)$(166)