v3.26.1
Derivative Instruments
 6 Months Ended
Jun. 30, 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):

June 30, 2026
 AssetsLiabilities
Contractual/AssetsLiabilitiesNet
NotionalFairFairFair Value
Amount (1)
ValueValueAsset (Liability)
Freestanding derivatives
Cross-currency swaps$1,729 $137 $107 $30 
Equity index call options1,500 15 — 15 
Equity index futures (2)
48,419 — — — 
Equity index put options 16,500 83 — 83 
Interest rate swaps - cleared (2)
4,780 — — — 
Interest rate futures (2)
19,968 — — — 
Total return swaps8,356 134 53 81 
Bond forwards6,049 37 487 (450)
Total freestanding derivatives107,301 406 647 (241)
Embedded derivatives
Fixed index annuity embedded derivatives (3)
N/A— 850 (850)
Registered index linked annuity embedded derivatives (3)
N/A— 8,395 (8,395)
Total embedded derivativesN/A— 9,245 (9,245)
Derivatives related to funds withheld under reinsurance treaties
Cross-currency swaps158 10 — 10 
Cross-currency forwards684 6 10 (4)
Funds withheld embedded derivative (4)
N/A1,651 — 1,651 
Total derivatives related to funds withheld under reinsurance treaties842 1,667 10 1,657 
Total$108,143 $2,073 $9,902 $(7,829)

(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 June 30,Six Months Ended June 30,
2026202520262025
Derivatives excluding funds withheld under reinsurance treaties and non-qualified voluntary deferred compensation plan
Cross-currency swaps$(13)$58 $5 $85 
Equity index call options(7)— (7)— 
Equity index futures1,241 (613)808 (466)
Equity index put options(396)(419)(373)(311)
Interest rate swaps42 9 66 37 
Interest rate futures(9)(547)(115)(71)
Total return swaps(754)(176)(647)(64)
Bond forwards51 (67)(16)48 
Fixed index annuity embedded derivatives(32)(10)(26)(11)
Registered index linked annuity embedded derivatives(2,589)(986)(1,831)(589)
Total net gains (losses) on derivative instruments excluding derivative instruments related to funds withheld under reinsurance treaties(2,466)(2,751)(2,136)(1,342)
Derivatives related to funds withheld under reinsurance treaties
Cross-currency swaps(2)(11)— (10)
Cross-currency forwards— (38)2 (56)
Funds withheld embedded derivative(115)(130)(101)(331)
Total net gains (losses) on derivative instruments related to funds withheld under reinsurance treaties(117)(179)(99)(397)
Total net gains (losses) on derivative instruments including derivative instruments related to funds withheld under reinsurance treaties$(2,583)$(2,930)$(2,235)$(1,739)
Derivatives related to non-qualified voluntary deferred compensation plan
Equity index futures$15 $— $9 $— 
Total return swaps25 — 22 — 
Total operating costs and other expenses related to non-qualified voluntary deferred compensation plan$40 $— $31 $— 

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 June 30, 2026 and December 31, 2025, the fair value of the Company’s net non-cleared, over-the-counter derivative assets by counterparty were $30 million and $151 million, respectively, and held collateral was $55 million and $130 million, respectively, related to these agreements.

At June 30, 2026 and December 31, 2025, the fair value of the Company’s net non-cleared, over-the-counter derivative liabilities by counterparty were $571 million and $237 million, respectively, and provided collateral was $631 million and $295 million, respectively, related to these agreements.

If all of the downgrade provisions had been triggered at June 30, 2026 and December 31, 2025, in aggregate, the Company would have had to disburse $25 million and nil, respectively, and would have been allowed to claim $59 million and $79 million, respectively.
The Company pledged collateral of $2,083 million and $1,403 million as of June 30, 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 the six months ended June 30, 2026 and 2025, the Company deferred option premiums totaling $365 million and $52 million, 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):

June 30, 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$422 $— $422 $392 $9 $21 $— 
Financial Liabilities:
Freestanding derivative liabilities$657 $— $657 $86 $4 $491 $76 
Derivative deferred premium payable306 — 306 306 — — — 
Securities lending77 — 77 — 77 — — 
Repurchase agreements400 — 400 — — 400 — 
Repurchase agreements - collateral upgrade1,483 (1,483)— — — — — 
Total financial liabilities$2,923 $(1,483)$1,440 $392 $81 $891 $76 
(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 $9,245 million and $6,906 million as of June 30, 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 $1,651 million and $1,752 million at June 30, 2026 and December 31, 2025, respectively.