INVESTMENTS

6 Months Ended

Jun. 30, 2026

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.


	June 30, 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	$	17,381	$	0	$	29	$	4,047	$	13,363
Municipalities	826		0		0		183		643
Mortgage- and asset-backed securities	455		0		0		51		404
Public utilities	2,429		0		74		225		2,278
Sovereign and supranational	315		0		6		22		299
Banks/financial institutions	5,298		0		135		599		4,834
Other corporate	5,371		0		253		684		4,940
Total yen-denominated	32,075		0		497		5,811		26,761
U.S. dollar-denominated:
U.S. government and agencies	207		0		1		4		204
Municipalities	1,085		0		81		45		1,121
Mortgage- and asset-backed securities	5,055		0		264		45		5,274
Public utilities	4,297		0		441		116		4,622
Sovereign and supranational	57		0		18		0		75
Banks/financial institutions	3,932		0		479		27		4,384
Other corporate	18,365		0		2,498		583		20,280
Total U.S. dollar-denominated	32,998		0		3,782		820		35,960
Other currencies:
Mortgage- and asset-backed securities	43		0		4		0		47
Public utilities	50		0		4		0		54
Other corporate	24		0		2		0		26
Total other currencies	117		0		10		0		127
Total securities available-for-sale	$	65,190	$	0	$	4,289	$	6,631	$	62,848


	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
Municipalities	856		0		5		145		716
Mortgage- and asset-backed securities	297		0		1		38		260
Public utilities	2,519		0		123		174		2,468
Sovereign and supranational	330		0		7		13		324
Banks/financial institutions	5,382		0		170		477		5,075
Other corporate	5,438		0		357		534		5,261
Total yen-denominated	32,885		0		704		5,108		28,481
U.S. dollar-denominated:
U.S. government and agencies	230		0		2		2		230
Municipalities	1,185		0		83		54		1,214
Mortgage- and asset-backed securities	3,854		0		239		35		4,058
Public utilities	4,292		0		465		107		4,650
Sovereign and supranational	57		0		21		0		78
Banks/financial institutions	3,672		0		518		21		4,169
Other corporate	18,967		0		2,740		597		21,110
Total U.S. dollar-denominated	32,257		0		4,068		816		35,509
Other currencies:
Mortgage- and asset-backed securities	44		0		4		0		48
Public utilities	52		0		4		0		56
Other corporate	25		0		2		0		27
Total other currencies	121		0		10		0		131
Total securities available-for-sale	$	65,263	$	0	$	4,782	$	5,924	$	64,121


	June 30, 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	$	14,901	$	1	$	14,900	$	5	$	1,209	$	13,696
Municipalities	225		0		225		0		20		205

Public utilities	31		0		31		0		5		26
Sovereign and supranational	337		3		334		3		22		315

Other corporate	15		0		15		0		1		14
Total yen-denominated	15,509		4		15,505		8		1,257		14,256
Total securities held-to-maturity	$	15,509	$	4	$	15,505	$	8	$	1,257	$	14,256


	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
Municipalities	235		0		235		0		6		229
Public utilities	32		0		32		0		3		29
Sovereign and supranational	381		3		378		6		9		375
Other corporate	16		0		16		0		0		16
Total yen-denominated	16,125		5		16,120		87		731		15,476
Total securities held-to-maturity	$	16,125	$	5	$	16,120	$	87	$	731	$	15,476


	June 30, 2026			December 31, 2025
(In millions)	Fair Value			Fair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated		$	694		$	609
U.S. dollar-denominated		231			278

Total equity securities		$	925		$	887

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

During the first six 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 June 30, 2026, were as follows:


(In millions)	Amortized Cost (1)			Fair Value
Available-for-sale:
Due in one year or less		$	1,882		$	2,004
Due after one year through five years		6,851			7,516
Due after five years through 10 years		16,059			16,734
Due after 10 years		34,845			30,869
Mortgage- and asset-backed securities		5,553			5,725
Total fixed maturity securities available-for-sale		$	65,190		$	62,848
Held-to-maturity:
Due in one year or less		$	2		$	2
Due after one year through five years		4,491			4,478
Due after five years through 10 years		3,980			3,919
Due after 10 years		7,032			5,857

Total fixed maturity securities held-to-maturity		$	15,505		$	14,256

(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:

June 30, 2026

December 31, 2025

(In millions)

Credit
Rating

Amortized
Cost

Fair
Value

Credit
Rating

Amortized
Cost

Fair
Value

Japan National Government(1)

A+

$29,714

$24,612

A+

$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 June 30,				Six Months Ended June 30,
(In millions)	2026		2025		2026		2025
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales	$	0	$	5	$	1	$	119
Gross losses from sales	(837)		(98)		(978)		(333)
Foreign currency gains (losses)	599		79		725		240
Other investments:
Gross gains (losses) from sales and redemptions	0		11		(2)		12


Total sales and redemptions	(238)		(3)		(254)		38
Equity securities	87		98		73		37
Impairment losses	(11)		(6)		(35)		(6)
Credit losses:

Fixed maturity securities held-to-maturity	0		0		1		0
Commercial mortgage and other loans	(76)		(61)		(126)		(114)

Loan commitments	(1)		2		1		0
Reinsurance recoverables and other	0		1		(14)		1
Total credit losses	(77)		(58)		(138)		(113)
Derivatives and other:
Derivative gains (losses)	(134)		23		(229)		(22)
Foreign currency gains (losses)	220		(475)		479		(1,318)
Total derivatives and other	86		(452)		250		(1,340)
Total net investment gains (losses)	$	(153)	$	(421)	$	(104)	$	(1,384)

In the three-month period ended June 30, 2026, the Company did not recognize impairment losses on real estate owned (REO) properties. In the six-month period ended June 30, 2026, the Company recognized impairment losses of $24 million on 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.

In the three-month and six-month periods ended June 30, 2025, the Company recognized impairment losses of $6 million on office-type REO property classified as held-and-used for the production of income. The impairment was based on the Company's evaluation of a material adverse change in occupancy and resulted in an estimated fair value of the REO property of $12 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 gains, net of losses, included in net investment gains and losses for the three-month period ended June 30, 2026 that relate to equity securities held at the June 30, 2026 reporting date were $60 million. The unrealized holding gains, net of losses, included in net investment gains and losses for the three-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $101 million.

The unrealized holding gains, net of losses, included in net investment gains and losses for the six-month period ended June 30, 2026 that relate to equity securities held at the June 30, 2026 reporting date were $29 million. The unrealized holding gains, net of losses, included in net investment gains and losses for the six-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $47 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)	June 30, 2026			December 31, 2025
Unrealized gains (losses) on securities available-for-sale		$	(2,342)		$	(1,142)
Deferred income taxes		(411)			(667)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities		$	(2,753)		$	(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 June 30, 2026 and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	June 30, 2026
	Total						Less than 12 months						12 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		$	168		$	4		$	132		$	2		$	36		$	2
Japan government and agencies:
Yen-denominated		11,520			4,047			4,124			173			7,396			3,874
Municipalities:
U.S. dollar-denominated		623			45			98			5			525			40
Yen-denominated		550			183			302			21			248			162
Mortgage- and asset- backed securities:
U.S. dollar-denominated		1,277			45			962			12			315			33
Yen-denominated		333			51			169			8			164			43
Public utilities:
U.S. dollar-denominated		1,286			116			602			8			684			108
Yen-denominated		1,051			225			289			12			762			213

Sovereign and supranational:

Yen-denominated		254			22			219			9			35			13
Banks/financial institutions:
U.S. dollar-denominated		702			27			553			5			149			22
Yen-denominated		3,335			599			611			34			2,724			565
Other corporate:
U.S. dollar-denominated		5,187			583			2,022			24			3,165			559
Yen-denominated		2,705			684			833			48			1,872			636
Total		$	28,991		$	6,631		$	10,916		$	361		$	18,075		$	6,270


	December 31, 2025
	Total						Less than 12 months						12 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-denominated		13,521			3,727			7,966			692			5,555			3,035
Municipalities:
U.S. dollar-denominated		630			54			8			0			622			54
Yen-denominated		520			145			234			6			286			139
Mortgage- and asset- backed securities:
U.S. dollar-denominated		547			35			217			5			330			30
Yen-denominated		183			38			9			1			174			37
Public utilities:
U.S. dollar-denominated		1,055			107			169			2			886			105
Yen-denominated		838			174			0			0			838			174
Sovereign and supranational:

Yen-denominated		276			13			236			0			40			13
Banks/financial institutions:
U.S. dollar-denominated		252			21			62			0			190			21
Yen-denominated		3,467			477			495			26			2,972			451
Other corporate:
U.S. dollar-denominated		4,535			597			620			5			3,915			592
Yen-denominated		2,395			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 June 30, 2026. Refer to the Allowance for Credit Losses Methodology section below for additional information.

As of June 30, 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.


	June 30, 2026				December 31, 2025
(In millions)	Amortized Cost		% of Total		Amortized Cost		% of Total
Commercial mortgage and other loans:
Transitional real estate loans:
Office	$	1,176	11.9	%	$	1,229	12.1	%
Retail	154		1.6		267		2.6
Apartments/Multi-Family	1,350		13.7		1,555		15.3
Industrial	47		.5		75		.7
Hospitality	382		3.9		522		5.1
Other	235		2.4		240		2.4
Total transitional real estate loans	3,344		34.0		3,888		38.2
Commercial mortgage loans:
Office	250		2.5		255		2.5
Retail	172		1.7		217		2.1
Apartments/Multi-Family	499		5.0		539		5.3
Industrial	420		4.2		427		4.2

Other	27		.3		14		.1
Total commercial mortgage loans	1,368		13.7		1,452		14.2
Middle market loans	4,597		46.5		4,404		43.2
Other loans	578		5.8		447		4.4
Total commercial mortgage and other loans	$	9,887	100.0	%	$	10,191	100.0	%
Allowance for credit losses	(533)				(426)
Total net commercial mortgage and other loans	$	9,354			$	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 (20%), Texas (14%) and Arizona (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 June 30, 2026, the Company had $125 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 June 30, 2026, the Company had commitments of approximately $696 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 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 June 30, 2026, the Company had commitments of approximately $83 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.


	June 30, 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	$	2,556	$	153	$	635	$	788	$	3,344	$	700
Commercial mortgage loans	1,368		0		0		0		1,368		0
Middle market loans	4,490		10		97		107		4,597		97
Other loans	578		0		0		0		578		0
Total	$	8,992	$	163	$	732	$	895	$	9,887	$	797

(1) As of June 30, 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 loans	1,452		0		0		0		1,452		0
Middle market loans	4,263		58		83		141		4,404		98
Other loans	447		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 period ended June 30, 2026, the Company recognized interest income of $1 million on loans that were on nonaccrual status. For the three-month period ended June 30, 2025, the Company recognized no interest income on loans that were on nonaccrual status. For the six-month periods ended June 30, 2026 and 2025, the Company recognized interest income of $7 million and $1 million, respectively, on loans that were on nonaccrual status.

•Of these loans, TREs with an amortized cost of $168 million and $30 million had no credit loss allowance as of June 30, 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 June 30, 2026, there were no MMLs on nonaccrual status without an allowance for credit loss. As of December 31, 2025, MMLs with an amortized cost of $36 million, were on nonaccrual status without an allowance for credit loss.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first six 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 June 30, 2026
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:


Other-than-insignificant payment delays	$	107	3.5	%	Delay in payments of three months on average



Term extension and interest rate reduction	149		4.9		Term extension of 24 months on average and reduction in the weighted-average contractual interest rate from 6.6% to 2.2%
Middle market loans:


Term extension	$	27	.6	%	Term extension of six months on average

(1) Net of allowance for credit losses


Three Months Ended June 30, 2025
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional real estate loans:

Term extension	$	128	3.1	%	Term extension of 22 months on average
Term extension and interest rate reduction	152		3.7		Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%



Middle market loans:

Principal forgiveness	$	4	.1	%	Reduction in the amortized cost basis of $0.3 million
Principal forgiveness and term extension	25		.6		Reduction in the amortized cost basis of $34 million and term extension of 30 months on average

(1) Net of allowance for credit losses


Six Months Ended June 30, 2026
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional real estate loans:


Other-than-insignificant payment delays	$	107	3.5	%	Delay in payments of three months on average



Term extension and interest rate reduction	149		4.9		Term extension of 24 months on average and reduction in the weighted-average contractual interest rate from 6.6% to 2.2%
Middle market loans:


Term extension	$	27	.6	%	Term extension of six months on average

Principal forgiveness and term extension	6		.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


Six Months Ended June 30, 2025
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional real estate loans:


Term extension	$	159	3.9	%	Term extension of 20 months on average
Term extension and interest rate reduction	152		3.7		Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%




Middle market loans:

Principal forgiveness	$	6	.1	%	Reduction in the amortized cost basis of $4 million
Term extension	33		.8		Term extension of six months on average
Other-than-insignificant payment delays	28		.7		Delay in principal and interest payments of 35 months on average
Principal forgiveness and term extension	25		.6		Reduction in the amortized cost basis of $34 million and term extension of 30 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 periods presented, at amortized cost.


	June 30, 2026
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due		Nonaccrual Status
Transitional real estate loans	$	149	$	46	$	89	$	135

Middle market loans	70		10		0		0

Total	$	219	$	56	$	89	$	135


	June 30, 2025
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due		Nonaccrual Status
Transitional real estate loans	$	592	$	0	$	60	$	60

Middle market loans	106		1		0		0

Total	$	698	$	1	$	60	$	60

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 June 30, 2026 and 2025, and subsequently defaulted in the three- and six-month periods ended June 30, 2026 and 2025, were immaterial.

As of June 30, 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 June 30, 2026:
Balance at March 31, 2026	$	(286)	$	(6)	$	(163)	$	(15)	$	(4)	$	0	$	(474)
(Addition to) release of allowance for credit losses	(29)		0		(46)		(2)		0		0		(77)
Writeoffs, net of recoveries	0		0		0		0		0		0		0
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2026	$	(315)	$	(6)	$	(209)	$	(17)	$	(4)	$	0	$	(551)
Three Months Ended June 30, 2025:
Balance at March 31, 2025	$	(203)	$	(15)	$	(150)	$	(19)	$	(5)	$	0	$	(392)
(Addition to) release of allowance for credit losses	(45)		3		(19)		2		0		0		(59)
Writeoffs, net of recoveries	5		0		42		0		0		0		47
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2025	$	(243)	$	(12)	$	(127)	$	(17)	$	(5)	$	0	$	(404)
Six Months Ended June 30, 2026:
Balance at December 31, 2025	$	(277)	$	(9)	$	(138)	$	(17)	$	(5)	$	0	$	(446)
(Addition to) release of allowance for credit losses	(46)		3		(82)		0		1		0		(124)
Writeoffs, net of recoveries	8		0		11		0		0		0		19
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2026	$	(315)	$	(6)	$	(209)	$	(17)	$	(4)	$	0	$	(551)
Six Months Ended June 30, 2025:
Balance at December 31, 2024	$	(199)	$	(14)	$	(140)	$	(17)	$	(5)	$	0	$	(375)
(Addition to) release of allowance for credit losses	(73)		2		(43)		0		0		0		(114)
Writeoffs, net of recoveries	29		0		56		0		0		0		85
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2025	$	(243)	$	(12)	$	(127)	$	(17)	$	(5)	$	0	$	(404)

As of June 30, 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 June 30, 2026, the Company established an allowance for credit losses of $86 million related to these loans.

As of June 30, 2026, the Company's held-to-maturity portfolio includes Japan Government and Agency securities with an amortized cost of $14.8 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 June 30, 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)	2026		2025		2024		2023		2022		Prior		Total
Loan-to-Value Ratio:
0%-59.99%	$	0	$	0	$	0	$	0	$	141	$	157	$	298
60%-69.99%	0		0		0		0		324		304		628
70%-79.99%	0		0		0		14		515		457		986
80% or greater	65		0		0		0		349		1,018		1,432
Total	$	65	$	0	$	0	$	14	$	1,329	$	1,936	$	3,344
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	8	$	0	$	8


Commercial Mortgage Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Total		Weighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%	$	35	$	11	$	0	$	31	$	0	$	1,061	$	1,138	2.80
60%-69.99%	13		20		0		0		0		77		110		1.91
70%-79.99%	0		0		0		0		0		72		72		1.45
80% or greater	0		0		12		0		0		36		48		0.87
Total	$	48	$	31	$	12	$	31	$	0	$	1,246	$	1,368	2.59
Weighted Average DSCR	1.90		1.83		1.09		2.74		0.00		2.65
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0


Middle Market Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
Credit Ratings:
BBB	$	73	$	13	$	61	$	22	$	0	$	94	$	6	$	269
BB	269		355		506		114		296		774		66		2,380
B	49		291		124		46		232		628		45		1,415
CCC	0		25		3		0		34		273		26		361
CC	6		5		2		0		10		81		8		112
C and lower	0		0		0		0		0		53		7		60
Total	$	397	$	689	$	696	$	182	$	572	$	1,903	$	158	$	4,597
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	11	$	0	$	11


Other Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
Credit Ratings:
A	$	20	$	0	$	0	$	0	$	60	$	0	$	0	$	80
AA	0		0		0		0		8		3		0		11
BBB	81		37		257		0		24		24		0		423
BB	0		0		0		64		0		0		0		64




Total	$	101	$	37	$	257	$	64	$	92	$	27	$	0	$	578
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)	June 30, 2026			December 31, 2025
Other investments:
Policy loans		$	204		$	210
Short-term investments (1)		2,815			1,373
Limited partnerships (2)		4,346			4,109
Real estate owned		847			902
Other		39			28
Total other investments		$	8,251		$	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 June 30, 2026 and December 31, 2025, all REO was classified as held-and-used for the production of income. Depreciation expense on REO was $8 million for each of the three-month periods ended June 30, 2026 and 2025, and $15 million and $14 million for the six-month periods ended June 30, 2026 and 2025, respectively. Additionally, as of June 30, 2026 and December 31, 2025, accumulated depreciation on REO was $53 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 $2.2 billion and $2.1 billion of unfunded commitments related to variable interest entities (VIEs) that are non-consolidated as of June 30, 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)	June 30, 2026			December 31, 2025
Assets: (1)
Fixed maturity securities available-for-sale		$	4,208		$	3,636

Commercial mortgage and other loans		7,509			7,896
Other investments (2)		2,389			2,320

Other assets (3)		41			45
Total assets of consolidated VIEs		$	14,147		$	13,897
Liabilities:
Other liabilities (3)		$	887		$	765
Total liabilities of consolidated VIEs		$	887		$	765

(1) As of June 30, 2026, the Company's investments in consolidated VIEs also held cash and cash equivalents of $382 million, of which $63 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. As of June 30, 2026, assets held in the trust consisted of available-for-sale securities with a carrying value of $618 million and $6 million of cash and cash equivalents.

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)	June 30, 2026			December 31, 2025
Assets:
Fixed maturity securities available-for-sale		$	7,805		$	6,750
Other investments (1)		1,796			1,603
Total investments in VIEs not consolidated		$	9,601		$	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
	June 30, 2026								December 31, 2025
(In millions)	Overnight and Continuous(1)		Up to 30 days		30-90 days		Total		Overnight and Continuous(1)		Up to 30 days		30-90 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	2,276	$	3,817	$	6,093	$	0	$	1,591	$	1,329	$	2,920

Public utilities	43		0		0		43		54		0		0		54

Banks/financial institutions	223		0		0		223		150		0		0		150
Other corporate	981		0		0		981		865		0		0		865

Total borrowings	$	1,247	$	2,276	$	3,817	$	7,340	$	1,069	$	1,591	$	1,329	$	3,989
Gross amount of recognized liabilities for securities lending transactions							$	7,340							$	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 no securities collateral at June 30, 2026, compared with $2.2 billion at December 31, 2025, 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 June 30, 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.