v3.26.1
Derivative Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
3. Derivative Instruments

We use a variety of derivative instruments to manage risks, primarily equity, interest rate, foreign currency and market volatility. See Note 5 – Fair Value for information about the fair value hierarchy for derivatives.

The following table presents the notional amount and fair value of derivative instruments:
June 30, 2026December 31, 2025
Notional AmountFair ValueNotional AmountFair Value
(In millions)AssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedges
Foreign currency hedges
Swaps27,919 $658 $565 26,437 $560 $868 
Forwards1,670 98 17 2,302 81 34 
Interest rate swaps4,198 51 283 4,347 86 242 
Forwards on net investments220 2 — 234 — — 
Interest rate swaps51,484 36 99 31,252 129 30 
Total derivatives designated as hedges845 964 856 1,174 
Derivatives not designated as hedges
Equity options107,469 8,277 485 97,259 6,905 170 
Futures54 106 — 890 192 1 
Foreign currency swaps29,675 491 543 19,248 230 744 
Interest rate swaps and forwards27,800 122 549 14,606 72 295 
Other swaps2,288 151 — 2,845 78 2 
Foreign currency forwards40,878 1,042 3,700 47,486 857 3,356 
Embedded derivatives
Funds withheld, including related parties(2,751)97 (2,765)150 
Interest sensitive contract liabilities— 16,384 — 14,749 
Total derivatives not designated as hedges7,438 21,758 5,569 19,467 
Total derivatives$8,283 $22,722 $6,425 $20,641 

Derivatives Designated as Hedges

Cash Flow Hedges – We use interest rate swaps to convert floating-rate interest payments to fixed-rate interest payments to reduce exposure to interest rate changes. The interest rate swaps will expire by January 2036. During the three months ended June 30, 2026 and 2025, we recognized losses of $84 million and gains of $76 million, respectively, in other comprehensive income (OCI) associated with these hedges. During the six months ended June 30, 2026 and 2025, we recognized losses of $148 million and gains of $172 million, respectively, in OCI associated with these hedges. There were no amounts deemed ineffective during the three and six months ended June 30, 2026 and 2025. As of June 30, 2026, we expected an estimated $20 million of losses to be reclassified to income within the next 12 months based on current market economics; however, actual amounts recognized may vary as a result of changes in relevant market conditions.

Fair Value Hedges – We use foreign currency forward contracts, foreign currency swaps, foreign currency interest rate swaps and interest rate swaps that are designated and accounted for as fair value hedges to hedge certain exposures to foreign currency risk and interest rate risk. The foreign currency forward price is agreed upon at the time of the contract and payment is made at a specified future date. The amortized cost of AFS debt securities in qualifying fair value hedges of foreign currency risk was $21,248 million and $21,324 million as of June 30, 2026 and December 31, 2025, respectively. The carrying value of interest sensitive contract liabilities in qualifying fair value hedges of foreign currency swaps was $8,473 million and $8,449 million as of June 30, 2026 and December 31, 2025, respectively.

The following represents the carrying amount and the cumulative amount of fair value hedging adjustments of hedged liabilities, excluding liabilities solely hedging foreign currency risk and cumulative amounts related to foreign currency gains (losses):
June 30, 2026December 31, 2025
(In millions)Carrying amount of the hedged liabilitiesCumulative amount of fair value hedging gains (losses)Carrying amount of the hedged liabilitiesCumulative amount of fair value hedging gains (losses)
Interest sensitive contract liabilities
Foreign currency interest rate swaps$4,017 $67 $4,271 $77 
Interest rate swaps33,676 277 19,175 (20)
The following is a summary of the gains (losses) related to the derivatives and related hedged items in fair value hedge relationships:
Amounts excluded
(In millions)DerivativesHedged itemsNetRecognized in income through amortization approachRecognized in income through changes in fair value
Three months ended June 30, 2026
Investment related gains (losses)
Foreign currency forwards$5 $(6)$(1)$9 $— 
Foreign currency swaps68 (80)(12)— — 
Foreign currency interest rate swaps(9)21 12 — — 
Interest rate swaps(192)194 2 — — 
Interest sensitive contract benefits
Foreign currency interest rate swaps21 (21)— — — 
Three months ended June 30, 2025
Investment related gains (losses)
Foreign currency forwards(235)228 (7)9 — 
Foreign currency swaps(681)699 18 — — 
Foreign currency interest rate swaps344 (330)14 — — 
Interest rate swaps65 (49)16 — — 
Interest sensitive contract benefits
Foreign currency interest rate swaps25 (24)1 — — 

Amounts excluded
(In millions)DerivativesHedged itemsNetRecognized in income through amortization approachRecognized in income through changes in fair value
Six months ended June 30, 2026
Investment related gains (losses)
Foreign currency forwards$45 $(42)$3 $16 $— 
Foreign currency swaps241 (254)(13)— — 
Foreign currency interest rate swaps(68)79 11 — — 
Interest rate swaps(299)300 1 — — 
Interest sensitive contract benefits
Foreign currency interest rate swaps45 (44)1 — — 
Six months ended June 30, 2025
Investment related gains (losses)
Foreign currency forwards(350)332 (18)19 — 
Foreign currency swaps(1,013)1,058 45 — — 
Foreign currency interest rate swaps481 (464)17 — — 
Interest rate swaps194 (174)20 — — 
Interest sensitive contract benefits
Foreign currency interest rate swaps48 (47)1 — — 

The following is a summary of the gains (losses) excluded from the assessment of hedge effectiveness that were recognized in OCI:
Three months ended June 30,Six months ended June 30,
(In millions)2026202520262025
Foreign currency forwards$(3)$3 $(2)$29 
Foreign currency swaps(149)(87)44 20 
Net Investment Hedges – We use foreign currency forwards to hedge the foreign currency exchange rate risk of our investments in subsidiaries that have a reporting currency other than the US dollar. We assess hedge effectiveness based on the changes in forward rates. During the three months ended June 30, 2026 and 2025, these derivatives had losses of $1 million and $14 million, respectively. During the six months ended June 30, 2026 and 2025, these derivatives had gains of $3 million and losses of $22 million, respectively. These derivatives are included in foreign currency translation and other adjustments on the condensed consolidated statements of comprehensive income (loss). As of June 30, 2026 and December 31, 2025, the cumulative foreign currency translations recorded in AOCI related to these net investment hedges were gains of $17 million and $14 million, respectively. During the three and six months ended June 30, 2026 and 2025, there were no amounts deemed ineffective.

Derivatives Not Designated as Hedges

Equity options – We use equity indexed options to economically hedge indexed annuity products that guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specified market index, including the S&P 500 and other bespoke indices. To hedge against adverse changes in equity indices, we enter into contracts to buy equity indexed options. The contracts are net settled in cash based on differentials in the indices at the time of exercise and the strike price.

Futures – Futures contracts are purchased to hedge the growth in interest credited to the customer as a direct result of increases in the related indices. We enter into exchange-traded futures with regulated futures commission clearing brokers who are members of a trading exchange. Under exchange-traded futures contracts, we agree to purchase a specified number of contracts with other parties and to post variation margin on a daily basis in an amount equal to the difference in the daily fair values of those contracts.

Interest rate swaps and forwards – We use interest rate swaps and forwards to reduce market risks from interest rate changes and to alter interest rate exposure arising from duration mismatches between assets and liabilities. With an interest rate swap, we agree with another party to exchange the difference between fixed-rate and floating-rate interest amounts tied to an agreed-upon notional principal amount at specified intervals. With an interest rate forward, including a bond forward, we agree with a counterparty to lock in the terms of an investment purchase that will occur on a specified future date.

Other swaps – Other swaps include total return swaps, credit default swaps and swaptions. We purchase total rate of return swaps to gain exposure and benefit from a reference asset or index without ownership. Credit default swaps provide a measure of protection against the default of an issuer or allow us to gain credit exposure to an issuer or traded index. We use credit default swaps coupled with a bond to synthetically create the characteristics of a reference bond. Swaptions provide an option to enter into an interest rate swap and are used to hedge against interest rate exposure.

Embedded derivatives – We have embedded derivatives which are required to be separated from their host contracts and reported as derivatives. Host contracts include reinsurance agreements structured on a modified coinsurance (modco) or funds withheld basis and indexed annuity products.

The following is a summary of the gains (losses) related to derivatives not designated as hedges:
Three months ended June 30,Six months ended June 30,
(In millions)2026202520262025
Equity options$2,847 $871 $1,692 $(65)
Futures113 (9)66 (16)
Foreign currency swaps117 (1,009)553 (1,288)
Interest rate swaps and forwards and other swaps(35)(70)(149)(137)
Foreign currency forwards(258)(401)(212)(611)
Embedded derivatives on funds withheld(32)41 (193)199 
Amounts recognized in investment related gains (losses)2,752 (577)1,757 (1,918)
Embedded derivatives in indexed annuity products1
(2,135)(887)(604)116 
Total gains (losses) on derivatives not designated as hedges$617 $(1,464)$1,153 $(1,802)
1 Included in interest sensitive contract benefits on the condensed consolidated statements of income (loss).

Credit Risk—We may be exposed to credit-related losses in the event of counterparty nonperformance on derivative financial instruments. Generally, the current credit exposure of our derivative contracts is the fair value at the reporting date less any collateral received from the counterparty.

We manage credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties. Where possible, we maintain collateral arrangements and use master netting agreements that provide for a single net payment from one counterparty to another at each due date and upon termination. We have also established counterparty exposure limits, where possible, in order to evaluate if there is sufficient collateral to support the net exposure.
Collateral arrangements typically require the posting of collateral in connection with its derivative instruments. Collateral agreements often contain posting thresholds, some of which may vary depending on the posting party’s financial strength ratings. Additionally, a decrease in our financial strength rating to a specified level can result in settlement of the derivative position.

The estimated fair value of our net derivative and other financial assets and liabilities after the application of master netting agreements and collateral were as follows:
Gross amounts not offset on the condensed consolidated balance sheets
(In millions)
Gross amount recognized1
Financial instruments2
Collateral (received)/pledgedNet amount
Off-balance sheet securities collateral3
Net amount after securities collateral
June 30, 2026
Derivative assets$11,034 $(3,055)$(7,934)$45 $(170)$(125)
Derivative liabilities(6,241)3,055 2,945 (241)631 390 
December 31, 2025
Derivative assets$9,190 $(2,602)$(5,908)$680 $(889)$(209)
Derivative liabilities(5,742)2,602 2,491 (649)561 (88)
1 The gross amounts of recognized derivative assets and derivative liabilities are reported on the condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, amounts not subject to master netting or similar agreements were immaterial.
2 Represents amounts offsetting derivative assets and derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets or gross derivative liabilities for presentation on the condensed consolidated balance sheets.
3 For non-cash collateral received, we do not recognize the collateral on our balance sheet unless the obligor (transferor) has defaulted under the terms of the secured contract and is no longer entitled to redeem the pledged asset. Amounts do not include any excess of collateral pledged or received.