v3.26.3
INSURANCE LIABILITIES AND ANNUITY BENEFITS
 9 Months Ended
Sep. 30, 2026
Insurance [Abstract]  
INSURANCE LIABILITIES AND ANNUITY BENEFITS INSURANCE LIABILITIES AND ANNUITY BENEFITS. Insurance liabilities and annuity benefits are comprised of obligations to annuitants and insureds in our run-off insurance operations. Our insurance operations (net of eliminations) generated revenue of $833 million and $875 million, profit/(loss) was $(210) million and $361 million and net income/(loss) was $(202) million and $287 million for the three months ended September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026 and 2025, revenues were $2,326 million and $2,681 million, profit was $91 million and $714 million and net income was $39 million and $567 million, respectively. These operations were primarily supported by investment securities, substantially all debt securities, of $35,241 million and $37,842 million, limited partnerships of $5,441 million and $5,089 million, a diversified commercial mortgage loan portfolio collateralized by first liens on U.S. commercial real estate properties of $1,760 million and $1,802 million (net of allowance for credit losses of $18 million and $19 million) and residential mortgage loans of $435 million and $395 million (net of allowance for credit losses of an insignificant amount), as of September 30, 2026 and December 31, 2025, respectively. As of September 30, 2026, the commercial mortgage loan portfolio had no delinquent or non-accrual loans and about one-fourth of the portfolio was held in the office sector, which had a weighted average loan-to-value ratio of 56%, debt service coverage of 1.6, and an insignificant amount of scheduled maturities through 2026. A summary of our insurance liabilities and annuity benefits is presented below.
September 30, 2026
Long-term careStructured settlement annuitiesLifeOther contractsTotal
Future policy benefit reserves
$24,050 $7,570 $834 $330 $32,785 
Investment contracts
— 608 — 450 1,058 
Other
— — 112 168 280 
Total
$24,050 $8,178 $946 $948 $34,123 
December 31, 2025
Future policy benefit reserves
$25,792 $8,383 $906 $357 $35,438 
Investment contracts
—647—493 1,140 
Other
——113203 316 
Total
$25,792 $9,031 $1,019 $1,053 $36,894 
The following tables summarize balances of and changes in future policy benefit reserves.

September 30, 2026September 30, 2025
Long-term careStructured settlement annuitiesLifeLong-term careStructured settlement annuitiesLife
Present value of expected net premiums
Balance, beginning of year$4,426 $— $1,833 $4,144 $— $4,318 
Beginning balance at locked-in discount rate4,140 — 1,714 3,991 — 4,415 
Effect of changes in cash flow assumptions54 — — 257 — 4 
Effect of actual variances from expected experience (a)(37)— (23)(3)— (2,343)
Adjusted beginning of year balance4,157 — 1,691 4,244 — 2,076 
Interest accrual 169 — 69 164 — 138 
Net premiums collected(303)— (145)(299)— (223)
Effect of foreign currency— — (2)— — 108 
Ending balance at locked-in discount rate4,024 — 1,614 4,110 — 2,099 
Effect of changes in discount rate assumptions7 — 7 278 — 87 
Balance, end of period$4,031 $— $1,621 $4,388 $— $2,186 
Present value of expected future policy benefits
Balance, beginning of year$30,218 $8,383 $2,739 $28,820 $8,426 $5,336 
Beginning balance at locked-in discount rate27,976 8,048 2,582 27,448 8,301 5,411 
Effect of changes in cash flow assumptions276 — (6)308 (37)43 
Effect of actual variances from expected experience (a)86 (5)11 142 6 (2,381)
Adjusted beginning of year balance28,339 8,043 2,586 27,898 8,270 3,074 
Interest accrual1,160 316 97 1,129 323 167 
Benefit payments(1,203)(473)(230)(1,130)(486)(319)
Effect of foreign currency— — (5)— — 113 
Ending balance at locked-in discount rate28,295 7,886 2,448 27,897 8,107 3,035 
  Effect of changes in discount rate assumptions(214)(316)7 2,291 360 127 
Balance, end of period$28,081 $7,570 $2,455 $30,188 $8,467 $3,161 
Net future policy benefit reserves$24,050 $7,570 $834 $25,801 $8,467 $976 
Less: Reinsurance recoverables, net of allowance for credit losses(148)— (141)(157)— (179)
Net future policy benefit reserves, after reinsurance recoverables$23,902 $7,570 $692 $25,644 $8,467 $797 
Weighted-average duration of liability (years)(b)10.39.55.811.310.26.0
Weighted-average interest accretion rate5.6 %5.4 %5.4 %5.6 %5.4 %5.3 %
Current discount rate6.1 %6.1 %5.7 %5.3 %5.3 %4.9 %
Gross premiums or assessments recognized during period$338 $— $153 $343 $— $249 
Expected future gross premiums, undiscounted7,326 — 2,915 7,499 — 4,468 
Expected future gross premiums, discounted(b)4,465 — 1,720 4,813 — 2,452 
Expected future benefit payments, undiscounted60,512 17,332 3,841 61,497 17,961 5,091 
Expected future benefit payments, discounted(b)28,081 7,570 2,455 30,188 8,467 3,161 
(a) Substantially all of Life reflects novations executed during the three months ended September 30, 2025, in connection with the February 3, 2025 Canadian life and health insurance portfolio reinsurance transaction.
(b) Determined using the current discount rate as of September 30, 2026 and 2025.

As of September 30, 2026 and 2025, policyholders account balances totaled $1,292 million and $1,407 million, respectively. As our insurance operations are in run-off, changes in policyholder account balances for the nine months ended September 30, 2026 and 2025 are primarily attributed to surrenders, withdrawals and benefit payments of $261 million and $367 million, partially offset by net additions from separate accounts and interest credited of $174 million and $197 million, respectively. Interest on policyholder account balances is generally credited at minimum guaranteed rates, primarily between 3.0% and 6.0% at both September 30, 2026 and 2025, respectively.
Our 2026 annual review of future policy benefit reserves cash flow assumptions resulted in an increase in net future policy benefit reserves, after reinsurance recoverables and a pre-tax charge to earnings of $328 million ($259 million, after-tax), primarily related to claims experience and long-term care cost of care inflation, partially offset by premium rate increases. Our 2025 annual review of future policy benefit reserves cash flow assumptions resulted in an increase in net future policy benefit reserves, after reinsurance recoverables and a pre-tax charge to earnings of $126 million ($100 million, after-tax), primarily related to long-term care cost of care inflation and lower policy terminations or benefit reductions related to premium rate increases assumptions, partially offset by favorable experience, including mortality.

Included in Insurance losses and annuity benefits in our Statement of Earnings (Loss) for the nine months ended September 30, 2026 and 2025 are unfavorable pre-tax adjustments of $368 million and $166 million respectively, from updating the net premium ratio (i.e., the percentage of projected gross premiums required to cover expected policy benefits and related expenses) after updating for actual historical experience each quarter and updating of future cash flow assumptions. Included in these amounts for the nine months ended September 30, 2026 and 2025, are unfavorable adjustments of $222 million and $189 million, respectively, due to insufficient gross premiums (i.e., net premium ratio exceeded 100%), related to certain cohorts in our long-term care and life insurance portfolios. These adjustments are primarily attributable to increases in the net premium ratio as a result of updating future cash flow assumptions on cohorts where the beginning of the period net premium ratio exceeded 100%.

See Notes 3 and 9 for further information related to our run-off insurance operations.