Other invested assets, allowance for credit losses

^[1]

58,666

65,425

^[1]

21,833

18,125

Short term investments, allowance for credit losses

6,635

Other liabilities, allowance for credit losses

^[1]

11,755

20,323

Total Liabilities

$ 874,974

$ 872,512

Preferred Stock, par value (in dollars per share)

$ 0.01

Preferred Stock, Shares Authorized

10,000,000

Preferred Stock, Shares Issued

0

Common Stock, par value (in dollars per share)

$ 0.01

Common Stock, Shares Authorized

1,500,000,000

Common Stock, Shares, Issued

666,305,189

Treasury Stock, Shares

290,018,851

269,867,738

ASU 2016-13

Short term investments, allowance for credit losses

$ 0

$ 1

Other assets, allowance for credit losses

19

11

Other liabilities, allowance for credit losses

21

20

Leveraged lease loans

Other invested assets, allowance for credit losses

2

Other invested assets, at fair value

8,046

6,407

Fair value option

Increase (Decrease) in Stockholders' Equity [Roll Forward]

$ 1,263

$ 1,092

[1]	See Note 4 for details of balances associated with variable interest entities.

Consolidated Statements of Operations - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
REVENUES
Premiums	$ 34,827	$ 31,140	$ 34,202
Policy charges and fee income	5,944	6,029	5,978
Net investment income	18,287	17,410	17,585
Asset management and service fees	4,901	4,391	4,239
Other income (loss)	2,951	1,950	3,262
Realized investment gains (losses), net	4,024	(3,887)	(459)
Total revenues	70,934	57,033	64,807
BENEFITS AND EXPENSES
Policyholders’ benefits	38,458	35,059	36,820
Interest credited to policyholders’ account balances	3,482	4,538	4,880
Dividends to policyholders	2,874	1,625	2,274
Amortization of deferred policy acquisition costs	2,097	2,221	2,332
Goodwill impairment	1,060	0	0
General and administrative expenses	13,582	13,913	13,416
Total benefits and expenses	61,553	57,356	59,722
Income (loss) before income taxes and equity in earnings of operating joint ventures	9,381	(323)	5,085
Total income tax expense (benefit)	1,674	(81)	947
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF OPERATING JOINT VENTURES	7,707	(242)	4,138
Equity in earnings of operating joint ventures, net of taxes	87	96	100
NET INCOME (LOSS)	7,794	(146)	4,238
Less: Income (loss) attributable to noncontrolling interests	70	228	52
NET INCOME (LOSS) ATTRIBUTABLE TO PRUDENTIAL FINANCIAL, INC.	$ 7,724	$ (374)	$ 4,186
Basic earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc. (in dollars per share)	$ 19.65	$ (1.00)	$ 10.23
Diluted earnings per share-Common Stock:
Net income (loss) attributable to Prudential Financial, Inc. (in dollars per share)	19.51	(1.00)	10.11
Dividends declared per share of Common Stock (in dollars per share)	$ 4.60	$ 4.40	$ 4.00

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Statement of Comprehensive Income [Abstract]
NET INCOME (LOSS)	$ 7,794	$ (146)	$ 4,238
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments for the period	(1,138)	523	67
Net unrealized investment gains (losses)	(11,712)	7,229	17,195
Defined benefit pension and postretirement unrecognized periodic benefit (cost)	1,107	210	(322)
Total	(11,743)	7,962	16,940
Less: Income tax expense (benefit) related to other comprehensive income (loss)	(2,314)	1,252	3,811
Other comprehensive income (loss), net of taxes	(9,429)	6,710	13,129
Comprehensive income (loss)	(1,635)	6,564	17,367
Less: Comprehensive income (loss) attributable to noncontrolling interests	55	239	55
Comprehensive income (loss) attributable to Prudential Financial, Inc.	$ (1,690)	$ 6,325	$ 17,312

Consolidated Statements of Equity - USD ($)
$ in Millions

Total

Cumulative Effect, Period of Adoption, Adjustment

^[2]

ASU 2016-01

^[1]

Common Stock

Additional Paid-in Capital

Retained Earnings

Cumulative Effect, Period of Adoption, Adjustment

^[2]

Retained Earnings

ASU 2016-01

^[1]

Common Stock Held in Treasury

Common Stock

Accumulated Other Comprehensive Income (Loss)

ASU 2016-01

^[1]

Total Prudential Financial, Inc. Equity

Cumulative Effect, Period of Adoption, Adjustment

^[2]

Total Prudential Financial, Inc. Equity

ASU 2016-01

^[1]

Noncontrolling Interests

Balance at Dec. 31, 2018

$ 49,031

$ (14)

$ 6

$ 24,828

$ 30,470

$ (21)

$ (17,593)

$ 10,906

$ 7

$ 48,617

$ (14)

$ 414

Exchangeable Surplus Notes conversion

(2,500)

502

Assurance IQ acquisition

454

79

375

454

Contributions from noncontrolling interests

208

Distributions to noncontrolling interests

(82)

Consolidations/(deconsolidations) of noncontrolling interests

9

Stock-based compensation programs

388

123

265

388

Dividends declared on Common Stock

(1,644)

Comprehensive income:

Other comprehensive income (loss), net of tax

4,238

4,186

52

13,129

13,126

3

Total comprehensive income (loss)

17,367

17,312

55

Balance at Dec. 31, 2019

63,719

$ (99)

6

25,532

32,991

$ (99)

(19,453)

24,039

63,115

$ (99)

604

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Contributions from noncontrolling interests

(500)

100

Distributions to noncontrolling interests

(53)

Consolidations/(deconsolidations) of noncontrolling interests

(105)

Stock-based compensation programs

353

52

301

353

Dividends declared on Common Stock

(1,769)

Comprehensive income:

Other comprehensive income (loss), net of tax

(146)

(374)

228

6,710

6,699

11

Total comprehensive income (loss)

6,564

6,325

239

Balance at Dec. 31, 2020

68,210

6

25,584

30,749

(19,652)

30,738

67,425

785

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Contributions from noncontrolling interests

(2,500)

85

Distributions to noncontrolling interests

(75)

Consolidations/(deconsolidations) of noncontrolling interests

(118)

Stock-based compensation programs

462

148

314

462

Dividends declared on Common Stock

(1,821)

Comprehensive income:

Other comprehensive income (loss), net of tax

7,794

7,724

70

(9,429)

(9,414)

(15)

Total comprehensive income (loss)

(1,635)

(1,690)

55

Balance at Dec. 31, 2021

$ 62,608

$ 6

$ 25,732

$ 36,652

$ (21,838)

$ 21,324

$ 61,876

$ 732

[1]	Includes the impact from the adoptions of ASU 2017-08 and 2017-12.
[2]	Includes the impact from the adoption of ASU 2016-13. See Note 2.

Consolidated Statements of Cash Flows - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2021

Dec. 31, 2020

Dec. 31, 2019

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

$ 7,794

$ (146)

$ 4,238

Realized investment (gains) losses, net

(4,024)

3,887

459

Policy charges and fee income

(2,302)

(2,652)

(2,616)

Interest credited to policyholders’ account balances

3,482

4,538

4,880

Goodwill impairment

1,060

0

Depreciation and amortization

204

457

460

(Gains) losses on assets supporting experience-rated contractholder liabilities, net

299

(743)

(971)

Change in:

Deferred policy acquisition costs

(451)

(542)

(634)

Future policy benefits and other insurance liabilities

7,762

10,817

10,992

Income taxes

(62)

(424)

(339)

Derivatives, net

(2,426)

(2,940)

1,485

Other, net

(1,524)

(3,884)

1,671

Cash flows from (used in) operating activities

9,812

8,368

19,625

Proceeds from the sale/maturity/prepayment of:

Fixed maturities, available-for-sale

64,759

44,106

52,306

Fixed maturities, held-to-maturity

239

88

100

Fixed maturities, trading

3,626

690

363

Assets supporting experience-rated contractholder liabilities

18,863

29,162

15,281

Equity securities

4,290

2,704

2,708

Payments for the purchase/origination of:

9,367

5,447

6,525

Policy loans

2,019

2,528

2,279

Other invested assets

2,972

1,815

1,783

Short-term investments

32,696

47,339

38,095

Fixed maturities, available-for-sale

(65,174)

(56,523)

(64,570)

Fixed maturities, trading

(5,675)

(1,413)

(876)

Assets supporting experience-rated contractholder liabilities

(21,394)

(30,822)

(14,613)

Equity securities

(4,430)

(3,168)

(2,813)

Acquisitions, net of cash acquired

(9,434)

(6,107)

(10,677)

Policy loans

(1,216)

(1,956)

(1,931)

Other invested assets

(3,628)

(2,760)

(2,557)

Short-term investments

(32,329)

(49,802)

(37,286)

0

(1,755)

Dispositions, net of cash disposed

132

1,454

0

Derivatives, net

(429)

1,286

1,047

Other, net

(596)

(278)

(437)

Cash flows from (used in) investing activities

(5,342)

(16,210)

(17,028)

CASH FLOWS FROM FINANCING ACTIVITIES

Policyholders’ account deposits

31,795

41,424

27,485

Policyholders’ account withdrawals

(29,227)

(34,701)

(26,662)

Net change in securities sold under agreements to repurchase and cash collateral for loaned securities

42

499

16

Cash dividends paid on Common Stock

(1,814)

(1,766)

(1,641)

Net change in financing arrangements (maturities 90 days or less)

297

(21)

(181)

Common Stock reissued for exercise of stock options

(2,500)

(500)

(2,500)

200

153

133

Proceeds from the issuance of debt (maturities longer than 90 days)

268

3,013

2,993

Repayments of debt (maturities longer than 90 days)

(1,708)

(2,743)

(1,429)

Proceeds from notes issued by consolidated VIEs

0

971

Repayments of notes issued by consolidated VIEs

0

(19)

(638)

Other, net

(364)

(456)

(181)

Cash flows from (used in) financing activities

(3,011)

4,883

(1,634)

Effect of foreign exchange rate changes on cash balances

(309)

340

16

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS INCLUDING BALANCES CLASSIFIED AS HELD-FOR-SALE

1,150

(2,619)

979

NET CHANGE IN CASH BALANCES CLASSIFIED AS HELD-FOR-SALE

2,071

0

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS

(921)

(2,619)

979

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR

13,855

16,474

15,495

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF YEAR

12,934

13,855

16,474

SUPPLEMENTAL CASH FLOW INFORMATION

Income taxes paid, net of refunds

1,668

287

1,348

Interest paid

1,452

1,531

1,521

HELD-FOR-SALE CLASSIFICATION

Assets classified as held-for-sale

153,793

^[1]

0

Liabilities classified as held-for-sale

151,359

^[1]

0

Net assets classified as held-for-sale

2,434

^[1]

0

NON-CASH TRANSACTIONS DURING THE YEAR

Treasury Stock shares issued for stock-based compensation programs

138

151

197

Conversion of surplus notes into Common Stock

0

502

Treasury Stock shares issued

454

RECONCILIATION TO STATEMENTS OF FINANCIAL POSITION

Cash and cash equivalents

12,888

^[2]

13,701

^[2]

16,327

Restricted cash and restricted cash equivalents (included in “Other assets”)

46

154

147

Total cash, cash equivalents, restricted cash and restricted cash equivalents

12,934

13,855

16,474

Significant Pension Risk Transfer transactions:

NON-CASH TRANSACTIONS DURING THE YEAR

Assets received, excluding cash and cash equivalents

5,377

703

3,166

Net cash received

1,020

346

1,166

Liabilities assumed

6,397

1,049

4,332

Acquisitions:

NON-CASH TRANSACTIONS DURING THE YEAR

Assets acquired, excluding cash and cash equivalents

0

2,425

Liabilities assumed

0

216

Treasury Stock shares issued

0

454

Net cash paid on acquisition

$ 0

$ 1,755

[1]	See Note 1 for details of the assets and liabilities classified as “held-for-sale” as of December 31, 2021.
[2]	See Note 4 for details of balances associated with variable interest entities.

Business and Basis of Presentation

12 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Basis of Presentation

BUSINESS AND BASIS OF PRESENTATION

Prudential Financial, Inc. (“Prudential Financial”) and its subsidiaries (collectively, “Prudential” or the “Company”) provide a wide range of insurance, investment management, and other financial products and services to both individual and institutional customers throughout the United States and in many other countries. Principal products and services provided include life insurance, annuities, retirement solutions, mutual funds and investment management.

The Company’s principal operations consist of PGIM (the Company’s global investment management business), the U.S. Businesses (consisting of the Retirement, Group Insurance, Individual Annuities, Individual Life and Assurance IQ businesses), the International Businesses, the Closed Block division, and the Company’s Corporate and Other operations. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in Corporate and Other operations. Divested and Run-off Businesses consist of businesses that have been, or will be, sold or exited, including businesses that have been placed in wind-down status that do not qualify for “discontinued operations” accounting treatment under U.S. GAAP. The Company’s Corporate and Other operations include corporate items and initiatives that are not allocated to business segments as well as the Divested and Run-off Businesses described above.

Basis of Presentation

The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Consolidated Financial Statements include the accounts of Prudential Financial, entities over which the Company exercises control, including majority-owned subsidiaries and minority-owned entities such as limited partnerships in which the Company is the general partner and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. See Note 4 for additional information on the Company’s consolidated variable interest entities. Intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining deferred policy acquisition costs (“DAC”) and related amortization; policyholders’ account balances related to the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products; value of business acquired (“VOBA”) and its amortization; amortization of deferred sales inducements (“DSI”); measurement of goodwill and any related impairment; valuation of investments including derivatives, measurement of allowance for credit losses, and the recognition of other-than-temporary impairments (“OTTI”); future policy benefits including guarantees; pension and other postretirement benefits; provision for income taxes and valuation of deferred tax assets; and accruals for contingent liabilities, including estimates for losses in connection with unresolved legal and regulatory matters.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

COVID-19

Since the first quarter of 2020, the novel coronavirus (“COVID-19”) has resulted in extreme stress and disruption in the global economy and financial markets. While markets have rebounded, the pandemic has adversely impacted, and may continue to adversely impact, the Company’s results of operations, financial condition and cash flows. Due to the highly uncertain nature of these conditions, it is not possible to estimate the ultimate impacts at this time. The risks may have manifested, and may continue to manifest, in the Company’s financial statements in the areas of, among others, i) insurance liabilities and related balances: potential changes to assumptions regarding investment returns, mortality, morbidity and policyholder behavior which are reflected in our insurance liabilities and certain related balances (e.g., DAC, VOBA, etc.) and; ii) investments: increased risk of loss on our investments due to default or deterioration in credit quality or value. The Company cannot predict what impact the COVID-19 pandemic will ultimately have on its businesses.

Acquisitions

Assurance IQ

The Company completed its acquisition of Assurance IQ in October 2019. Assurance IQ is a wholly-owned subsidiary of the Company and the results of the Assurance IQ business are reported as a separate segment within the Company’s U.S. Businesses.

The total purchase consideration included $2,212 million paid at closing, and $100 million of contingent consideration (see Note 23 for additional information regarding the contingent liability). In addition to the purchase consideration, the Company also granted approximately $160 million of cash and equity awards to Assurance IQ employees which are recognized as compensation expense over their requisite service periods. See Note 21 for further details on the equity awards issued as part of the transaction. The contingent consideration as well as additional compensation awards are payable in 2023, contingent upon Assurance IQ’s achievement of certain profitability targets. The Company recognized a goodwill asset of $2,140 million in connection with the acquisition. Based on the goodwill impairment test performed as of December 31, 2021, the Company recorded a goodwill impairment charge of $1,060 million, which reduced the Assurance IQ goodwill asset to $1,080 million as of December 31, 2021. See Note 2 and Note 10 for additional information regarding goodwill.

Business Dispositions

Prudential Annuities Life Assurance Corporation, Representing a Portion of Individual Annuities’ Traditional Variable Annuity Block of Business

In September 2021, the Company entered into a definitive agreement to sell its equity interest in Prudential Annuities Life Assurance Corporation (“PALAC”), which represents a portion of its in-force traditional variable annuity block of business, to Fortitude Group Holdings, LLC. The transaction has a total value of approximately $2.2 billion, comprising the sales price for PALAC, a pre-closing net capital release to the Company and the expected tax impact from the sale. The PALAC block primarily consists of non-New York traditional variable annuities with guaranteed living benefits that were issued prior to 2011, which constitute approximately $30 billion or 18% of Prudential’s total in-force individual annuity account values as of December 31, 2021. The Company will retain, through a reinsurance agreement, its interest in all FlexGuard products and all fixed annuities and fixed indexed annuities remaining in PALAC.

The Company expects to record a gain on the sale of the business upon the closing of the transaction, which is expected to occur in the first half of 2022, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.

Beginning in the third quarter of 2021, the Company reported the assets and liabilities of this block of business as “held-for-sale” with results continuing to be reported within the Individual Annuities segment.

Full Service Retirement Business

In July 2021, the Company entered into a definitive agreement with Great-West Life & Annuity Insurance Company (“Great-West”) pursuant to which the Company has agreed to sell to Great-West the Company’s Full Service Retirement business, primarily through a combination of (i) the sale of all of the outstanding equity interests of certain legal entities, including Prudential Retirement Insurance and Annuity Company (“PRIAC”); (ii) the ceding of certain insurance policies through reinsurance; and (iii) the sale, transfer and/or novation of certain in-scope contracts and brokerage accounts.

The Company expects to record a gain on the sale of the business upon the closing of the transaction, which is expected to occur in the first half of 2022, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.

Total proceeds from the sale are expected to be approximately $2.8 billion, which includes cash consideration for the sale of PRIAC, ceding commission for the reinsured business and capital available to be released from PICA. Separately, the Company expects to incur approximately $400 million of taxes and transaction related costs.

Beginning in the third quarter of 2021, the Company reported the assets and liabilities of the Full Service Retirement business as “held-for-sale” and has transferred the results of this business to Divested and Run-off Businesses within Corporate

and Other operations. All prior period amounts have been restated, which impacts both segment reporting and adjusted operating income, but does not impact results reported under GAAP. The Full Service Retirement business generated pre-tax income of $190 million, $179 million and $237 million for the years ended December 31, 2021, 2020 and 2019, respectively. These amounts exclude the impacts of overhead costs, retained in the Company’s Corporate and Other operations, that will not be transferred to the buyer or eliminated with the sale.

The table below reflects the carrying amounts of assets and liabilities held-for-sale related to the pending dispositions described above:


	December 31, 2021
	Retirement Full Service		Individual Annuities PALAC		Total
	(in millions)
Assets held-for-sale(1):
Fixed maturities, available-for-sale, at fair value(2)	$	4,798	$	8,771	$	13,569
Fixed maturities, trading, at fair value	374		27		401
Assets supporting experience-rated contractholder liabilities, at fair value	18,818		0		18,818
Equity securities	0		322		322
Commercial mortgage and other loans(2)	5,068		1,497		6,565
Policy loans	0		12		12
Other invested assets	10		94		104
Short-term investments	3		875		878
Cash and cash equivalents	56		2,015		2,071
Accrued investment income	160		61		221
Deferred policy acquisition costs	100		1,097		1,197
Value of business acquired	185		30		215
Other assets(3)	674		10,644		11,318
Separate account assets	65,835		32,267		98,102
Total assets held-for-sale	$	96,081	$	57,712	$	153,793
Liabilities held-for-sale(1):
Future policy benefits	$	157	$	4,505	$	4,662
Policyholders’ account balances	28,164		11,750		39,914


Other liabilities	374		8,307		8,681
Separate account liabilities	65,835		32,267		98,102
Total liabilities held-for-sale	$	94,530	$	56,829	$	151,359

__________

(1)Under the terms of the sales agreements, certain of these assets and liabilities held-for-sale may be subject to capital transactions or substituted for other similar items prior to the closing of each transaction.

(2)“Fixed maturities, available-for-sale, at fair value” with an allowance for credit losses of $1 million and “Commercial mortgage and other loans” net of allowance for credit losses of $15 million, as of December 31, 2021, respectively.

(3)Includes $455 million of goodwill associated with Retirement Full Service as of December 31, 2021.

The Prudential Life Insurance Company of Taiwan Inc.

In June 2021, Prudential International Insurance Holdings, Ltd. (“PIIH”), a subsidiary of Prudential Financial, completed the sale of The Prudential Life Insurance Company of Taiwan Inc. (“POT”) to Taishin Financial Holding Co, Ltd. (the “Buyer”) for cash consideration of approximately NT5.5 billion, equal to approximately $200 million at then current exchange rates, and contingent consideration with a fair value of approximately $80 million as of December 31, 2021. The fair value of the contingent consideration is tied to the level of yields for the 10-year Taiwanese Government bond for two years after the signing of the transaction and can result in a maximum payout of $100 million if yields increase by 40 basis points. In connection with the transaction, the Company recognized a liability with a fair value of approximately $34 million as of December 31, 2021, representing its financial guarantee of certain insurance obligations of POT.

The after-tax loss on the sale of POT was approximately $400 million, of which approximately $350 million was recorded during 2020, and approximately $50 million was recorded during 2021.

Prior to the sale, in the third quarter of 2020, the Company transferred the results of POT and the anticipated impact of its sale from the International Businesses segment to Divested and Run-off Businesses within Corporate & Other operations. Prior period amounts were restated at that time, which impacted both segment reporting and adjusted operating income, but did not impact results reported under GAAP.

Pramerica SGR (PGIM Italy Joint Venture)

In March 2021, the Company sold its 35% ownership stake in Pramerica SGR, PGIM’s asset management joint venture in Italy, to its partner UBI Banca, which was acquired in 2020 by Intesa Sanpaolo Group. The after-tax gain on the sale of Pramerica SGR was approximately $330 million, which was recognized in adjusted operating income in the first quarter of 2021.

The Prudential Life Insurance Company of Korea, Ltd.

In August 2020, PIIH completed the sale of The Prudential Life Insurance Company of Korea, Ltd. (“POK”) to KB Financial Group Inc., for cash consideration of approximately ₩2.3 trillion, equal to approximately $1.9 billion. The Company recognized an approximate $800 million after-tax loss on the transaction in 2020.

Prior to the sale, in the second quarter of 2020, the Company transferred the results of POK and the anticipated impact of its sale from the International Businesses segment to Divested and Run-off Businesses within Corporate & Other operations. Prior period amounts were restated at that time, which impacted both segment reporting and adjusted operating income, but did not impact results reported under GAAP.

Significant Accounting Policies and Pronouncements

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies and Pronouncements

SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS

ASSETS

Fixed maturities, available-for-sale, at fair value (“AFS debt securities”) includes bonds, notes and redeemable preferred stock that are carried at fair value. See Note 6 for additional information regarding the determination of fair value. The purchased cost of fixed maturities is adjusted for amortization of premiums and accretion of discounts to maturity or, if applicable, call date.

AFS debt securities, where fair value is below amortized cost, are reviewed quarterly to determine whether the amortized cost basis of the security is recoverable. For mortgage-backed and asset-backed AFS debt securities, a credit impairment will be recognized in earnings as an allowance for credit losses and reported in “Realized investment gains (losses), net,” to the extent the amortized cost exceeds the net present value of projected future cash flows (the “net present value”) for the security.

For all other AFS debt securities, qualitative factors are first considered including, but not limited to, the extent of the decline and the reasons for the decline in value (e.g., credit events, currency or interest-rate related, including general credit spread widening), and the financial condition of the issuer. If analysis of these qualitative factors results in the security needing to be impaired, a credit impairment will be recognized in earnings as an allowance for credit losses and reported in “Realized investment gains (losses), net,” to the extent the amortized cost exceeds the net present value of projected future cash flows (the “net present value”) for the security.

A credit impairment recorded cannot exceed the difference between the amortized cost and fair value of the respective security. The net present value used to measure a credit impairment is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the AFS debt security at the date of acquisition. Once the Company has deemed all or a portion of the amortized cost uncollectible, the allowance is removed from the balance sheet by writing down the amortized cost basis of the AFS debt security. Any amount of an AFS debt security’s change in fair value not recorded as an allowance for credit losses will be recorded in Other Comprehensive Income (loss) (“OCI”).

When an AFS debt security’s fair value is below amortized cost and the Company has the intent to sell the AFS debt security, or it is more likely than not the Company will be required to sell the AFS debt security before its anticipated recovery,

the amortized cost basis of the AFS debt security is written down to fair value and any previously recognized allowance is reversed. The write-down is reported in “Realized investment gains (losses), net.”

Interest income, including amortization of premium and accretion of discount, are included in “Net investment income” under the effective yield method. Prepayment premiums are also included in “Net investment income.”

For high credit quality mortgage-backed and asset-backed AFS debt securities (those rated AA or above), the amortized cost and effective yield of the securities are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to “Net investment income” in accordance with the retrospective method.

For mortgage-backed and asset-backed AFS debt securities rated below AA, the effective yield is adjusted prospectively for any changes in the estimated timing and amount of cash flows unless the investment is purchased with credit deterioration or an allowance is currently recorded for the respective security. If an investment is impaired, any changes in the estimated timing and amount of cash flows will be recorded as the credit impairment, as opposed to a yield adjustment. If the asset is purchased with credit deterioration (or previously impaired), the effective yield will be adjusted if there are favorable changes in cash flows subsequent to the allowance being reduced to zero.

For mortgage-backed and asset-backed AFS debt securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. These assumptions can significantly impact income recognition, unrealized gains and loss recorded in OCI, and the amount of impairment recognized in earnings. The payment priority of the respective security is also considered. For all other AFS debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security’s position within the capital structure of the issuer.

The associated unrealized gains and losses, net of tax, and the effect on DAC, VOBA, DSI, future policy benefits, policyholders’ account balances and policyholders’ dividends that would result from the realization of unrealized gains and losses, are included in “Accumulated other comprehensive income (loss)” (“AOCI”). Each of these balances is discussed in greater detail below.

Fixed maturities, held-to-maturity, at amortized cost includes bonds that the Company has both the positive intent and ability to hold to maturity, and are carried at amortized cost, net of the current expected credit loss (“CECL”) allowance (“HTM debt securities”). Interest income for HTM debt securities is computed in the same manner as interest income for AFS debt securities.

Credit impairment for HTM debt securities is recorded through a CECL allowance. The CECL allowance is generally determined based on probability of default and loss given default assumptions according to sector, credit quality and remaining time to maturity. Changes in the allowance are reported in “Realized investment gains (losses), net.” Once the Company has deemed all or a portion of the amortized cost uncollectible, the uncollectible portion of the allowance is removed from the balance sheet by writing down the amortized cost basis of the security.

The CECL allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. The allowance is calculated separately for each HTM debt security.

Key inputs to the CECL model include unpaid principal balances, credit ratings, annual expected loss factors, average life adjusted for prepayment considerations, current and historical interest rate assumptions, and other factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate.

Fixed maturities, trading, at fair value consists of fixed maturities with embedded features that are considered derivatives and assets contained within consolidated variable interest entities. Realized and unrealized gains and losses on these investments are reported in “Other income (loss),” and interest and dividend income from these investments is reported in “Net investment income.”

Assets supporting experience-rated contractholder liabilities, at fair value includes invested assets that consist of fixed maturities, equity securities, short-term investments and cash equivalents, that support certain products which are experience-rated, meaning that the investment results associated with these products are expected to ultimately accrue to contractholders. Realized and unrealized gains and losses for these investments are reported in “Other income (loss).” Interest and dividend income from these investments is reported in “Net investment income.”

Equity securities, at fair value is comprised of common stock, mutual fund shares and non-redeemable preferred stock carried at fair value. Realized and unrealized gains and losses on these investments are reported in “Other income (loss),” and dividend income is reported in “Net investment income” on the ex-dividend date.

Commercial mortgage and other loans consists of commercial mortgage loans, agricultural property loans, as well as certain other collateralized and uncollateralized loans. Uncollateralized loans primarily represent reverse dual currency loans and corporate loans held by the Company’s international insurance operations.

Commercial mortgage and other loans originated and held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses, and net of the CECL allowance. Certain off-balance sheet credit exposures (e.g., indemnification of serviced mortgage loans, and certain unfunded mortgage loan commitments where the Company cannot unconditionally cancel the commitment) are also subject to a CECL allowance. See Note 23 for additional information.

The Company carries certain commercial mortgage loans originated within the Company’s commercial mortgage operations at fair value where the fair value option has been elected. Loans held for sale where the Company has not elected the fair value option are carried at the lower of cost or fair value. Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. Interest income, and the amortization of the related premiums or discounts, are included in “Net investment income” under the effective yield method. Prepayment fees are also included in “Net investment income.”

Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related ASUs, using a modified retrospective method for certain financial assets carried at amortized cost and certain off-balance sheet exposures. Adoption of these ASUs requires an entity to estimate lifetime credit losses for certain financial assets carried at amortized cost and certain off-balance sheet exposures based on relevant information about past events, current conditions, and reasonable and supportable forecasts that may affect the collectability of reported amounts. The most significant impact is that modifications made to the Company’s process for measuring credit losses for its commercial mortgage and other loans class classified as held for investment. The impact of the standard resulted in a decrease to “Total assets” of $122 million ($115 million of this decrease was recorded for commercial mortgage and other loans), a decrease to “Total liabilities” of $23 million, and a decreased to “Retained earnings” of $99 million upon adoption on January 1, 2020.

The CECL allowance represents the Company’s best estimate of expected credit losses over the remaining life of the assets or off-balance sheet credit exposures. The determination of the allowance considers historical credit loss experience, current conditions, and reasonable and supportable forecasts. Prior to the adoption of ASU 2016-13, the allowance was based upon credit losses that were probable of occurring for recognized loans, not an estimate of credit losses that may occur over the remaining life of the asset.

The allowance is calculated separately for commercial mortgage loans, agricultural mortgage loans, and other collateralized and uncollateralized loans. For commercial mortgage and agricultural mortgage loans, the allowance is calculated using an internally developed CECL model that pools together loans that share similar risk characteristics. Similar risk characteristics used to create the pools include, but are not limited to, vintage, maturity, credit rating, and collateral type.

Key inputs to the CECL model include unpaid principal balances, internal credit ratings, annual expected loss factors, average lives of the loans adjusted for prepayment considerations, current and historical interest rate assumptions, and other

factors influencing the Company’s view of the current stage of the economic cycle and future economic conditions. Subjective considerations include a review of whether historical loss experience is representative of current market conditions and the Company’s view of the credit cycle. Model assumptions and factors are reviewed and updated as appropriate. Information about certain key inputs is detailed below.

Key factors in determining the internal credit ratings for commercial mortgage and agricultural mortgage loans include loan-to-value and debt-service-coverage ratios. Other factors include amortization, loan term, and estimated market value growth rate and volatility for the property type and region. The loan-to-value ratio compares the carrying amount of the loan to the fair value of the underlying property or properties collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the carrying amount of the loan exceeds the collateral value. A loan-to-value ratio less than 100% indicates an excess of collateral value over the carrying amount of the loan. The debt service coverage ratio is a property’s net operating income as a percentage of its debt service payments. Debt service coverage ratios less than 1.0 indicates that property operations do not generate enough income to cover the loan’s current debt payments. A debt service coverage ratio greater than 1.0 indicates an excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company’s periodic review of the commercial mortgage loan and agricultural property loan portfolios, which includes an internal appraisal of the underlying collateral value. The Company’s periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company’s commercial mortgage and agricultural loan portfolios.

Annual expected loss rates are based on historical default and loss experience factors. Using average lives, the annual expected loss rates are converted into life-of-loan loss expectations.

When individual loans no longer have the credit risk characteristics of the commercial or agricultural mortgage loan pools, they are removed from the pools and are evaluated individually for an allowance. The allowance is determined based on the outstanding loan balance less the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The CECL allowance on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. The change in allowance is reported in “Realized investment gains (losses), net.” As it relates to unfunded commitments that are in scope of this guidance, the CECL allowance is reported in “Other liabilities,” and the change in the allowance is reported in “Realized investment gains (losses), net.”

The CECL allowance for other collateralized and uncollateralized loans (e.g., corporate loans) carried at amortized cost is determined based on probability of default and loss given default assumptions by sector, credit quality and average lives of the loans. Additions to, or releases of, the allowance are reported in “Realized investment gains (losses), net.”

Once the Company has deemed a portion of the amortized cost to be uncollectible, the uncollectible portion of allowance is removed from the balance sheet by writing down the amortized cost basis of the loan. The carrying amount of the loan is not adjusted for subsequent recoveries in value.

Interest received on loans that are past due is either applied against the principal or reported as net investment income based on the Company’s assessment as to the collectability of the principal. The Company defines “past due” as principal or interest not collected at least 30 days past the scheduled contractual due date. See Note 3 for additional information about the Company’s past due loans.

The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged against interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established.

Commercial mortgage and other loans are occasionally restructured in a troubled debt restructuring (“TDR”). These restructurings generally include one or more of the following: full or partial payoffs outside of the original contract terms; changes to interest rates; extensions of maturity; or additions or modifications to covenants. Additionally, the Company may

accept assets in full or partial satisfaction of the debt as part of a TDR. When restructurings occur, they are evaluated individually to determine whether the restructuring or modification constitutes a TDR as defined by authoritative accounting guidance. If the borrower is experiencing financial difficulty and the Company has granted a concession, the restructuring, including those that involve a partial payoff or the receipt of assets in full satisfaction of the debt is deemed to be a TDR. When there is a reasonable expectation that the Company will execute a TDR, all effects of the potential restructuring are considered for the estimation of the CECL allowance.

When a loan is modified in a TDR, the CECL allowance of the loan is remeasured using the modified terms and the loan’s original effective yield, and the allowance is adjusted accordingly. The loan will be evaluated to determine whether the loan no longer has similar credit risk characteristics of the commercial or agricultural mortgage loan pools and need to be evaluated for an allowance on an individual basis. Subsequent to the modification, income is recognized prospectively based on the modified terms of the loan.

In a TDR where the Company receives assets in full satisfaction of the debt, any CECL allowance is reversed and a direct write-down of the loan is recorded for the amount of the allowance, and any additional loss, net of recoveries, or any gain is recorded for the difference between the fair value of the assets received and the recorded investment in the loan. When assets are received in partial settlement, the same process is followed, and the remaining loan is evaluated prospectively for credit impairment based on the CECL allowance process noted above.

The Company’s PGIM business provides commercial mortgage origination, underwriting and servicing for certain government sponsored entities (“GSEs”). The Company has agreed to indemnify the GSEs for a portion of the credit risk associated with certain of the mortgages it services. Management has established a CECL allowance that factors in historical loss information, current conditions and reasonable and supportable forecasts. The allowance also considers the remaining lives of the loans subject to the indemnification. The CECL allowance is included in “Other liabilities” and changes in the CECL allowance are reported in “Realized investment gains (losses), net.” See Note 23 for additional information. Prior to the adoption of ASU 2016-13, a credit loss allowance was not required.

Policy loans represents funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in “Net investment income” at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.

Other invested assets consists of the Company’s non-coupon investments in limited partnerships and limited liability companies (“LPs/LLCs”), other than operating joint ventures, as well as wholly-owned investment real estate, derivative assets and other investments. LPs/LLCs interests are accounted for using either the equity method of accounting, or at fair value with changes in fair value reported in “Other income (loss).” The Company’s income from investments in LPs/LLCs accounted for using the equity method, other than the Company’s investments in operating joint ventures, is included in “Net investment income.” The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. In applying the equity method (including assessment for OTTI), the Company uses financial information provided by the investee, generally on a one to three-month lag. The Company consolidates LPs/LLCs in certain other instances where it is deemed to exercise control, or is considered the primary beneficiary of a variable interest entity. See Note 4 for additional information about VIEs.

The Company’s wholly-owned investment real estate consists of real estate which the Company has the intent to hold for the production of income as well as real estate held for sale. Real estate which the Company has the intent to hold for the production of income is carried at depreciated cost less any write-downs to fair value for impairment losses and is reviewed for impairment whenever events or circumstances indicate that the carrying value may not be recoverable. Real estate held for sale is carried at the lower of depreciated cost or fair value less estimated selling costs and is not further depreciated once classified as such. An impairment loss is recognized when the carrying value of the investment real estate exceeds the estimated undiscounted future cash flows (excluding interest charges) from the investment. At that time, the carrying value of the investment real estate is written down to fair value. Decreases in the carrying value of investment real estate held for the production of income due to OTTI are recorded in “Realized investment gains (losses), net.” Depreciation on real estate held for the production of income is computed using the straight-line method over the estimated useful lives of the properties and is included in “Net investment income.”

Short-term investments primarily consists of highly liquid debt instruments with a maturity of twelve months or less and greater than three months when purchased, other than those debt instruments meeting this definition that are included in “Assets supporting experience-rated contractholder liabilities, at fair value.” These investments are generally carried at fair value or

amortized cost that approximates fair value and include certain money market investments, funds managed similar to regulated money market funds, short-term debt securities issued by government-sponsored entities and other highly liquid debt instruments.

Cash and cash equivalents includes cash on hand, amounts due from banks, certain money market investments, funds managed similar to regulated money market funds, other debt instruments with maturities of three months or less when purchased, other than cash equivalents that are included in “Assets supporting experience-rated contractholder liabilities, at fair value,” and receivables related to securities purchased under agreements to resell (see also “Securities sold under agreements to repurchase” below). These assets are generally carried at fair value or amortized cost which approximates fair value.

Accrued investment income primarily includes accruals of interest and dividend income from investments that have been earned but not yet received.

Deferred policy acquisition costs represent costs directly related to the successful acquisition of new and renewal insurance and annuity business that have been deferred to the extent such costs are deemed recoverable from future profits. Such DAC primarily includes commissions, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully acquired contracts. In each reporting period, capitalized DAC is amortized to “Amortization of DAC,” net of the accrual of imputed interest on DAC balances. DAC is subject to periodic recoverability testing. DAC, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI.

For traditional participating life insurance which are included in the Closed Block, DAC is amortized over the expected life of the contracts in proportion to gross margins based on historical and anticipated future experience. Any changes in estimated gross margins on unamortized DAC are reflected in the period such that estimated gross margins are revised on a retrospective basis. DAC related to non-participating traditional individual life insurance and longevity reinsurance contracts is amortized in proportion to gross premiums.

DAC related to universal and variable life products and fixed and variable deferred annuity products are generally deferred and amortized over the expected life of the contracts in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. The Company uses a reversion to the mean approach for equities to derive future equity return assumptions; however, if the projected equity return calculated using this approach is greater than the maximum equity return assumption, the maximum equity return is utilized, and if the projected equity return is negative, the return is floored at 0%. Gross profits also include impacts from the embedded derivatives associated with certain of the optional living benefit features of variable annuity contracts, and index-linked crediting features of certain universal life and annuity contracts and related hedging activities. Total gross profits include both actual gross profits and estimates of gross profits for future periods. The Company regularly evaluates and adjusts DAC balances with a corresponding charge or credit to current period earnings, representing a cumulative adjustment to all prior periods’ amortization, for the impact of actual gross profits and changes in the Company’s projections of estimated future gross profits. Adjustments to DAC balances result from: (i) the annual review of assumptions that reflect the comprehensive review of the assumptions used in estimating gross profits for future periods; (ii) quarterly adjustments for current period experience (also referred to as “experience true-up” adjustments) that reflect the impact of differences between actual gross profits for a given period and the previously estimated expected gross profits for that period; and (iii) quarterly adjustments for market performance (also referred to as “experience unlocking”) that reflect the impact of changes to the Company’s estimate of total gross profits to reflect actual fund performance and market conditions.

For group annuity contracts (other than single premium group annuities), acquisition costs are generally deferred and amortized over the expected life of the contracts in proportion to gross profits. For group corporate-, bank- and trust-owned life insurance contracts, acquisition costs are generally deferred and amortized in proportion to lives insured. For single premium immediate annuities with life contingencies, single premium group annuities, including non-participating group annuity contracts, and single premium structured settlements with life contingencies, all acquisition costs are charged to expense immediately because generally all premiums are recognized as revenue at the inception of the contract. For funding agreement notes contracts, single premium structured settlement contracts without life contingencies, and single premium immediate annuities without life contingencies, acquisition expenses are deferred and amortized over the expected life of the contracts using the interest method. For other group life and disability insurance contracts and guaranteed investment contracts (“GICs”), acquisition costs are expensed as incurred.

For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. If policyholders surrender traditional life insurance policies in exchange for life insurance policies that do not have fixed and guaranteed terms, the Company immediately charges to expense the remaining unamortized DAC on the surrendered policies. For other internal replacement transactions, except those that involve the addition of a nonintegrated contract feature that does not change the existing base contract, the unamortized DAC is immediately charged to expense if the terms of the new policies are not substantially similar to those of the former policies. If the new terms are substantially similar to those of the earlier policies, the DAC is retained with respect to the new policies and amortized over the expected life of the new policies. See Note 7 for additional information regarding DAC.

Value of business acquired represents identifiable intangible assets to which a portion of the purchase price in a business acquisition is attributed under the application of purchase accounting. VOBA represents an adjustment to the stated value of in-force insurance contract liabilities to present them at fair value, determined as of the acquisition date. VOBA balances are subject to recoverability testing, in the manner in which they were acquired. The Company has established a VOBA asset primarily for its acquired life insurance products, accident and health products with fixed benefits, deferred annuity contracts, and defined contribution and defined benefit businesses. As of December 31, 2021, the majority of the VOBA balance relates to the 2011 acquisition of AIG Star Life Insurance Co., Ltd, AIG Edison Life Insurance Company, and AIG Financial Assurance Japan K.K. and AIG Edison Service Co., Ltd. (collectively, the “Star and Edison Businesses”.) The Company amortizes VOBA over the anticipated life of the acquired contracts using the same methodology and assumptions used to amortize DAC. The Company records amortization of VOBA in “General and administrative expenses.” VOBA, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. See Note 8 for additional information regarding VOBA.

Assets held-for-sale consists of assets associated with pending business dispositions. The Company classifies a business as held-for-sale when management has approved or received approval from the Board to sell the business, the sale is probable to be completed within a year and certain other specified criteria are met. The business classified as held-for-sale is recorded at the lower of carrying value or estimated fair value, less costs to sell. If the carrying value of the business exceeds its estimated fair value, less costs to sell, a loss is recognized and reported in “Other income (loss)” when the criteria for the held-for-sale classification as described above are met. If the estimated fair value, less costs to sell, exceeds the carrying value of the business, the gain is recorded in “Other income (loss)” when the sale is completed. See Note 1 for additional information on the pending business dispositions classified as held-for-sale, including the composition of assets included as “Assets held-for-sale".

Other assets consists primarily of prepaid pension benefit costs (see Note 18), certain restricted assets (e.g., cash and cash equivalents), trade receivables, goodwill and other intangible assets, “right-of-use” lease assets (see “Other liabilities” below), DSI, the Company’s investments in operating joint ventures, property and equipment, reinsurance recoverables (see “Reinsurance” below), and receivables resulting from sales of securities that had not yet settled at the balance sheet date.

Trade receivables primarily relate to Assurance IQ and are reported net of the CECL allowance. The CECL allowance considers the credit quality of the counterparties and is generally determined based on probability of default and loss given default assumptions. Additions to or releases of the allowance are reported in “General and administrative expenses.”

Property and equipment are carried at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of the related assets, which generally range from 3 to 40 years.

As a result of certain acquisitions, the Company recognizes an asset for goodwill representing the excess of cost over the net fair value of the assets acquired and liabilities assumed. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. A reporting unit is an operating segment, or a unit one level below the operating segment if discrete financial information is prepared and regularly reviewed by management at that level. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

The Company tests goodwill for impairment annually as of December 31 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Accounting guidance provides for an optional qualitative assessment for testing goodwill impairment that may allow companies to skip the quantitative test. As part of the annual goodwill impairment test, the Company estimates the fair value of the reporting units by applying the quantitative test, which involves comparing each reporting unit’s fair value to its carrying value including goodwill. If the fair value of a reporting unit exceeds its carrying value, the applicable goodwill is considered not to

be impaired. If the carrying value exceeds fair value, goodwill is reduced and an impairment charge to income is recognized for the excess. The measurement of a goodwill impairment loss includes the related income tax effect from any tax deductible goodwill. The impairment loss cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted. Management is required to make significant estimates in determining the fair value of a reporting unit including, but not limited to: projected revenues and operating margins, applicable discount and growth rates, and comparative market multiples. See Note 10 for additional information on goodwill, including the recorded impairment charge in 2021.

The Company offered various types of sales inducements to policyholders related to fixed and variable deferred annuity contracts. The Company defers sales inducements and amortizes them over the expected life of the policy using the same methodology and assumptions used to amortize DAC. Sales inducement balances are subject to periodic recoverability testing. The Company records amortization of DSI in “Interest credited to policyholders’ account balances.” DSI, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. See Note 13 for additional information regarding sales inducements.

Identifiable intangible assets primarily include customer relationships and mortgage servicing rights and are recorded net of accumulated amortization. The Company tests identifiable intangible assets for impairment on an annual basis as of December 31 of each year or whenever events or circumstances suggest that the carrying value of an identifiable intangible asset may exceed the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If this condition exists and the carrying value of an identifiable intangible asset exceeds its fair value, the excess is recognized as an impairment and is recorded as a charge against net income. Measuring intangible assets requires the use of estimates. Significant estimates include the projected net cash flow attributable to the intangible asset and the rate at which future net cash flows are discounted for purposes of estimating fair value, as applicable. See Note 10 for additional information regarding identifiable intangible assets.

Investments in operating joint ventures are generally accounted for under the equity method. The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. See Note 9 for additional information on investments in operating joint ventures.

Leases are recorded on the balance sheet as “right-of-use” assets and lease liabilities within “Other assets” and “Other liabilities” respectively. Leases are classified as either operating or finance leases and lease expense is recognized within “General and administrative expenses.” As a lessee, for operating leases, total lease expense is recognized using a straight-line method. Finance leases are treated as the purchase of an asset on a financing basis. Additionally, as a lessor, for sales-type and direct financing leases, the Company derecognizes the carrying value of the leased asset that is considered to have been transferred to a lessee and records a lease receivable and residual asset (“receivable and residual” approach). See Note 11 for additional information regarding leases.

Separate account assets represents segregated funds that are invested for certain policyholders, pension funds and other customers. The assets consist primarily of equity securities, fixed maturities, real estate-related investments, real estate mortgage loans, short-term investments and derivative instruments and are reported at fair value. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. The investment income and realized investment gains or losses from separate account assets generally accrue to the policyholders and are not included in the Company’s results of operations. Mortality, policy administration and surrender charges assessed against the accounts are included in “Policy charges and fee income.” Asset management fees charged to the accounts are included in “Asset management and service fees.” Seed money that the Company invests in separate accounts is reported in the appropriate general account asset line. Investment income and realized investment gains or losses from seed money invested in separate accounts accrue to the Company and are included in the Company’s results of operations. See Note 13 for additional information regarding separate account arrangements with contractual guarantees. See also “Separate account liabilities” below.

LIABILITIES

Future policy benefits represents liabilities that primarily consist of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums (the portion of the gross premium required to provide for all expected future benefits and expenses). For individual traditional participating life insurance products, the mortality and interest rate assumptions applied are those used to calculate the policies’ guaranteed cash surrender values. For life insurance, other than individual traditional

participating life insurance, and annuity and disability products, expected mortality and morbidity are generally based on Company experience, industry data and/or other factors. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality, morbidity and interest rate assumptions are “locked-in” upon the issuance of new insurance or annuity business with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by recognizing a premium deficiency. A premium deficiency exists when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses. If a premium deficiency is recognized, the assumptions without a provision for the risk of adverse deviation as of the premium deficiency test date are locked-in and used in subsequent valuations. The net reserves continue to be subject to premium deficiency testing. In determining if a premium deficiency related to short-duration contracts exists, the Company considers, among other factors, anticipated investment income. Any adjustments to future policy benefit reserves related to net unrealized gains on securities classified as available-for-sale are included in AOCI. In certain instances, the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. In these situations, accounting standards require that an additional liability (Profits Followed by Losses or “PFL” liability) be recognized by an amount necessary to sufficiently offset the losses that would be recognized in later years. Historically, PFL liabilities have been predominantly associated with certain universal life contracts that measure GAAP reserves using a dynamic approach, and accordingly, are updated each quarter, using current in-force and market data, and as part of the annual assumption update, such that the liability as of each measurement date represents the Company’s current estimate of the present value of the amount necessary to offset anticipated future losses. See Note 12 for additional information regarding future policy benefits.

The Company’s liability for future policy benefits also includes a liability for unpaid claims and claim adjustment expenses. The Company does not establish claim liabilities until a loss has been incurred. However, unpaid claims and claim adjustment expenses include estimates of claims that the Company believes have been incurred but have not yet been reported as of the balance sheet date. The Company’s liability for future policy benefits also includes net liabilities for guarantee benefits related to certain long-duration life and annuity contracts, which are discussed more fully in Note 13, and deferred profits.

Policyholders’ account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is primarily associated with the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance, as applicable. These policyholders’ account balances also include provision for benefits under non-life contingent payout annuities and certain unearned revenues. See Note 12 for additional information regarding policyholders’ account balances. Policyholders’ account balances also include amounts representing the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products. For additional information regarding the valuation of these embedded derivatives, see Note 6.

Policyholders’ dividends includes dividends payable to policyholders and the policyholder dividend obligation associated with the participating policies included in the Closed Block. The dividends payable for participating policies included in the Closed Block are determined at the end of each year for the following year by the Board of Directors of The Prudential Insurance Company of America (“PICA”) based on its statutory results, capital position, ratings, and the emerging experience of the Closed Block. The policyholder dividend obligation represents amounts expected to be paid to Closed Block policyholders as an additional policyholder dividend unless otherwise offset by future Closed Block performance. Any adjustments to the policyholder dividend obligation related to net unrealized gains (losses) on securities classified as available-for-sale are included in AOCI. For additional information on the policyholder dividend obligation, see Note 15. The dividends payable for policies other than the participating policies included in the Closed Block include dividends payable in accordance with certain group and individual insurance policies.

Securities sold under agreements to repurchase represents liabilities associated with securities repurchase agreements that are used primarily to earn spread income. As part of securities repurchase agreements, the Company transfers U.S. government and government agency securities to a third-party and receives cash as collateral. For securities repurchase agreements, the cash received is typically invested in cash equivalents, short-term investments or fixed maturities. Receivables associated with securities purchased under agreements to resell are generally reflected as cash equivalents. As part of securities resale agreements, the Company invests cash and receives as collateral U.S. government securities or other debt securities.

Securities repurchase and resale agreements that satisfy certain criteria are treated as secured borrowing or secured lending arrangements. These agreements are carried at the amounts at which the securities will be subsequently resold or reacquired, as specified in the respective transactions. For securities purchased under agreements to resell, the Company’s policy is to take possession or control of the securities either directly or through a third-party custodian. These securities are

valued daily and additional securities or cash collateral is received, or returned, when appropriate to protect against credit exposure. Securities to be resold are the same, or substantially the same, as the securities received. The majority of these transactions are with large brokerage firms and large banks. For securities sold under agreements to repurchase, the market value of the securities to be repurchased is monitored, and additional collateral is obtained where appropriate, to protect against credit exposure. The Company obtains collateral in an amount at least equal to 95% of the fair value of the securities sold. Securities to be repurchased are the same, or substantially the same, as those sold. The majority of these transactions are with highly rated money market funds. Income and expenses related to these transactions executed within the insurance companies used to earn spread income are reported as “Net investment income.”

Cash collateral for loaned securities represents liabilities to return cash proceeds from security lending transactions. Securities lending transactions are used primarily to earn spread income. As part of securities lending transactions, the Company transfers U.S. and foreign debt and equity securities, as well as U.S. government and government agency securities, and receives cash as collateral. Cash proceeds from securities lending transactions are primarily used to earn spread income, and are typically invested in cash equivalents, short-term investments or fixed maturities. Securities lending transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company’s securities lending transactions are with large brokerage firms and large banks. Income and expenses associated with securities lending transactions used to earn spread income are reported as “Net investment income.”

The Company also enters into securities lending transactions where non-cash collateral, typically U.S. government, Japanese government, or other sovereign bonds are received. The collateral received is not reported on the Company’s Consolidated Statements of Financial Position. In these transactions, the Company receives a fee and obtains collateral in an amount equal to 102% to 105% of the fair value of the loaned securities. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of these transactions are with large brokerage firms and large banks. Income is reported as “Net investment income.”

Income taxes primarily represents the net deferred tax liability and the Company’s estimated taxes payable for the current year and open audit years.

The Company and its includible domestic subsidiaries file a consolidated federal income tax return that includes both life insurance companies and non-life insurance companies. Subsidiaries operating outside the U.S. are taxed, and income tax expense is recorded, based on applicable foreign statutes. See Note 16 for a discussion of certain non-U.S. jurisdictions for which the Company assumes repatriation of earnings.

Items required by tax regulations to be included in the tax return may differ from the items reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements may be different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in the Company’s tax return, and some differences are temporary, reversing over time, such as valuation of insurance reserves. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years for which the Company has already recorded the tax benefit in the Company’s Consolidated Statements of Operations. Deferred tax liabilities generally represent tax expense recognized in the Company’s financial statements for which payment has been deferred, or expenditures for which the Company has already taken a deduction in the Company’s tax return but have not yet been recognized in the Company’s financial statements. Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes.

The application of U.S. GAAP requires the Company to evaluate the recoverability of the Company’s deferred tax assets and establish a valuation allowance if necessary to reduce the Company’s deferred tax assets to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. See Note 16 for a discussion of factors considered when evaluating the need for a valuation allowance.

The U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act of 2017”) included two new tax provisions that could impact the Company’s effective tax rate and cash tax payments. The Base Erosion and Anti-Abuse Tax (“BEAT”) taxes modified taxable income, starting at a rate of 10% in 2019 and increasing to 12.5% in 2026, and is due if the calculated BEAT amount that is determined without the benefit of foreign and certain tax credits is greater than the regular corporate tax in any given year. In general, modified taxable income is calculated by adding back to a taxpayer’s regular taxable income the amount of certain “base erosion tax benefits” with respect to payments to foreign affiliates, as well as the “base erosion percentage” of any net

operating loss deductions. Final Regulations confirmed that benefit and claim payments made by our U.S. insurance business to our foreign affiliates on reinsurance assumed by the U.S. affiliates are not base erosion payments. The Global Intangible Low-Taxed Income (“GILTI”) provision applies a minimum U.S. tax to earnings of consolidated foreign subsidiaries in excess of a 10% deemed return on tangible assets of foreign subsidiaries by imposing the U.S. tax rate to 50% of earnings of such foreign affiliates and provides for a partial foreign tax credit for foreign income taxes. The amount of tax in any period on GILTI can depend on annual differences between U.S. taxable income recognition rules and taxable income recognition rules in the country of operations and the overall taxable income of U.S. operations, as well as U.S. expense allocation rules which limit the amount of foreign tax credits that can be applied to reduce the U.S. tax on the GILTI provision. Under certain circumstances, the taxable income of U.S. operations may cause more than 50% of earnings of foreign affiliates to be subject to the GILTI provision. In years that the PFI consolidated federal income tax return reports a net operating loss or has a loss attributable to U.S. sources of operations, the GILTI provision would cause a loss of U.S. tax benefits for some or all of those losses, effectively increasing the tax on foreign earnings. The Company accounts for the effects of the BEAT and GILTI provisions as a period cost if and when incurred.

U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process. First, the Company determines whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. The Company measures the tax position as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date.

The Company’s liability for income taxes includes a liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by the Internal Revenue Service (“IRS”) or other taxing jurisdictions. Audit periods remain open for review until the statute of limitations has passed. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards (“tax attributes”), the statute of limitations does not close, to the extent of these tax attributes, until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. See Note 16 for additional information regarding income taxes.

Short-term and long-term debt liabilities are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium and debt issue costs. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Interest expense is generally presented within “General and administrative expenses” in the Company’s Consolidated Statements of Operations. Interest expense may also be reported within “Net investment income” for certain activity, as prescribed by specialized industry guidance. Short-term debt is debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. The short-term debt caption may exclude short-term debt items for which the Company has the intent and ability to refinance on a long-term basis in the near-term. See Note 17 for additional information regarding short-term and long-term debt.

Liabilities held-for-sale consists of liabilities associated with pending business dispositions. See “Assets held-for-sale" above for further description of the held-for-sale classification. See Note 1 for additional information on the pending business dispositions, including the composition of liabilities included as “Liabilities held-for-sale”.

Other liabilities consists primarily of trade payables, lease liabilities (see “Other assets” above), pension and other employee benefit liabilities (see Note 18), derivative liabilities (see “Derivative Financial Instruments” below), reinsurance payables (see “Reinsurance” below), and payables resulting from purchases of securities that had not yet settled at the balance sheet date.

Notes issued by consolidated variable interest entities represents notes issued by certain asset-backed investment vehicles, primarily collateralized loan obligations (“CLOs”), which the Company is required to consolidate. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs. The Company has elected the fair value option for the majority of these notes, and has based the fair value on the corresponding bank loan collateral. Changes in fair value are reported in “Other income (loss).”

Separate account liabilities primarily represents the contractholders’ account balances in separate account assets and to a lesser extent borrowings of the separate account, and will be equal and offsetting to total separate account assets. See also “Separate account assets” above.

Commitments and contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, they are included in the accrual. These accruals are generally reported in “Other liabilities.”

REVENUES AND BENEFITS AND EXPENSES

Insurance Revenue and Expense Recognition

Premiums from individual life products (other than universal and variable life contracts), as well as health insurance and long-term care products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium is generally deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized using the net level premium valuation methodology.

Premiums from non-participating group annuities with life contingencies, single premium structured settlements with life contingencies and single premium immediate annuities with life contingencies are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium is generally deferred and recognized into revenue based on expected future benefit payments. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized using the net level premium valuation methodology.

Certain individual annuity contracts provide the contractholder a guarantee that the benefit received upon death or annuitization will be no less than a minimum prescribed amount. These benefits are accounted for as insurance contracts. The Company also provides contracts with certain living benefits which are considered embedded derivatives. See Note 13 for additional information regarding these contracts and Note 6 for information regarding the valuation of these embedded derivatives.

Amounts received as payment for universal or variable group and individual life contracts, deferred fixed or variable annuities, structured settlements and other contracts without life contingencies, and participating group annuities are reported as deposits to “Policyholders’ account balances” and/or “Separate account liabilities.” Revenues from these contracts are reflected in “Policy charges and fee income” consisting primarily of fees assessed during the period against the policyholders’ account balances for mortality and other benefit charges, policy administration charges and surrender charges. In addition to fees, the Company earns investment income from the investment of deposits in the Company’s general account portfolio. Fees assessed that represent compensation to the Company for services to be provided in future periods and certain other fees are generally deferred and amortized into revenue over the life of the related contracts in proportion to estimated gross profits. Benefits and expenses for these products include claims in excess of related account balances, expenses of contract administration, interest credited to policyholders’ account balances and amortization of DAC, DSI and VOBA.

Policyholders’ account balances also include amounts representing the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products where changes in the value of the embedded derivatives are recorded though “Realized investment gains (losses), net”. For additional information regarding the valuation of these embedded derivatives, see Note 6.

For group life (other than universal and variable group life contracts) and disability insurance, premiums are generally recognized over the period to which the premiums relate in proportion to the amount of insurance protection provided. Claim and claim adjustment expenses are recognized when incurred.

Asset management and service fees principally includes asset-based asset management fees, which are recognized in the period in which the services are performed. In certain asset management fee arrangements, the Company is entitled to receive performance-based incentive fees when the return on assets under management exceeds certain benchmark returns or other performance targets. The Company may be required to return all, or part, of such performance-based incentive fees depending on future performance of these assets relative to performance benchmarks. The Company records performance-based incentive fee revenue when the contractual terms of the asset management fee arrangement have been satisfied and it is probable that a significant reversal in the amount of the fee will not occur. Under this principle the Company records a deferred performance-

based incentive fee liability to the extent it receives cash related to the performance-based incentive fee prior to meeting the revenue recognition criteria delineated above.

Other income (loss) includes realized and unrealized gains or losses from investments classified “Fixed maturities, trading, at fair value,” “Assets supporting experience-rated contractholder liabilities, at fair value,” “Equity securities, at fair value,” and “Other invested assets” that are measured at fair value and consolidated entities that follow specialized investment company fair value accounting. “Other income (loss)” also includes gains and losses primarily related to the remeasurement of foreign currency denominated assets and liabilities, as discussed in more detail under “Foreign Currency” below.

Additionally, for digital insurance brokerage placement services provided by Assurance IQ, the Company earns both initial and renewal commissions as compensation for the placement of insurance policies with insurance carriers. At the effective date of the policy, the Company records within “Other income (loss)” the expected lifetime revenue for the initial and renewal commissions considering estimates of the timing of future policy cancellations. These estimates are reassessed each reporting period and any changes in estimates are reflected in the current period.

Realized investment gains (losses), net includes realized gains or losses from sales and maturities of investments, changes to the allowance for credit losses, other impairments, fair value changes on mortgage loans where the fair value option has been elected, and derivative gains or losses. The derivative gains or losses include the impact of maturities, terminations and changes in fair value of the derivative instruments, including embedded derivatives, and other hedging instruments. Realized investment gains (losses) from the sales of securities are generally calculated using the specific identification method, with the exception of some of the Company’s International Businesses portfolios where the average cost method is used.

OTHER ACCOUNTING POLICIES

Share-Based Payments

The Company applies the fair value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans. Excess tax benefits (deficits) are recorded in earnings and represent the cumulative difference between the actual tax benefit realized and the amount of deferred tax assets recorded attributable to shared-based payment transactions.

The Company accounts for non-employee stock options using the fair value method in accordance with authoritative guidance and related interpretations on accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services.

Earnings Per Share

Earnings per share of Common Stock for 2021, 2020 and 2019 reflects the consolidated earnings of Prudential Financial. Basic earnings per share is computed by dividing available income attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share includes the effect of all dilutive potential common shares that were outstanding during the period. See Note 20 for additional information.

Foreign Currency

The currency in which the Company prepares its financial statements (the “reporting currency”) is the U.S. dollar. Assets, liabilities and results of foreign operations are recorded based on the functional currency of each foreign operation. The determination of the functional currency is based on economic facts and circumstances pertaining to each foreign operation. The local currencies of the Company’s foreign operations are typically their functional currencies with the most significant exception being the Company’s Japanese operations where multiple functional currencies exist.

There are two distinct processes for expressing these foreign transactions and balances in the Company’s financial statements: foreign currency measurement and foreign currency translation. Foreign currency measurement is the process by which transactions in foreign currencies are expressed in the functional currency. Gains and losses resulting from foreign currency measurement are reported in current earnings in “Other income (loss).” Foreign currency translation is the process of expressing a foreign entity’s functional currency financial statements in the reporting currency. Assets and liabilities of foreign operations and subsidiaries reported in currencies other than U.S. dollars are translated at the exchange rate in effect at the end of the period. Revenues, benefits and other expenses are translated at the average rate prevailing during the period. The effects of translating the statements of operations and financial position of non-U.S. entities with functional currencies other than the

U.S. dollar are included, net of related qualifying hedge gains and losses and income taxes, in “Foreign currency translation adjustment,” a component of AOCI.

Derivative Financial Instruments

Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk (“NPR”) used in valuation models. Derivative financial instruments generally used by the Company include swaps, futures, forwards and options and may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (OTC-cleared), while others are bilateral contracts between two counterparties (OTC-bilateral). Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models.

Derivatives are used to manage the interest rate and currency characteristics of assets or liabilities and to mitigate volatility of expected non-functional currency earnings and net investments in foreign operations resulting from changes in currency exchange rates. Additionally, derivatives may be used to reduce exposure to interest rate, credit, foreign currency and equity risks associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. As discussed in detail below, and in Note 5, all realized and unrealized changes in fair value of derivatives are recorded in current earnings, with the exception of cash flow hedges and hedges of net investments in foreign operations. The Company may also enter into intercompany derivatives, the results of which ultimately eliminate in consolidation over the term of the instrument; however, where applicable, derivative results are included in business gross profits which may impact the pattern by which DAC and other assets are amortized. Cash flows from derivatives are reported in the operating, investing, or financing activities sections in the Consolidated Statements of Cash Flows based on the nature and purpose of the derivative.

Derivatives are recorded either as assets, within “Other invested assets,” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with counterparties for which a master netting arrangement has been executed.

The Company designates derivatives as either (1) a hedge of the fair value of a recognized asset or liability or unrecognized firm commitment (“fair value” hedge); (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); (3) a foreign currency fair value or cash flow hedge (“foreign currency” hedge); (4) a hedge of a net investment in a foreign operation; or (5) a derivative that does not qualify for hedge accounting.

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship.

The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as fair value, cash flow, or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. Hedges of a net investment in a foreign operation are linked to the specific foreign operation.

When a derivative is designated as a fair value hedge and is determined to be highly effective, changes in its fair value, along with changes in the fair value of the hedged asset or liability (including losses or gains on firm commitments), are reported on a net basis in the Consolidated Statements of Operations, generally in “Realized investment gains (losses), net.” When swaps are used in hedge accounting relationships, periodic settlements are recorded in the same Consolidated Statements of Operations line as the related settlements of the hedged items.

When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in AOCI until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the Consolidated Statements of Operations line item associated with the hedged item.

When a derivative is designated as a foreign currency hedge and is determined to be highly effective, changes in its fair value are recorded either in current period earnings if the hedge transaction is a fair value hedge (e.g., a hedge of a recognized foreign currency asset or liability) or in AOCI if the hedge transaction is a cash flow hedge (e.g., a foreign currency

denominated forecasted transaction). When a derivative is used as a hedge of a net investment in a foreign operation, its change in fair value is accounted for in the same manner as a translation adjustment (i.e., reported in the cumulative translation adjustment account within AOCI).

If it is determined that a derivative no longer qualifies as an effective fair value or cash flow hedge or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” In this scenario, the hedged asset or liability under a fair value hedge will no longer be adjusted for changes in fair value associated with the hedged risk and the existing basis adjustment is amortized to the Consolidated Statements of Operations line associated with the asset or liability. The component of AOCI related to discontinued cash flow hedges is reclassified to the Consolidated Statements of Operations line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows.

When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, or because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” Any asset or liability that was recorded pursuant to recognition of the firm commitment is removed from the balance sheet and recognized currently in “Realized investment gains (losses), net.” Gains and losses that were in AOCI pursuant to the cash flow hedge of a forecasted transaction are recognized immediately in “Realized investment gains (losses), net.”

If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in “Realized investment gains (losses), net” without considering changes in the fair value of the economically associated assets or liabilities.

The Company is a party to financial instruments that contain derivative instruments that are “embedded” in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in “Realized investment gains (losses), net.” For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to carry the entire instrument at fair value and report it within “Other invested assets” or “Other liabilities.”

Reinsurance

For each of its reinsurance contracts, the Company determines if the contract provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. The Company reviews all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.

The Company participates in reinsurance arrangements in various capacities as either the ceding entity or as the reinsurer (i.e., assuming entity). See Note 14 for additional information about the Company’s reinsurance arrangements. Reinsurance assumed business is generally accounted for consistent with direct business. Amounts currently recoverable under reinsurance agreements are included in “Other assets” and amounts payable are included in “Other liabilities.” Revenues and benefits and expenses include amounts assumed under reinsurance agreements and are reflected net of reinsurance ceded.

Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements. Reinsurance recoverables are reported net of the CECL allowance. The CECL allowance considers the credit quality of the reinsurance counterparty and is generally determined based on the probability of default and loss given default assumptions, after considering any applicable collateral arrangements. Additions to or releases of the allowance are reported in “Policyholders’ benefits”. Reinsurance premiums, commissions, expense reimbursements, benefits and reserves related to reinsured long-duration contracts under coinsurance arrangements are accounted for over the life of the underlying reinsured contracts using assumptions consistent with those used to account for the underlying contracts. Coinsurance arrangements contrast with the Company’s yearly renewable term arrangements, where only mortality risk is transferred to the

reinsurer and premiums are paid to the reinsurer to reinsure that risk. The mortality risk that is reinsured under yearly renewable term arrangements represents the difference between the stated death benefits in the underlying reinsured contracts and the corresponding reserves or account value carried by the Company on those same contracts. The premiums paid to the reinsurer are based upon negotiated amounts, not on the actual premiums paid by the underlying contract holders to the Company. As yearly renewable term arrangements are usually entered into by the Company with the expectation that the contracts will be in force for the lives of the underlying policies, they are considered to be long-duration reinsurance contracts. The cost of reinsurance for universal life products is generally recognized based on the gross assessments of the underlying direct policies. The cost of reinsurance for term insurance products is generally recognized in proportion to yearly renewable term premiums over the life of the underlying policies. The cost of reinsurance related to short-duration reinsurance contracts is accounted for over the reinsurance contract period.

If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in “Other liabilities” and deposits made are included in “Other assets”. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as “Other income (loss)” or “General and administrative expenses,” as appropriate.

RECENT ACCOUNTING PRONOUNCEMENTS

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the current fiscal year and/or those that have been issued but not yet adopted as of December 31, 2021, and as of the date of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.

ASU issued but not yet adopted as of December 31, 2021— ASU 2018-12

ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the FASB on August 15, 2018, and was amended by ASU 2019-09, Financial Services - Insurance (Topic 944): Effective Date, issued in October 2019, and ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application, issued in November 2020. The Company will adopt ASU 2018-12 effective January 1, 2023 using the modified retrospective transition method where permitted, and apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the 2023 financial statements.

The Company has an established governance framework to manage the implementation of the standard. The Company’s implementation efforts continue to progress including, but not limited to, implementing refinements to key accounting policy decisions, modifications to actuarial valuation models, updates to data sourcing capabilities, automation of key financial reporting and analytical processes and updates to internal controls over financial reporting.

ASU 2018-12 will impact, at least to some extent, the accounting and disclosure requirements for all long-duration insurance and investment contracts issued by the Company. While the magnitude of impacts is still being assessed, the Company expects the standard to result in a significant decrease to “Total equity” upon adoption, primarily from remeasuring in-force contract liabilities using current upper-medium grade fixed income instrument yields through “Accumulated other comprehensive income (loss)”. The standard also requires significantly enhanced disclosures. In addition to the significant impacts to the balance sheet upon adoption, the Company also expects an impact to the pattern of earnings emergence following the transition date. Outlined below are four key areas of change, although there are other less significant policy changes not noted below.

ASU 2018-12 Amended Topic

Description

Method of adoption

Effect on the financial statements or other significant matters

Cash flow assumptions used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products

Requires an entity to review and, if necessary, update the cash flow assumptions used to measure the liability for future policy benefits, for both changes in future assumptions and actual experience, at least annually using a retrospective update method with a cumulative catch-up adjustment recorded in a separate line item in the Consolidated Statements of Operations.

An entity may choose one of two adoption methods for the liability for future policy benefits: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) a full retrospective transition method.

The Company will adopt this guidance effective January 1, 2023 using the modified retrospective transition method. As a result of the modified retrospective transition method, the Company expects the vast majority of the impact of updating cash flow assumptions as of the transition date to be reflected in the pattern of earnings in subsequent periods. The Company also expects some decrease to “Retained earnings” upon adoption from cash flow assumption updates isolated to the impact on certain issue year cohorts.

Discount rate assumption used to measure the liability for future policy benefits for non-participating traditional and limited-pay insurance products

Requires discount rate assumptions to be based on an upper-medium grade fixed income instrument yield, which will be updated each quarter with the impact recorded through OCI. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the discount rate assumptions.

As noted above, an entity may choose either a modified retrospective transition method or full retrospective transition method for the liability for future policy benefits. Under either method, for balance sheet remeasurement purposes, the liability for future policy benefits will be remeasured using current discount rates as of either the beginning of the prior year (if early adoption is elected) or the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.

As noted above, the Company will adopt the guidance for the liability for future policy benefits effective January 1, 2023 using the modified retrospective transition method. Upon adoption, the Company expects a decrease to AOCI as a result of remeasuring in-force contract liabilities using current upper-medium grade fixed income instrument yields. The adjustment upon adoption will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates.

Amortization of deferred acquisition costs (DAC) and other balances

Requires DAC and other balances, such as unearned revenue reserves and DSI, to be amortized on a constant level basis over the expected term of the related contract, independent of expected profitability.

An entity may apply one of two adoption methods: (1) a modified retrospective transition method whereby the entity may choose to apply the amendments to contracts in force as of the beginning of the prior year (if early adoption is elected) or as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or (2) if an entity chooses a full retrospective transition method for its liability for future policy benefits, as described above, it is required to also use a full retrospective transition method for DAC and other balances.

The Company will adopt this guidance effective January 1, 2023 using the modified retrospective transition method. Under the modified retrospective transition method, the Company does not expect a significant impact to the balance sheet, other than the impact of the removal of any related amounts in AOCI.

Market Risk Benefits (“MRB”)

Requires an entity to measure all market risk benefits (e.g., living benefit and death benefit guarantees associated with variable annuities) at fair value, and record MRB assets and liabilities separately on the Consolidated Statements of Financial Position. Changes in fair value of market risk benefits are recorded in net income, except for the portion of the change in MRB liabilities attributable to changes in an entity’s NPR, which is recognized in OCI.

An entity shall adopt the guidance for market risk benefits using the retrospective transition method, which includes a cumulative effect adjustment on the balance sheet as of either the beginning of prior year (if early adoption is elected) or the beginning of the earliest period presented. An entity shall maximize the use of relevant observable information and minimize the use of unobservable information in determining the balance of the market risk benefits upon adoption.

The Company will adopt this guidance effective January 1, 2023 using the retrospective transition method. Upon adoption, the Company expects a decrease to “Retained earnings” and offsetting increase to AOCI from reclassifying the cumulative effect of changes in NPR from retained earnings to AOCI. There will also be an impact to “Retained earnings” for the difference between the fair value and carrying value of benefits not currently measured at fair value (e.g., guaranteed minimum death benefits on variable annuities).

Modifications related to COVID-19

We assess modifications to certain fixed income instruments on a case-by-case basis to evaluate whether a TDR has occurred. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") provides a temporary suspension of TDR accounting for certain COVID-19 related modifications where the investment was not more than 30 days past due as of December 31, 2019 (“TDR Relief”). The TDR Relief was set to expire on December 31, 2020, but was extended through December 31, 2021 by the Consolidated Appropriations Act of 2021. The Company elected to apply the TDR Relief beginning in the first quarter of 2021. The TDR Relief does not apply to modifications completed 60 days after the national emergency related to COVID-19 ends, or December 31, 2021, whichever comes earlier. As of December 31, 2021, any such modifications did not have a material impact on the Company's results of operations.

Investments

12 Months Ended

Dec. 31, 2021

Investments [Abstract]

Investments

INVESTMENTS

Fixed Maturity Securities

The following tables set forth the composition of fixed maturity securities (excluding investments classified as trading), as of the dates indicated:


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	26,231	$	5,958	$	31	$	0	$	32,158
Obligations of U.S. states and their political subdivisions	10,445		1,781		8		0		12,218
Foreign government bonds	83,363		11,842		529		7		94,669
U.S. public corporate securities	98,836		13,721		390		12		112,155
U.S. private corporate securities(2)	35,019		2,583		162		58		37,382
Foreign public corporate securities	24,877		2,571		118		21		27,309
Foreign private corporate securities	28,047		1,448		442		16		29,037
Asset-backed securities(3)	11,402		137		14		0		11,525
Commercial mortgage-backed securities	12,490		631		22		0		13,099
Residential mortgage-backed securities(4)	2,749		123		14		0		2,858
Total fixed maturities, available-for-sale(1)(2)	$	333,459	$	40,795	$	1,730	$	114	$	372,410


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Amortized Cost, Net of Allowance
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	833	$	221	$	0	$	1,054	$	0	$	833
Foreign public corporate securities	486		49		0		535		5		481
Foreign private corporate securities	9		0		0		9		0		9


Residential mortgage-backed securities(4)	191		14		0		205		0		191
Total fixed maturities, held-to-maturity(5)	$	1,519	$	284	$	0	$	1,803	$	5	$	1,514

__________

(1)Excludes “Assets held-for-sale” with amortized cost of $13,145 million, fair value of $13,569 million, unrealized gains of $572 million, unrealized losses of $147 million and allowance for credit losses of $1 million. See Note 1 for additional information on the pending dispositions.

(2)Excludes notes with amortized cost of $5,941 million (fair value, $5,995 million), which have been offset with the associated debt under a netting agreement.

(3)Includes credit-tranched securities collateralized loan obligations, education loans, auto loans, credit cards and other asset types.

(4)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(5)Excludes notes with amortized cost of $4,750 million (fair value, $5,394 million), which have been offset with the associated debt under a netting agreement.


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	30,766	$	9,699	$	17	$	0	$	40,448
Obligations of U.S. states and their political subdivisions	10,668		2,144		1		0		12,811
Foreign government bonds	94,110		16,373		239		0		110,244
U.S. public corporate securities	95,299		18,516		213		47		113,555
U.S. private corporate securities(1)	36,894		4,196		134		19		40,937
Foreign public corporate securities	25,857		3,768		64		24		29,537
Foreign private corporate securities	28,668		3,183		226		33		31,592
Asset-backed securities(2)	14,489		176		74		0		14,591
Commercial mortgage-backed securities	15,036		1,288		11		10		16,303
Residential mortgage-backed securities(3)	2,683		205		1		0		2,887
Total fixed maturities, available-for-sale(1)	$	354,470	$	59,548	$	980	$	133	$	412,905


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Amortized Cost, Net of Allowance
	(in millions)
Fixed maturities, held-to-maturity:
Foreign government bonds	$	935	$	270	$	0	$	1,205	$	0	$	935
Foreign public corporate securities	651		68		0		719		9		642
Foreign private corporate securities	87		1		0		88		0		87


Residential mortgage-backed securities(3)	266		20		0		286		0		266
Total fixed maturities, held-to-maturity(4)	$	1,939	$	359	$	0	$	2,298	$	9	$	1,930

__________

(1)Excludes notes with amortized cost of $5,966 million (fair value, $6,100 million), which have been offset with the associated debt under a netting agreement.

(2)Includes credit-tranched securities collateralized by loan obligations, auto loans, education loans, home equity and other asset types.

(3)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(4)Excludes notes with amortized cost of $4,998 million (fair value, $5,821 million), which have been offset with the associated debt under a netting agreement.

The following tables set forth the fair value and gross unrealized losses on available-for-sale fixed maturity securities without an allowance for credit losses aggregated by investment category and length of time that individual fixed maturity securities had been in a continuous unrealized loss position, as of the dates indicated:


	December 31, 2021
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	1,521	$	15	$	269	$	16	$	1,790	$	31
Obligations of U.S. states and their political subdivisions	289		5		71		3		360		8
Foreign government bonds	4,534		244		6,945		282		11,479		526
U.S. public corporate securities	12,403		219		2,947		152		15,350		371
U.S. private corporate securities	4,362		84		848		78		5,210		162
Foreign public corporate securities	3,652		76		802		42		4,454		118
Foreign private corporate securities	6,350		270		1,604		169		7,954		439
Asset-backed securities	6,568		13		170		1		6,738		14
Commercial mortgage-backed securities	921		11		263		11		1,184		22
Residential mortgage-backed securities	751		13		18		1		769		14
Total fixed maturities, available-for-sale(1)	$	41,351	$	950	$	13,937	$	755	$	55,288	$	1,705

__________

(1)Excludes “Assets held-for-sale” with fair value of $4,644 million and gross unrealized losses of $147 million. See Note 1 for additional information on the pending dispositions.


	December 31, 2020
	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	750	$	17	$	0	$	0	$	750	$	17
Obligations of U.S. states and their political subdivisions	73		1		0		0		73		1
Foreign government bonds	6,536		231		39		8		6,575		239
U.S. public corporate securities	3,905		87		1,197		106		5,102		193
U.S. private corporate securities	1,712		52		843		82		2,555		134
Foreign public corporate securities	1,412		30		376		23		1,788		53
Foreign private corporate securities	798		34		2,371		192		3,169		226
Asset-backed securities	4,132		25		4,685		49		8,817		74
Commercial mortgage-backed securities	284		8		93		3		377		11
Residential mortgage-backed securities	116		1		1		0		117		1
Total fixed maturities, available-for-sale	$	19,718	$	486	$	9,605	$	463	$	29,323	$	949

As of December 31, 2021 and 2020, the gross unrealized losses on fixed maturity available-for-sale securities without an allowance were composed of $1,242 million and $636 million, respectively, related to “1” highest quality or “2” high quality securities based on the National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $463 million and $313 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. As of December 31, 2021, the $755 million of gross unrealized losses of twelve months or more were concentrated in the consumer non-cyclical, utility and finance sectors within corporate securities. As of December 31, 2020, the $463 million of gross unrealized losses of twelve months or more were concentrated in the energy, utility and finance sectors within corporate securities.

In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for credit losses related to these fixed maturity securities was not warranted at December 31, 2021. This conclusion was based on a detailed analysis of the underlying credit and cash flows on each security. Gross unrealized losses are primarily attributable to increases in interest rates, general credit spread widening, foreign currency exchange rate movements and the financial condition or near-term prospects of the issuer. As of December 31, 2021, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized cost basis.

The following table sets forth the amortized cost or amortized cost, net of allowance and fair value of fixed maturities by contractual maturities, as of the date indicated:


	December 31, 2021
	Available-for-Sale(1)				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost, Net of Allowance		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	8,049	$	8,454	$	0	$	0
Due after one year through five years	47,965		50,818		482		535
Due after five years through ten years	69,291		75,508		30		32
Due after ten years(2)	181,513		210,148		811		1,031
Asset-backed securities	11,402		11,525		0		0
Commercial mortgage-backed securities	12,490		13,099		0		0
Residential mortgage-backed securities	2,749		2,858		191		205
Total	$	333,459	$	372,410	$	1,514	$	1,803

__________

(1)Excludes “Assets held-for-sale” with amortized cost of $13,145 million and fair value of $13,569 million. See Note 1 for additional information on the pending dispositions.

(2)Excludes available-for-sale notes with amortized cost of $5,941 million (fair value, $5,995 million) and held-to-maturity notes with amortized cost of $4,750 million (fair value, $5,394 million), which have been offset with the associated debt under a netting agreement.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed and residential mortgage-backed securities are shown separately in the table above, as they do not have a single maturity date.

The following table sets forth the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on write-downs and the allowance for credit losses of fixed maturities, for the periods indicated:


	Years Ended December 31,
	2021		2020		2019
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	36,333	$	21,013	$	32,283
Proceeds from maturities/prepayments	27,976		23,563		20,036
Gross investment gains from sales and maturities	2,565		1,690		1,715
Gross investment losses from sales and maturities	(648)		(524)		(434)
OTTI recognized in earnings(2)	N/A		N/A		(315)
Write-downs recognized in earnings(3)	(1)		(304)		N/A
(Addition to) release of allowance for credit losses(4)	19		(133)		N/A
Fixed maturities, held-to-maturity:
Proceeds from maturities/prepayments(5)	$	239	$	88	$	99
(Addition to) release of allowance for credit losses(4)	4		0		N/A

__________

(1)Excludes activity from non-cash related proceeds due to the timing of trade settlements of $450 million, $(470) million and $(13) million for the years ended December 31, 2021, 2020 and 2019, respectively.

(2)For the year ended December 31, 2019, amounts exclude the portion of OTTI amounts remaining in OCI, representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.

(3)Amounts represent write-downs of credit adverse securities and securities actively marketed for sale. In addition, for the years ended December 31, 2020 and 2019, amounts also include write-downs on securities approaching maturities related to foreign exchange movements.

(4)Effective January 1, 2020, credit losses on available-for-sale and held-to-maturity fixed maturity securities are recorded within the “allowance for credit losses”.

(5)Excludes activity from non-cash related proceeds due to the timing of trade settlements of less than $(1) million, less than $(1) million and less than $1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The following tables set forth the activity in the allowance for credit losses for fixed maturity securities, as of the dates indicated:


	Year Ended December 31, 2021
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	0	$	123	$	0	$	10	$	0	$	133
Additions to allowance for credit losses not previously recorded	0		7		89		0		0		0		96

Reductions for securities sold during the period	0		0		(48)		0		(9)		0		(57)


Additions (reductions) on securities with previous allowance	0		0		(56)		0		(1)		0		(57)
Reclassified to “Assets held-for sale”(1)	0		0		(1)		0		0		0		(1)

Balance, end of period	$	0	$	7	$	107	$	0	$	0	$	0	$	114

__________

(1) See Note 1 for additional information on the pending dispositions.


	Year Ended December 31, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, available-for-sale:
Balance, beginning of period	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Additions to allowance for credit losses not previously recorded	0		39		255		0		1		0		295

Reductions for securities sold during the period	0		(39)		(126)		0		0		0		(165)


Additions (reductions) on securities with previous allowance	0		0		5		0		9		0		14
Write-downs charged against the allowance	0		0		(11)		0		0		0		(11)

Balance, end of period	$	0	$	0	$	123	$	0	$	10	$	0	$	133


	Year Ended December 31, 2021
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9
Current period provision for expected losses	0		0		(3)		0		0		0		(3)





Change in foreign exchange	0		0		(1)		0		0		0		(1)
Balance, end of period	$	0	$	0	$	5	$	0	$	0	$	0	$	5


	Year Ended December 31, 2020
	U.S. Treasury Securities and Obligations of U.S. States		Foreign Government Bonds		U.S. and Foreign Corporate Securities		Asset-Backed Securities		Commercial Mortgage-Backed Securities		Residential Mortgage-Backed Securities		Total
	(in millions)
Fixed maturities, held-to-maturity:
Balance, beginning of period	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Cumulative effect of adoption of ASU 2016-13.	0		0		9		0		0		0		9






Balance, end of period	$	0	$	0	$	9	$	0	$	0	$	0	$	9

See Note 2 for additional information about the Company’s methodology for developing our allowance and expected losses.

For the year ended December 31, 2021, the net decrease in the allowance for credit losses on available-for-sale securities was primarily related to the overall improving credit environment in the energy and consumer cyclical sectors within corporate securities, partially offset by net additions in the transportation, communications and utility sectors within corporate securities due to adverse projected cash flows. For the year ended December 31, 2020, the net increase in the allowance for credit losses on available-for-sale securities was primarily related to securities within the energy, communications and consumer cyclical sectors within corporate securities due to adverse projected cash flows, partially offset by a release on restructured securities in the energy sector within corporate securities and foreign government securities.

The Company did not have any fixed maturity securities purchased with credit deterioration, as of both December 31, 2021 and 2020.

Assets Supporting Experience-Rated Contractholder Liabilities

The following table sets forth the composition of “Assets supporting experience-rated contractholder liabilities,” as of the dates indicated:


	December 31, 2021								December 31, 2020
					Assets Held-for-Sale(1)
	Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value		Amortized Cost or Cost		Fair Value
	(in millions)
Short-term investments and cash equivalents	$	30	$	30	$	786	$	786	$	658	$	658
Fixed maturities:
Corporate securities	101		103		12,112		12,463		14,442		15,472
Commercial mortgage-backed securities	0		0		1,799		1,830		1,743		1,839
Residential mortgage-backed securities(2)	0		0		658		683		964		1,018
Asset-backed securities(3)	0		0		2,079		2,093		1,665		1,697
Foreign government bonds	761		761		240		237		934		945
U.S. government authorities and agencies and obligations of U.S. states	182		193		344		400		371		443
Total fixed maturities(4)	1,044		1,057		17,232		17,706		20,119		21,414
Equity securities	1,787		2,271		328		326		1,661		2,043
Total assets supporting experience-rated contractholder liabilities(5)	$	2,861	$	3,358	$	18,346	$	18,818	$	22,438	$	24,115

__________

(1)See Note 1 for additional information on the pending dispositions.

(2)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.

(3)Includes collateralized loan obligations, auto loans, education loans, home equity and other asset types. Collateralized loan obligations at fair value, including “Assets held-for-sale” were $1,607 million and $1,102 million as of December 31, 2021 and 2020, respectively, all of which were rated AA or above.

(4)As a percentage of amortized cost, 97% and 94% of the portfolio including “Assets held-for-sale” was considered high or highest quality based on NAIC or equivalent ratings, as of December 31, 2021 and 2020, respectively.

(5)As a percentage of amortized cost, 95% and 79% of the portfolio including “Assets held-for-sale” consisted of public securities as of December 31, 2021 and 2020, respectively.

The net change in unrealized gains (losses) from assets supporting experience-rated contractholder liabilities including “Assets held-for-sale” still held at period end, recorded within “Other income (loss),” was $(708) million, $726 million and $996 million during the years ended December 31, 2021, 2020 and 2019, respectively.

Equity Securities

The net change in unrealized gains (losses) from equity securities still held at period end, including “Assets held-for-sale” recorded within “Other income (loss),” was $591 million, $205 million and $943 million during the years ended December 31, 2021, 2020 and 2019, respectively.

Concentrations of Financial Instruments

The Company monitors its concentrations of financial instruments and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any single issuer.

As of the dates indicated, the Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s equity included securities of the U.S. government and certain U.S. government agencies and securities guaranteed by the U.S. government, as well as the securities disclosed below:


	December 31, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Investments in Japanese government and government agency securities:
Fixed maturities, available-for-sale	$	73,681	$	83,382	$	80,273	$	92,764
Fixed maturities, held-to-maturity	812		1,026		912		1,173
Fixed maturities, trading	23		23		25		25
Assets supporting experience-rated contractholder liabilities	983		977		849		855


Total	$	75,499	$	85,408	$	82,059	$	94,817

Commercial Mortgage and Other Loans

The following table sets forth the composition of “Commercial mortgage and other loans,” as of the dates indicated:


	December 31, 2021				December 31, 2020
	Amount (in millions)		% of Total		Amount (in millions)		% of Total
Commercial mortgage and agricultural property loans by property type:
Office	$	10,225	17.6	%	$	12,750	19.7	%
Retail	6,779		11.7		7,326		11.3
Apartments/Multi-Family	16,742		28.8		18,330		28.3
Industrial	13,009		22.4		14,954		23.1
Hospitality	1,876		3.2		2,395		3.7
Other	3,936		6.8		4,981		7.7
Total commercial mortgage loans	52,567		90.5		60,736		93.8
Agricultural property loans	5,520		9.5		4,048		6.2
Total commercial mortgage and agricultural property loans	58,087		100.0	%	64,784		100.0	%
Allowance for credit losses	(115)				(227)
Total net commercial mortgage and agricultural property loans	57,972				64,557
Other loans:
Uncollateralized loans	561				655
Residential property loans	67				101
Other collateralized loans	70				120
Total other loans	698				876
Allowance for credit losses	(4)				(8)
Total net other loans	694				868
Total net commercial mortgage and other loans(1)(2)	$	58,666			$	65,425

__________

(1)Excludes “Assets held-for-sale” of $6,565 million net of allowance for credit losses of $15 million as of December 31, 2021. See Note 1 for additional information on the pending dispositions.

(2)Includes loans which are carried at fair value under the fair value option and are collateralized primarily by apartment complexes. As of December 31, 2021 and 2020, the net carrying value of these loans was $1,263 million and $1,092 million, respectively.

As of December 31, 2021, the commercial mortgage and agricultural property loans were secured by properties geographically dispersed throughout the United States (with the largest concentrations in California (29%), Texas (7%) and New York (7%)) and included loans secured by properties in Europe (6%), Asia (2%) and Australia (1%).

The following table sets forth the activity in the allowance for credit losses for commercial mortgage and other loans, as of the dates indicated:


	Commercial Mortgage Loans		Agricultural Property Loans		Residential Property Loans		Other Collateralized Loans		Uncollateralized Loans		Total
	(in millions)
Balance at December 31, 2018	$	120	$	3	$	0	$	0	$	5	$	128
Addition to (release of) allowance for credit losses	(5)		0		0		0		(1)		(6)
Charge-offs, net of recoveries	(1)		0		0		0		0		(1)

Balance at December 31, 2019	114		3		0		0		4		121
Cumulative effect of adoption of ASU 2016-13	110		5		0		0		0		115
Addition to (release of) allowance for expected losses	1		1		0		0		1		3
Write-downs charged against allowance	(7)		0		0		0		0		(7)
Other	0		0		0		3		0		3
Balance at December 31, 2020	218		9		0		3		5		235

Addition to (release of) allowance for expected losses	(92)		(5)		0		0		(1)		(98)

Reclassified to “Asset held-for-sale”(1)	(15)		0		0		0		0		(15)
Other	0		0		0		(3)		0		(3)
Balance at December 31, 2021	$	111	$	4	$	0	$	0	$	4	$	119

__________

(1) See Note 1 for additional information on the pending dispositions.

See Note 2 for additional information about the Company’s methodology for developing our allowance and expected losses.

For the year ended December 31, 2021, the net decrease in the allowance for credit losses on commercial mortgage and other loans was primarily related to the improving credit environment. For the year ended December 31, 2020, the increase in the allowance for credit losses on commercial mortgage and other loans was primarily related to the cumulative effect of adoption of ASU 2016-13.

The following tables set forth key credit quality indicators based upon the recorded investment gross of allowance for credit losses, as of the date indicated:


	December 31, 2021
	Amortized Cost by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Total(1)
	(in millions)
Commercial Mortgage Loans
Loan-to-Value Ratio:
0%-59.99%	$	1,287	$	467	$	2,459	$	3,211	$	3,072	$	14,011	$	0	$	24,507
60%-69.99%	3,101		1,941		4,124		3,631		1,356		4,161		0		18,314
70%-79.99%	2,497		1,207		1,327		1,059		631		2,108		0		8,829
80% or greater	184		39		7		62		50		575		0		917
Total	$	7,069	$	3,654	$	7,917	$	7,963	$	5,109	$	20,855	$	0	$	52,567
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	6,803	$	3,356	$	6,828	$	7,384	$	4,445	$	16,864	$	0	$	45,680
1.0 - 1.2x	266		154		662		478		234		2,069		0		3,863
Less than 1.0x	0		144		427		101		430		1,922		0		3,024
Total	$	7,069	$	3,654	$	7,917	$	7,963	$	5,109	$	20,855	$	0	$	52,567
Agricultural Property Loans
Loan-to-Value Ratio:
0%-59.99%	$	1,958	$	887	$	494	$	334	$	370	$	1,226	$	80	$	5,349
60%-69.99%	92		5		29		37		0		0		0		163
70%-79.99%	0		0		0		0		0		0		0		0
80% or greater	0		3		5		0		0		0		0		8
Total	$	2,050	$	895	$	528	$	371	$	370	$	1,226	$	80	$	5,520
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	2,007	$	870	$	517	$	364	$	312	$	1,121	$	80	$	5,271
1.0 - 1.2x	43		25		10		1		58		41		0		178
Less than 1.0x	0		0		1		6		0		64		0		71
Total	$	2050	$	895	$	528	$	371	$	370	$	1,226	$	80	$	5,520

__________

(1) Excludes “Assets held-for-sale” of $6,580 million. See Note 1 for additional information on the pending dispositions.


	December 31, 2020
	Amortized Cost by Origination Year
	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Commercial Mortgage Loans
Loan-to-Value Ratio:
0%-59.99%	$	828	$	2,693	$	3,217	$	3,854	$	3,223	$	15,360	$	29,175
60%-69.99%	2,678		4,981		4,291		2,239		2,667		4,058		20,914
70%-79.99%	2,492		2,587		1,500		1,057		918		1,409		9,963
80% or greater	23		3		61		69		23		505		684
Total	$	6,021	$	10,264	$	9,069	$	7,219	$	6,831	$	21,332	$	60,736
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	5,901	$	9,429	$	8,587	$	6,954	$	6,382	$	18,904	$	56,157
1.0 - 1.2x	118		711		383		263		384		1,719		3,578
Less than 1.0x	2		124		99		2		65		709		1,001
Total	$	6,021	$	10,264	$	9,069	$	7,219	$	6,831	$	21,332	$	60,736
Agricultural Property Loans
Loan-to-Value Ratio:
0%-59.99%	$	956	$	494	$	349	$	527	$	367	$	1,254	$	3,947
60%-69.99%	8		51		39		3		0		0		101
70%-79.99%	0		0		0		0		0		0		0
80% or greater	0		0		0		0		0		0		0
Total	$	964	$	545	$	388	$	530	$	367	$	1,254	$	4,048
Debt Service Coverage Ratio:
Greater or Equal to 1.2x	$	941	$	544	$	381	$	468	$	308	$	1,202	$	3,844
1.0 - 1.2x	23		0		1		59		1		40		124
Less than 1.0x	0		1		6		3		58		12		80
Total	$	964	$	545	$	388	$	530	$	367	$	1,254	$	4,048

See Note 2 for additional information about the Company’s commercial mortgage and other loans credit quality monitoring process.

The following tables set forth an aging of past due commercial mortgage and other loans based upon the recorded investment gross of allowance for credit losses, as well as the amount of commercial mortgage and other loans on non-accrual status, as of the dates indicated:


	December 31, 2021
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	52,565	$	0	$	0	$	2	$	2	$	52,567	$	2
Agricultural property loans	5,520		0		0		0		0		5,520		19
Residential property loans	66		0		0		1		1		67		1
Other collateralized loans	70		0		0		0		0		70		0
Uncollateralized loans	561		0		0		0		0		561		0
Total(3)	$	58,782	$	0	$	0	$	3	$	3	$	58,785	$	22

__________

(1)As of December 31, 2021, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2.

(3)Excludes “Assets held-for-sale” of $6,580 million. See Note 1 for additional information on the pending dispositions.


	December 31, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Non-Accrual Status(2)
	(in millions)
Commercial mortgage loans	$	60,614	$	3	$	119	$	0	$	122	$	60,736	$	5
Agricultural property loans	3,996		37		0		15		52		4,048		15
Residential property loans	99		1		0		1		2		101		1
Other collateralized loans	120		0		0		0		0		120		0
Uncollateralized loans	655		0		0		0		0		655		0
Total	$	65,484	$	41	$	119	$	16	$	176	$	65,660	$	21

__________

(1)As of December 31, 2020, there were no loans in this category accruing interest.

(2)For additional information regarding the Company’s policies for accruing interest on loans, see Note 2.

Loans on non-accrual status recognized interest income of $5 million and $2 million for the year ended December 31, 2021 and 2020, respectively. Loans on non-accrual status that did not have a related allowance for credit losses were $20 million and $15 million as of December 31, 2021 and 2020, respectively.

The Company did not have any significant losses on commercial mortgage and other loans purchased with credit deterioration, as of both December 31, 2021 and 2020.

Other Invested Assets

The following table sets forth the composition of “Other invested assets,” as of the dates indicated:


	December 31,
	2021		2020
	(in millions)
LPs/LLCs:
Equity method:
Private equity(1)	$	6,509	$	4,311
Hedge funds	2,797		2,451
Real estate-related(1)	2,370		1,985
Subtotal equity method	11,676		8,747
Fair value:
Private equity	1,852		1,786
Hedge funds	2,119		2,036
Real estate-related	319		314
Subtotal fair value	4,290		4,136
Total LPs/LLCs	15,966		12,883
Real estate held through direct ownership(2)	1,789		2,027
Derivative instruments	3,280		1,915
Other(3)	798		1,300
Total other invested assets(4)	$	21,833	$	18,125

__________

(1)Prior period amounts have been updated to conform to current period presentation.

(2)As of December 31, 2021 and 2020, real estate held through direct ownership had mortgage debt of $274 million and $409 million, respectively.

(3)Primarily includes strategic investments made by investment management operations, leveraged leases and member and activity stock held in the Federal Home Loan Banks of New York and Boston. For additional information regarding the Company’s holdings in the Federal Home Loan Banks of New York, see Note 17.

(4)Excludes “Assets held-for-sale” of $104 million as of December 31, 2021. See Note 1 for additional information on the pending dispositions.

In certain investment structures, the Company’s investment management business invests with other co-investors in an investment fund referred to as a feeder fund. In these structures, the invested capital of several feeder funds is pooled together and used to purchase ownership interests in another fund, referred to as a master fund. The master fund utilizes this invested capital and, in certain cases, other debt financing, to purchase various classes of assets on behalf of its investors. Specialized industry accounting for investment companies calls for the feeder fund to reflect its investment in the master fund as a single net asset equal to its proportionate share of the net assets of the master fund, regardless of its level of interest in the master fund. In cases where the Company consolidates the feeder fund, it retains the feeder fund’s net asset presentation and reports the consolidated feeder fund’s proportionate share of the net assets of the master fund in “Other invested assets,” with any unaffiliated investors’ non-controlling interest in the feeder fund reported in “Other liabilities” or “Noncontrolling interests.” The consolidated feeder funds’ investments in these master funds, reflected on this net asset basis, totaled $654 million and $459 million as of December 31, 2021 and 2020, respectively. There was $467 million and $201 million of unaffiliated interest in the consolidated feeder funds as of December 31, 2021 and 2020, respectively, and the master funds had gross assets of $76,600 million and $54,123 million, respectively, and gross liabilities of $73,882 million and $50,706 million, respectively, which are not included on the Company’s balance sheet.

Equity Method Investments

The following tables set forth summarized combined financial information for significant LP/LLC interests accounted for under the equity method, including the Company’s investments in operating joint ventures that are described in more detail in Note 9. Changes between periods in the tables below reflect changes in the activities within the operating joint ventures and LPs/LLCs, as well as changes in the Company’s level of investment in such entities:


	December 31,
	2021		2020
	(in millions)
STATEMENTS OF FINANCIAL POSITION
Total assets(1)	$	689,767	$	424,712
Total liabilities(2)	$	111,189	$	35,705
Partners’ capital	578,578		389,007
Total liabilities and partners’ capital	$	689,767	$	424,712
Total liabilities and partners’ capital included above	$	12,141	$	9,475
Equity in LP/LLC interests not included above	852		666
Carrying value(3)	$	12,993	$	10,141

__________

(1)Amount represents gross assets of each fund where the Company has a significant investment. These assets consist primarily of investments in real estate, investments in securities and other miscellaneous assets.

(2)Amount represents gross liabilities of each fund where the Company has a significant investment. These liabilities consist primarily of third-party-borrowed funds, securities repurchase agreements and other miscellaneous liabilities.

(3)Excludes “Assets held-for-sale” of $81 million. See Note 1 for additional information on the pending dispositions.


	Years Ended December 31,
	2021		2020		2019
	(in millions)
STATEMENTS OF OPERATIONS
Total revenue(1)	$	128,429	$	42,964	$	11,430
Total expenses(2)	(21,235)		(8,887)		(5,800)
Net earnings (losses)	$	107,194	$	34,077	$	5,630
Equity in net earnings (losses) included above	$	2,085	$	744	$	525
Equity in net earnings (losses) of LP/LLC interests not included above	161		28		11
Total equity in net earnings (losses)	$	2,246	$	772	$	536

__________

(1)Amount represents gross revenue of each fund where the Company has a significant investment. This revenue consists of income from investments in real estate, investments in securities and other income.

(2)Amount represents gross expenses of each fund where the Company has a significant investment. These expenses consist primarily of interest expense, investment management fees, salary expenses and other expenses.

Accrued Investment Income

The following table sets forth the composition of “Accrued investment income,” as of the dates indicated:


	December 31,
	2021		2020
	(in millions)
Fixed maturities	$	2,398	$	2,676



Equity securities	5		7
Commercial mortgage and other loans	175		205
Policy loans	253		274
Other invested assets	22		27
Short-term investments and cash equivalents	2		4
Total accrued investment income(1)	$	2,855	$	3,193

__________

(1) Excludes “Assets held-for-sale” of $221 million as of December 31, 2021. See Note 1 for additional information on the pending dispositions.

Write-downs on accrued investment income were less than $1 million for both the years ended December 31, 2021 and 2020.

Net Investment Income

The following table sets forth “Net investment income” by investment type, for the periods indicated:


	Years Ended December 31,
	2021		2020		2019
	(in millions)
Fixed maturities, available-for-sale(1)	$	11,999	$	12,339	$	12,644
Fixed maturities, held-to-maturity(1)	226		235		232
Fixed maturities, trading	193		126		149
Assets supporting experience-rated contractholder liabilities	601		700		731
Equity securities	162		162		160
Commercial mortgage and other loans	2,552		2,485		2,584
Policy loans	533		584		619
Other invested assets	2,617		1,318		1,005
Short-term investments and cash equivalents	63		197		453
Gross investment income	18,946		18,146		18,577
Less: investment expenses	(659)		(736)		(992)
Net investment income	$	18,287	$	17,410	$	17,585

__________

(1)Includes income on credit-linked notes which are reported on the same financial statement line items as related surplus notes, as conditions are met for right to offset.

The carrying value of non-income producing assets included $437 million in available-for-sale fixed maturities, $72 million in trading fixed maturities and less than $1 million in other invested assets as of December 31, 2021. Non-income producing assets represent investments that had not produced income for the twelve months preceding December 31, 2021.

Realized Investment Gains (Losses), Net

The following table sets forth “Realized investment gains (losses), net” by investment type, for the periods indicated:


	Years Ended December 31,
	2021		2020		2019
	(in millions)
Fixed maturities(1)	$	1,939	$	729	$	966
Commercial mortgage and other loans	173		103		44
Investment real estate	108		(16)		78
LPs/LLCs	(14)		2		(38)
Derivatives	1,796		(4,715)		(1,513)
Other	22		10		4
Realized investment gains (losses), net	$	4,024	$	(3,887)	$	(459)

__________

(1)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.

Net Unrealized Gains (Losses) on Investments within AOCI

The following table sets forth net unrealized gains (losses) on investments, as of the dates indicated:


	December 31,
	2021		2020		2019
	(in millions)
Fixed maturity securities, available-for-sale—with OTTI(1)	$ N/A		$ N/A		$	243
Fixed maturity securities, available-for-sale—all other(1)	N/A		N/A		44,279
Fixed maturity securities, available-for-sale with an allowance(2)	23		(25)		N/A
Fixed maturity securities, available-for-sale without an allowance(2)	39,467		58,593		N/A
Derivatives designated as cash flow hedges(3)	1,019		(168)		832
Derivatives designated as fair value hedges(3)	(35)		10		0
Other investments(4)	(7)		7		(15)
Net unrealized gains (losses) on investments	$	40,467	$	58,417	$	45,339

__________

(1)Effective January 1, 2020, per ASU 2016-13, fixed maturity securities, available-for-sale are no longer required to be disclosed “with OTTI” and “all other.”

(2)Includes net unrealized gains of $425 million on “Assets held-for-sale” as of December 31, 2021.

(3)For additional information on cash flow and fair value hedges, see Note 5.

(4)As of December 31, 2021, there were no net unrealized losses on held-to-maturity securities that were previously transferred from available-for-sale. Includes net unrealized gains on certain joint ventures that are strategic in nature and are included in “Other assets.”

Repurchase Agreements and Securities Lending

In the normal course of business, the Company sells securities under agreements to repurchase and enters into securities lending transactions. The following table sets forth the composition of “Securities sold under agreements to repurchase,” as of the dates indicated:


	December 31, 2021								December 31, 2020
	Remaining Contractual Maturities of the Agreements								Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		30 to 90 Days		Total		Overnight & Continuous		Up to 30 Days		30 to 90 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	9,044	$	0	$	438	$	9,482	$	9,548	$	546	$	0	$	10,094


Commercial mortgage-backed securities	486		0		0		486		463		0		0		463
Residential mortgage-backed securities	217		0		0		217		337		0		0		337
Total securities sold under agreements to repurchase	$	9,747	$	0	$	438	$	10,185	$	10,348	$	546	$	0	$	10,894

The following table sets forth the composition of “Cash collateral for loaned securities” which represents the liability to return cash collateral received for the following types of securities loaned, as of the dates indicated:


	December 31, 2021						December 31, 2020
	Remaining Contractual Maturities of the Agreements						Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 Days		Total		Overnight & Continuous		Up to 30 Days		Total
	(in millions)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	1	$	0	$	1	$	0	$	0	$	0
Obligations of U.S. states and their political subdivisions	84		0		84		108		0		108
Foreign government bonds	205		0		205		426		0		426
U.S. public corporate securities	2,834		0		2,834		2,360		0		2,360
Foreign public corporate securities	643		0		643		567		0		567


Equity securities	484		0		484		38		0		38
Total cash collateral for loaned securities(1)	$	4,251	$	0	$	4,251	$	3,499	$	0	$	3,499

__________

(1)The Company did not have any agreements with remaining contractual maturities greater than thirty days, as of the dates indicated.

Securities Pledged

The Company pledges as collateral investment securities it owns to unaffiliated parties through certain transactions, including securities lending, securities sold under agreements to repurchase, collateralized borrowings and postings of collateral with derivative counterparties. The following table sets forth the carrying value of investments pledged to third parties, as of the dates indicated:


	December 31,
	2021		2020
	(in millions)
Fixed maturities(1)	$	16,411	$	19,608
Fixed maturities, trading	0		67
Assets supporting experience-rated contractholder liabilities	34		29
Separate account assets	2,673		3,191
Equity securities	868		416
Other	319		450
Total securities pledged	$	20,305	$	23,761

__________

(1)Includes fixed maturity securities classified as available-for-sale and held-to-maturity and excludes fixed maturity securities classified as trading.

The following table sets forth the carrying amount of the associated liabilities supported by the pledged collateral, as of the dates indicated:


	December 31,
	2021		2020
	(in millions)
Securities sold under agreements to repurchase	$	10,185	$	10,894
Cash collateral for loaned securities	4,251		3,499
Separate account liabilities	2,737		3,249

Total liabilities supported by the pledged collateral	$	17,173	$	17,642

In the normal course of its business activities, the Company accepts collateral that can be sold or repledged. The primary sources of this collateral are securities in customer accounts, securities purchased under agreements to resell and postings of collateral from OTC derivative counterparties. The fair value of this collateral was approximately $4,967 million as of December 31, 2021 (the largest components of which included $334 million of securities and $4,633 million of cash from OTC derivative counterparties) and $8,872 million as of December 31, 2020 (the largest components of which included $252 million of securities and $8,620 million of cash from OTC derivative counterparties). A portion of the aforementioned securities, for both periods, had either been sold or repledged.

Assets on Deposit, Held in Trust, and Restricted as to Sale

The following table provides assets on deposit, assets held in trust, and securities restricted as to sale, as of the dates indicated:


	December 31,
	2021		2020
	(in millions)
Assets on deposit with governmental authorities or trustees	$	33	$	31
Assets held in voluntary trusts(1)	484		539
Assets held in trust related to reinsurance and other agreements(2)	16,235		16,614
Securities restricted as to sale(3)	86		153
Total assets on deposit, assets held in trust and securities restricted as to sale(4)	$	16,838	$	17,337

__________

(1)Represents assets held in voluntary trusts established primarily to fund guaranteed dividends to certain policyholders and to fund certain employee benefits.

(2)Represents assets held in trust related to reinsurance agreements excluding reinsurance agreements between wholly-owned subsidiaries. Assets valued at $28.4 billion and $34.0 billion were held in trust related to reinsurance agreements between wholly-owned subsidiaries as of December 31, 2021 and 2020, respectively.

(3)Includes member and activity stock associated with memberships in the Federal Home Loan Banks of New York and Boston.

(4)Includes $553 million “Assets held-for-sale” related to the pending sales of PALAC and Full Service Retirement Business as of December 31, 2021.

Variable Interest Entities

12 Months Ended

Dec. 31, 2021

Variable Interest Entity, Measure of Activity [Abstract]

Variable Interest Entities

VARIABLE INTEREST ENTITIES

In the normal course of its activities, the Company enters into relationships with various special-purpose entities and other entities that are deemed to be VIEs. A VIE is an entity that either (1) has equity investors that lack certain essential characteristics of a controlling financial interest (including the ability to control activities of the entity, the obligation to absorb the entity’s expected losses and the right to receive the entity’s expected residual returns) or (2) lacks sufficient equity to finance its own activities without financial support provided by other entities, which in turn would be expected to absorb at least some of the expected losses of the VIE.

The Company is the primary beneficiary if the Company has (1) the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and (2) the obligation to absorb losses of the entity that could be potentially significant to the VIE or the right to receive benefits from the entity that could be potentially significant. If the Company determines that it is the VIE’s primary beneficiary, it consolidates the VIE.

Consolidated Variable Interest Entities

The Company is the investment manager of certain asset-backed investment vehicles, commonly referred to as CLOs, and certain other vehicles for which the Company earns fee income for investment management services. The Company may sell or syndicate investments through these vehicles, principally as part of the strategic investing activity of the Company’s investment management businesses. Additionally, the Company may invest in securities issued by these vehicles. The Company is also the investment manager of certain investment structures whose beneficial interests are wholly-owned by consolidated subsidiaries.

The Company has analyzed these relationships and determined that for certain CLOs and other investment structures it is the primary beneficiary and consolidates these entities. This analysis includes a review of (1) the Company’s rights and responsibilities as investment manager and (2) variable interests (if any) held by the Company. The assets of these VIEs are restricted and must be used first to settle liabilities of the VIE. The Company is not required to provide, and has not provided, material financial or other support to any of these VIEs.

Additionally, the Company is the primary beneficiary of certain VIEs in which the Company has invested, as part of its investment activities, but for which it is not the investment manager. These include structured investments issued by a VIE that manages yen-denominated investments coupled with cross-currency coupon swap agreements thereby creating synthetic dual currency investments. The Company’s involvement in the structuring of these investments combined with its economic interest indicates that the Company is the primary beneficiary. The Company has not provided material financial support or other support that was not contractually required to these VIEs.

The table below reflects the carrying amount and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported. The liabilities primarily comprise obligations under debt instruments issued by the VIEs. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs.


	Consolidated VIEs for which the Company is the Investment Manager(1)				Other Consolidated VIEs(1)
	December 31,				December 31,
	2021		2020		2021		2020

	(in millions)
Fixed maturities, available-for-sale	$	200	$	110	$	262	$	296
Fixed maturities, held-to-maturity	9		87		790		882
Fixed maturities, trading	178		160		0		0
Assets supporting experience-rated contractholder liabilities	0		0		0		0
Equity securities	79		42		0		0
Commercial mortgage and other loans	915		975		0		0
Other invested assets	2,846		2,221		138		127
Cash and cash equivalents	128		101		0		0
Accrued investment income	1		2		3		4
Other assets	499		594		785		768
Total assets of consolidated VIEs	$	4,855	$	4,292	$	1,978	$	2,077
Other liabilities	$	505	$	256	$	2	$	2
Notes issued by consolidated VIEs(2)	274		305		0		0
Total liabilities of consolidated VIEs	$	779	$	561	$	2	$	2

__________

(1)Total assets of consolidated VIEs reflect $2,885 million and $2,538 million as of December 31, 2021 and 2020, respectively, related to VIEs whose beneficial interests are wholly-owned by consolidated subsidiaries.

(2)Recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company. As of December 31, 2021, the maturity of this obligation was within 3 years.

Unconsolidated Variable Interest Entities

The Company has determined that it is not the primary beneficiary of certain VIEs for which it is the investment manager. These VIEs consist primarily of CLOs and investment funds for which the Company has determined that it is not the primary beneficiary as it does not have both (1) the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and (2) the obligation to absorb losses of the entity that could be potentially significant to the VIE or the right to receive benefits from the entity that could be potentially significant. The Company’s maximum exposure to loss resulting from its relationship with unconsolidated VIEs for which it is the investment manager is limited to its investment in the VIEs, which was $997 million and $935 million at December 31, 2021 and 2020, respectively. These investments are reflected in “Fixed maturities, available-for-sale,” “Fixed maturities, trading,” “Equity securities” and “Other invested assets.” There are no liabilities associated with these unconsolidated VIEs on the Company’s Consolidated Statements of Financial Position.

In the normal course of its activities, the Company will invest in LPs/LLCs which include hedge funds, private equity funds and real estate-related funds and may or may not be VIEs. The Company’s maximum exposure to loss on these investments, both VIEs and non-VIEs, is limited to the amount of its investment. The Company has determined that it is not required to consolidate these entities because either (1) it does not control them or (2) it does not have the obligation to absorb losses of these entities that could be potentially significant to the entities or the right to receive benefits from the entities that could be potentially significant. The Company classifies these investments as “Other invested assets” and its maximum exposure to loss associated with these entities, excluding “Assets held for sale,” was $15,966 million and $12,883 million as of December 31, 2021 and 2020, respectively.

In addition, in the normal course of its activities, the Company will invest in structured investments including VIEs for which it is not the investment manager. These structured investments typically invest in fixed income investments and are managed by third parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited to the amount of its investment. See Note 3 for details regarding the carrying amounts and classification of these assets. The Company has not provided material financial or other support that was not contractually required to these structures. The Company has determined that it is not the primary beneficiary of these structures due to the fact that it does not control these entities.

Derivative Instruments

12 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVES AND HEDGING

Types of Derivative and Hedging Instruments

Interest Rate Contracts

Interest rate swaps, options and futures are used by the Company to reduce risks from changes in interest rates, manage interest rate exposures arising from mismatches between assets and liabilities and to hedge against changes in their values it owns or anticipates acquiring or selling.

Swaps may be attributed to specific assets or liabilities or to a portfolio of assets or liabilities. Under interest rate swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed upon notional principal amount.

The Company also uses interest rate swaptions, caps, and floors to manage interest rate risk. A swaption is an option to enter into a swap with a forward starting effective date. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. In an interest rate cap, the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price. Similarly, in an interest rate floor, the buyer receives payments at the end of each period in which the interest rate is below the agreed strike price. Swaptions, caps and floors are included in interest rate options.

In standardized exchange-traded interest rate futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced investments. The Company enters into exchange-traded futures with regulated futures commission’s merchants who are members of a trading exchange.

Equity Contracts

Equity options, total return swaps, and futures are used by the Company to manage its exposure to the equity markets which impacts the value of assets and liabilities it owns or anticipates acquiring or selling.

Equity index options are contracts which will settle in cash based on differentials in the underlying indices at the time of exercise and the strike price. The Company uses combinations of purchases and sales of equity index options to hedge the effects of adverse changes in equity indices within a predetermined range.

Total return swaps are contracts whereby the Company agrees with counterparties to exchange, at specified intervals, the difference between the return on an asset (or market index) and London Inter-Bank Offered Rate (“LIBOR”) plus an associated funding spread based on a notional amount. The Company generally uses total return swaps to hedge the effect of adverse changes in equity indices.

In standardized exchange-traded equity futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced equity indices. The Company enters into exchange-traded futures with regulated futures commission’s merchants who are members of a trading exchange.

Foreign Exchange Contracts

Currency derivatives, including currency futures, options, forwards and swaps, and foreign currency denominated debts are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell, and to hedge the currency risk associated with net investments in foreign operations and anticipated earnings of its foreign operations.

Under currency forwards, the Company agrees with counterparties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. As noted above, the Company uses currency forwards to mitigate the impact of changes in currency exchange rates on U.S. dollar-equivalent earnings generated by certain of its non-U.S. businesses, primarily its international insurance and investment operations. The Company executes forward sales of the hedged currency in exchange for U.S. dollars at a specified exchange rate. The maturities of these currency forwards correspond with the future periods in which the non-U.S. dollar-denominated earnings are expected to be generated.

Under currency swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party.

Under foreign currency denominated debts, the Company uses a portion of its foreign currency denominated debt (same functional currency of its foreign subsidiaries) to hedge the risk of change in the net investment in a foreign subsidiary due to changes in exchange rates. These debt obligations reduce the Company’s foreign currency exposure from equity investment and act as hedge of the investment.

Credit Contracts

The Company writes credit default swaps to gain exposure similar to investment in public fixed maturity cash instruments. With these derivatives the Company sells credit protection on a single name reference, or certain index reference, and in return receives a quarterly premium. This premium or credit spread generally corresponds to the difference between the yield on the referenced name (or an index’s referenced names) public fixed maturity cash instruments and swap rates, at the time the agreement is executed. If there is an event of default by the referenced name or one of the referenced names in the index, as defined by the agreement, then the Company is obligated to pay the referenced amount of the contract to the counterparty and receive in return the referenced defaulted security or similar security (in the case of a credit default index) or pay the referenced amount less the auction recovery rate. See credit derivatives section for further discussion of guarantees. In addition to selling credit protection, the Company purchases credit protection using credit derivatives to hedge specific credit exposures in the Company’s investment portfolio.

Other Contracts

“To Be Announced” (“TBA”) Forward Contracts. The Company uses TBA forward contracts to gain exposure to the investment risk and return of mortgage-backed securities. TBA transactions can help the Company enhance the return on its investment portfolio, and can provide a more liquid and cost-effective method of achieving these goals than purchasing or selling individual mortgage-backed pools. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. Additionally, pursuant to the Company’s mortgage dollar roll program, TBAs or mortgage-backed securities are transferred to counterparties with a corresponding agreement to repurchase them at a future date. These transactions do not qualify as secured borrowings and are accounted for as derivatives.

Loan Commitments. In its mortgage operations, the Company enters into commitments to fund commercial mortgage loans at specified interest rates and other applicable terms within specified periods of time. These commitments are legally binding agreements to extend credit to a counterparty. Loan commitments for loans that will be held for sale are recognized as derivatives and recorded at fair value. The determination of the fair value of loan commitments accounted for as derivatives considers various factors including, among others, terms of the related loan, the intended exit strategy for the loans based upon either securitization valuation models or investor purchase commitments, prevailing interest rates, origination income or expense, and the value of service rights. Loan commitments that relate to the origination of mortgage loans that will be held for investment are not accounted for as derivatives and accordingly are not recognized in the Company’s financial statements. See Note 23 for additional information.

Embedded Derivatives. The Company offers certain products (for example, variable annuities) which may include guaranteed benefit features that are accounted for as embedded derivatives. These embedded derivatives are carried at fair value through “Realized investment gains (losses), net” based on the change in value of the underlying contractual guarantees, which are determined using valuation models.

Synthetic Guarantees. The Company sells synthetic GICs, through both full service and investment-only sales channels, to investment vehicles primarily used by qualified defined contribution pension plans. The synthetic GICs are issued in respect of assets that are owned by the trustees of such plans, who invest the assets according to the contract terms agreed to with the Company. The contracts establish participant balances and credit interest thereon. The participant balances are supported by the underlying assets. In connection with certain participant-initiated withdrawals, the contract guarantees that after all underlying assets are liquidated, any remaining participant balances will be paid by the Company. These contracts are accounted for as derivatives and recorded at fair value.

Primary Risks Managed by Derivatives

The table below provides a summary of the gross notional amount and fair value of derivatives contracts by the primary underlying risks, excluding embedded derivatives and associated reinsurance recoverables. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements and cash collateral. This netting impact results in total derivative assets of $3,266 million and $1,906 million as of December 31, 2021 and 2020, respectively, and total derivative liabilities of $2,278 million and $792 million as of December 31, 2021 and 2020, respectively, reflected in the Consolidated Statements of Financial Position.


	December 31, 2021						December 31, 2020
Primary Underlying Risk/ Instrument Type	Gross		Fair Value				Gross		Fair Value
	Notional		Assets		Liabilities		Notional		Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	3,591	$	805	$	(69)	$	3,065	$	978	$	(90)
Interest Rate Forwards	248		15		(2)		249		0		(8)
Foreign Currency
Foreign Currency Forwards	4,789		62		(107)		2,577		68		(116)
Currency/Interest Rate
Foreign Currency Swaps	21,272		1,151		(193)		22,642		878		(1,037)
Total Derivatives Designated as Hedge Accounting Instruments	$	29,900	$	2,033	$	(371)	$	28,533	$	1,924	$	(1,251)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Swaps	$	196,124	$	10,515	$	(14,430)	$	178,803	$	17,174	$	(13,172)
Interest Rate Futures	17,429		76		(9)		15,778		99		(5)
Interest Rate Options	15,353		710		(265)		14,593		914		(233)
Interest Rate Forwards	4,709		41		(11)		2,910		25		0
Foreign Currency
Foreign Currency Forwards	28,235		1,046		(1,209)		35,478		764		(647)
Foreign Currency Options	0		0		0		0		0		0
Currency/Interest Rate
Foreign Currency Swaps	12,683		751		(216)		13,661		537		(601)
Credit
Credit Default Swaps	3,489		128		(1)		3,360		63		(28)
Equity
Equity Futures	6,178		1		(10)		5,668		10		(25)
Equity Options	60,057		2,065		(2,640)		36,250		1,731		(1,028)
Total Return Swaps	13,850		49		(430)		22,489		32		(1,277)
Other
Other(1)	1,255		0		0		1,262		0		0
Synthetic GICs	81,984		1		0		86,264		0		0
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	441,346	$	15,383	$	(19,221)	$	416,516	$	21,349	$	(17,016)
Total Derivatives(2)(3)(4)	$	471,246	$	17,416	$	(19,592)	$	445,049	$	23,273	$	(18,267)

__________

(1)“Other” primarily includes derivative contracts used to improve the balance of the Company’s tail longevity and mortality risk. Under these contracts, the Company’s gains (losses) are capped at the notional amount.

(2)Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $10,245 million and $20,119 million as of December 31, 2021, and 2020, respectively, primarily included in “Future policy benefits.”

(3)Recorded in “Other invested assets” and “Other liabilities” on the Consolidated Statements of Financial Position.

(4)Excludes “Assets held-for-sale” with fair value of $1,643 million and “Liabilities held-for-sale” with fair value of $1,503 million with outstanding gross notional amounts of $41,179 million as of December 31, 2021. See Note 1 for additional information on the pending dispositions.

As of December 31, 2021, the following amounts were recorded on the Consolidated Statements of Financial Position related to the carrying amount of the hedged assets (liabilities) and cumulative basis adjustments included in the carrying amount for fair value hedges:


	December 31, 2021				December 31, 2020
Balance Sheet Line Item in which Hedged Item is Recorded	Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)		Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)(1)

	(in millions)
Fixed maturities, available-for-sale, at fair value	$	641	$	63	$	402	$	79
Commercial mortgage and other loans	$	17	$	1	$	20	$	2
Policyholders’ account balances	$	(1,552)	$	(170)	$	(1,627)	$	(303)
Future policy benefits	$	(3,001)	$	(279)	$	(1,585)	$	(372)

________

(1)There were no material fair value hedging adjustments for hedged assets and liabilities for which hedge accounting has been discontinued.

Most of the Company’s derivatives do not qualify for hedge accounting for various reasons. For example: (i) derivatives that economically hedge embedded derivatives do not qualify for hedge accounting because changes in the fair value of the embedded derivatives are already recorded in net income; (ii) derivatives that are utilized as macro hedges of the Company’s exposure to various risks typically do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedge accounting rules; and (iii) synthetic GICs, which are product standalone derivatives, do not qualify as hedging instruments under hedge accounting rules.

Offsetting Assets and Liabilities

The following table presents recognized derivative instruments (excluding embedded derivatives and associated reinsurance recoverables), and repurchase and reverse repurchase agreements that are offset in the Consolidated Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Consolidated Statements of Financial Position:


	December 31, 2021
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:(2)
Derivatives	$	17,272	$	(14,150)	$	3,122	$	(802)	$	2,320
Securities purchased under agreement to resell	704		0		704		(704)		0
Total Assets	$	17,976	$	(14,150)	$	3,826	$	(1,506)	$	2,320
Offsetting of Financial Liabilities:(2)
Derivatives	$	19,587	$	(17,314)	$	2,273	$	(797)	$	1,476
Securities sold under agreement to repurchase	10,185		0		10,185		(9,699)		486
Total Liabilities	$	29,772	$	(17,314)	$	12,458	$	(10,496)	$	1,962


	December 31, 2020
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives	$	23,144	$	(21,367)	$	1,777	$	(806)	$	971
Securities purchased under agreement to resell	252		0		252		(252)		0
Total Assets	$	23,396	$	(21,367)	$	2,029	$	(1,058)	$	971
Offsetting of Financial Liabilities:
Derivatives	$	18,265	$	(17,475)	$	790	$	(790)	$	0
Securities sold under agreement to repurchase	10,894		0		10,894		(10,432)		462
Total Liabilities	$	29,159	$	(17,475)	$	11,684	$	(11,222)	$	462

__________

(1)Amounts exclude the excess of collateral received/pledged from/to the counterparty.

(2)Excludes “Assets held-for-sale” with fair value of $1,643 million and “Liabilities held-for-sale” with fair value of $1,503 million. See Note 1 for additional information on the pending dispositions.

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above, see “—Counterparty Credit Risk” below. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset. For additional information on the Company’s accounting policy for securities repurchase and resale agreements, see Note 2.

Cash Flow, Fair Value and Net Investment Hedges

The primary derivative instruments used by the Company in its fair value, cash flow and net investment hedge accounting relationships are interest rate swaps, currency swaps, currency forwards, and foreign currency denominated debts. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, and equity derivatives in any of its fair value, cash flow or net investment hedge accounting relationships.

The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, including the offset of the hedged item in fair value hedge relationships.


	Year Ended December 31, 2021
	Realized Investment Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited To Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)




	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	20	$	(9)	$	0	$	0	$	(98)	$	(73)	$	0
Currency	(8)		0		0		0		0		6		0
Total gains (losses) on derivatives designated as hedge instruments	12		(9)		0		0		(98)		(67)		0
Gains (losses) on the hedged item:
Interest Rate	(24)		16		0		0		133		96		0
Currency	7		2		0		0		0		(6)		0
Total gains (losses) on hedged item	(17)		18		0		0		133		90		0
Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness

Currency	0		0		0		0		0		(6)		(46)
Total Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness	0		0		0		0		0		(6)		(46)
Total gains (losses) on fair value hedges net of hedged item	(5)		9		0		0		35		17		(46)
Cash flow hedges
Interest Rate	(2)		2		0		0		0		0		(13)
Currency	(4)		0		0		0		0		0		48
Currency/Interest Rate	105		271		181		0		0		0		1,152
Total gains (losses) on cash flow hedges	99		273		181		0		0		0		1,187
Net investment hedges
Currency	0		0		0		0		0		0		(9)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		(9)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,875)		0		0		0		0		0		0
Currency	(364)		0		(3)		0		0		0		0
Currency/Interest Rate	802		0		5		0		0		0		0
Credit	61		0		0		0		0		0		0
Equity	(2,600)		0		0		0		0		0		0
Other	1		0		0		0		0		0		0
Embedded Derivatives	5,674		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	1,699		0		2		0		0		0		0
Total	$	1,793	$	282	$	183	$	0	$	35	$	17	$	1,132


	Year Ended December 31, 2020
	Realized Investment Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited To Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)




	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	(17)	$	(8)	$	0	$	0	$	236	$	186	$	0
Currency	0		0		0		0		0		46		0
Total gains (losses) on derivatives designated as hedge instruments	(17)		(8)		0		0		236		232		0
Gains (losses) on the hedged item:
Interest Rate	16		18		0		0		(196)		(155)		0
Currency	0		1		0		0		0		(46)		0
Total gains (losses) on hedged item	16		19		0		0		(196)		(201)		0
Amortization for Gain (Loss) Excluded from Assessment of the Effectiveness
Currency .............................................	0		0		0		0		0		(1)		10
Total Amortization for Gain (loss) Excluded from Assessment of the Effectiveness ......................................	0		0		0		0		0		(1)		10
Total gains (losses) on fair value hedges net of hedged item	(1)		11		0		0		40		30		10
Cash flow hedges
Interest Rate	40		1		0		(1)		0		0		7
Currency	5		0		0		0		0		0		(69)
Currency/Interest Rate	99		314		(303)		0		0		0		(938)
Total gains (losses) on cash flow hedges	144		315		(303)		(1)		0		0		(1,000)
Net investment hedges
Currency	(7)		0		126		0		0		0		(128)
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	(7)		0		126		0		0		0		(128)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	5,800		0		0		0		0		0		0
Currency	100		0		(1)		0		0		0		0
Currency/Interest Rate	(188)		0		(4)		0		0		0		0
Credit	(56)		0		0		0		0		0		0
Equity	(5,623)		0		0		0		0		0		0
Other	2		0		0		0		0		0		0
Embedded Derivatives	(4,882)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(4,847)		0		(5)		0		0		0		0
Total	$	(4,711)	$	326	$	(182)	$	(1)	$	40	$	30	$	(1,118)


	Year Ended December 31, 2019
	Realized Investment Gains (Losses)		Net Investment Income		Other Income (Loss)		Interest Expense		Interest Credited To Policyholders’ Account Balances		Policyholders’ Benefits		Change in AOCI(1)




	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest Rate	$	(14)	$	(7)	$	0	$	0	$	194	$	155	$	0
Currency	0		0		0		0		0		0		0
Total gains (losses) on derivatives designated as hedge instruments	(14)		(7)		0		0		194		155		0
Gains (losses) on the hedged item:
Interest Rate	11		20		0		0		(186)		(140)		0
Currency	1		3		0		0		0		0		0
Total gains (losses) on hedged item	12		23		0		0		(186)		(140)		0
Total gains (losses) on fair value hedges net of hedged item	(2)		16		0		0		8		15		0
Cash flow hedges
Interest Rate	58		0		0		0		0		0		(25)
Currency	6		0		0		0		0		0		(62)
Currency/Interest Rate	130		282		(97)		0		0		0		99
Total gains (losses) on cash flow hedges	194		282		(97)		0		0		0		12
Net investment hedges
Currency	0		0		0		0		0		0		4
Currency/Interest Rate	0		0		0		0		0		0		0
Total gains (losses) on net investment hedges	0		0		0		0		0		0		4
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	4,533		0		0		0		0		0		0
Currency	14		0		5		0		0		0		0
Currency/Interest Rate	394		0		0		0		0		0		0
Credit	123		0		0		0		0		0		0
Equity	(4,057)		0		0		0		0		0		0
Other	0		0		0		0		0		0		0
Embedded Derivatives	(2,705)		0		0		0		0		0		0
Total gains (losses) on derivatives not qualifying as hedge accounting instruments	(1,698)		0		5		0		0		0		0
Total	$	(1,506)	$	298	$	(92)	$	0	$	8	$	15	$	16

__________

(1)Excluding changes related to net investment hedges using non-derivative instruments of $25 million for year ended December 31, 2021, $(21) million for year ended December 31, 2020, and $0 million for year ended December 31, 2019.

Presented below is a rollforward of current period cash flow hedges in AOCI before taxes:


	(in millions)
Balance, December 31, 2018	$	811
Cumulative effect adjustment from the adoption of ASU 2017-12	9
Amount recorded in AOCI
Interest Rate	33
Currency	(56)
Currency/Interest Rate	414
Total amount recorded in AOCI	391
Amount reclassified from AOCI to income
Interest Rate	(58)
Currency	(6)
Currency/Interest Rate	(315)
Total amount reclassified from AOCI to income	(379)
Balance, December 31, 2019	$	832
Amount recorded in AOCI
Interest Rate	47
Currency	(64)
Currency/Interest Rate	(828)
Total amount recorded in AOCI	(845)
Amount reclassified from AOCI to income
Interest Rate	(40)
Currency	(5)
Currency/Interest Rate	(110)
Total amount reclassified from AOCI to income	(155)
Balance, December 31, 2020	$	(168)
Amount recorded in AOCI
Interest Rate	(13)
Currency	44
Currency/Interest Rate	1,709
Total amount recorded in AOCI	1,740
Amount reclassified from AOCI to income
Interest Rate	0
Currency	4
Currency/Interest Rate	(557)
Total amount reclassified from AOCI to income	(553)
Balance, December 31, 2021	$	1,019

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Consolidated Statements of Comprehensive Income; these amounts are then reclassified to earnings when the hedged item affects earnings. Using December 31, 2021 values, it is estimated that a pre-tax gain of approximately $289 million is expected to be reclassified from AOCI to earnings during the subsequent twelve months ending December 31, 2022.

The exposures the Company is hedging with these qualifying cash flow hedges include the variability of future cash flows from forecasted transactions denominated in foreign currencies, the purchases of invested assets, and the receipt or payment of variable interest on existing financial instruments. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions is 30 years.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the

additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. In addition, there were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

For net investment hedges, in addition to derivatives, the Company uses foreign currency denominated debt to hedge the risk of change in the net investment in a foreign subsidiary due to changes in exchange rates. For effective net investment hedges, the amounts, before applicable taxes, recorded in the cumulative translation adjustment within AOCI were $16 million for the year ended December 31, 2021, $(149) million for the year ended December 31, 2020, and $4 million for the year ended December 31 2019.

Credit Derivatives

The following table provides a summary of the notional and fair value of written credit protection, presented as assets (liabilities). The Company’s maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is equal to the notional amounts. These credit derivatives have maturities of less than 26 years for index references.


	December 31, 2021
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total(3)
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(2)	49		0		0		0		2,397		41		0		0		0		0		928		87		3,374		128
Total	$	49	$	0	$	0	$	0	$	2,397	$	41	$	0	$	0	$	0	$	0	$	928	$	87	$	3,374	$	128


	December 31, 2020
	NAIC Rating Designation of Underlying Credit Obligation(1)
	NAIC 1				NAIC 2				NAIC 3				NAIC 4				NAIC 5				NAIC 6				Total
	Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value		Gross Notional		Fair Value
	(in millions)
Single name reference(2)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Index reference(2)	50		0		0		0		3,003		63		0		0		0		0		0		0		3,053		63
Total	$	50	$	0	$	0	$	0	$	3,003	$	63	$	0	$	0	$	0	$	0	$	0	$	0	$	3,053	$	63

_________

(1)The NAIC rating designations are based on availability and the lowest ratings among Moody's Investors Service, Inc. ("Moody's"), Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Inc. (“Fitch”). If no rating is available from a rating agency, a NAIC 6 rating is used.

(2)Single name credit default swaps may reference to the credit of corporate debt, sovereign debt, and structured finance. Index references NAIC designations are based on the lowest rated single name reference included in the index.

(3)Excludes “Assets held-for-sale” with fair value of $54 million and “Liabilities held-for-sale” with fair value of $0 million. See Note 1 for additional information on the pending dispositions.

In addition to writing credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio. As of December 31, 2021 and 2020, the Company had $115 million and $307 million of outstanding notional amounts, reported at fair value as a liability of $1 million and $28 million, respectively

Counterparty Credit Risk

The Company is exposed to losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. The Company manages credit risk by: (i) entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties governed by master netting agreements, as applicable; (ii) trading through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

Substantially all of the Company’s derivative agreements have zero thresholds which require daily full collateralization by the party in a liability position. In addition, certain of the Company’s derivative agreements contain credit-risk related contingent features; if the credit rating of one of the parties to the derivative agreement is to fall below a certain level, the party with positive fair value could request termination at the then fair value or demand immediate full collateralization from the party whose credit rating fell and is in a net liability position.

As of December 31, 2021, there were no net liability derivative positions with counterparties with credit risk-related contingent features. All derivatives have been appropriately collateralized by the Company or the counterparty in accordance with the terms of the derivative agreements.

Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Measurement—Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1—Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. The Company’s Level 1 assets and liabilities primarily include certain cash equivalents and short-term investments, equity securities and derivative contracts that trade on an active exchange market.

Level 2—Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company’s Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not trade in active markets because they are not publicly available), certain commercial mortgage loans, short-term investments and certain cash equivalents (primarily commercial paper), and certain OTC derivatives.

Level 3—Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value. The Company’s Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured OTC derivative contracts, certain consolidated real estate funds for which the Company is the general partner and embedded derivatives resulting from certain products with guaranteed benefits.

Assets and Liabilities by Hierarchy Level—The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated:


	As of December 31, 2021(1)
	Level 1		Level 2		Level 3		Netting(2)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	32,158	$	0	$		$	32,158
Obligations of U.S. states and their political subdivisions	0		12,210		8				12,218
Foreign government bonds	0		94,659		10				94,669
U.S. corporate public securities	0		112,073		82				112,155
U.S. corporate private securities(3)	0		35,344		2,038				37,382
Foreign corporate public securities	0		27,184		125				27,309
Foreign corporate private securities	0		25,966		3,071				29,037
Asset-backed securities(4)	0		11,200		325				11,525
Commercial mortgage-backed securities	0		11,763		1,336				13,099
Residential mortgage-backed securities	0		2,533		325				2,858
Subtotal	0		365,090		7,320				372,410
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		193		0				193
Obligations of U.S. states and their political subdivisions	0		0		0				0
Foreign government bonds	0		761		0				761
Corporate securities	0		103		0				103
Asset-backed securities(4)	0		0		0				0
Commercial mortgage-backed securities	0		0		0				0
Residential mortgage-backed securities	0		0		0				0
Equity securities	862		1,409		0				2,271
All other(5)	2		18		0				20
Subtotal	864		2,484		0				3,348
Fixed maturities, trading	0		8,402		421				8,823
Equity securities	7,386		192		799				8,377
Commercial mortgage and other loans	0		1,263		0				1,263
Other invested assets(6)	409		17,004		493		(14,150)		3,756
Short-term investments	1,199		4,114		330				5,643
Cash equivalents	753		4,436		70				5,259
Other assets	0		0		164				164
Separate account assets(7)(8)	12,305		206,383		1,283				219,971
Total assets	$	22,916	$	609,368	$	10,880	$	(14,150)	$	629,014
Future policy benefits(9)	$	0	$	0	$	9,068	$		$	9,068
Policyholders’ account balances	0		0		1,436				1,436
Other liabilities	33		19,141		0		(17,314)		1,860
Notes issued by consolidated VIEs	0		0		0				0
Total liabilities	$	33	$	19,141	$	10,504	$	(17,314)	$	12,364


	As of December 31, 2020
	Level 1		Level 2		Level 3		Netting(2)		Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	40,298	$	150	$		$	40,448
Obligations of U.S. states and their political subdivisions	0		12,807		4				12,811
Foreign government bonds	0		110,233		11				110,244
U.S. corporate public securities	0		113,486		69				113,555
U.S. corporate private securities(3)	0		38,689		2,248				40,937
Foreign corporate public securities	0		29,384		153				29,537
Foreign corporate private securities	0		28,727		2,865				31,592
Asset-backed securities(4)	0		14,068		523				14,591
Commercial mortgage-backed securities	0		16,294		9				16,303
Residential mortgage-backed securities	0		2,876		11				2,887
Subtotal	0		406,862		6,043				412,905
Assets supporting experience-rated contractholder liabilities:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		212		0				212
Obligations of U.S. states and their political subdivisions	0		231		0				231
Foreign government bonds	0		926		19				945
Corporate securities	0		14,990		482				15,472
Asset-backed securities(4)	0		1,583		114				1,697
Commercial mortgage-backed securities	0		1,839		0				1,839
Residential mortgage-backed securities	0		1,018		0				1,018
Equity securities	1,784		259		0				2,043
All other(5)	50		549		20				619
Subtotal	1,834		21,607		635				24,076
Fixed maturities, trading	0		3,671		243				3,914
Equity securities	6,207		1,131		660				7,998
Commercial mortgage and other loans	0		1,092		0				1,092
Other invested assets(6)	227		23,045		366		(21,367)		2,271
Short-term investments	405		5,728		177				6,310
Cash equivalents	1,476		4,005		1				5,482
Other assets	0		0		268				268
Separate account assets(7)(8)	51,826		250,623		1,821				304,270
Total assets	$	61,975	$	717,764	$	10,214	$	(21,367)	$	768,586
Future policy benefits(9)	$	0	$	0	$	18,879	$		$	18,879
Policyholders’ account balances	0		0		1,914				1,914
Other liabilities	32		17,828		0		(17,475)		385
Notes issued by consolidated VIEs	0		0		0				0
Total liabilities	$	32	$	17,828	$	20,793	$	(17,475)	$	21,178

__________

(1)Excludes amounts for financial instruments reclassified to “Assets held-for-sale of $129,579 million and “Liabilities held-for-sale” of $6,214 million. Assets held-for-sale and liabilities held-for-sale are valued on a basis consistent with similar instruments described herein. See Note 1 for additional information on the pending dispositions.

(2)“Netting” amounts represent cash collateral of $(3,164) million and $3,892 million as of December 31, 2021 and 2020, respectively.

(3)Excludes notes with fair value of $5,995 million (carrying amount of $5,941 million) and $6,100 million (carrying amount of $5,966 million) as of December 31, 2021 and 2020, respectively, which have been offset with the associated payables under a netting agreement.

(4)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(5)All other represents cash equivalents and short-term investments.

(6)Other invested assets excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. At December 31, 2021 and 2020, the fair values of such investments were $4,290 million and $4,136 million respectively.

(7)Separate account assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets. At December 31, 2021 and 2020, the fair value of such investments were $26,174 million and $23,007 million, respectively.

(8)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Consolidated Statements of Financial Position.

(9)As of December 31, 2021, the net embedded derivative liability position of $9,069 million includes $611 million of embedded derivatives in an asset position and $9,680 million of embedded derivatives in a liability position. As of December 31, 2020, the net embedded derivative liability position of $18,879 million includes $520 million of embedded derivatives in an asset position and $19,399 million of embedded derivatives in a liability position.

The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below.

Fixed Maturity Securities—The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices for each security are generally sourced from multiple pricing vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. The pricing hierarchy is updated for new financial products and recent pricing experience with various vendors. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Typical inputs used by these pricing services include but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, and/or estimated cash flow, prepayment speeds and default rates. If the pricing information received from third-party pricing services is deemed not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service or classify the securities as Level 3. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2.

Internally-developed valuations or indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from the independent pricing services is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may override the information with an internally-developed valuation. As of December 31, 2021 and 2020, overrides on a net basis were not material. Pricing service overrides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy.

The Company conducts several specific price monitoring activities. Daily analyses identify price changes over predetermined thresholds defined at the financial instrument level. Various pricing integrity reports are reviewed on a daily and monthly basis to determine if pricing is reflective of market activity or if it would warrant any adjustments. Other procedures performed include, but are not limited to, reviews of third-party pricing services methodologies, reviews of pricing trends and back testing.

The fair values of private fixed maturities, which are originated by internal private asset managers, are primarily determined using discounted cash flow models. These models primarily use observable inputs that include Treasury or similar base rates plus estimated credit spreads to value each security. The credit spreads are obtained through a survey of private market intermediaries who are active in both primary and secondary transactions, and consider, among other factors, the credit quality and the reduced liquidity associated with private placements. Internal adjustments are made to reflect variation in observed sector spreads. Since most private placements are valued using standard market observable inputs and inputs derived from, or corroborated by, market observable data including, but not limited to observed prices and spreads for similar publicly-traded issues, they have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may incorporate significant unobservable inputs, which reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the price of a security, a Level 3 classification is made.

Assets Supporting Experience-Rated Contractholder Liabilities—Assets supporting experience-rated contractholder liabilities consist primarily of fixed maturity securities, equity securities and derivatives whose fair values are determined consistent with similar instruments described above under “Fixed Maturity Securities” and below under “Equity Securities” and “Derivative Instruments.”

Equity Securities—Equity securities consist principally of investments in common and preferred stock of publicly-traded companies, perpetual preferred stock, privately-traded securities, as well as mutual fund shares. The fair values of most publicly-traded equity securities are based on quoted market prices in active markets for identical assets and are classified

within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using discounted cash flow, earnings multiple and other valuation models that require a substantial level of judgment around inputs and therefore are classified within Level 3. The fair values of mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy. The fair values of perpetual preferred stock are based on inputs obtained from independent pricing services that are primarily based on indicative broker quotes. As a result, the fair values of perpetual preferred stock are classified as Level 3.

Commercial Mortgage and Other Loans—The fair value of loans held and accounted for using the fair value option is determined utilizing pricing indicators from the whole loan market, where investors are committed to purchase these loans at a predetermined price, which is considered the principal exit market for these loans. The Company evaluates the valuation inputs used for these assets, including the existence of predetermined exit prices, the terms of the loans, prevailing interest rates and credit risk, and deems the primary pricing inputs are Level 2 inputs in the fair value hierarchy.

Other Invested Assets—Other invested assets primarily include investments in LPs/LLCs, derivatives and certain limited partnerships which are consolidated because the Company is either deemed to exercise control or considered the primary beneficiary of a variable interest entity. These entities are primarily investment companies and follow specialized industry accounting whereby their assets are carried at fair value. The investments held by these entities include various feeder fund investments in underlying master funds (whose underlying holdings generally include public fixed maturities, equity securities and mutual funds), as well as wholly-owned real estate held within other investment funds. For the unconsolidated fund investments, the fair value is primarily determined by the fund managers and is measured at NAV as a practical expedient.

Other Assets—Other assets reflected in Level 3 primarily include reinsurance recoverables which are carried at fair value and relate to the reinsurance of the Company’s living benefit guarantees on certain variable annuity contracts. The methods and assumptions used to estimate the fair value are consistent with those described below under “Future Policy Benefits.”

Derivative Instruments—Derivatives are recorded at fair value either as assets, within “Other invested assets” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, commodity prices, credit spreads, market volatility, expected returns, NPR, liquidity and other factors. For derivative positions included within Level 3 of the fair value hierarchy, liquidity valuation adjustments are made to reflect the cost of exiting significant risk positions, and consider the bid-ask spread, maturity, complexity and other specific attributes of the underlying derivative position.

The Company’s exchange-traded futures and options include Treasury futures, Eurodollar futures, commodity futures, Eurodollar options and commodity options. Exchange-traded futures and options are valued using quoted prices in active markets and are classified within Level 1 in the fair value hierarchy.

The majority of the Company’s derivative positions are traded in the OTC derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models that utilize actively quoted or observable market input from external market data providers, third-party pricing vendors and/or recent trading activity. The Company’s policy is to use mid-market pricing in determining its best estimate of fair value. The fair values of most OTC derivatives, including interest rate and cross-currency swaps, currency forward contracts, commodity forward contracts, credit default swaps, loan commitments held for sale and TBA forward contracts on highly rated mortgage-backed securities issued by U.S. government sponsored entities are determined using discounted cash flow models. The fair values of European style option contracts are determined using Black-Scholes option pricing models. These models’ key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, NPR, volatility and other factors.

The Company’s cleared interest rate swaps and credit derivatives linked to an index are valued using models that utilize actively quoted or observable market inputs, including the secured overnight financing rate (“SOFR”), obtained from external market data providers, third-party pricing vendors and/or recent trading activity. These derivatives are classified as Level 2 in the fair value hierarchy.

The majority of the Company’s derivative agreements are with highly rated major international financial institutions. To reflect the market’s perception of its own and the counterparty’s NPR, the Company incorporates additional spreads over LIBOR into the discount rate used in determining the fair value of OTC derivative assets and liabilities after netting of collateral.

Derivatives classified as Level 3 include look-back equity options and other structured products. These derivatives are valued based upon models, such as Monte Carlo simulation models and other techniques that utilize significant unobservable inputs. Level 3 methodologies are validated through periodic comparison of the Company’s fair values to external broker-dealer values.

Cash Equivalents and Short-Term Investments—Cash equivalents and short-term investments include money market instruments, commercial paper and other highly liquid debt instruments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The remaining instruments in this category are generally fair valued based on market observable inputs and these investments have primarily been classified within Level 2.

Separate Account Assets—Separate account assets include mutual funds, fixed maturity securities, treasuries, equity securities, real estate and commercial mortgage loans for which values are determined consistent with similar instruments described above under “Fixed Maturity Securities,” “Equity Securities” and “Commercial Mortgage and Other Loans.”

Future Policy Benefits—The liability for future policy benefits is related to guarantees primarily associated with the living benefit features of certain variable annuity contracts offered by the Company’s Individual Annuities segment, including guaranteed minimum accumulation benefits (“GMAB”), guaranteed withdrawal benefits (“GMWB”) and guaranteed minimum income and withdrawal benefits (“GMIWB”), accounted for as embedded derivatives. The fair values of these liabilities are calculated as the present value of future expected benefit payments to customers less the present value of future expected rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or asset balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally-developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management’s judgment.

The significant inputs to the valuation models for these embedded derivatives include capital market assumptions, such as interest rate levels and volatility assumptions, the Company’s market-perceived NPR, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy.

Capital market inputs and actual policyholders’ account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets and volatility. In the risk neutral valuation, the initial swap curve drives the total return used to grow the policyholders’ account values. The Company’s discount rate assumption is based on the LIBOR swap curve adjusted for an additional spread relative to LIBOR to reflect NPR.

Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data. These assumptions are generally updated annually unless a material change that the Company feels is indicative of a long-term trend is observed in an interim period.

Policyholders’ Account Balances—The liability for policyholders’ account balances is related to certain embedded derivative instruments associated with certain universal life and annuity products that provide the policyholders with the index-linked interest credited over contract specified term periods. The fair values of these liabilities are determined using discounted cash flow models which include capital market assumptions such as interest rates and equity index volatility assumptions, the Company’s market-perceived NPR and actuarially determined assumptions for mortality, lapses and projected hedge costs.

As there is no observable active market for these liabilities, the fair value is determined as the present value of account balances paid to policyholders in excess of contractually guaranteed minimums using option pricing techniques for index term periods that contain deposits as of the valuation date, and the expected option cost for future index term periods, where the terms of index crediting rates have not yet been declared by the Company. Premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows are also incorporated in the fair value of these liabilities. Since the valuation of these liabilities require the use of management’s judgement to determine these risk premiums and the use of unobservable inputs, these liabilities are reflected within Level 3 in the fair value hierarchy.

Capital market inputs, including interest rates and equity markets volatility, and actual policyholders’ account values are updated each quarter. Actuarial assumptions are reviewed at least annually and updated based upon emerging experience, future expectations and other data, including any observable market data. Aside from these annual updates, assumptions are generally updated only if a material change is observed in an interim period that the Company believes is indicative of a long-term trend.

Other Liabilities—Other liabilities include certain derivative instruments and the contingent consideration liability associated with the acquisition of Assurance IQ. The fair values of derivative instruments are primarily determined consistent with those described above under “Derivative Instruments.” For the contingent consideration liability, see Note 1 for additional information.

Notes issued by Consolidated VIEs—These notes are based on the fair values of corresponding bank loan collateral. Since the notes are valued based on reference collateral, they are classified as Level 3. See Note 4 and “Fair Value Option” below for additional information.

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities—The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities:

As of December 31, 2021

Fair Value

Valuation
Techniques

Unobservable Inputs

Minimum

Maximum

Weighted
Average

Impact of
Increase in
Input on
Fair
Value(1)

(in millions)

Assets:

Corporate securities(2)(3)

$

4,800

Discounted cash flow(5)

Discount rate

0.31%

20%

5.00%

Decrease

Market comparables

EBITDA multiples(4)

4.1X

19.2X

8.9X

Increase

Liquidation

Liquidation value

11.31%

62.58%

55.57%

Increase

Equity securities

$

277

Discounted cash flow(5)

Discount rate

0.5%

20%

Decrease

Market comparables

EBITDA multiples(4)

1X

7.5X

4.0X

Increase

Net Asset Value

Share price

$1

$1,498

$594

Increase

Separate account assets-commercial mortgage loans(6)

$

150

Discounted cash flow

Spread

1.05%

1.98%

1.18%

Decrease

Liabilities:

Future policy benefits(7)

$

9,068

Discounted cash flow

Lapse rate(9)

1%

20%

Decrease

Spread over LIBOR(10)

0.03%

1.14%

Decrease

Utilization rate(11)

39%

96%

Increase

Withdrawal rate

See table footnote (12) below.

Mortality rate(13)

0%

15%

Decrease

Equity volatility curve

16%

25%

Increase

Policyholders’ account balances(8)

$

1,436

Discounted
cash flow

Lapse rate(9)

1%

6%

Decrease

Spread over LIBOR(10)

0.03%

1.14%

Decrease

Mortality rate(13)

0%

23%

Decrease

Equity volatility curve

12%

27%

Increase

As of December 31, 2020

Fair Value

Valuation
Techniques

Unobservable Inputs

Minimum

Maximum

Weighted
Average

Impact of
Increase in
Input on
Fair
Value(1)

(in millions)

Assets:

Corporate securities(2)(3)

$

3,697

Discounted cash flow(5)

Discount rate

0.40%

25%

4.28%

Decrease

Market comparables

EBITDA multiples(4)

7.0X

15.0X

9.0X

Increase

Liquidation

Liquidation value

12.13%

15.00%

13.02%

Increase

Equity securities

$

195

Discounted cash flow(5)

Discount rate

0.5%

20%

Decrease

Market comparables

EBITDA multiples(4)

1X

8.8X

3.3X

Increase

Net Asset Value

Share price

$1

$1,414

$495

Increase

Separate account assets-commercial mortgage loans(6)

$

775

Discounted cash flow

Spread

1.60%

2.98%

1.80%

Decrease

Liabilities:

Future policy benefits(7)

$

18,879

Discounted cash flow

Lapse rate(9)

1%

20%

Decrease

Spread over LIBOR(10)

0.06%

1.17%

Decrease

Utilization rate(11)

39%

96%

Increase

Withdrawal rate

See table footnote (12) below.

Mortality rate(13)

0%

15%

Decrease

Equity volatility curve

18%

26%

Increase

Policyholders’ account balances(8)

$

1,914

Discounted
cash flow

Lapse rate(9)

1%

42%

Decrease

Spread over LIBOR(10)

0.06%

1.17%

Decrease

Mortality rate(13)

0%

24%

Decrease

Equity volatility curve

6%

42%

Increase

__________

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

(2)Includes assets classified as fixed maturities available-for-sale, assets supporting experience-rated contractholder liabilities and fixed maturities, trading.

(3)Excludes notes which have been offset with the associated payables under a netting agreement.

(4)Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.

(5)Includes certain investments where enterprise value is less than the amount needed to support senior and subordinated claims. These investments typically use a range of discount rates (10% to 20%), therefore presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(6)Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Consolidated Statements of Operations.

(7)Future policy benefits primarily represent general account liabilities for the living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(8)Policyholders’ account balances primarily represent general account liabilities for the index-linked interest credited on certain of the Company’s life and annuity products that are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than a weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(9)Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. For any given contract, lapse rates vary throughout the period over which cash flows are projected for the purposes of valuing these embedded derivatives.

(10)The spread over the LIBOR swap curve represents the premium added to the proxy for the risk-free rate (LIBOR) to reflect the Company’s estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements, living benefit guarantees, and index-linked interest crediting guarantees are insurance liabilities and are therefore senior to debt.

(11)The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status, and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(12)The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of both December 31, 2021 and 2020, the minimum withdrawal rate assumption is 76% and maximum withdrawal rate assumption may be greater than 100%.The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(13)The range reflects the mortality rates for the vast majority of business with living benefits and other contracts, with policyholders ranging from 45 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits. Mortality rates may vary by product, age, and duration. A mortality improvement assumption is also incorporated into the overall mortality table.

Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another or multiple inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities—The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term, and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors.

Future Policy Benefits—The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Changes in Level 3 Assets and Liabilities––The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.


	Year Ended December 31, 2021
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3(2)		Fair Value, end of period		Unrealized gains (losses) for assets still held(3)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	150	$	0	$	0	$	(150)	$	0	$	0	$	0	$	0	$	0	$	0	$	0
U.S. states	4		0		0		0		0		0		4		0		0		8		0
Foreign government	11		0		0		0		0		(1)		0		0		0		10		0
Corporate securities(4)	5,335		(204)		1,560		(47)		114		(1,278)		(8)		386		(542)		5,316		(258)
Structured securities(5)	543		90		1,546		(3)		0		(248)		10		1,779		(1,731)		1,986		62
Assets supporting experience-rated contractholder liabilities:
Foreign government	19		0		0		(14)		0		(5)		0		0		0		0		0
Corporate securities(4)	482		6		17		0		0		(113)		(157)		71		(306)		0		0
Structured securities(5)	114		(5)		221		(8)		0		(38)		0		2		(286)		0		0
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	20		0		1		(1)		0		(20)		0		0		0		0		0
Other assets:
Fixed maturities, trading	243		36		50		(55)		0		(21)		161		52		(45)		421		34
Equity securities	660		117		171		(98)		0		(24)		(31)		76		(72)		799		145
Other invested assets	366		39		193		(55)		0		(50)		0		0		0		493		40
Short-term investments	177		1		783		0		0		(597)		(26)		5		(13)		330		(1)
Cash equivalents	1		(1)		82		0		0		0		(4)		0		(8)		70		(1)
Other assets	268		(74)		55		0		0		(9)		0		0		(76)		164		(44)
Separate account assets(6)	1,821		326		298		(81)		0		(30)		(615)		67		(503)		1,283		199
Liabilities:
Future policy benefits	(18,879)		6,959		0		0		(1,322)		0		12		0		4,162		(9,068)		4,654
Policyholders’ account balances(7)	(1,914)		(1,174)		0		0		(389)		0		0		1		2,040		(1,436)		(10)
Other liabilities	0		0		0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0		0		0


	Year Ended December 31, 2021
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(3)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)(8)
	(in millions)
Fixed maturities, available-for-sale	$	45	$	0	$	0	$	(163)	$	4	$	(43)	$	0	$	0	$	(153)
Assets supporting experience-rated contractholder liabilities	0		(6)		0		0		7		0		0		0		0
Other assets:
Fixed maturities, trading	0		36		0		0		0		0		34		0		0
Equity securities	0		117		0		0		0		0		145		0		0
Other invested assets	7		32		0		0		0		6		34		0		0
Short-term investments	0		0		0		0		1		(1)		0		0		0
Cash equivalents	(1)		0		0		0		0		(1)		0		0		0
Other assets	(113)		0		0		39		0		(44)		0		0		0
Separate account assets(6)	0		0		326		0		0		0		0		199		0
Liabilities:
Future policy benefits	6,959		0		0		0		0		4,654		0		0		0
Policyholders’ account balances	(1,174)		0		0		0		0		(10)		0		0		0
Other liabilities	0		0		0		0		0		0		0		0		0
Notes issued by consolidated VIEs	0		0		0		0		0		0		0		0		0


	Year Ended December 31, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(3)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	105	$	0	$	45	$	0	$	0	$	0	$	0	$	0	$	0	$	150	$	0
U.S. states	4		0		0		0		0		0		0		0		0		4		0
Foreign government	22		0		0		0		0		0		0		1		(12)		11		0
Corporate securities(4)	3,236		274		1,144		(127)		0		(1,021)		(16)		2,178		(333)		5,335		203
Structured securities(5)	948		(8)		685		(18)		0		(547)		156		178		(851)		543		(11)
Assets supporting experience-rated contractholder liabilities:
Foreign government	24		0		0		0		0		(5)		0		0		0		19		0
Corporate securities(4)	637		(17)		6		(9)		0		(182)		(19)		99		(33)		482		(25)
Structured securities(5)	69		(1)		191		0		0		(33)		0		1		(113)		114		3
Equity securities	0		0		0		0		0		0		0		0		0		0		0
All other activity	0		0		134		0		0		(5)		(2)		0		(107)		20		0
Other assets:
Fixed maturities, trading	287		(24)		33		(33)		0		0		9		19		(48)		243		(24)
Equity securities	633		14		59		(50)		0		(6)		11		0		(1)		660		11
Other invested assets	567		7		209		0		4		(5)		(415)		8		(9)		366		7
Short-term investments	155		1		327		0		0		(115)		(48)		0		(143)		177		(1)
Cash equivalents	131		0		0		0		0		0		(130)		0		0		1		0
Other assets	113		87		69		0		0		(1)		0		0		0		268		88
Separate account assets(6)	1,717		143		242		(71)		0		(84)		0		43		(169)		1,821		157
Liabilities:
Future policy benefits	(12,831)		(4,837)		0		0		(1,304)		0		93		0		0		(18,879)		(5,263)
Policyholders’ account balances(7)	(1,316)		(228)		0		0		(370)		0		0		0		0		(1,914)		(155)
Other liabilities	(105)		105		0		0		0		0		0		0		0		0		105
Notes issued by consolidated VIEs	(800)		25		0		0		0		0		775		0		0		0		25


	Year Ended December 31, 2020
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(3)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)(8)
	(in millions)
Fixed maturities, available-for-sale	$	(111)	$	0	$	0	$	368	$	9	$	(139)	$	0	$	0	$	331
Assets supporting experience-rated contractholder liabilities	0		(22)		0		0		4		0		(22)		0		0
Other assets:
Fixed maturities, trading	0		(25)		0		0		1		0		(24)		0		0
Equity securities	0		14		0		0		0		0		11		0		0
Other invested assets	0		7		0		0		0		0		7		0		0
Short-term investments	1		0		0		0		0		(1)		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0		0
Other assets	87		0		0		0		0		88		0		0		0
Separate account assets(6)	0		0		143		0		0		0		0		157		0
Liabilities:
Future policy benefits	(4,837)		0		0		0		0		(5,263)		0		0		0
Policyholders’ account balances	(228)		0		0		0		0		(155)		0		0		0
Other liabilities	0		105		0		0		0		0		105		0		0
Notes issued by consolidated VIEs	0		25		0		0		0		0		25		0		0

The following tables summarize the portion of changes in fair values of Level 3 assets and liabilities included in earnings and OCI for the year ended December 31, 2019, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held as of December 31, 2019:


	Year Ended December 31, 2019
	Total realized and unrealized gains (losses)										Unrealized gains (losses) for assets still held(3)
	Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances		Included in other comprehensive income (losses)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Interest credited to policyholders’ account balances
	(in millions)
Fixed maturities, available-for-sale	$	(67)	$	0	$	0	$	86	$	18	$	(98)	$	0	$	0
Assets supporting experience-rated contractholder liabilities	0		(4)		0		0		9		0		(5)		0
Other assets:
Fixed maturities, trading	0		(27)		0		0		1		0		(27)		0
Equity securities	0		42		0		0		0		0		34		0
Other invested assets	(1)		12		0		0		0		(1)		0		0
Short-term investments	0		0		0		0		0		0		0		0
Cash equivalents	0		0		0		0		0		0		0		0
Other assets	44		0		0		0		0		44		0		0
Separate account assets(6)	0		0		180		0		4		0		0		170
Liabilities:
Future policy benefits	(2,685)		0		0		0		0		(2,999)		0		0
Policyholders’ account balances	(933)		0		0		0		0		(917)		0		0
Other liabilities	0		(5)		0		0		0		0		(5)		0
Notes issued by consolidated VIEs	15		0		0		0		0		15		0		0

__________

(1)“Other,” for the periods ended December 31, 2021 and 2020, primarily represent deconsolidation of VIE, reclassifications of certain assets between reporting categories and foreign currency translation.

(2)Transfers out of level 3 for the period ended December 31, 2021, included $218 million of corporate securities and $79 million of structured securities reclassified from Fixed maturities, available for sale to “Assets held-for-sale”, and $4,162 million of Future Policy Benefits and $2,040 million of Policyholders’ account balances reclassified to "Liabilities held-for-sale". See Note 1 for additional information on the pending dispositions.

(3)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(4)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(5)Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities.

(6)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Consolidated Statements of Financial Position.

(7)Issuances and settlements for Policyholders’ account balances are presented net in the rollforward. Prior period amounts have been updated to conform to current period presentation.

(8)Effective January 1, 2020, the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period were added prospectively due to adoption of ASU 2018-13. Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

Derivative Fair Value Information

The following tables present the balances of certain derivative assets and liabilities measured at fair value on a recurring basis, as of the date indicated, by primary underlying risks. These tables exclude embedded derivatives and associated reinsurance recoverables. The derivative assets and liabilities shown below are included in “Other invested assets” or “Other liabilities” in the tables contained within the sections “—Assets and Liabilities by Hierarchy Level” and “—Changes in Level 3 Assets and Liabilities,” above.


	As of December 31, 2021
	Level 1		Level 2		Level 3		Netting(1)		Total

	(in millions)
Derivative assets:(2)
Interest Rate	$	76	$	12,086	$	1	$		$	12,163
Currency	0		1,108		0				1,108
Credit	0		128		0				128
Currency/Interest Rate	0		1,902		0				1,902
Equity	242		1,872		1				2,115
Commodity	0		0		0				0
Netting(1)							(14,150)		(14,150)
Total derivative assets	$	318	$	17,096	$	2	$	(14,150)	$	3,266
Derivative liabilities:(2)
Interest Rate	$	9	$	14,777	$	0	$		$	14,786
Currency	0		1,316		0				1,316
Credit	0		1		0				1
Currency/Interest Rate	0		409		0				409
Equity	11		3,069		0				3,080
Commodity	0		0		0				0
Netting(1)							(17,314)		(17,314)
Total derivative liabilities	$	20	$	19,572	$	0	$	(17,314)	$	2,278


	As of December 31, 2020
	Level 1		Level 2		Level 3		Netting(1)		Total

	(in millions)
Derivative assets:
Interest Rate	$	99	$	19,091	$	0	$		$	19,190
Currency	0		832		0				832
Credit	0		63		0				63
Currency/Interest Rate	0		1,415		0				1,415
Equity	128		1,645		0				1,773
Commodity	0		0		0				0
Netting(1)							(21,367)		(21,367)
Total derivative assets	$	227	$	23,046	$	0	$	(21,367)	$	1,906
Derivative liabilities:
Interest Rate	$	5	$	13,503	$	0	$		$	13,508
Currency	0		763		0				763
Credit	0		28		0				28
Currency/Interest Rate	0		1,638		0				1,638
Equity	25		2,305		0				2,330
Commodity	0		0		0				0
Netting(1)							(17,475)		(17,475)
Total derivative liabilities	$	30	$	18,237	$	0	$	(17,475)	$	792

__________

(1)“Netting” amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting agreement.

(2)Excludes “Assets held-for-sale” with fair value of $1,643 million and “Liabilities held-for-sale” with fair value of $1,503 million. See Note 1 for additional information on the pending dispositions.

Changes in Level 3 derivative assets and liabilities—The following tables provide a summary of the changes in fair value of Level 3 derivative assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods:


	Year Ended December 31, 2021
	Fair Value, beginning of period		Total realized and unrealized gains (losses) (4)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3 (2)		Transfers out of Level 3 (2)		Fair Value, end of period		Unrealized gains (losses) for assets still held (4)
	(in millions)
Net Derivative - Equity	$	0	$	1	$	1	$	0	$	0	$	(1)	$	0	$	0	$	0	$	1	$	1
Net Derivative - Interest Rate	0		1		0		0		0		0		0		0		0		1		1


	Year Ended December 31, 2020
	Fair Value, beginning of period		Total realized and unrealized gains (losses) (4)		Purchases		Sales		Issuances		Settlements		Other(1)		Transfers into Level 3 (2)		Transfers out of Level 3 (2)		Fair Value, end of period		Unrealized gains (losses) for assets still held (4)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	1		(1)		0		0		0		0		0		0		0		0		0


	Year Ended December 31, 2019
	Fair Value, beginning of period		Total realized and unrealized gains (losses) (4)		Purchases		Sales		Issuances		Settlements		Other(3)		Transfers into Level 3 (2)		Transfers out of Level 3 (2)		Fair Value, end of period		Unrealized gains (losses) for assets still held (4)
	(in millions)
Net Derivative - Equity	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Net Derivative - Interest Rate	2		(1)		0		0		0		0		0		0		0		1		(2)

__________

(1)Represents conversion of warrants to equity shares.

(2)Transfers into or out of Level 3 are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such positions still held at the end of the quarter.

(3)Related to warrants received in restructuring a certain asset that resulted in reclassification of reporting category.

(4)Total realized and unrealized gains (losses) as well as unrealized gains (losses) for assets still held at the end of the period are recorded in “Realized investment gains (losses), net.”

Nonrecurring Fair Value Measurements—The following tables represent information for assets measured at fair value on a nonrecurring basis. The fair value measurement is nonrecurring as these assets are measured at fair value only when there is a triggering event (e.g., an evidence of impairment). Assets included in the table are those that were impaired during the respective reporting periods and that are still held as of the reporting date. The estimated fair values for these amounts were determined using significant unobservable inputs (Level 3).


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Realized gains (losses) net:
Commercial mortgage loans(1)	$	0	$	0	$	2
Mortgage servicing rights(2)	$	6	$	(25)	$	11
Investment real estate	$	(15)	$	(24)	$	0
Goodwill Impairment(3)	$	(1,060)	$	0	$	0


	Year Ended December 31,
	2021		2020
	(in millions)
Carrying value after measurement as of period end
Commercial mortgage loans(1):	$	0	$	0
Mortgage servicing rights(2):	$	75	$	307
Investment real estate	$	326	$	31
Goodwill(3)	$	1,080	$	0

__________

(1)Commercial mortgage loans are valued based on discounted cash flows utilizing market rates or the fair value of the underlying real estate collateral.

(2)Mortgage servicing rights are valued using a discounted cash flow model. The model incorporates assumptions for servicing revenues, which are adjusted for expected prepayments, delinquency rates, escrow deposit income and estimated loan servicing expenses. The discount rates incorporated into the model are determined based on the estimated returns a market participant would require for this business plus a liquidity and risk premium. This estimate includes available relevant data from any active market sales of mortgage servicing rights.

(3)Based on the goodwill impairment test performed as of December 31, 2021, the Company recognized a goodwill impairment charge for Assurance IQ. The fair value was determined using weighting of both market approach valuation techniques, based on both sales and EBITDA forward multiples, and discounted cash flow approach valuation techniques. The valuation included unobservable inputs such as forward market multiples of comparable peer companies and an implied control premium under the market approaches, as well as forecasted cash flows, discount rate applied, expected synergies and growth rate assumptions under the discounted cash flow approaches. The inputs and assumptions applied are consistent with how a market participant would value Assurance IQ and the related goodwill. See Note 10 for more information on the valuation of Assurance IQ and the resulting impairment charge.

Fair Value Option

The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made by the Company to help mitigate volatility in earnings that result from different measurement attributes. Electing the fair value option also allows the Company to achieve consistent accounting for certain assets and liabilities. Changes in fair value are reflected in “Realized investment

gains (losses), net” for commercial mortgage and other loans and “Other income (loss)” for other assets and notes issued by consolidated VIEs. Changes in fair value due to instrument-specific credit risk are estimated using changes in credit spreads and quality ratings for the period reported. Interest income on commercial mortgage and other loans is included in “Net investment income.” Interest income on these loans is recorded based on the effective interest rate as determined at the closing of the loan.

The following tables present information regarding assets and liabilities where the fair value option has been elected:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Liabilities:
Notes issued by consolidated VIEs:
Changes in fair value	$	0	$	(25)	$	(15)


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Commercial mortgage and other loans:
Interest income	$	15	$	17	$	20
Notes issued by consolidated VIEs:
Interest expense	$	0	$	32	$	45


	Year Ended December 31,
	2021		2020
	(in millions)
Commercial mortgage and other loans(1):
Fair value as of period end	$	1,263	$	1,092
Aggregate contractual principal as of period end	$	1,253	$	1,073
Other assets:
Fair value as of period end	$	59	$	10
Notes issued by consolidated VIEs:
Fair value as of period end	$	0	$	0
Aggregate contractual principal as of period end	$	0	$	0

__________

(1)As of December 31, 2021, for loans for which the fair value option has been elected, there were no loans in non-accrual status and none of the loans were more than 90 days past due and still accruing.

Fair Value of Financial Instruments

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.


	December 31, 2021(1)
	Fair Value								Carrying Amount(2)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(3)	$	0	$	1,794	$	9	$	1,803	$	1,514
Assets supporting experience-rated contractholder liabilities	3		7		0		10		10
Commercial mortgage and other loans	0		64		59,937		60,001		57,403
Policy loans	0		0		10,386		10,386		10,386
Other invested assets	0		81		0		81		81
Short-term investments	972		20		0		992		992
Cash and cash equivalents	7,108		521		0		7,629		7,629
Accrued investment income	0		2,855		0		2,855		2,855
Other assets	47		2,677		39		2,763		2,762
Total assets	$	8,130	$	8,019	$	70,371	$	86,520	$	83,632
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	33,550	$	38,831	$	72,381	$	71,290
Securities sold under agreements to repurchase	0		10,185		0		10,185		10,185
Cash collateral for loaned securities	0		4,251		0		4,251		4,251
Short-term debt	0		518		204		722		722
Long-term debt(4)	613		20,414		899		21,926		18,622
Notes issued by consolidated VIEs	0		0		274		274		274
Other liabilities	0		7,053		53		7,106		7,106
Separate account liabilities—investment contracts	0		28,567		24,847		53,414		53,414
Total liabilities	$	613	$	104,538	$	65,108	$	170,259	$	165,864


	December 31, 2020
	Fair Value								Carrying Amount(2)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(3)	$	0	$	2,209	$	89	$	2,298	$	1,930
Assets supporting experience-rated contractholder liabilities	39		0		0		39		39
Commercial mortgage and other loans	0		107		67,477		67,584		64,333
Policy loans	0		0		11,271		11,271		11,271
Other invested assets	0		153		0		153		153
Short-term investments	1,464		26		0		1,490		1,490
Cash and cash equivalents	7,951		268		0		8,219		8,219
Accrued investment income	0		3,193		0		3,193		3,193
Other assets	154		2,917		449		3,520		3,517
Total assets	$	9,608	$	8,873	$	79,286	$	97,767	$	94,145
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	36,820	$	73,653	$	110,473	$	107,526
Securities sold under agreements to repurchase	0		10,894		0		10,894		10,894
Cash collateral for loaned securities	0		3,499		0		3,499		3,499
Short-term debt	0		794		146		940		925
Long-term debt(4)	644		21,685		1,139		23,468		19,718
Notes issued by consolidated VIEs	0		0		305		305		305
Other liabilities	0		7,626		48		7,674		7,674
Separate account liabilities—investment contracts	0		86,046		23,631		109,677		109,677
Total liabilities	$	644	$	167,364	$	98,922	$	266,930	$	260,218

__________

(1)Excludes amounts for financial instruments reclassified to “Assets held-for-sale” of $6,936 million or “Liabilities held-for-sale” of $101,992 million. See Note 1 for additional information on the pending dispositions.

(2)Carrying values presented herein differ from those in the Company’s Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments.

(3)Excludes notes with fair value of $5,394 million (carrying amount of $4,750 million) and $5,821 million (carrying amount of $4,998 million) as of December 31, 2021 and 2020, respectively, which have been offset with the associated payables under a netting agreement.

(4)Includes notes with fair value of $11,389 million (carrying amount of $10,691 million) and $11,921 million (carrying amount of $10,964 million) as of December 31, 2021 and 2020, respectively, which have been offset with the associated receivables under a netting agreement.

The fair values presented above have been determined by using available market information and by applying market valuation methodologies, as described in more detail below.

Fixed Maturities, Held-to-Maturity

The fair values of public fixed maturity securities are generally based on prices from third-party pricing services, which are reviewed for reasonableness; however, for certain public fixed maturity securities and investments in private placement fixed maturity securities, this information is either not available or not reliable. For these public fixed maturity securities, the fair value is based on indicative broker quotes, if available, or determined using a discounted cash flow model or other internally-developed models. For private fixed maturities, fair value is determined using a discounted cash flow model. In determining the fair value of certain fixed maturity securities, the discounted cash flow model may also use unobservable inputs, which reflect the Company’s own assumptions about the inputs market participants would use in pricing the security.

Commercial Mortgage and Other Loans

The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate or foreign government bond rate (for non-U.S. dollar-denominated loans) plus

an appropriate credit spread for loans of similar quality, average life and currency. The quality ratings for these loans, a primary determinant of the credit spreads and a significant component of the pricing process, are based on an internally-developed methodology. Certain commercial mortgage loans are valued incorporating other factors, including the terms of the loans, the relative strength of the underlying collateral, the principal exit strategies for the loans, prevailing interest rates and credit risk.

Policy Loans

The Company’s valuation technique for policy loans is to discount cash flows at the current policy loan coupon rate. Policy loans are fully collateralized by the cash surrender value of underlying insurance policies. As a result, the carrying value of the policy loans approximates the fair value.

Short-Term Investments, Cash and Cash Equivalents, Accrued Investment Income and Other Assets

The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. These assets include: certain short-term investments, which are not securities, recorded at amortized cost and include quality loans; cash and cash equivalent instruments; accrued investment income; and other assets that meet the definition of financial instruments, including receivables, such as reinsurance recoverables, unsettled trades, accounts receivable and restricted cash.

Policyholders’ Account Balances—Investment Contracts

Only the portion of policyholders’ account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities, single premium endowments, payout annuities and other similar contracts without life contingencies, fair values are generally derived using discounted projected cash flows based on interest rates that are representative of the Company’s financial strength ratings, and hence reflect the Company’s NPR. For GICs, funding agreements, structured settlements without life contingencies and other similar products, fair values are generally derived using discounted projected cash flows based on interest rates being offered for similar contracts with maturities consistent with those of the contracts being valued. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. For defined contribution and defined benefit contracts and certain other products, the fair value is the market value of the assets supporting the liabilities.

Securities Sold Under Agreements to Repurchase

The Company receives collateral for selling securities under agreements to repurchase, or pledges collateral under agreements to resell. Repurchase and resale agreements are also generally short-term in nature and, therefore, the carrying amounts of these instruments approximate fair value.

Cash Collateral for Loaned Securities

Cash collateral for loaned securities represents the collateral received or paid in connection with loaning or borrowing securities, similar to the securities sold under agreement to repurchase above. Due to the short-term nature of these transactions, the carrying value approximates fair value.

Debt

The fair value of short-term and long-term debt, as well as notes issued by consolidated VIEs, is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. With the exception of the notes issued by consolidated VIEs for which recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company, the fair values of these instruments consider the Company’s NPR. Discounted cash flow models predominately use market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities. For commercial paper issuances and other debt with a maturity of less than 90 days, the carrying value approximates fair value.

Other Liabilities

Other liabilities are primarily payables, such as reinsurance payables, unsettled trades, drafts and accrued expense payables. Due to the short-term until settlement of most of these liabilities, the Company believes that carrying value approximates fair value.

Separate Account Liabilities—Investment Contracts

Only the portion of separate account liabilities related to products that are investment contracts are reflected in the table above. Separate account liabilities are recorded at the amount credited to the contractholder, which reflects the change in fair value of the corresponding separate account assets including contractholder deposits less withdrawals and fees; therefore, carrying value approximates fair value.

Deferred Policy Acquisition Costs Disclosures [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2021

Deferred Policy Acquisition Costs

DEFERRED POLICY ACQUISITION COSTS

The balances of and changes in DAC as of and for the years ended December 31, are as follows:


	2021		2020		2019
	(in millions)
Balance, beginning of period	$	19,027	$	19,912	$	20,058
Capitalization of commissions, sales and issue expenses	2,548		2,763		2,966
Amortization—Impact of assumption and experience unlocking and true-ups	35		(36)		(164)
Amortization—All other	(2,132)		(2,185)		(2,168)
Change due to unrealized investment gains and losses	717		(379)		(713)
Foreign currency translation	(457)		142		(8)
Reclassified to “Assets held-for-sale”(1)	(1,197)		0		0
Other(2)	(349)		(1,190)		(59)
Balance, end of period	$	18,192	$	19,027	$	19,912

__________

(1)See Note 1 for additional information on the pending dispositions.

(2)“Other” for 2021 represents the sale of The Prudential Life Insurance Company of Taiwan Inc. “Other” for 2020 primarily represents the impact related to the sale of The Prudential Life Insurance Company of Korea, Ltd. of $(1,193) million. “Other” for 2019 primarily represents the impact related to the sale of the Company’s Pramerica of Italy subsidiary of $(46) million and DAC ceded to a third-party reinsurer of $(14) million.

Value of Business Acquired

12 Months Ended

Dec. 31, 2021

Present Value of Future Insurance Profits [Abstract]

Value of Business Acquired

VALUE OF BUSINESS ACQUIRED

The balances of and changes in VOBA as of and for the years ended December 31, are as follows:


	2021		2020		2019
	(in millions)
Balance, beginning of period	$	1,103	$	1,110	$	1,850

Amortization—Impact of assumption and experience unlocking and true-ups	5		(317)		(139)
Amortization—All other	(124)		(212)		(235)
Change due to unrealized investment gains and losses	67		418		(478)
Interest	25		56		64
Foreign currency translation	(90)		48		10
Reclassified to “Assets held-for-sale”(1)	(215)		0		0
Other	0		0		38
Balance, end of period	$	771	$	1,103	$	1,110

__________

(1)See Note 1 for additional information on the pending dispositions.

The following table provides VOBA balances for the year ended December 31, 2021:


	VOBA Balance
	(in millions)
CIGNA	$	29

Gibraltar Life	740
Gibraltar BSN Life Berhad	2
Total(1)	$	771

__________

(1)Excludes “Assets held-for-sale” of $215 million as of December 31, 2021. See Note 1 for additional information on the pending dispositions.

The following table provides estimated future amortization, net of interest, for the periods indicated:


	2022		2023		2024		2025		2026		Thereafter		Total
	(in millions)
Estimated future VOBA amortization(1)	$	73	$	66	$	61	$	56	$	52	$	463	$	771

__________

(1)VOBA classified as “Assets held-for-sale” of $215 million as of December 31, 2021 is excluded from the estimated future amortization amounts. See Note 1 for additional information on the pending dispositions.

Investments In Operating Joint Ventures

12 Months Ended

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investments In Operating Joint Ventures

INVESTMENTS IN OPERATING JOINT VENTURES

The Company has made investments in certain joint ventures that are strategic in nature and made other than for the sole purpose of generating investment income. These investments are primarily accounted for under the equity method of accounting and are included in “Other assets” in the Company’s Consolidated Statements of Financial Position. The earnings from these investments are primarily included on an after-tax basis in “Equity in earnings of operating joint ventures, net of taxes” in the Company’s Consolidated Statements of Operations. The summarized financial information for the Company’s operating joint ventures has been included in the summarized combined financial information for all significant equity method investments shown in Note 3.

The following table sets forth information related to the Company’s investments in operating joint ventures as of and for the years ended December 31:


	2021(1)		2020		2019
	(in millions)
Investment in operating joint ventures	$	1,317	$	1,394	$	1,309
Dividends received from operating joint ventures	$	116	$	60	$	70
After-tax equity in earnings of operating joint ventures	$	87	$	96	$	100

__________

(1)In March of 2021, the Company sold its 35% ownership stake in Pramerica SGR, an asset management joint venture within PGIM. See Note 1 for additional information on the disposition.

For the years ended December 31, 2021, 2020 and 2019, the Company recognized $11 million, $30 million and $29 million, respectively, of asset management fee income for services the Company provided to these operating joint ventures.

Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

GOODWILL AND OTHER INTANGIBLES

The changes in the carrying value of goodwill by reportable segment are as follows:


	PGIM		Assurance IQ		International Businesses		Corporate and Other(1)		Other(1)		Total
	(in millions)
Goodwill balance, December 31, 2018:	$	233	$	0	$	164	$	456	$	10	$	863
Acquisitions	22		2,128		0		0		0		2,150
Foreign currency translation	(1)		0		1		0		0		0
Goodwill balance, December 31, 2019:	254		2,128		165		456		10		3,013
Foreign currency translation and other(2)	4		12		(21)		27		0		22
Goodwill balance, December 31, 2020:	258		2,140		144		483		10		3,035
Acquisitions(3)	304		0		0		0		0		304
Impairments	0		(1,060)		0		0		0		(1,060)
Foreign currency translation	(4)		0		(14)		(2)		0		(20)
Reclassified to “Assets held-for-sale”(4)	0		0		0		(455)		0		(455)
Goodwill balance, December 31, 2021:	$	558	$	1,080	$	130	$	26	$	10	$	1,804

__________

(1)Prior period amounts have been reclassified to conform to current period presentation.

(2)The goodwill associated with Assurance IQ includes a measurement period adjustment made during 2020. The goodwill reclassification between International Businesses and Corporate and Other relates to an operation that became classified as a divested business and transferred to Corporate and Other during 2020.

(3)During 2021, PGIM completed the acquisitions of Montana Capital Partners, a European-based private equity secondaries asset manager, and Green Harvest Asset Management LLC, a separately managed account platform providing customized solutions for the high net worth market.

(4)The Full Service Retirement business has been classified as divested business and transferred to Corporate and Other, and its assets, including goodwill, are reclassified to “Assets held-for-sale” as of December 31, 2021. See Note 1 for more information on this pending disposition.

The Company tests goodwill for impairment annually, as of December 31, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount, as discussed in further detail in Note 2.

The Company performed the annual goodwill impairment test using the quantitative approach for all reporting units at December 31, 2021. While the estimated fair value of PGIM and Gibraltar and Other, within the International Businesses segment, significantly exceeded their carrying value as of December 31, 2021, the test resulted in a $1,060 million pre-tax ($837 million after-tax) non-cash impairment charge, related to the goodwill assigned to Assurance IQ. The annual quantitative goodwill impairment test for Assurance IQ estimated the fair value of the businesses by weighting the results from discounted cash flow valuation techniques and market valuation techniques based on both sales and EBITDA forward multiples. The decline in the estimated fair value of Assurance IQ below its carrying value as of December 31, 2021 was driven by a combination of factors as discussed below.

The estimated fair value of Assurance IQ as of December 31, 2021 was significantly impacted by the decline in the value of comparable publicly traded companies, particularly during the last three months of the year, as the market multiples are utilized in both the market approaches and in estimating the terminal value under the discounted cash flow approaches. The deterioration in the peer valuations was mainly driven by sector-wide concerns attributed to margin compression and increased customer attrition, among other factors. In addition, revisions to the business long-term forecasts following the annual Medicare enrollment period in the fourth quarter of 2021, reflected lower growth rates in Medicare sales driven by slower agent growth, and increased operating expenses, along with other changes in business plans, including shifts in the product mix. The long-term forecasts also incorporated changes in the expected synergies to be realized and were reflective of the current and expected industry and market conditions and trends. These revisions led to declines in the cash flow projections, used as part of the discounted cash flow approaches, consistent with how a market participant would assess the outlook of the business. The combination of the decline in peer valuations with the revisions to the business forecast, caused the estimated fair value of Assurance IQ to decline below its carrying value as of December 31, 2021 and resulted in a non-cash goodwill impairment charge of $1,060 million pre-tax, or $837 million after-tax.

Estimating the fair value of reporting units is a subjective process that involves the use of significant estimates by management. For all reporting units tested, unanticipated changes in business performance or regulatory environment, market declines or other events impacting the fair value of these businesses, including changes in market multiples, discount rates,

interest rates and growth rates assumptions or increases in the level of equity required to support these businesses, could cause additional goodwill impairment charges in future periods.

Other Intangibles

Other intangible balances at December 31, are as follows:


	2021						2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in millions)
Subject to amortization:
Mortgage servicing rights	$	864	$	(543)	$	321	$	819	$	(512)	$	307
Customer relationships	308		(194)		114		247		(175)		72
Software and other	200		(84)		116		192		(60)		132
Not subject to amortization	68		N/A		68		69		N/A		69
Total(1)					$	619					$	580

__________

(1)Includes “Assets held-for-sale” of $39 million as of December 31, 2021. See Note 1 for more information on the pending dispositions.

The fair values of net mortgage servicing rights were $324 million and $309 million at December 31, 2021 and 2020, respectively. Amortization expense for other intangibles was $110 million, $102 million and $65 million for the years ending December 31, 2021, 2020 and 2019, respectively. The amortization expense amounts for 2021, 2020 and 2019 do not include impairments recorded for mortgage servicing rights or other intangibles. See the nonrecurring fair value measurements section of Note 6 for more information regarding these impairments.

The following table provides estimated future amortization for the periods indicated:


	2022		2023		2024		2025		2026
	(in millions)
Estimated future amortization expense of other intangibles	$	104	$	88	$	81	$	70	$	46

Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Operating Leases, Lessee

LEASES

The Company occupies leased office space and other facilities in many locations under various long-term leases and has entered into numerous leases covering the long-term use of computers and other equipment. The leases, depending on their specific terms, are classified as either operating or finance with the vast majority of leases falling under the operating classification. The leases in the Company’s portfolio have remaining lease terms from less than one year to 27 years, some of which include options to extend the leases for up to 20 years, and some of which include options to terminate the leases within 4 years. An analysis of all economic and non-economic factors associated with leases containing certain options, including factors such as the existence of cancellation penalties, leasehold improvements made to the underlying assets and location of the underlying assets, is conducted to determine whether those leases are reasonably certain to renew, and hence, should be included in the lease term that is used to establish the right-of-use assets and lease liabilities for those arrangements.

The Company does not have residual guarantees associated with its lessee arrangements, nor are there any restrictions or covenants associated with its lease arrangements.

Lessee

Supplemental balance sheet information related to leases where the Company is the lessee is included below. Right-of-use assets and lease liabilities are included within “Other assets” and “Other liabilities” respectively.


	December 31,
	2021			2020
	($ in millions)
Operating Leases:

Right-of-use assets	$	395		$	466
Lease liabilities	$	432		$	511

Weighted average remaining lease term	6 years			6 years
Weighted average discount rate	2.25		%	2.22		%

Maturities of operating lease liabilities are as follows:


	December 31, 2021
	(in millions)
2022	$	129
2023	100
2024	84
2025	59
2026	28
Thereafter	69
Total lease payments	469
Less imputed interest	(37)
Total	$	432

As of December 31, 2021, the Company has an additional $192 million of payments on operating leases that have not yet commenced, primarily for properties to be used by various domestic operations. These operating leases will commence between 2022 and 2023 with lease terms from 5 years to 15 years.

Lease expense is included in “General and administrative expenses,” which consisted of operating lease and short-term costs. Operating lease costs were $153 million, $156 million, and $138 million for the years ended December 31, 2021, 2020, and 2019, respectively. Short-term lease costs were $96 million, $104 million, and $101 million for the years ended December 31, 2021, 2020, and 2019, respectively. Short-term lease costs relate to those leases with terms of twelve months or less that do not include an option to purchase the underlying asset that is reasonably certain of exercise.

Lessor

The Company directly owns real estate properties within its investment portfolio. Such real estate is leased to third-parties, with the Company serving as the lessor. The terms of the leases vary depending on property type (e.g., commercial or residential). In most cases, the lessee has an option to renew the lease contract based on market rates but does not have an option to purchase the property. The terms of the leases may also include provisions for the use of common areas. Such non-lease components are not separately accounted for by the Company, as a result of applying the practical expedient discussed in Note 2. Lease income included in “Net investment income” were $115 million, $161 million, and $182 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Operating Leases, Lessor

LEASES

The Company occupies leased office space and other facilities in many locations under various long-term leases and has entered into numerous leases covering the long-term use of computers and other equipment. The leases, depending on their specific terms, are classified as either operating or finance with the vast majority of leases falling under the operating classification. The leases in the Company’s portfolio have remaining lease terms from less than one year to 27 years, some of which include options to extend the leases for up to 20 years, and some of which include options to terminate the leases within 4 years. An analysis of all economic and non-economic factors associated with leases containing certain options, including factors such as the existence of cancellation penalties, leasehold improvements made to the underlying assets and location of the underlying assets, is conducted to determine whether those leases are reasonably certain to renew, and hence, should be included in the lease term that is used to establish the right-of-use assets and lease liabilities for those arrangements.

The Company does not have residual guarantees associated with its lessee arrangements, nor are there any restrictions or covenants associated with its lease arrangements.

Lessee

Supplemental balance sheet information related to leases where the Company is the lessee is included below. Right-of-use assets and lease liabilities are included within “Other assets” and “Other liabilities” respectively.


	December 31,
	2021			2020
	($ in millions)
Operating Leases:

Right-of-use assets	$	395		$	466
Lease liabilities	$	432		$	511

Weighted average remaining lease term	6 years			6 years
Weighted average discount rate	2.25		%	2.22		%

Maturities of operating lease liabilities are as follows:


	December 31, 2021
	(in millions)
2022	$	129
2023	100
2024	84
2025	59
2026	28
Thereafter	69
Total lease payments	469
Less imputed interest	(37)
Total	$	432

As of December 31, 2021, the Company has an additional $192 million of payments on operating leases that have not yet commenced, primarily for properties to be used by various domestic operations. These operating leases will commence between 2022 and 2023 with lease terms from 5 years to 15 years.

Lease expense is included in “General and administrative expenses,” which consisted of operating lease and short-term costs. Operating lease costs were $153 million, $156 million, and $138 million for the years ended December 31, 2021, 2020, and 2019, respectively. Short-term lease costs were $96 million, $104 million, and $101 million for the years ended December 31, 2021, 2020, and 2019, respectively. Short-term lease costs relate to those leases with terms of twelve months or less that do not include an option to purchase the underlying asset that is reasonably certain of exercise.

Lessor

The Company directly owns real estate properties within its investment portfolio. Such real estate is leased to third-parties, with the Company serving as the lessor. The terms of the leases vary depending on property type (e.g., commercial or residential). In most cases, the lessee has an option to renew the lease contract based on market rates but does not have an option to purchase the property. The terms of the leases may also include provisions for the use of common areas. Such non-lease components are not separately accounted for by the Company, as a result of applying the practical expedient discussed in Note 2. Lease income included in “Net investment income” were $115 million, $161 million, and $182 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Policyholders' Liabilities

12 Months Ended

Dec. 31, 2021

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Policyholders' Liabilities

POLICYHOLDERS’ LIABILITIES

Future Policy Benefits

Future policy benefits at December 31 for the years indicated are as follows:


	2021		2020
	(in millions)
Life insurance	$	188,777	$	195,245
Individual and group annuities and supplementary contracts	77,779		77,254
Other contract liabilities	25,695		30,873
Included in “Liabilities held-for-sale”(1)	(4,662)		0
Subtotal future policy benefits excluding unpaid claims and claim settlement expenses	287,589		303,372
Unpaid claims and claim settlement expenses	3,195		2,971
Total future policy benefits	$	290,784	$	306,343

__________

(1)See Note 1 for additional information on the pending dispositions

Life insurance liabilities include reserves for death, endowment, and other policy benefits. Individual and group annuities and supplementary contracts liabilities include reserves for life contingent individual immediate annuities and life contingent group annuities. Other contract liabilities include liabilities for variable annuity living benefit guarantees and certain other reserves for long-term care, group, annuities and individual life and health products.

Future policy benefits for individual participating traditional life insurance are based on the net level premium method, calculated using the guaranteed mortality and nonforfeiture interest rates which range from 2.5% to 7.5%. Participating insurance represented 2% and 3% of direct individual life insurance in force as of December 31, 2021 and 2020, respectively, and 10%, 10%, and 11% of direct individual life insurance premiums for 2021, 2020, and 2019, respectively.

Future policy benefits for individual non-participating traditional life insurance policies, group life polices, group and individual long-term care policies and individual health insurance policies are generally equal to the present value of future benefit payments and related expenses, less the present value of future net premiums. Assumptions as to mortality, morbidity and persistency are based on the Company’s experience, industry data, and/or other factors, when the basis of the reserve is established. Interest rates used in the determination of the present values range from (0.1)% to 7.8%.

Future policy benefits for individual and group annuities and supplementary contracts with life contingencies are generally equal to the present value of expected future payments. Assumptions as to mortality are based on the Company’s experience, industry data, and/or other factors, when the basis of the reserve is established. The interest rates used in the determination of the present values range from (0.2)% to 12.1%; less than 1% of the reserves are based on an interest rate in excess of 8%.

Future policy benefits for other contract liabilities are generally equal to the present value of expected future payments based on the Company’s experience, except for example, certain group insurance coverages for which future policy benefits are equal to gross unearned premium reserves. The interest rates used in the determination of the present values range from 0.6% to 6.5%.

The Company’s liability for future policy benefits is also inclusive of liabilities for guaranteed benefits related to certain long-duration life and annuity contracts. Liabilities for guaranteed benefits with embedded derivative features are primarily in “other contract liabilities” in the table above. The remaining liabilities for guaranteed benefits are primarily reflected with the underlying contract in the table above. See Note 13 for additional information regarding liabilities for guaranteed benefits related to certain long-duration life and annuity contracts.

Reserves for recognizing a premium deficiency included in “Future policy benefits” are established, if necessary, when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses. Additionally, in certain instances the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. In these situations, accounting standards require that an additional PFL liability be recognized by an amount necessary to sufficiently offset the losses that would be recognized in later years. Premium deficiencies have been recognized in the past for the group single premium annuity business, which consists of limited-payment, long-duration traditional, non-participating annuities; structured settlements; single premium immediate annuities with life contingencies; long-term care; certain individual health policies; and certain interest-sensitive life products.

The Company’s liability for future policy benefits is also inclusive of liabilities for claims reserves and unpaid claims and claim settlement expenses. Unpaid claims and claim settlement expenses primarily reflect the Company’s present value of future disability claim payments and expenses as well as estimates of claims incurred but not yet reported as of the balance sheet date related to group disability products. Unpaid claim liabilities that are discounted use interest rates ranging from 1.8% to 6.4%. Claims reserves for claims reported but not yet paid and claims incurred but not yet reported are primarily reflected with the underlying contract in the table above.

Policyholders’ Account Balances

Policyholders’ account balances at December 31 for the years indicated are as follows:


	2021		2020
	(in millions)
Individual annuities	$	52,230	$	47,663
Group annuities	30,400		30,700
Guaranteed investment contracts and guaranteed interest accounts	13,717		14,071
Funding agreements	6,023		6,938
Interest-sensitive life contracts	41,283		41,711
Dividend accumulation and other deposit type funds	18,894		20,599
Included in “Liabilities held-for-sale”(1)	(39,914)		$	0
Total policyholders’ account balances	$	122,633	$	161,682

__________

(1)See Note 1 for additional information on the pending dispositions.

Policyholders’ account balances primarily represent an accumulation of account deposits plus credited interest less withdrawals, expense charges and mortality charges, if applicable. These policyholders’ account balances also include provisions for benefits under non-life contingent payout annuities and certain unearned revenues. Policyholders’ account balances also include amounts representing the fair value of embedded derivative instruments associated with the index-linked features of certain universal life and annuity products. See Note 6 for additional information on the fair value of these embedded derivative instruments. Included in “Funding agreements” at December 31, 2021 and 2020 are $4,959 million and $4,402 million, respectively, related to the Company’s Funding Agreement Notes Issuance Program (“FANIP”). Under this program, which has a maximum authorized amount of $15 billion of medium-term notes and $3 billion of commercial paper, Delaware statutory trusts issue short-term commercial paper and/or medium-term notes to investors that are secured by funding agreements issued to the trusts by PICA. The outstanding commercial paper and notes have fixed or floating interest rates that range from 0.0% to 3.5% and original maturities ranging from one month to five years. Included in the amounts at December 31, 2021 and 2020 are funding agreements which secure the medium-term note liability, which are carried at amortized cost, of $3,117 million and $2,414 million, respectively, and short-term note liability of $1,847 million and $1,991 million, respectively.

Also included in “Funding agreements” are collateralized funding agreements issued to the Federal Home Loan Bank of New York (“FHLBNY”) at December 31, 2021 and 2020 totaling $1,050 million and $2,522 million, respectively. These obligations, which are carried at amortized cost, have fixed interest rates that range from 0.620% to 1.925% and original maturities ranging from nine months to seven years. For additional details on the FHLBNY program, see Note 17.

Interest crediting rates range from 0% to 6.3% for interest-sensitive life contracts and from 0% to 13.3% for contracts other than interest-sensitive life. Less than 1% of policyholders’ account balances have interest crediting rates in excess of 8%.

Certain Long-Duration Contracts with Guarantees

12 Months Ended

Dec. 31, 2021

Long-Duration Contracts, Assumptions Supporting Guarantee Obligations [Abstract]

Certain Long-Duration Contracts With Guarantees

CERTAIN LONG-DURATION CONTRACTS WITH GUARANTEES

The Company issues variable annuity contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. The Company also issued variable annuity contracts with general and separate account options where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract adjusted for any partial withdrawals (“return of net deposits”). In certain of these variable annuity contracts, the Company also contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract adjusted for any partial withdrawals plus a minimum return (“minimum return”), and/or (2) the highest contract value on a specified date adjusted for any withdrawals (“contract value”). These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods. The Company also issues annuity contracts and single

premium life contracts with market value adjusted investment options (“MVAs”). Annuity contracts and single premium life contracts with MVAs provide for a return of principal plus a fixed rate of return if held-to-maturity, or, alternatively, a “market adjusted value” if surrendered prior to maturity or if funds are reallocated to other investment options. The market value adjustment may result in a gain or loss to the Company, depending on crediting rates or an indexed rate at surrender, as applicable. The Company also issues fixed deferred, fixed index, and immediate annuity contracts that have a guaranteed credited rate, annuity benefit, and withdrawal benefit. The Company also issues indexed variable annuity contracts for which the return is tied to the return of specific indices where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract adjusted for any partial withdrawals upon death. In certain of these indexed variable annuity contracts, the Company also contractually guarantees to the contractholder withdrawal benefits payable during specific periods.

In addition, the Company issues certain variable life, variable universal life and universal life contracts where the Company contractually guarantees to the contractholder a death benefit even when there is insufficient value to cover monthly mortality and expense charges, whereas otherwise the contract would typically lapse (“no-lapse guarantee”). Variable life and variable universal life contracts are offered with general and separate account options.

The assets supporting the variable portion of all variable annuities are carried at fair value and reported as “Separate account assets” with an equivalent amount reported as “Separate account liabilities.” Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in “Policy charges and fee income” and changes in liabilities for minimum guarantees are generally included in “Policyholders’ benefits” or “Realized investment gains (losses), net.”

For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, contract lapses and contractholder mortality.

For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, timing of annuitization, contract lapses and contractholder mortality.

For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. The Company’s primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, interest rates, market volatility and contractholder behavior.

The Company’s contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed may not be mutually exclusive. The liabilities related to the net amount at risk are reflected within “Future policy benefits.” As of December 31, 2021 and 2020, the Company had the following guarantees associated with these contracts, by product and guarantee type:


	December 31, 2021				December 31, 2020
	In the Event of Death		At Annuitization / Accumulation(1)		In the Event of Death		At Annuitization / Accumulation(1)
	($ in millions)
Annuity Contracts
Return of net deposits
Account value	$	132,811	$	16	$	133,726	$	17
Net amount at risk	$	200	$	0	$	214	$	0
Average attained age of contractholders	69 years		76 years		68 years		75 years
Minimum return or contract value
Account value	$	30,527	$	147,924	$	31,157	$	148,841
Net amount at risk	$	2,055	$	3,509	$	2,327	$	4,203
Average attained age of contractholders	71 years		69 years		70 years		68 years
Average period remaining until earliest expected annuitization	N/A		0.20 years		N/A		0.20 years

__________

(1)Includes income and withdrawal benefits.


	December 31,
	2021		2020
	In the Event of Death
	($ in millions)
Variable Life, Variable Universal Life and Universal Life Contracts
Separate account value	$	9,844	$	8,939
General account value	$	19,789	$	19,279
Net amount at risk	$	223,587	$	222,703
Average attained age of contractholders	57 years		55 years

Account balances of variable annuity contracts with guarantees were invested in separate account investment options as follows:


	December 31,
	2021		2020
	(in millions)
Equity funds	$	95,594	$	94,270
Bond funds	59,241		62,549

Money market funds	4,812		3,156
Total	$	159,647	$	159,975

In addition to the amounts invested in separate account investment options above, $7,159 million at December 31, 2021, and $7,729 million at December 31, 2020, of account balances of variable annuity contracts with guarantees, inclusive of contracts with MVA features, were invested in general account investment options. For the years ended December 31, 2021, 2020 and 2019, there were no transfers of assets, other than cash, from the general account to any separate account, and accordingly no gains or losses recorded.

Liabilities for Guarantee Benefits

The table below summarizes the changes in general account liabilities for guarantees. The liabilities for GMDB and GMIB are included in “Future policy benefits” and the related changes in the liabilities are included in “Policyholders’ benefits.” GMAB, GMWB and GMIWB are accounted for as embedded derivatives and are recorded at fair value within “Future policy benefits.” Changes in the fair value of these derivatives, including changes in the Company’s own risk of non-performance, along with any fees attributed or payments made relating to the derivative, are recorded in “Realized investment gains (losses), net.” See Note 6 for additional information regarding the methodology used in determining the fair value of these embedded derivatives. The Company maintains a portfolio of derivative investments that serve as a partial hedge of the risks associated with these products, for which the changes in fair value are also recorded in “Realized investment gains (losses), net.” This portfolio of derivative investments does not qualify for hedge accounting treatment under U.S. GAAP. Additionally,

the Company externally reinsures the guaranteed benefit features associated with certain contracts. See Note 14 for further information regarding the external reinsurance arrangement.


	GMDB				GMIB		GMAB/GMWB/GMIWB
	Variable Life, Variable Universal Life and Universal Life		Annuity		Annuity		Annuity
	(in millions)
Balance at December 31, 2018	$	5,418	$	713	$	378	$	8,927
Incurred guarantee benefits(1)	1,492		82		(8)		3,905
Paid guarantee benefits	(111)		(69)		(4)		0
Change in unrealized investment gains and losses	805		27		(15)		0
Other(2)	(2)		0		4		(1)
Balance at December 31, 2019	7,602		753		355		12,831
Incurred guarantee benefits(1)	1,389		162		12		6,103
Paid guarantee benefits	(126)		(89)		(4)		0
Change in unrealized investment gains and losses	721		38		(8)		0
Other(2)(3)	(77)		(1)		13		(53)
Balance at December 31, 2020	9,509		863		368		18,881
Incurred guarantee benefits(1)	1,076		10		(24)		(5,638)
Paid guarantee benefits	(189)		(70)		0		0
Change in unrealized investment gains and losses	(326)		(55)		(17)		0
Reclassified to “Liabilities held-for-sale”(4)	0		(216)		(5)		(4,163)
Other(2)(5)	(9)		0		(89)		(12)
Balance at December 31, 2021	$	10,061	$	532	$	233	$	9,068

__________

(1)Incurred guarantee benefits include the portion of assessments established as additions to reserves as well as changes in estimates affecting the reserves. Also includes changes in the fair value of features considered to be derivatives.

(2)Other primarily represents foreign currency translation.

(3)Includes the impact from the sale of POK.

(4)See Note 1 for additional information on the pending dispositions.

(5)Includes the impact from the sale of POT.

The GMDB, which includes the liability for no-lapse guarantees, and GMIB liability are established when associated assessments (which include all policy charges including charges for administration, mortality, expense, surrender, and other, regardless of how characterized) are recognized. This liability is established using current best estimate assumptions and is based on the ratio of the present value of total expected excess payments (e.g., payments in excess of account value) over the life of the contract divided by the present value of total expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. Similar to as described above for DAC, the reserves are subject to adjustments based on annual reviews of assumptions and quarterly adjustments for experience, including market performance. These adjustments reflect the impact on the benefit ratio of using actual historical experience from the issuance date to the balance sheet date plus updated estimates of future experience. The updated benefit ratio is then applied to all prior periods’ assessments to derive an adjustment to the reserve recognized through a benefit or charge to current period earnings.

The GMAB features provide the contractholder with a guaranteed return of initial account value or an enhanced value if applicable. The most significant of the Company’s GMAB features are the guaranteed return option features, which includes an automatic rebalancing element that reduces the Company’s exposure to these guarantees. The GMAB liability is calculated as the present value of future expected payments in excess of the account balance less the present value of future expected rider fees attributable to the embedded derivative feature.

The GMWB features provide the contractholder with access to a guaranteed remaining balance if the account value is reduced to zero through a combination of market declines and withdrawals. The guaranteed remaining balance is generally equal to the protected value under the contract, which is initially established as the greater of the account value or cumulative deposits when withdrawals commence, less cumulative withdrawals. The contractholder also has the option, after a specified time period, to reset the guaranteed remaining balance to the then current account value, if greater. The contractholder accesses the guaranteed remaining balance through payments over time, subject to maximum annual limits. The GMWB liability is

calculated as the present value of future expected payments to customers less the present value of future expected rider fees attributable to the embedded derivative feature.

The GMIWB features, taken collectively, provide a contractholder two optional methods to receive guaranteed minimum payments over time, a “withdrawal” option or an “income” option. The withdrawal option (which was available under only one of the GMIWBs and is no longer offered) guarantees that a contractholder can withdraw an amount each year until the cumulative withdrawals reach a total guaranteed balance. The income option (which varies among the Company’s GMIWBs) in general guarantees the contractholder the ability to withdraw an amount each year for life (or for joint lives, in the case of any spousal version of the benefit) where such amount is equal to a percentage of a protected value under the benefit. The contractholder also has the potential to increase this annual amount, based on certain subsequent increases in account value that may occur. The GMIWB can be elected by the contractholder upon issuance of an appropriate deferred variable annuity contract or at any time following contract issue prior to annuitization. Certain GMIWB features include an automatic rebalancing element that reduces the Company’s exposure to these guarantees. The GMIWB liability is calculated as the present value of future expected payments to customers less the present value of future expected rider fees attributable to the embedded derivative feature.

Sales Inducements

The Company defers sales inducements and amortizes them over the anticipated life of the policy using the same methodology and assumptions used to amortize DAC. DSI is included in “Other assets.” The Company has offered various types of sales inducements including: (1) a bonus whereby the policyholder’s initial account balance is increased by an amount equal to a specified percentage of the customer’s initial deposit; (2) additional credits after a certain number of years a contract is held; and (3) enhanced interest crediting rates that are higher than the normal general account interest rate credited in certain product lines. Changes in DSI, reported as “Interest credited to policyholders’ account balances,” are as follows:


	Sales Inducements
	(in millions)
Balance at December 31, 2018	$	1,024
Capitalization	1
Amortization—Impact of assumption and experience unlocking and true-ups	108
Amortization—All other	(163)
Change in unrealized investment gains and losses	(35)
Balance at December 31, 2019	935
Capitalization	1
Amortization—Impact of assumption and experience unlocking and true-ups	104
Amortization—All other	(166)
Change in unrealized investment gains and losses	(54)
Balance at December 31, 2020	820
Capitalization	1
Amortization—Impact of assumption and experience unlocking and true-ups	40
Amortization—All other	(166)
Change in unrealized investment gains and losses	76
Reclassified to “Assets held-for-sale”(1)	(295)
Other(2)	(2)
Balance at December 31, 2021	$	474

__________

(1)See Note 1 for additional information on the pending dispositions.

(2)Represents the impact from the sale of POT.

Reinsurance

12 Months Ended

Dec. 31, 2021

Reinsurance Disclosures [Abstract]

Reinsurance

REINSURANCE

The Company participates in reinsurance with third parties primarily to provide additional capacity for future growth, limit the maximum net loss potential arising from large risks and acquire or dispose of businesses.

Effective April 1, 2015, the Company entered into an agreement with Union Hamilton Reinsurance, Ltd. (“Union Hamilton”) an external counterparty, to reinsure approximately 50% of the Prudential Premier® Retirement Variable Annuity with Highest Daily Lifetime Income (“HDI”) v.3.0 business, a guaranteed benefit feature. This reinsurance agreement covered most new HDI v.3.0 variable annuity business issued between April 1, 2015 and December 31, 2016 on a quota share basis,

with Union Hamilton’s cumulative quota share amounting to $2.9 billion of new rider premiums as of December 31, 2016. Reinsurance on business subject to this agreement remains in force for the duration of the underlying annuity contracts. New sales subsequent to December 31, 2016 are not covered by this external reinsurance agreement. This reinsurance agreement is accounted for as an embedded derivative.

In January 2013, the Company acquired the Hartford Life Business through reinsurance transactions with three subsidiaries of Hartford Financial Services Group, Inc. (“Hartford Financial”). Under the related agreements, the Company provided reinsurance for approximately 700,000 life insurance policies with net retained face amount in force of approximately $141 billion. The Company acquired the general account business through a coinsurance arrangement and, for certain types of general account policies, a modified coinsurance arrangement. The Company acquired the separate account business through a modified coinsurance arrangement. In May 2018, Hartford Financial sold a group of operating subsidiaries, which included two of the Company’s counterparties to these reinsurance arrangements, to Talcott Resolution Life Insurance Company (“Talcott Resolution”). Talcott Resolution was acquired by Sixth Street in July 2021. There was no impact to the terms, rights or obligations of the Company, or operation of these reinsurance arrangements, as a result of these changes in control of such counterparties.

Since 2011, the Company has entered into a number of reinsurance agreements to assume pension liabilities in the United Kingdom. Under these arrangements, the Company assumes the longevity risk, and in some arrangements, also the investment risk associated with the pension benefits of certain specified beneficiaries.

In 2006, the Company acquired the variable annuity business of The Allstate Corporation (“Allstate”) through a reinsurance transaction. The reinsurance arrangements with Allstate include a coinsurance arrangement associated with the general account liabilities assumed and a modified coinsurance arrangement associated with the separate account liabilities assumed. The reinsurance payable, which represents the Company’s obligation under the modified coinsurance arrangement, is netted with the reinsurance receivable in the Consolidated Statements of Financial Position. During the fourth quarter of 2021, Allstate sold the two counterparties to the aforementioned variable annuity reinsurance transaction to third parties. The Company anticipates there will be no impact to the terms, rights or obligations of the Company, or operation of these reinsurance arrangements, as a result of this change in control of such counterparties.

In 2004, the Company acquired the retirement business of CIGNA and subsequently entered into various reinsurance arrangements. The Company still has indemnity coinsurance and modified coinsurance without assumption arrangements in effect related to this acquisition.

For the domestic business, life and disability reinsurance is accomplished through various plans of reinsurance, primarily yearly renewable term, per person excess, excess of loss, and coinsurance. On policies sold since 2000, the Company has reinsured a significant portion of the individual life mortality risk. Placement of reinsurance is accomplished primarily on an automatic basis with some specific risks reinsured on a facultative basis. The Company is authorized and has historically retained up to $30 million per life, but reduced its operating retention limit to $20 million per life in 2013. Retention in excess of the operating limit is on an exception basis.

The international business primarily uses reinsurance to obtain experience with respect to certain new product offerings and to a lesser extent, to mitigate mortality risk for certain protection products and for capital management purposes.

Reinsurance amounts included in the Consolidated Statements of Operations for premiums, policy charges and fee income, and policyholders’ benefits for the years ended December 31, are as follows:


	2021		2020		2019
	(in millions)
Direct premiums	$	31,623	$	29,091	$	33,260
Reinsurance assumed	5,581		4,336		3,022
Reinsurance ceded	(2,377)		(2,287)		(2,080)
Premiums	$	34,827	$	31,140	$	34,202

Direct policy charges and fee income	$	5,261	$	5,341	$	5,252
Reinsurance assumed	1,204		1,192		1,181
Reinsurance ceded	(521)		(504)		(455)
Policy charges and fee income	$	5,944	$	6,029	$	5,978

Direct policyholders’ benefits	$	34,861	$	32,514	$	35,601
Reinsurance assumed	7,024		5,659		4,304
Reinsurance ceded	(3,427)		(3,114)		(3,085)
Policyholders’ benefits	$	38,458	$	35,059	$	36,820

Reinsurance recoverables at December 31, are as follows:


	2021		2020
	(in millions)
Individual and group annuities(1)	$	185	$	273
Life insurance(2)	6,770		6,649
Other reinsurance	396		432
Total reinsurance recoverables(3)(4)	$	7,351	$	7,354

__________

(1)Primarily represents reinsurance recoverables established under the reinsurance agreement with Union Hamilton related to the ceding of certain embedded derivative liabilities associated with the Company’s guaranteed benefits of $110 million and $204 million as of December 31, 2021 and 2020, respectively.

(2)Includes reinsurance recoverables established under the reinsurance arrangements associated with the acquisition of the Hartford Life Business of $2,178 million and $2,245 million as of December 31, 2021 and 2020, respectively. The Company has also recorded reinsurance payables related to the Hartford Life Business acquisition of $1,341 million and $1,362 million as of December 31, 2021 and 2020, respectively.

(3)Net of $(10) million and $(5) million of loss allowance as of December 31, 2021 and 2020, respectively.

(4)Excludes reinsurance recoverables of $30 million related to “Asset held-for-sale” operations as of December 31, 2021. See Note 1 for additional information on the pending dispositions.

Excluding the reinsurance recoverables associated with the acquisition of the Hartford Life Business, four major reinsurance companies account for approximately 61% of the reinsurance recoverables as of December 31, 2021. The Company periodically reviews the financial condition of its reinsurers, amounts recoverable therefrom, and unearned reinsurance premium, in order to reduce its exposure to loss from reinsurer insolvencies. Any expected credit losses are reflected in the CECL allowance, after considering any collateral the Company obtained in the form of a trust, letter of credit, or funds withheld arrangement. See Note 2 for additional details regarding CECL. Under the Company’s international longevity reinsurance transactions, the Company obtains collateral from its counterparties to mitigate counterparty default risk.

Closed Block

12 Months Ended

Dec. 31, 2021

Closed Block Disclosure [Abstract]

Closed Block

CLOSED BLOCK

On December 18, 2001, the date of demutualization, PICA established a closed block for certain in-force participating insurance policies and annuity products, along with corresponding assets used for the payment of benefits and policyholders’ dividends on these products, (collectively the “Closed Block”), and ceased offering these participating products. The recorded assets and liabilities were allocated to the Closed Block at their historical carrying amounts. The Closed Block forms the principal component of the Closed Block division. See Note 22 for financial information on the Closed Block. The insurance policies and annuity contracts comprising the Closed Block are managed in accordance with the Plan of Reorganization approved by the New Jersey Department of Banking and Insurance (“NJDOBI”) on December 18, 2001, and PICA is directly obligated for the insurance policies and annuity contracts in the Closed Block.

The policies included in the Closed Block are specified individual life insurance policies and individual annuity contracts that were in force on the date of demutualization and for which PICA is currently paying or expects to pay experience-based policy dividends. Assets have been allocated to the Closed Block in an amount that has been determined to produce cash flows which, together with revenues from policies included in the Closed Block, are expected to be sufficient to support obligations and liabilities relating to these policies, including provision for payment of benefits, certain expenses and taxes and to provide for continuation of the policyholder dividend scales in effect in 2000, assuming experience underlying such scales continues. To the extent that, over time, cash flows from the assets allocated to the Closed Block and claims and other experience related to the Closed Block are, in the aggregate, more or less favorable than what was assumed when the Closed Block was established, total dividends paid to Closed Block policyholders may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect in 2000 had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to Closed Block policyholders and will not be available to shareholders. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from PICA’s assets outside of the Closed Block. The Closed Block will continue in effect as long as any policy in the Closed Block remains in force unless, with the consent of the New Jersey insurance regulator, it is terminated earlier.

The excess of Closed Block liabilities over Closed Block assets at the date of the demutualization (adjusted to eliminate the impact of related amounts in AOCI) represented the estimated maximum future earnings at that date from the Closed Block expected to result from operations attributed to the Closed Block after income taxes. In establishing the Closed Block, the Company developed an actuarial calculation of the timing of such maximum future earnings. If actual cumulative earnings of the Closed Block from inception through the end of any given period are greater than the expected cumulative earnings, only the expected earnings will be recognized in income. Any excess of actual cumulative earnings over expected cumulative earnings will represent undistributed accumulated earnings attributable to policyholders, which are recorded as a policyholder dividend obligation. The policyholder dividend obligation represents amounts to be paid to Closed Block policyholders as an additional policyholder dividend unless otherwise offset by future Closed Block performance that is less favorable than originally expected. If the actual cumulative earnings of the Closed Block from its inception through the end of any given period are less than the expected cumulative earnings of the Closed Block, the Company will recognize only the actual earnings in income.

As of December 31, 2021 and 2020, the Company recognized a policyholder dividend obligation of $4,387 million and $2,920 million, respectively, to Closed Block policyholders for the excess of actual cumulative earnings over the expected cumulative earnings. Additionally, accumulated net unrealized investment gains that have arisen subsequent to the establishment of the Closed Block have been reflected as a policyholder dividend obligation of $3,640 million and $5,867 million at December 31, 2021 and 2020, respectively, to be paid to Closed Block policyholders unless offset by future experience, with a corresponding amount reported in AOCI.

In December 2019, PICA’s Board of Directors acted to decrease the dividend scale on Closed Block policies. In December 2020, PICA’s Board of Directors acted to decrease the dividend scale on Closed Block policies. In December 2021, PICA’s Board of Directors approved a continuation of the dividend scale on Closed Block policies. The actions taken by PICA’s Board of Directors resulted in decreases of approximately $79 million, $147 million and $68 million for the years ended December 31, 2019, 2020 and 2021, respectively, in the liability for policyholders’ dividends recognized.

Closed Block liabilities and assets designated to the Closed Block at December 31, as well as maximum future earnings to be recognized from these liabilities and assets, are as follows:


	2021		2020
	(in millions)
Closed Block liabilities
Future policy benefits	$	45,596	$	46,762
Policyholders’ dividends payable	616		635
Policyholders’ dividend obligation	8,027		8,787
Policyholders’ account balances	4,737		4,874
Other Closed Block liabilities	3,107		3,141
Total Closed Block liabilities	62,083		64,199
Closed Block assets
Fixed maturities, available-for-sale, at fair value	38,160		41,959
Fixed maturities, trading, at fair value	1,137		277
Equity securities, at fair value	2,288		2,345
Commercial mortgage and other loans	8,241		8,421
Policy loans	3,815		4,064
Other invested assets	4,358		3,610
Short-term investments	557		124
Total investments	58,556		60,800
Cash and cash equivalents	451		269
Accrued investment income	392		431
Other Closed Block assets	137		92
Total Closed Block assets	59,536		61,592
Excess of reported Closed Block liabilities over Closed Block assets	2,547		2,607
Portion of above representing accumulated other comprehensive income (loss):
Net unrealized investment gains (losses)	3,535		5,810
Allocated to policyholder dividend obligation	(3,640)		(5,867)
Future earnings to be recognized from Closed Block assets and Closed Block liabilities	$	2,442	$	2,550

Information regarding the policyholder dividend obligation is as follows:


	2021		2020
	(in millions)
Balance, January 1	$	8,787	$	6,149
Cumulative effect adjustment from the adoption of ASU 2016-13(1)	0		(13)
Impact from earnings allocable to policyholder dividend obligation	1,468		117
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligation	(2,228)		2,534
Balance, December 31	$	8,027	$	8,787

__________

(1)See Note 2 for more information.

Closed Block revenues and benefits and expenses for the years ended December 31, are as follows:


	2021		2020		2019
	(in millions)
Revenues
Premiums	$	1,789	$	1,981	$	2,207
Net investment income	2,514		2,255		2,332
Realized investment gains (losses), net	807		182		521
Other income (loss)	880		362		589
Total Closed Block revenues	5,990		4,780		5,649
Benefits and Expenses
Policyholders’ benefits	2,557		2,758		2,906
Interest credited to policyholders’ account balances	124		127		130
Dividends to policyholders	2,794		1,549		2,187
General and administrative expenses	312		327		351
Total Closed Block benefits and expenses	5,787		4,761		5,574
Closed Block revenues, net of Closed Block benefits and expenses, before income taxes	203		19		75
Income tax expense (benefit)	123		(43)		10
Closed Block revenues, net of Closed Block benefits and expenses and income taxes	$	80	$	62	$	65

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The following schedule discloses significant components of income tax expense (benefit) for each year presented:


	Year Ended December 31,
	2021		2020		2019

	(in millions)
Current tax expense (benefit):
U.S.	$	1,094	$	(571)	$	86
State and local	24		11		2
Foreign	770		848		879
Total current tax expense (benefit)	1,888		288		967
Deferred tax expense (benefit):
U.S.	16		(362)		57
State and local	(1)		1		(1)
Foreign	(229)		(8)		(76)
Total deferred tax expense (benefit)	(214)		(369)		(20)
Total income tax expense (benefit) on income (loss) before equity in earnings of operating joint ventures	1,674		(81)		947
Income tax expense (benefit) on equity in earnings of operating joint ventures	33		47		43
Income tax expense (benefit) on discontinued operations	0		0		0
Income tax expense (benefit) reported in equity related to:
Other comprehensive income (loss)	(2,314)		1,252		3,811
Total income taxes	$	(607)	$	1,218	$	4,801

Reconciliation of Expected Tax at Statutory Rates to Reported Income Tax Expense (Benefit)

The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% applicable for 2021, 2020 and 2019, and the reported income tax expense (benefit) are summarized as follows:


	Year Ended December 31,
	2021			2020(1)			2019

	(in millions)
Expected federal income tax expense (benefit)	$	1,970		$	(68)		$	1,068
Non-taxable investment income	(292)			(228)			(270)
Foreign taxes at other than U.S. rate	149			250			234
Low-income housing and other tax credits	(126)			(112)			(118)


Changes in tax law	10			(192)			(2)
Sale of subsidiary	(26)			277			4
Non-controlling interest	(14)			(48)			(11)
Non-deductible expenses	11			14			23
Change in valuation allowance	13			17			(1)
State taxes	18			10			1
Other	(39)			(1)			19
Reported income tax expense (benefit)	$	1,674		$	(81)		$	947
Effective tax rate	17.8		%	25.1		%	18.6		%

__________

(1)Prior period amounts have been updated to conform to current period presentation.

The effective tax rate is the ratio of “Total income tax expense (benefit)” divided by “Income before income taxes and equity in earnings of operating joint ventures.” The Company’s effective tax rate for fiscal years 2021, 2020 and 2019 was 17.8%, 25.1% and 18.6%, respectively. The following is a description of items that had a significant impact on the difference between the Company’s statutory U.S. federal income tax rate of 21% applicable for 2021, 2020 and 2019, and the Company’s effective tax rate during the periods presented:

Non-Taxable Investment Income. The U.S. Dividends Received Deduction (“DRD”) reduces the amount of dividend income subject to U.S. tax and is included in the non-taxable investment income shown in the table above. More specifically, the U.S. DRD constitutes $115 million of the total $292 million of 2021 non-taxable investment income, $109 million of the total $228 million of 2020 non-taxable investment income, and $122 million of the total $270 million of 2019 non-taxable investment income. The DRD for the current period was estimated using information from 2020, current year investment results, and current year’s equity market performance. The actual current year DRD can vary based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD.

Foreign Taxes at Other Than U.S. Rates. The statutory income tax rate in the Company’s largest non-U.S. tax jurisdiction is approximately 28% in Japan as compared to the U.S. federal income tax rate of 21% applicable for 2021, 2020 and 2019.

The 952 Election. The Company made a tax election, effective for the 2017 and later tax years, to subject earnings from its insurance operations in Brazil to tax in the U.S. in the tax year earned, net of related foreign tax credits. This election has the effect of reducing the rate at which the Company will incur taxes on these earnings from the approximately 40% tax rate in Brazil to the 21% tax rate in the U.S. In conjunction with this election, the Company remeasured its related deferred tax assets from the previous 45% rate in Brazil to the new rate of 21% in the U.S., which resulted in additional income tax expense at the time of election. The net effect of the lower tax rate was a net increase (decrease) in income tax expense of $(3) million in 2019, $19 million in 2020, and $(18) million in 2021. In October 2019, the IRS issued a legal memorandum, applicable to all taxpayers, in which the IRS argues that the election became inoperable in 1998. The Company disagrees with the IRS’s position and intends to defend its position. This matter has been assigned to the IRS Independent Office of Appeals, an independent dispute resolution function within the IRS. The Appeals process is intended to reach resolution without litigation, while the Company preserves all available legal remedies, including litigation, if it does not agree with the outcome at Appeals. If the Company is ultimately not successful, it will not be able to claim a U.S. tax credit for the Brazil taxes in excess of the U.S. tax rate, and thus will have a higher tax expense over time.

Low-Income Housing and Other Tax Credits. These amounts include incentives within the U.S. tax code for the development of affordable housing aiming at low-income Americans. The Company routinely makes such investments that generate a tax credit which reduces the Company’s effective tax rate.

Changes in Tax Law. The following is a notable change in tax law that impacted the Company’s effective tax rate for the periods presented:

The CARES Act. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted into law. One provision of the CARES Act amends the Tax Act of 2017 and allows companies with net operating losses (“NOLs”) originating in 2020, 2019 or 2018 to carry back those losses for up to five years. For 2020, the Company recorded an income tax benefit of $149 million and $51 million from carrying the estimated 2020 NOL and 2018 NOL back to tax years that have a 35% tax rate.

Sale of Subsidiary. This line item is primarily related to the difference between tax basis and GAAP basis for subsidiaries sold. See Note 1 for additional information on the sale of subsidiary-related items.

Other. This line item represents insignificant reconciling items that are individually less than 5% of the computed expected federal income tax expense (benefit) and have therefore been aggregated for purposes of this reconciliation in accordance with relevant disclosure guidance.

GILTI High Tax Exclusion. On July 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations which will allow an annual election to exclude from the U.S. tax return certain GILTI amounts when the taxes paid by a foreign affiliate exceed 18.9% (90% of U.S. statutory rate of 21%) of the GILTI amount for that foreign affiliate (the “high-tax exception”). These regulations are effective for the 2021 taxable year with an election to apply to any taxable year beginning after 2017. In many of the countries in which we operate, including Japan, there are differences between local tax rules used to determine the tax base and the U.S. tax principles used to determine GILTI. Also, our Japan affiliates have a different tax year than the U.S. calendar tax year used to determine GILTI. Therefore, while many of the countries, including Japan, have a statutory tax rate above the 18.9% threshold, separate affiliates may not meet the 18.9% threshold each year and, as such, may not qualify for this exclusion. The Company made the high-tax exception election for the 2020 tax year and anticipates to make the high-tax exception election for the 2021 tax year and recorded a lower GILTI cost included in “Total income tax expense” for 2020 and 2021.

The Treasury Department and the IRS also issued Proposed Regulations on July 20, 2020 which would require that, if a high-tax exception election is made with respect to GILTI in any year, an election having the same effect must also be made with regard to income taxed under Subpart F of the Tax Code. Such an election under Subpart F of the Tax Code would apply to the Full Inclusion election made by the Company for its insurance operations in Brazil, thereby increasing the tax rate applied to our Brazil insurance operations. The Proposed Regulations will be effective for taxable years beginning after they are issued in final form.

Schedule of Deferred Tax Assets and Deferred Tax Liabilities


	As of December 31,
	2021		2020(1)
	(in millions)
Deferred tax assets:
Insurance reserves	$	296	$	1,693
Policyholders’ dividends	1,741		1,901
Net operating and capital loss carryforwards	260		205

Employee benefits	617		929
Investments	398		0
Goodwill and other intangibles	149		0
Other	0		404
Deferred tax assets before valuation allowance	3,461		5,132
Valuation allowance	(147)		(143)
Deferred tax assets after valuation allowance	3,314		4,989
Deferred tax liabilities:

Net unrealized investment gains	9,456		13,841
Deferred policy acquisition costs	3,307		3,430
Investments	0		43

Value of business acquired	261		270
Goodwill and other intangibles	0		29
Other	116		0
Deferred tax liabilities	13,140		17,613
Net deferred tax liability	$	(9,826)	$	(12,624)

__________

(1)Prior period amounts have been updated to conform to current period presentation.

The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized.

A valuation allowance has been recorded against deferred tax assets related to federal, state and local taxes and foreign operations. Adjustments to the valuation allowance are made to reflect changes in management’s assessment of the amount of the deferred tax asset that is realizable and the amount of deferred tax asset actually realized during the year. The valuation allowance includes amounts recorded in connection with deferred tax assets as follows:


	Federal		State		Foreign Operations		Total
	(in millions)
Balance at January 1, 2019	$	0	$	106	$	11	$	117
Charged to costs and expenses	3		34		(5)		32
Other adjustments	0		(13)		0		(13)
Balance at December 31, 2019	3		127		6		136
Charged to costs and expenses	12		5		5		22
Other adjustments	0		(16)		1		(15)
Balance at December 31, 2020	15		116		12		143
Charged to costs and expenses	5		(8)		9		6
Other adjustments	0		(1)		(1)		(2)
Balance at December 31, 2021	$	20	$	107	$	20	$	147

The following table sets forth the amount and expiration dates of federal, state and foreign operating, capital loss and tax credit carryforwards for tax purposes, as of the periods indicated:


	As of December 31,
	2021		2020
	(in millions)
Federal net operating and capital loss carryforwards(1)	$	327	$	231
State net operating and capital loss carryforwards(2)	$	1,895	$	1,880
Foreign net operating and capital loss carryforwards(3)	$	268	$	136
Federal foreign tax credit carryforwards(4)	$	12	$	9
General business credits	$	0	$	82

__________

(1)Unlimited carryforward.

(2)Certain state net operating loss carryforwards expire between 2022 and 2041, whereas others have an unlimited carryforward.

(3)$52 million expires between 2022 and 2036 and $195 million has an unlimited carryforward.

(4)Expires between 2028 and 2031. These relate to foreign non-general basket tax credits.

Consistent with the Tax Act of 2017, the Company provides applicable U.S. income tax for all unremitted earnings of the Company’s foreign affiliates. For certain foreign affiliates organized in withholding tax jurisdictions, the Company considers the unremitted foreign earnings of those affiliates to be indefinitely reinvested, and therefore does not provide for the withholding tax when calculating its current and deferred tax obligations. For certain other foreign affiliates organized in withholding tax jurisdictions, the Company does not consider unremitted earnings indefinitely reinvested, and therefore provides for foreign withholding tax when calculating its current and deferred tax obligations. The following table summarizes the Company’s indefinite reinvestment assertions for jurisdictions in which the Company operates that impose a withholding tax on dividends that is not eliminated by a tax treaty or may be subject to other foreign country tax upon a remittance:


Unremitted earnings are indefinitely reinvested			Unremitted earnings are not indefinitely reinvested
Insurance operations in Chile and China and non-insurance operations in Korea and certain operations in Luxembourg			Insurance operations in Argentina, India, Indonesia, Ghana and Kenya, and non-insurance operations in China, India and Taiwan

The Company made no changes with respect to its repatriation assumptions in 2019. During the second and third quarters of 2020, respectively, the Company determined that the earnings of its Korean and Taiwan insurance operations would be repatriated to the United States; accordingly, these earnings were not considered indefinitely reinvested, and the Company recognized an income tax expense of $132 million in “Income (loss) before equity in earnings of operating joint ventures” during 2020. During the second quarter of 2020, the Company changed the permanent investment assertion for Europrisa Management Company S.A (Luxembourg) due to a plan to liquidate the company, which gave rise to an immaterial amount of income tax expense during 2020. The Company made no changes with respect to its repatriation assumptions in 2021.

The following table sets forth the undistributed earnings of foreign subsidiaries, where the Company assumes indefinite reinvestment of such earnings and for which, in 2021, 2020, and 2019, U.S. deferred taxes have not been provided, and for which foreign deferred withholding taxes have not been provided. The net tax liability that may arise if the 2021 earnings were remitted which includes any foreign exchange impacts, is immaterial.


	At December 31,
	2021		2020		2019
	(in millions)
Undistributed earnings of foreign subsidiaries (assuming indefinite reinvestment for U.S. tax purposes)(1)	N/A		N/A		N/A
Undistributed earnings of foreign subsidiaries (assuming indefinite reinvestment only for Withholding or other non-U.S. Taxes)	$	209	$	176	$	2,764

__________

(1)Consistent with the Tax Act of 2017, the Company provides U.S. income tax for all unremitted earnings of the Company’s foreign affiliates as of December 31, 2017.

The Company’s “Income (loss) before income taxes and equity in earnings of operating joint ventures” includes income (loss) from domestic operations of $7,575 million, $(3,226) million and $1,985 million, and income (loss) from foreign operations of $1,806 million, $2,903 million and $3,101 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Tax Audit and Unrecognized Tax Benefits

The Company’s liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the IRS or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to the liability for income taxes.

The following table reconciles the total amount of unrecognized tax benefits at the beginning and end of the periods indicated:


	2021		2020		2019
	(in millions)
Balance at January 1,	$	17	$	18	$	20
Increases in unrecognized tax benefits—prior years	4		0		0
(Decreases) in unrecognized tax benefits—prior years	(9)		(1)		(2)
Increases in unrecognized tax benefits—current year	0		0		0
(Decreases) in unrecognized tax benefits—current year	0		0		0
Settlements with taxing authorities	0		0		0
Balance at December 31,	$	12	$	17	$	18
Unrecognized tax benefits that, if recognized, would favorably impact the effective rate	$	12	$	0	$	0

The Company does not anticipate any significant changes within the next twelve months to its total unrecognized tax benefits related to tax years for which the statute of limitations has not expired.

The Company classifies all interest and penalties related to tax uncertainties as income tax expense (benefit). The amounts recognized in the consolidated financial statements for tax-related interest and penalties for the years ended December 31 are as follows:


	2021		2020		2019
	(in millions)
Interest and penalties recognized in the Consolidated Statements of Operations	$	4	$	1	$	1


	2021		2020
	(in millions)
Interest and penalties recognized in liabilities in the Consolidated Statements of Financial Position	$	7	$	3

Listed below are the tax years that remain subject to examination, by major tax jurisdiction, as of December 31, 2021:


Major Tax Jurisdiction						Open Tax Years
United States						2014-2021
Japan						Fiscal years ended March 31, 2017-2021
Korea						2016-2021

The Company participates in the IRS’s Compliance Assurance Program. Under this program, the IRS assigns an examination team to review completed transactions as they occur in order to reach agreement with the Company on how they should be reported in the relevant tax returns. If disagreements arise, accelerated resolutions programs are available to resolve the disagreements in a timely manner.

Some of the Company’s affiliates in Japan file a consolidated tax return, while others file separate tax returns. The Company’s affiliates in Japan are subject to audits by the local taxing authority. The general statute of limitations is five years from when the return is filed. The Japanese National Tax Service conducted tax audits of some non-insurance companies during the reporting period, which had no material impact on the Company’s 2021, 2020 or 2019 results.

In August 2020, the Company sold an affiliate in South Korea that filed a separate tax return and was subject to audits by the local taxing authority. The general statute of limitations is five years from when the return is filed. During 2020, the Korean tax authority completed a routine tax audit of Prudential of Korea for 2017, 2016, and 2015 tax years. While these activities had no material impact on the Company’s 2021, 2020 or 2019 results, the tax authority raised questions about the treatment of foreign tax credits. The Company is responsible via an indemnity for taxes and other costs that may arise from the dispute.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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Short-Term and Long-Term Debt

Short-Term and Long-Term Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

SHORT-TERM AND LONG-TERM DEBT

Short-term Debt

The table below presents the Company’s short-term debt at December 31, for the years indicated as follows:


	2021			2020
	($ in millions)
Commercial paper:
Prudential Financial	$	25		$	25
Prudential Funding, LLC	395			355
Subtotal commercial paper	420			380

Current portion of long-term debt:
Senior Notes	0			399
Mortgage Debt	197			128
Surplus Notes subject to set-off arrangements(1)	500			500

Subtotal Current portion of long-term debt	697			1,027
Other(2)	105			18
Subtotal	1,222			1,425
Less: Assets under set-off arrangements(1)	500			500
Total short-term debt(3)	$	722		$	925
Supplemental short-term debt information:
Portion of commercial paper borrowings due overnight	$	150		$	75
Daily average commercial paper outstanding for the quarter ended	$	1,414		$	1,602
Weighted average maturity of outstanding commercial paper, in days	16			18
Weighted average interest rate on outstanding commercial paper	0.08		%	0.11		%

__________

(1)The surplus notes have corresponding assets where rights to set-off exist, thereby reducing the amount of surplus notes.

(2)Includes a $98 million bridge loan and $7 million drawn on a revolving line of credit held by a subsidiary at December 31, 2021.

(3)Includes Prudential Financial debt of $25 million and $424 million at December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, the Company was in compliance with all covenants related to the above debt.

Commercial Paper

Prudential Financial has a commercial paper program with an authorized capacity of $3.0 billion. Prudential Financial’s commercial paper borrowings have generally been used to fund the working capital needs of its subsidiaries and provide short-term liquidity at Prudential Financial.

Prudential Funding, LLC (“Prudential Funding”), a wholly-owned subsidiary of PICA, has a commercial paper program, with an authorized capacity of $7.0 billion. Prudential Funding commercial paper borrowings generally have served as an additional source of financing to meet the working capital needs of PICA and its subsidiaries. Prudential Funding also lends to other subsidiaries of Prudential Financial up to limits agreed with the NJDOBI. Prudential Funding maintains a support agreement with PICA whereby PICA has agreed to maintain Prudential Funding’s tangible net worth at a positive level. Additionally, Prudential Financial has issued a subordinated guarantee covering Prudential Funding’s $7.0 billion commercial paper program.

Federal Home Loan Bank of New York

PICA is a member of the FHLBNY. Membership allows PICA access to the FHLBNY’s financial services, including the ability to obtain collateralized loans and to issue collateralized funding agreements. Under applicable law, the funding agreements issued to the FHLBNY have priority claim status above debt holders of PICA. FHLBNY borrowings and funding agreements are collateralized by qualifying mortgage-related assets or U.S. Treasury securities, the fair value of which must be maintained at certain specified levels relative to outstanding borrowings. FHLBNY membership requires PICA to own member stock and borrowings require the purchase of activity-based stock in an amount equal to 4.5% of outstanding borrowings. Under FHLBNY guidelines, if any of PICA’s financial strength ratings decline below A-/A3/A- Negative by S&P/Moody’s/Fitch, respectively, and the FHLBNY does not receive written assurances from the NJDOBI regarding PICA’s solvency, new borrowings from the FHLBNY would be limited to a term of 90 days or less. Currently there are no restrictions on the term of borrowings from the FHLBNY. All FHLBNY stock purchased by PICA is classified as restricted general account investments within “Other invested assets,” and the carrying value of these investments was $80.5 million and $147.4 million as of December 31, 2021 and 2020, respectively.

NJDOBI permits PICA to pledge collateral to the FHLBNY in an amount of up to 5% of its prior year-end statutory net admitted assets, excluding separate account assets. Based on PICA’s statutory net admitted assets as of December 31, 2020, the 5% limitation equates to a maximum amount of eligible assets of $7.7 billion and an estimated maximum borrowing capacity (after taking into account required collateralization levels) of approximately $6.9 billion. Nevertheless, FHLBNY borrowings are subject to the FHLBNY’s discretion and to the availability of qualifying assets at PICA.

In the first quarter of 2020, PICA issued $3.6 billion in funding agreements under the FHLBNY facility. As of December 31, 2021, $1.0 billion of funding agreements remain outstanding under this facility maturing in February 2027 with a rate of 1.925%. These funding agreements are reflected as “Policyholders’ account balances” on the Consolidated Statements of Financial Position and as such are not included in the foregoing table.

Federal Home Loan Bank of Boston

PRIAC is a member of the Federal Home Loan Bank of Boston (“FHLBB”). Membership allows PRIAC access to collateralized advances which will be classified in “Short-term debt” or “Long-term debt,” depending on the maturity date of the obligation. PRIAC’s membership in FHLBB requires the ownership of member stock and borrowings from FHLBB require the purchase of activity-based stock in an amount between 3.0% and 4.5% of outstanding borrowings, depending on the maturity date of the obligation. All FHLBB stock purchased by PRIAC is classified as restricted general account investments within “Other invested assets,” and the carrying value of these investments was $6 million as of both December 31, 2021 and 2020. As of December 31, 2021, PRIAC had no advances outstanding under the FHLBB facility.

Under Connecticut state insurance law, without the prior consent of the Connecticut Insurance Department, the amount of assets insurers may pledge to secure debt obligations is limited to the lesser of 5% of prior-year statutory admitted assets or 25% of prior-year statutory surplus, resulting in a maximum borrowing capacity for PRIAC under the FHLBB facility of approximately $264 million as of December 31, 2021. As a result of the Company’s agreement to sell its Full Service

Retirement business to Great-West, which includes the sale of all of its outstanding equity interests in PRIAC, we expect that the Company will no longer be a member of the FHLBB as of the closing of the sale.

Credit Facilities

As of December 31, 2021, the Company maintained syndicated, unsecured committed credit facilities as described below.


Borrower	Original Term	Expiration Date	Capacity		Amount Outstanding
			(in millions)
Prudential Financial and Prudential Funding	5 years	Jul 2026	$	4,000	$	0
Prudential Holdings of Japan, Inc.	5 years	Sep 2024	¥	100,000	¥	0

In July 2021, the Company amended and restated its $4.0 billion five-year credit facility that has both Prudential Financial and Prudential Funding as borrowers and a syndicate of financial institutions as lenders, extending the term of the facility to July 2026. The credit facility contains customary representations and warranties, covenants and events of default and borrowings are not contingent on the borrowers’ credit ratings nor subject to material adverse change clauses. Borrowings under this facility are conditioned on the continued satisfaction of customary conditions, including Prudential Financial’s maintenance of consolidated net worth of at least $23.5 billion, which is calculated as U.S. GAAP equity, excluding AOCI, equity of noncontrolling interests and equity attributable to the Closed Block. The Company expects that it may borrow under the facility from time to time to fund its working capital needs. In addition, amounts under this credit facility may be drawn in the form of standby letters of credit that can be used to meet the Company’s operating needs. The amended and restated facility also includes certain sustainability-linked pricing adjustments, by which the applicable interest rate margins and commitment fee may be decreased or increased if the Company achieves, or fails to achieve, certain specified targets relating to its reduction of domestic greenhouse gas emissions and its increase in diversity among its senior leaders.

The ¥100 billion five-year facility was entered into by Prudential Holdings of Japan, Inc. (“PHJ”) in September 2019. This facility also contains customary representations and warranties, covenants, and events of default and borrowings are not contingent on the borrower’s credit ratings nor subject to material adverse change clauses.

Borrowings under each of these credit facilities may be used for general corporate purposes. As of December 31, 2021, the Company was in compliance with the covenants under each of these credit facilities.

In addition to the above credit facilities, the Company had access to $205 million of certain other lines of credit at December 31, 2021, of which $175 million was for the sole use of certain real estate separate accounts. The separate account facilities include loan-to-value ratio requirements and other financial covenants, and recourse on obligations under these facilities is limited to the assets of the applicable separate account. At December 31, 2021, $55 million of these credit facilities were used. The Company also has access to uncommitted lines of credit from financial institutions.

Agreements for Senior Notes Issuance

In November 2013, Prudential Financial entered into a ten-year put option agreement with a Delaware trust upon the completion of the sale of $1.5 billion of trust securities by that Delaware trust in a Rule 144A private placement. The trust invested the proceeds from the sale of the trust securities in a portfolio of principal and interest strips of U.S. Treasury securities. The put option agreement provides Prudential Financial the right to sell to the trust at any time up to $1.5 billion of 4.419% senior notes due November 2023 and receive in exchange a corresponding amount of U.S. Treasury securities held by the trust. In return, the Company agreed to pay a semi-annual put premium to the trust at a rate of 1.777% per annum applied to the unexercised portion of the put option. The put option agreement with the trust provides Prudential Financial with a source of liquid assets.

The put option described above will be exercised automatically in full upon the Company’s failure to make certain payments to the trust, such as paying the put option premium or reimbursing the trust for its expenses, if the Company’s failure to pay is not cured within 30 days, and upon an event involving its bankruptcy. The Company is also required to exercise the put option if its consolidated stockholders’ equity, calculated in accordance with U.S. GAAP but excluding AOCI, falls below $7.0 billion, subject to adjustment in certain cases. The Company has a one-time right to unwind a prior voluntary exercise of the put option by repurchasing all of the senior notes then held by the trust in exchange for a corresponding amount of U.S. Treasury securities. Finally, Prudential Financial may redeem all but not less than all outstanding senior notes prior to their maturity at a redemption price equal to the greater of par or a make-whole price, following a voluntary exercise in full of the put option.

In May 2020, Prudential Financial entered into a ten-year facility agreement with a Delaware trust upon the completion of the sale of $1.5 billion of trust securities by that Delaware trust in a Rule 144A private placement. The trust invested the proceeds from the sale of the trust securities in a portfolio of principal and/or interest strips of U.S. Treasury securities. The facility agreement provides Prudential Financial the right to issue and sell to the trust from time to time up to $1.5 billion of 2.850% senior notes due May 15, 2030 and receive in exchange a corresponding amount of the U.S. Treasury securities held by the trust. In return, the Company agreed to pay a semi-annual facility fee to the trust at a rate of 2.175% per annum applied to the maximum amount of senior notes that the Company could issue and sell to the trust. Similar to the Company’s put option agreement, the facility agreement with the trust provides Prudential Financial with a source of liquid assets.

The right to issue senior notes described above will be exercised automatically in full upon the Company’s failure to make certain payments to the trust, such as paying the facility fee or reimbursing the trust for its expenses, if the Company’s failure to pay is not cured within 30 days, and upon an event involving its bankruptcy. The Company is also required to exercise this issuance right if its consolidated stockholders’ equity, calculated in accordance with U.S. GAAP but excluding AOCI, falls below $9.0 billion, subject to adjustment in certain cases. Prior to any involuntary exercise of the issuance right, the Company has the right to repurchase any of its senior notes then held by the trust in exchange for a corresponding amount of U.S. Treasury securities. Finally, Prudential Financial may redeem any outstanding senior notes, in whole or in part, prior to February 15, 2030, at a redemption price equal to the greater of par or a make-whole price, or thereafter, at par.

Long-term Debt

The table below presents the Company’s long-term debt at December 31, for the years indicated as follows:


	Maturity Dates	Rate(1)	December 31,
			2021		2020
			($ in millions)
Fixed-rate notes:
Surplus notes	2025	8.3%	$	344	$	343
Surplus notes subject to set-off arrangements	2023-2038	2.23%-5.26%	7,861		8,134
Senior notes	2023-2051	1.5%-6.75%	10,282		11,179
Mortgage debt	2027	3.85%	24		24
Floating-rate notes:
Line of Credit	2024	1.33%-1.41%	300		300
Surplus notes subject to set-off arrangements	2024-2037	1.49%-1.64%	2,330		2,330

Mortgage debt(2)	2023-2024	1.57%-1.86%	54		257
Junior subordinated notes(3)	2042-2060	1.55%-5.88%	7,618		7,615
Subtotal			28,813		30,182
Less: assets under set-off arrangements(4)			10,191		10,464
Total long-term debt(5)			$	18,622	$	19,718

__________

(1)Ranges of interest rates are for the year ended December 31, 2021.

(2)Includes $29 million of debt denominated in foreign currency at both December 31, 2021 and 2020.

(3)Includes Prudential Financial debt of $7,564 million and subsidiary debt of $54 million denominated in foreign currency at December 31, 2021.

(4)Assets under set-off arrangements represent a reduction in the amount of surplus notes included in long-term debt, resulting from an arrangement where valid rights of set-off exist and it is the intent of both parties to settle on a net basis under legally enforceable arrangements. These assets include available-for-sale securities that are reported at fair value.

(5)Includes Prudential Financial debt of $17,673 million and $18,561 million at December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, the Company was in compliance with all debt covenants related to the borrowings in the table above.

The following table presents the contractual maturities of the Company’s long-term debt as of December 31, 2021:


	Calendar Year
	2023		2024		2025		2026		2027 and thereafter		Total
	(in millions)
Long-term debt	$	203	$	324	$	345	$	500	$	17,250	$	18,622

Senior Notes

Under its shelf registration statement, the Company has issued Medium-Term Notes and InterNotes® Retail Notes. In addition, the Company completed a debt exchange offer in 2017, pursuant to which it issued two series of Senior Notes.

The table below presents the Company’s balances related to these issuances, as well as its mortgage debt balance, as of December 31 for the years indicated as follows:


Facility Name	Maturity Date Range	2021 Amount Outstanding		2020 Amount Outstanding
		($ in millions)
Medium-Term Notes	2023-2051	$	8,544	$	9,847
Senior Notes	2047-2049	1,469		1,462
InterNotes® Retail Notes	2029-2045	269		270
Mortgage Debt(1)	2022-2027	274		409
Total		$	10,556	$	11,988

__________

(1)Includes $197 million of notes from current portion of long-term debt as of December 31, 2021.

Medium-Term Notes Program. The outstanding balance of this program decreased by $1.3 billion from December 31, 2020, primarily driven by $910 million in debt redemptions and $400 million in debt maturities. On August 30, 2021, the Company redeemed, at a make-whole redemption price, $700 million principal amount of its 3.500% medium-term notes due in 2024 and $210 million of the previously outstanding $600 million principal amount of its 3.878% medium-term notes due in 2028. In addition to the total principal redemption of $910 million, the Company made a make-whole payment of $91 million, which is reflected in “General and administrative expenses”.

The weighted average interest rate on outstanding Senior Notes, Medium-Term Notes, and InterNotes® Retail Notes, including the effect of interest rate hedging activity, was 4.39% and 4.45% for the years ended December 31, 2021 and 2020, respectively, excluding the effect of debt issued to consolidated subsidiaries.

Mortgage Debt. Mortgage debt decreased by $135 million from December 31, 2020, due to maturities and prepayments. This mortgage debt is issued by the Company’s subsidiaries and has recourse only to real estate property held for investment by those subsidiaries.

Funding Agreement Notes Issuance Program (“FANIP”). The Company maintains a FANIP in which statutory trusts issue medium-term notes and commercial paper secured by funding agreements issued to the trusts by PICA. These obligations are included in “Policyholders’ account balances” and not included in the foregoing table. See Note 12 for further discussion of these obligations.

Surplus Notes

As of December 31, 2021, PICA had $344 million of fixed-rate surplus notes outstanding. These notes are subordinated to other PICA borrowings and policyholder obligations, and the payment of interest and principal may only be made with the prior approval of the NJDOBI. The NJDOBI could prohibit the payment of the interest and principal on the surplus notes if certain statutory capital requirements are not met. At December 31, 2021 and 2020, the Company met these statutory capital requirements.

Surplus Notes with Set-Off Arrangements


Agreement Start Date	Maturity Years	Maximum Borrowing Capacity		2021 Amount Outstanding		2020 Amount Outstanding
		($ in millions)
Regulation XXX
2012-2021(1)(2)	2022-2036	$	1,750	$	1,600	$	1,750
2014-2017	2024-2037	2,400		2,330		2,330
2018	2038	1,600		920		1,070
Guideline AXXX
2013(3)	2033	3,500		3,500		3,248
2017	2037	2,000		1,466		1,466
2020	2032	1,200		775		700
Other Notes
2019	2029	4,000		100		400
Total		$	16,450	$	10,691	$	10,964

__________

(1)Prudential has agreed to reimburse one of the external counterparties for any payment under the credit linked notes funded by it in an amount of up to $0.5 billion.

(2)Includes $0.5 billion of notes from current portion of long-term debt.

(3)The current financing capacity available under the facility is $3.5 billion but can be increased to a maximum potential size of $4.5 billion.

Surplus Notes Supporting Regulation XXX and Guideline AXXX Reserves

As shown in the table above, the Company’s captive reinsurance subsidiaries maintain facilities with external counterparties providing for the issuance of surplus notes by the captive to finance reserves required under Regulation XXX and Guideline AXXX. Under these facilities, the captives receive in exchange for the surplus notes one or more credit-linked notes issued by special-purpose affiliates in aggregate principal amounts equal to the surplus notes issued. The captives hold the credit-linked notes as assets supporting the non-economic portion of the statutory reserves required to be held by the Company’s domestic insurance subsidiaries under Regulation XXX and Guideline AXXX in connection with the reinsurance of term life or universal life insurance policies through the captive. The non-economic portion of the statutory reserve equals the difference between the statutory reserve required under Regulation XXX and Guideline AXXX and the amount the Company considers necessary to maintain solvency for moderately adverse experience. The credit-linked notes are redeemable for cash upon the occurrence of a liquidity stress event affecting the captives and external counterparties have agreed to fund these payments in return for a fee. Under certain of these different transactions, Prudential Financial has agreed to reimburse the captive for investment losses in excess of specified amounts.

For each of the above transactions, because valid rights of set-off exist, interest and principal payments on the surplus notes and on the related credit-linked notes are settled on a net basis, and the surplus notes are reflected in the Company’s total consolidated borrowings on a net basis. The surplus notes for the captive reinsurance subsidiaries described above are subordinated to policyholder obligations, and the repayment of principal may only be made with prior approval of the Arizona Department of Insurance and Financial Institutions, the domiciliary insurance regulator of the captives. The payment of interest on the surplus notes has been approved by the Arizona Department of Insurance and Financial Institutions, subject to its ability to withdraw that approval.

Other Surplus Notes

The surplus note facility listed under “Other Notes” in the table above reflects a financing facility that Prudential Legacy Insurance Company of New Jersey (“PLIC”) has entered into with certain external counterparties and a special-purpose affiliate, pursuant to which PLIC may, at its option, issue and sell to the affiliate up to $4.0 billion in aggregate principal amount of surplus notes, in return for an equal principal amount of credit-linked notes. The credit-linked notes are redeemable for cash upon the occurrence of a liquidity stress event affecting PLIC, and external counterparties have agreed to fund these payments in return for a fee. Upon issuance, PLIC would hold any credit-linked notes as assets to support future statutory surplus needs within PLIC.

Junior Subordinated Notes

Prudential Financial’s junior subordinated notes outstanding are considered hybrid securities that receive enhanced equity treatment from the rating agencies. These notes outstanding, along with their key terms, are as follows:


Issue Date	Principal Amount		Initial Interest Rate		Investor Type	Optional Redemption Date	Interest Rate Subsequent to Optional Redemption Date	Maturity Date
	($ in millions)
Aug-12	$	1,000	5.88	%	Institutional	9/15/2022	LIBOR + 4.18%	9/15/2042
Nov-12	$	1,500	5.63	%	Institutional	6/15/2023	LIBOR + 3.92%	6/15/2043
Mar-13	$	500	5.20	%	Institutional	3/15/2024	LIBOR + 3.04%	3/15/2044
May-15	$	1,000	5.38	%	Institutional	5/15/2025	LIBOR + 3.03%	5/15/2045
Sep-17	$	750	4.50	%	Institutional	9/15/2027	LIBOR + 2.38%	9/15/2047
Aug-18	$	565	5.63	%	Retail	8/15/2023	5.63%	8/13/2058
Sep-18	$	1,000	5.70	%	Institutional	9/15/2028	LIBOR + 2.67%	9/15/2048
Aug-20	$	500	4.13	%	Retail	9/1/2025	4.13%	9/1/2060
Aug-20	$	800	3.70	%	Institutional	10/1/2030	US Treasury + 3.04%	10/1/2050

The Company has the right to defer interest payments on these notes for specified periods, typically 5 to 10 years without resulting in a default, during which time interest will be compounded. On or after the optional redemption dates, Prudential Financial may redeem the notes at par plus accrued and unpaid interest. Prior to those optional redemption dates, redemptions generally are subject to a make-whole price; however, the Company may redeem the notes prior to these dates at par upon the occurrence of certain events, such as a future change in the regulatory capital treatment of the notes with respect to the Company.

Limited Recourse Notes

In 2014, the Company entered into financing transactions pursuant to which it issued $500 million of limited recourse notes and, in return, obtained $500 million of asset-backed notes issued by a designated series of a Delaware master trust and ultimately contributed the asset-backed notes to its subsidiary, PRIAC. The asset-backed notes mature from 2022 through 2027, with a portion of these notes having the option to extend through 2028, subject to conditions.

The master trust’s payment obligations under each of the asset-backed notes are secured by corresponding payment obligations of a third-party financial institution and a portfolio of specified assets that have an aggregate value at least equal to the principal amount of the applicable asset-backed note. The principal amount of each asset-backed note is payable to PRIAC in cash at any time upon demand by PRIAC or, if not repaid earlier, at maturity. Each of the limited recourse notes obligates Prudential Financial to reimburse the applicable third-party financial institution for any principal payments received on the corresponding asset-backed note, but there is no obligation to reimburse any portion of a principal payment that is needed by PRIAC to pay then current claims to its policyholders. Each limited recourse note bears interest at a rate equal to the rate on the corresponding asset-backed note, plus an amount representing fees payable to the applicable third-party financial institution. As of December 31, 2021, no principal payments have been received or are currently due on the asset-backed notes and, as a result, there was no payment obligation under the limited recourse notes. Accordingly, the notes are not reflected in the Consolidated Financial Statements as of December 31, 2021. As a result of the Company’s agreement to sell its Full Service Retirement business to Great-West, which includes the sale of all of its outstanding equity interests in PRIAC, we expect the $500 million of limited-recourse notes will be canceled as of the closing of the sale.

Interest Expense

In order to modify exposure to interest rate and currency exchange rate movements, the Company utilizes derivative instruments, primarily interest rate swaps, in conjunction with some of its debt issues. The impact of these derivative instruments is not reflected in the rates presented in the tables above. For those derivative instruments that qualify for hedge accounting, interest expense was $2 million, $2 million, and less than $1 million for the years ended December 31, 2021, 2020 and 2019, respectively. See Note 5 for additional information on the Company’s use of derivative instruments.

Interest expense for short-term and long-term debt was $1,474 million, $1,575 million and $1,563 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Pension and Other Postretirement Plans

The Company has funded and non-funded non-contributory defined benefit pension plans (“Pension Benefits”), which cover substantially all of its employees. For some employees, benefits are based on final average earnings and length of service (the “traditional formula”), while benefits for other employees are based on an account balance that takes into consideration age, length of service and earnings during their career (the “cash balance formula”). At December 31, 2021, approximately 78% of the Company’s Pension Benefits relate to its domestic qualified pension plan, which initially determined benefits based on the traditional formula. Effective January 1, 2001, active domestic employees covered under this plan were given the option to convert from the traditional formula to the cash balance formula, and all new domestic employees began accruing benefits under the cash balance formula. As of December 31, 2021, approximately 67% and 33% of the benefit obligation under this plan relates to participants under the traditional formula and cash balance formula, respectively. At December 31, 2021, the vast majority of active employees under this plan are accruing benefits under the cash balance formula.

The Company provides certain health care and life insurance benefits for its retired employees, their beneficiaries and covered dependents (“Other Postretirement Benefits”). The health care plan is contributory; the life insurance plan is non-contributory. Substantially all of the Company’s U.S. employees are eligible to receive Other Postretirement Benefits if they retire after age 55 with at least 10 years of service or under certain circumstances after age 50 with at least 20 years of continuous service.

On November 30, 2021, the Company announced that it will modify the Retiree Medical Savings Account (“RMSA”) plan, one of the components of Other Postretirement Benefits. The RMSA plan will no longer be offered to new employees effective January 1, 2022, while active employees will no longer receive service credits and retirees will no longer receive interest credits at some point after June 30, 2022. In addition, the Company added a 20-year time limit for retirees to utilize the RMSA plan (previously there was no time limit).

Prepaid benefits costs and accrued benefit liabilities are included in “Other assets” and “Other liabilities,” respectively, in the Company’s Consolidated Statements of Financial Position. The status of these plans as of December 31, 2021 and 2020 is summarized below:


	Pension Benefits				Other Postretirement Benefits
	2021		2020		2021		2020
	(in millions)
Change in benefit obligation
Benefit obligation at the beginning of period	$	(15,483)	$	(14,637)	$	(2,040)	$	(1,993)

Service cost	(328)		(321)		(27)		(24)
Interest cost	(364)		(429)		(49)		(64)
Plan participants’ contributions	0		0		(23)		(22)
Medicare Part D subsidy receipts	0		0		(5)		(7)
Amendments	0		0		121		0
Curtailments	0		16		0		0
Actuarial gains (losses), net(1)(2)	310		(978)		55		(101)
Settlements	24		43		0		0
Special termination benefits	(1)		(7)		0		0
Benefits paid	868		878		173		171
Acquisition/Divestiture	13		46		0		0
Foreign currency changes and other	174		(94)		2		0
Benefit obligation at end of period	$	(14,787)	$	(15,483)	$	(1,793)	$	(2,040)
Change in plan assets
Plan assets at beginning of period	$	14,897	$	13,906	$	1,589	$	1,557
Actual return on plan assets	1,059		1,740		174		171

Employer contributions	205		200		8		10
Plan participants’ contributions	0		0		23		22
Disbursement for settlements	(24)		(43)		0		0
Benefits paid	(868)		(878)		(173)		(171)
Acquisition/Divestiture	(5)		(51)		0		0
Foreign currency changes and other	(22)		23		0		0
Plan assets at end of period	$	15,242	$	14,897	$	1,621	$	1,589
Funded status at end of period	$	455	$	(586)	$	(172)	$	(451)
Amounts recognized in the Statements of Financial Position
Prepaid benefit cost	$	3,272	$	2,426	$	0	$	0
Accrued benefit liability	(2,817)		(3,012)		(172)		(451)
Net amount recognized	$	455	$	(586)	$	(172)	$	(451)
Items recorded in “Accumulated other comprehensive income (loss)” not yet recognized as a component of net periodic (benefit) cost:
Prior service cost	$	(5)	$	(10)	$	(69)	$	59
Net actuarial loss	3,131		3,972		211		354
Net amount not recognized	$	3,126	$	3,962	$	142	$	413
Accumulated benefit obligation	$	(13,969)	$	(14,690)	$	(1,793)	$	(2,040)

__________

(1)For 2021, actuarial gains for pension and other postretirement benefits were primarily driven by an increase in the discount rate.

(2)For 2020, actuarial losses for pension and other postretirement benefits were primarily driven by a decrease in the discount rate.

In addition to the plan assets above, the Company in 2007 established an irrevocable trust, commonly referred to as a “rabbi trust,” for the purpose of holding assets of the Company to be used to satisfy its obligations with respect to certain non-qualified retirement plans ($1,327 million and $1,360 million benefit obligation at December 31, 2021 and 2020, respectively). Assets held in the rabbi trust are available to the general creditors of the Company in the event of insolvency or bankruptcy. The Company may from time to time in its discretion make contributions to the trust to fund accrued benefits payable to participants in one or more of the plans, and, in the case of a change in control of the Company, as defined in the trust agreement, the Company will be required to make contributions to the trust to fund the accrued benefits, vested and unvested, payable on a pre-tax basis to participants in the plans. The Company did not make any discretionary payments to the trust in 2021 and 2020. As of December 31, 2021 and 2020, the assets in the trust had a carrying value of $1,109 million and $1,044 million, respectively.

The Company also maintains a separate rabbi trust for the purpose of holding assets of the Company to be used to satisfy its obligations with respect to certain other non-qualified retirement plans ($73 million and $77 million benefit obligation at December 31, 2021 and 2020, respectively), as well as certain cash-based deferred compensation arrangements. As of December 31, 2021 and 2020, the assets in the trust had a carrying value of $102 million and $111 million, respectively.

Pension benefits for foreign plans comprised 12% and 13% of the ending benefit obligation for both 2021 and 2020, respectively. Foreign pension plans comprised 4% of the ending fair value of plan assets for both 2021 and 2020, respectively. There are no material foreign postretirement plans.

Information for pension plans with a projected benefit obligation in excess of plan assets


	2021		2020

	(in millions)
Projected benefit obligation	$	2,817	$	3,012
Fair value of plan assets	$	0	$	0

Information for pension plans with an accumulated benefit obligation in excess of plan assets


	2021		2020

	(in millions)
Accumulated benefit obligation	$	2,620	$	2,834
Fair value of plan assets	$	0	$	0

Components of Net Periodic Benefit Cost

The Company uses market related value to determine components of net periodic (benefit) cost. Market related value recognizes certain changes in fair value of plan assets over a period of five years. Changes in the fair value of U.S. equities, international equities, real estate and other assets are recognized over a five year period. However, changes in the fair value for fixed maturity assets (including short-term investments) are recognized immediately for the purposes of market related value.

Net periodic (benefit) cost included in “General and administrative expenses” in the Company’s Consolidated Statements of Operations for the years ended December 31, includes the following components:


	Pension Benefits						Other Postretirement Benefits
	2021		2020		2019		2021		2020		2019
	(in millions)
Service cost	$	328	$	321	$	291	$	27	$	24	$	22
Interest cost	364		429		489		49		64		78
Expected return on plan assets	(824)		(804)		(816)		(102)		(100)		(95)
Amortization of prior service cost	(3)		(4)		(4)		6		6		4
Amortization of actuarial (gain) loss, net	245		262		217		16		16		24
Settlements	5		9		59		0		0		0
Curtailments	1		0		0		0		0		0
Special termination benefits(1)(2)(3)	1		7		26		0		0		1
Net periodic (benefit) cost	$	117	$	220	$	262	$	(4)	$	10	$	34

__________

(1)For 2021, 2020 and 2019, certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their involuntary termination.

(2)For 2021 and 2020, certain employees were provided special termination benefits under non-qualified plans in the form of unreduced early retirement benefits as a result of their participation in the Voluntary Separation Program that was offered to eligible U.S.-based employees in 2019.

(3)For 2019, certain employees were provided special termination benefits in the qualified and non-qualified plans in the form of retirement eligibility bridging as a result of their participation in the Voluntary Separation Program that was offered to eligible U.S.-based employees.

Changes in Accumulated Other Comprehensive Income (Loss)

The benefit obligation is based upon actuarial assumptions such as discount, termination, retirement, mortality and salary growth rates. Changes at year-end in these actuarial assumptions, along with experience changes based on updated participant

census data are deferred in AOCI. Plan assets generate actuarial gains and losses when actual returns on plan assets differ from expected returns on plan assets, and these differences are also deferred in AOCI. The cumulative deferred gain (loss) within AOCI is amortized into earnings if it exceeds 10% of the greater of the benefit obligation or plan assets at the beginning of the year, and the amortization period is based upon the actuarially calculated expected future years of service for a given plan.

The amounts recorded in AOCI as of the end of the period, which have not yet been recognized as a component of net periodic (benefit) cost, and the related changes in these items during the period that are recognized in “Other comprehensive income (loss)” are as follows:


	Pension Benefits				Other Postretirement Benefits
	Prior Service Cost		Net Actuarial (Gain) Loss		Prior Service Cost		Net Actuarial (Gain) Loss
	(in millions)
Balance, December 31, 2018	$	(15)	$	3,829	$	41	$	408
Amortization for the period	4		(217)		(4)		(24)
Deferrals for the period(1)	0		634		27		(45)
Impact of foreign currency changes and other	(1)		(55)		1		2
Balance, December 31, 2019	(12)		4,191		65		341
Amortization for the period	4		(262)		(6)		(16)
Deferrals for the period(2)	0		42		0		30
Impact of foreign currency changes and other	(2)		1		0		(1)
Balance, December 31, 2020	(10)		3,972		59		354
Amortization for the period	3		(245)		(6)		(16)
Deferrals for the period(3)	0		(545)		(121)		(127)
Impact of foreign currency changes and other	2		(51)		(1)		0
Balance, December 31, 2021	$	(5)	$	3,131	$	(69)	$	211

__________

(1)For 2019, deferred losses for pension were driven by a decrease in discount rate partially offset by favorable asset performance. Deferred gains for other postretirement benefits were driven by favorable asset performance partially offset by a decrease in discount rate.

(2)For 2020, deferred losses for pension and other postretirement benefits were driven by a decrease in discount rate partially offset by favorable asset performance.

(3)For 2021, deferred gains for pension and other postretirement benefits were driven by an increase in discount rate and favorable asset performance.

The Company’s assumptions related to the calculation of the domestic benefit obligation (end of period) and the determination of net periodic (benefit) cost (beginning of period) are presented in the table below:


	Pension Benefits						Other Postretirement Benefits
	2021		2020		2019		2021		2020		2019
Weighted average assumptions
Discount rate (beginning of period)	2.55	%	3.30	%	4.30	%	2.40	%	3.25	%	4.30	%
Discount rate (end of period)	2.85	%	2.55	%	3.30	%	2.75	%	2.40	%	3.25	%
Rate of increase in compensation levels (beginning of period)	4.50	%	4.50	%	4.50	%	N/A		N/A		N/A
Rate of increase in compensation levels (end of period)	4.50	%	4.50	%	4.50	%	N/A		N/A		N/A
Expected return on plan assets (beginning of period)	5.75	%	6.00	%	6.50	%	6.75	%	6.75	%	7.00	%
Interest crediting rate (beginning of period)	4.25	%	4.30	%	4.30	%	N/A		N/A		N/A
Interest crediting rate (end of period)	4.25	%	4.25	%	4.30	%	N/A		N/A		N/A
Health care cost trend rates (beginning of period)	N/A		N/A		N/A		6.25	%	6.25	%	6.00	%
Health care cost trend rates (end of period)	N/A		N/A		N/A		6.00	%	6.25	%	6.25	%
For 2021, 2020 and 2019, the ultimate health care cost trend rate after gradual decrease until: 2028, 2028, 2024, (beginning of period)	N/A		N/A		N/A		4.50	%	4.50	%	5.00	%
For 2021, 2020 and 2019, the ultimate health care cost trend rate after gradual decrease until: 2028, 2028, 2028 (end of period)	N/A		N/A		N/A		4.50	%	4.50	%	4.50	%

The domestic discount rate used to value the pension and postretirement obligations at December 31, 2021 and December 31, 2020 is based upon the value of a portfolio of Aa-rated investments whose cash flows would be available to pay the benefit obligation’s cash flows when due. The December 31, 2021 portfolio is selected from a compilation of approximately 420 Aa-rated bonds across the full range of maturities. Since yields can vary widely at each maturity point, the Company generally avoids using the highest and lowest yielding bonds at the maturity points, so as to avoid relying on bonds that might be mispriced or misrated. This refinement process generally results in having a distribution from the 10th to 90th percentile. The Aa-rated portfolio is then selected and, accordingly, its value is a measure of the benefit obligation. A single equivalent discount rate is calculated to equate the value of the Aa-rated portfolio to the cash flows for the benefit obligation. The result is rounded to the nearest 5 basis points and the benefit obligation is recalculated using the rounded discount rate.

The pension and postretirement expected long-term rates of return on plan assets for 2021 were determined based upon an approach that considered the allocation of plan assets as of December 31, 2020. Expected returns are estimated by asset class as noted in the discussion of investment policies and strategies below. Expected returns on asset classes are developed using a building-block approach that is forward looking and are not strictly based upon historical returns. The building blocks for equity returns include inflation, real return, a term premium, an equity risk premium, capital appreciation, expenses, the effect of active management and the effect of rebalancing. The building blocks for fixed maturity returns include inflation, real return, a term premium, credit spread, capital appreciation, effect of active management, expenses and the effect of rebalancing.

The Company applied the same approach to the determination of the expected rate of return on plan assets in 2022. The expected rate of return for 2022 is 6.00% and 7.00% for pension and postretirement, respectively.

The assumptions for foreign pension plans are based on local markets. There are no material foreign postretirement plans.

Plan Assets

The investment goal of the domestic pension plan assets is to generate an above benchmark return on a diversified portfolio of stocks, bonds and other investments. The cash requirements of the pension obligation, which include a traditional formula principally representing payments to annuitants and a cash balance formula that allows lump sum payments and annuity payments, are designed to be met by the bonds and short-term investments in the portfolio.

The investment goal of the domestic postretirement plan assets is to generate an above benchmark return on a diversified portfolio of stocks, bonds, and other investments, while meeting the cash requirements for the postretirement obligation that includes a medical benefit including prescription drugs, a dental benefit and a life benefit.

The pension and postretirement plans risk management practices include guidelines for asset concentration, credit rating, liquidity and tax efficiency. The pension and postretirement plans do not invest in leveraged derivatives. Derivatives such as futures contracts are used to reduce transaction costs and change asset concentration, while interest rate swaps and futures are used to adjust duration.

The plan fiduciaries for the Company’s pension and postretirement plans have developed guidelines for asset allocations reflecting a percentage of total assets by asset class, which are reviewed on an annual basis. Asset allocation targets as of December 31, 2021 are as follows:


	Pension				Postretirement
	Minimum		Maximum		Minimum		Maximum
Asset Category
U.S. Equities	2	%	6	%	34	%	74	%
International Equities	3	%	8	%	2	%	25	%
Fixed Maturities	50	%	65	%	10	%	43	%
Short-term Investments	0	%	13	%	0	%	26	%
Real Estate	2	%	16	%	0	%	0	%
Other	5	%	32	%	0	%	0	%

To implement the investment strategy, plan assets are invested in funds that primarily invest in securities that correspond to one of the asset categories under the investment guidelines. However, at any point in time, some of the assets in a fund may be of a different nature than the specified asset category.

Assets held with PICA are in either pooled separate accounts or single client separate accounts. Assets held with a bank are either in common/collective trusts or single client trusts. Pooled separate accounts and common/collective trusts hold assets for multiple investors. Each investor owns a “unit of account.” The asset allocation targets above include the underlying asset mix in the Pooled Separate Accounts and Common/Collective Trusts. Single client separate accounts or trusts hold assets for only one investor, the domestic qualified pension plan, and each security in the fund is treated as individually owned.

There were no investments in Prudential Financial Common Stock as of December 31, 2021 and December 31, 2020 for either the pension or postretirement plans.

The authoritative guidance around fair value established a framework for measuring fair value. Fair value is disclosed using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, as described in Note 6.

The following describes the valuation methodologies used for pension and postretirement plans assets measured at fair value.

Insurance Company Pooled Separate Accounts, Common/Collective Trusts, and United Kingdom Insurance Pooled Funds—Insurance company pooled separate accounts are invested via group annuity contracts issued by PICA. Assets are represented by a “unit of account.” The redemption value of those units is based on a per unit value whose value is the result of the accumulated values of underlying investments. The unit of account value is used as a practical expedient to estimate fair value.

Equities—See Note 6 for a discussion of the valuation methodologies for equity securities.

U.S. Government Securities (both Federal and State & Other), Non–U.S. Government Securities, and Corporate Debt—See Note 6 for a discussion of the valuation methodologies for fixed maturity securities.

Interest Rate Swaps—See Note 6 for a discussion of the valuation methodologies for derivative instruments.

Registered Investment Companies (Mutual Funds)—Securities are priced at the NAV, which is the closing price published by the registered investment company on the reporting date.

Short-term Investments—Securities are valued initially at cost and thereafter adjusted for amortization of any discount or premium (i.e., amortized cost). Amortized cost approximates fair value.

Partnerships—The value of interests owned in partnerships is based on valuations of the underlying investments that include private placements, structured debt, real estate, equities, fixed maturities, commodities and other investments.

Hedge Funds—The value of interests in hedge funds is based on the underlying investments that include equities, debt and other investments.

Variable Life Insurance Policies—These assets are held in group and individual variable life insurance policies issued by PICA. Group policies are invested in Insurance Company Pooled Separate Accounts. Individual policies are invested in Registered Investment Companies (Mutual Funds). The value of interest in these policies is the cash surrender value (contract value) of the policies based on the underlying investments. The variable life insurance policies are valued at contract value which approximates fair value.

Pension plan asset allocations in accordance with the investment guidelines are as follows:


	As of December 31, 2021								As of December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Fixed Maturities:
U.S. government securities (federal):
Mortgage-backed	$	0	$	0	$	0	$	0	$	0	$	1	$	0	$	1
Other U.S. government securities	0		1,081		0		1,081		0		985		0		985
U.S. government securities (state & other)	0		518		0		518		0		588		0		588
Non-U.S. government securities	0		114		0		114		0		103		0		103
Corporate Debt:
Corporate bonds	0		3,809		0		3,809		0		4,290		0		4,290
Asset-backed	0		23		0		23		0		25		0		25
Collateralized mortgage obligations	0		570		0		570		0		614		0		614
Collateralized loan obligations	0		502		0		502		0		441		0		441
Interest rate swaps(1)	0		(1)		0		(1)		0		0		0		0
Registered investment companies	85		0		0		85		96		0		0		96
Other(2)	11		4		42		57		33		2		35		70


Subtotal fixed maturities	96		6,620		42		6,758		129		7,049		35		7,213
Real Estate:
Partnerships	0		0		998		998		0		0		838		838
Other:
Partnerships	0		0		1,800		1,800		0		0		1,234		1,234
Hedge funds	0		0		1,304		1,304		0		0		1,327		1,327
Subtotal other	0		0		3,104		3,104		0		0		2,561		2,561
Net assets in the fair value hierarchy	$	96	$	6,620	$	4,144	$	10,860	$	129	$	7,049	$	3,434	$	10,612

Investments Measured at Net Asset Value, as a Practical Expedient(3):
Pooled separate accounts							$	2,554							$	2,659
Common/collective trusts							1,643								1,440
United Kingdom insurance pooled funds							185								186
Net assets at fair value							$	15,242							$	14,897

_______________

(1)Interest rate swaps notional amount is $433 million and $13 million for the years ended December 31, 2021 and 2020, respectively.

(2)This category primarily consists of cash and cash equivalents, short-term investments, payables and receivables, and open future contract positions (including fixed income collateral).

(3)The pension plan excludes from the fair value hierarchy investments that are measured at NAV per share (or its equivalent) as a practical expedient to estimate fair value.

Changes in Fair Value of Level 3 Pension Assets


		Fixed Maturities		Real Estate		Other
		Other		Partnerships		Partnerships		Hedge Fund
	(in millions)
Fair Value, January 1, 2020		$	44	$	688	$	973	$	1,312
Actual Return on Assets:
Relating to assets still held at the reporting date		0		11		161		116
Relating to assets sold during the period		0		0		0		0
Purchases, sales and settlements		(9)		139		100		(101)
Transfers in and/or out of Level 3		0		0		0		0
Fair Value, December 31, 2020		$	35	$	838	$	1,234	$	1,327
Actual Return on Assets:
Relating to assets still held at the reporting date		0		128		639		98
Relating to assets sold during the period		0		0		0		0
Purchases, sales and settlements		7		32		(73)		(121)
Transfers in and/or out of Level 3		0		0		0		0
Fair Value, December 31, 2021		$	42	$	998	$	1,800	$	1,304

Postretirement plan asset allocations in accordance with the investment guidelines are as follows:


	As of December 31, 2021								As of December 31, 2020
	Level 1		Level 2		Level 3(3)		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equities:
U.S. equities(1)	$	0	$	40	$	0	$	40	$	0	$	36	$	0	$	36
International equities	0		10		0		10		0		9		0		9
Subtotal equities	0		50		0		50		0		45		0		45
Fixed Maturities:
U.S. government securities (federal):
Other U.S. government securities	0		0		0		0		0		9		0		9
Non-U.S. government securities	0		0		0		0		0		1		0		1
Corporate Debt:
Corporate bonds	0		0		0		0		0		7		0		7
Asset-backed	0		0		0		0		0		2		0		2
Collateralized mortgage obligations	0		0		0		0		0		3		0		3
Collateralized loan obligations	0		0		0		0		0		4		0		4
Registered investment companies	0		0		0		0		19		0		0		19
Subtotal fixed maturities	0		0		0		0		19		26		0		45
Short-term Investments:
Registered investment companies	114		0		0		114		165		0		0		165
Net assets in the fair value hierarchy	$	114	$	50	$	0	$	164	$	184	$	71	$	0	$	255

Investments Measured at Net Asset Value, as a Practical Expedient(2):
Common/collective trusts							$	294							$	279
Net assets at fair value							458								534
Variable Life Insurance Policies at contract value							1,163								1,055
Total net assets							$	1,621							$	1,589

__________

(1)Prior period amounts have been updated to conform to current period presentation.

(2)The postretirement plan excludes from the fair value hierarchy investments that are measured at NAV per share (or its equivalent) as a practical expedient to estimate fair value.

(3)There were no changes in the fair value of Level 3 postretirement assets from December 31, 2020 through December 31, 2021.

The expected benefit payments for the Company’s pension and postretirement plans, as well as the expected Medicare Part D subsidy receipts related to the Company’s postretirement plan, for the years indicated are as follows:


	Pension Benefit Payments		Other Postretirement Benefit Payments		Other Postretirement Benefits– Medicare Part D Subsidy Receipts
	(in millions)
2022	$	823	$	160	$	6
2023	852		161		6
2024	859		160		6
2025	890		155		6
2026	898		150		6
2027-2031	4,683		583		26
Total	$	9,005	$	1,369	$	56

The Company anticipates that it will make cash contributions in 2022 of approximately $190 million to the pension plans and approximately $10 million to the postretirement plans.

Postemployment Benefits

The Company accrues postemployment benefits for income continuance and health and life benefits provided to former or inactive employees who are not retirees. The net accumulated liability for these benefits at December 31, 2021 and 2020 was $34 million and $15 million, respectively, and is included in “Other liabilities.”

Other Employee Benefits

The Company sponsors voluntary savings plans for employees (401(k) plans). The plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4% of annual salary. The matching contributions by the Company included in “General and administrative expenses” were $80 million, $82 million and $84 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The entire disclosure for retirement benefits.

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Stockholders' Equity Note [Abstract]

Equity

12 Months Ended

Dec. 31, 2021

Equity

EQUITY

Preferred Stock

As of December 31, 2021, 2020 and 2019, the Company had 10,000,000 shares of preferred stock authorized but none issued or outstanding.

Common Stock

On the date of demutualization in December 2001, Prudential Financial completed an initial public offering of its Common Stock. The shares of Common Stock issued were in addition to shares of Common Stock the Company distributed to policyholders as part of the demutualization. The Common Stock is traded on the New York Stock Exchange under the symbol “PRU”. In the event of a liquidation, dissolution or winding-up of the Company, holders of Common Stock would be entitled to receive a proportionate share of the net assets of the Company that remain after paying all liabilities and the liquidation preferences of any preferred stock.

The changes in the number of shares of Common Stock issued, held in treasury and outstanding, are as follows for the periods indicated:


	Common Stock
	Issued	Held In Treasury	Outstanding

	(in millions)
Balance, December 31, 2018	660.1	249.4	410.7
Common Stock issued(2)(3)	6.2	(5.5)	11.7
Common Stock acquired	0.0	27.2	(27.2)
Stock-based compensation programs(1)	0.0	(3.6)	3.6
Balance, December 31, 2019	666.3	267.5	398.8
Common Stock issued	0.0	0.0	0.0
Common Stock acquired	0.0	6.7	(6.7)
Stock-based compensation programs(1)	0.0	(4.3)	4.3
Balance, December 31, 2020	666.3	269.9	396.4
Common Stock issued	0.0	0.0	0.0
Common Stock acquired	0.0	24.5	(24.5)
Stock-based compensation programs(1)	0.0	(4.4)	4.4
Balance, December 31, 2021	666.3	290.0	376.3

__________

(1)Represents net shares issued from treasury pursuant to the Company’s stock-based compensation programs.

(2)In August 2019, as a result of the note holders’ exercise of the exchange option on $500 million of surplus notes, the Company issued approximately 6.2 million shares of Common Stock at an exchange rate equal to 12.3877 shares of Common Stock per each $1,000 principal amount of surplus notes. The Company’s obligations under the surplus notes are now satisfied. For additional information, see Note 20.

(3)In October 2019, the Company issued approximately 5.5 million shares of Common Stock as part of consideration paid for the Assurance IQ acquisition. For additional information about the acquisition, see Note 1.

Additional paid-in capital

“Additional paid-in capital” is primarily comprised of the cumulative excess between: (a) the total cash received by the Company in conjunction with past issuances of Common Stock shares or Common Stock shares reissued from treasury in conjunction with the Company’s stock-based compensation program and (b) the total par value associated with those shares ($.01 per share).

Common stock held in treasury

Common Stock held in treasury represents the Company’s previously issued shares of stock which have been repurchased by the Company but not retired. These shares are accounted for at the cost at which they were acquired. Common Stock held in treasury is typically impacted by repurchases of shares under the Board of Directors approved share repurchase program and by reissuances of shares associated with our stock-based compensation programs, or for other purposes, which are accounted for at average cost upon reissuance. Gains resulting from the reissuance of Common Stock held in treasury are credited to “Additional paid-in capital”. Losses resulting from the reissuance of Common Stock held in treasury are charged first to “Additional paid-in capital” to the extent the Company has previously recorded gains on treasury share transactions, then to “Retained earnings”.

The Board of Directors may from time to time, at its discretion, authorize management to repurchase shares of Common Stock of the Company. The timing and amount of share repurchases are determined by management based upon market conditions and other considerations, and repurchases may be executed in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Securities Exchange Act of 1934 (the “Exchange Act”). Numerous factors could affect the timing and amount of any future repurchases under the share repurchase authorization, including increased capital needs of the Company due to changes in regulatory capital requirements, opportunities for growth and acquisitions, and the effect of adverse market conditions on the segments.

The following table summarizes share repurchases for each of the past three years as well as the share repurchase authorization for 2022, which was approved by the Board of Directors in November 2021:


	January 1, 2022 - December 31, 2022		January 1, 2021 - December 31, 2021		January 1, 2020 - December 31, 2020(1)		January 1, 2019 - December 31, 2019
Total Board authorized share repurchase amount ($ in billions)	$	1.5	$	2.5	$	2.0	$	2.5
Total number of shares repurchased under this authorization as of the period end (in millions)	N/A*		24.5		6.7		27.2

__________

* Share repurchase authorization for a future period.

(1)In April 2020, the Company suspended Common Stock repurchases under the 2020 share repurchase authorization and did not resume share repurchases for the remainder of the authorization period.

Accumulated Other Comprehensive Income (Loss)

AOCI represents the cumulative OCI items that are reported separate from net income and detailed on the Consolidated Statements of Comprehensive Income. Each of the components that comprise OCI are described in further detail in Note 2 (Foreign Currency Translation Adjustment and Net Unrealized Investment Gains (Losses)) and Note 18 (Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)). The balance of and changes in each component of AOCI as of and for the years ended December 31, are as follows:


	Accumulated Other Comprehensive Income (Loss) Attributable to Prudential Financial, Inc.
	Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses)(1)		Pension and Postretirement Unrecognized Net Periodic Benefit (Cost)		Total Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance, December 31, 2018	$	(564)	$	14,745	$	(3,275)	$	10,906
Change in OCI before reclassifications	37		18,540		(563)		18,014
Amounts reclassified from AOCI	27		(1,345)		241		(1,077)
Income tax benefit (expense)	(36)		(3,835)		60		(3,811)
Cumulative effect of adoption of ASU 2017-12	0		7		0		7
Balance, December 31, 2019	(536)		28,112		(3,537)		24,039
Change in OCI before reclassifications	455		8,112		(70)		8,497
Amounts reclassified from AOCI	57		(883)		280		(546)
Income tax benefit (expense)	76		(1,276)		(52)		(1,252)
Balance, December 31, 2020	52		34,065		(3,379)		30,738
Change in OCI before reclassifications	(1,058)		(9,226)		843		(9,441)
Amounts reclassified from AOCI	(65)		(2,486)		264		(2,287)
Income tax benefit (expense)	(79)		2,634		(241)		2,314
Balance, December 31, 2021	$	(1,150)	$	24,987	$	(2,513)	$	21,324

__________

(1)Includes cash flow hedges of $1,019 million, $(168) million and $832 million as of December 31, 2021, 2020, and 2019, respectively, and fair value hedges of $(35) million, $10 million, and $0 million as of December 31, 2021, 2020, and 2019, respectively.

Reclassifications out of Accumulated Other Comprehensive Income (Loss)


	Years Ended December 31,						Affected line item in Consolidated Statements of Operations
	2021		2020		2019
	(in millions)
Amounts reclassified from AOCI(1)(2):
Foreign currency translation adjustment:
Foreign currency translation adjustment	$	2	$	1	$	(27)	Realized investment gains (losses), net
Foreign currency translation adjustment	63		(58)		0		Other income (loss)
Total foreign currency translation adjustment	65		(57)		(27)
Net unrealized investment gains (losses):
Cash flow hedges—Interest Rate	0		40		58		(3)
Cash flow hedges—Currency	(4)		5		6		(3)
Cash flow hedges—Currency/Interest rate	557		110		315		(3)
Fair value hedges—Currency	(6)		(1)		0		(3)
Net unrealized investment gains (losses) on available-for-sale securities	1,939		729		966		Realized investment gains (losses), net
Total net unrealized investment gains (losses)	2,486		883		1,345		(4)
Amortization of defined benefit items:
Prior service cost	(3)		(2)		0		(5)
Actuarial gain (loss)	(261)		(278)		(241)		(5)
Total amortization of defined benefit items	(264)		(280)		(241)
Total reclassifications for the period	$	2,287	$	546	$	1,077

__________

(1)All amounts are shown before tax.

(2)Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.

(3)See Note 5 for additional information on cash flow and fair value hedges.

(4)See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.

(5)See Note 18 for information on employee benefit plans.

Net Unrealized Investment Gains (Losses)

Net unrealized investment gains (losses) on available-for-sale fixed maturity securities and certain other invested assets and other assets are included in the Company’s Consolidated Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from “Other comprehensive income (loss)” those items that are included as part of “Net income (loss)” for a period that had been part of “Other comprehensive income (loss)” in earlier periods. The amounts for the periods indicated below, split between amounts related to available-for-sale fixed maturity securities on which an OTTI loss had been previously recognized, an allowance for credit losses has been recorded, and all other net unrealized investment gains (losses), are as follows:


	Net Unrealized Gains (Losses) on Available-for-Sale Fixed Maturity Securities on which an OTTI Loss has been Recognized		Net Unrealized Gains (Losses) on Available-for-Sale Fixed Maturity Securities on which an Allowance for Credit Losses has been Recorded		Net Unrealized Gains (Losses) on All Other Investments(1)		DAC, DSI, VOBA and Reinsurance Recoverables		Future Policy Benefits, Policyholders’ Account Balances and Reinsurance Payables		Policyholders’ Dividends		Income Tax Benefit (Expense)		Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
Balance, December 31, 2018	$	189	$	0	$	22,531	$	(739)	$	(787)	$	(917)	$	(5,532)	$	14,745
Net investment gains (losses) on investments arising during the period	129				23,826								(5,311)		18,644
Reclassification adjustment for (gains) losses included in net income	(96)				(1,249)								298		(1,047)
Reclassification adjustment for OTTI losses excluded from net income	21				(21)								0		0
Impact of net unrealized investment (gains) losses							(846)		(2,122)		(2,449)		1,180		(4,237)
Cumulative effect of adoption of ASU 2017-12					9								(2)		7
Balance, December 31, 2019	243		0		45,096		(1,585)		(2,909)		(3,366)		(9,367)		28,112
Reclassification to all other due to implementation of ASU 2016-13(2)	(243)				243								0		0
Net investment gains (losses) on investments arising during the period			47		13,914								(2,665)		11,296
Reclassification adjustment for (gains) losses included in net income			25		(908)								168		(715)
Reclassification due to allowance for credit losses recorded during the period			(97)		97								0		0
Impact of net unrealized investment (gains) losses							356		(3,679)		(2,526)		1,221		(4,628)
Balance, December 31, 2020	0		(25)		58,442		(1,229)		(6,588)		(5,892)		(10,643)		34,065
Net investment gains (losses) on investments arising during the period			41		(15,505)								3,435		(12,029)
Reclassification adjustment for (gains) losses included in net income			10		(2,496)								552		(1,934)
Reclassification due to allowance for credit losses recorded during the period			(3)		3								0		0
Impact of net unrealized investment (gains) losses							686		3,317		2,235		(1,353)		4,885
Balance, December 31, 2021	$	0	$	23	$	40,444	$	(543)	$	(3,271)	$	(3,657)	$	(8,009)	$	24,987

__________

(1)Includes cash flow and fair value hedges. See Note 5 for additional information.

(2)Represents net unrealized gains (losses) for which an OTTI loss had been previously recognized.

Retained earnings

Retained earnings primarily represents the cumulative net income earned by the Company that has been retained by the Company as of the reporting date. Other unique items, included but not limited to the adoption of new accounting standards updates, may also impact retained earnings. In any given period, retained earnings may increase due to net income and may decrease due to net losses or the declaration of dividends. The declaration and payment of dividends on the Common Stock is limited by New Jersey corporate law, pursuant to which Prudential Financial is prohibited from paying a Common Stock dividend if, after giving effect to that dividend, either (a) the Company would be unable to pay its debts as they become due in the usual course of its business or (b) the Company’s total assets would be less than its liabilities. In addition, the terms of the Company’s outstanding junior subordinated debt include a “dividend stopper” provision that restricts the payment of dividends on the Common Stock if interest payments are not made on the junior subordinated debt.

Other than the above limitations, the Company’s Retained earnings balance is free of restrictions for the payment of Common Stock dividends; however, Common Stock dividends will be dependent upon financial conditions, results of operations, cash needs, future prospects and other factors, including cash available to Prudential Financial, the parent holding company. The principal sources of funds available to Prudential Financial are dividends and returns of capital from its subsidiaries, loans from its subsidiaries, repayments of operating loans from its subsidiaries, and cash and other highly liquid assets. The primary uses of funds at Prudential Financial include servicing its debt, operating expenses, capital contributions and loans to subsidiaries, the payment of declared shareholder dividends and repurchases of outstanding shares of Common Stock if executed under Board authority. As of December 31, 2021, Prudential Financial had highly liquid assets (excluding amounts held in an intercompany liquidity account) of $3,553 million predominantly including cash, short-term investments, U.S. Treasury securities, obligations of other U.S. government authorities and agencies, and/or foreign government bonds.

Future cash available at Prudential Financial to support the payment of future Common Stock dividends is dependent on the receipt of dividends or other funds from its subsidiaries, the majority of which are subject to comprehensive regulation, including limitations on their payment of dividends and other transfers of funds, which are discussed in this Note further below.

Non-controlling interests

For certain subsidiaries, the Company owns a controlling interest that is less than 100% ownership of the subsidiary but must consolidate 100% of the subsidiary’s financial statements in accordance with U.S. GAAP. Non-controlling interests represent the portion of equity ownership in a consolidated subsidiary that is not attributable to the Company.

Insurance Subsidiaries - Statutory Financial Information and Restrictions on Payments of Dividends

U.S. Insurance Subsidiaries—Statutory Financial Information

The Company’s domestic insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis.

The risk-based capital (“RBC”) ratio is a primary measure by which the Company and its insurance regulators evaluate the capital adequacy of PICA and the Company’s other domestic insurance subsidiaries. RBC is determined by NAIC-prescribed formulas that consider, among other things, risks related to the type and quality of the invested assets, insurance-related risks associated with an insurer’s products and liabilities, interest rate risks and general business risks. Insurers that have less statutory capital than required are considered to have inadequate capital and are subject to varying degrees of regulatory action depending upon the level of capital inadequacy. The Company expects to report RBC ratios as of December 31, 2021 above the regulatory required minimums that would require corrective action and above our “AA” financial strength target levels for both PICA and PALAC.

The following table summarizes certain statutory financial information for the Company’s two largest U.S. insurance subsidiaries for the periods indicated:


	PICA						PALAC
In millions and presented as of or for the year ended	December 31, 2021		December 31, 2020		December 31, 2019		December 31, 2021		December 31, 2020		December 31, 2019
Statutory net income (loss)(1)	$	966	$	1,770	$	(169)	$	2,045	$	(768)	$	(2,052)
Statutory capital and surplus(1)	$	19,123	$	11,597	$	11,483	$	1,014	$	6,131	$	4,748

__________

(1)Prior year amounts have been updated to conform to finalized statutory filing where applicable.

U.S. Insurance Subsidiaries—Restrictions on Payment of Dividends to Prudential Financial, the Parent Holding Company

With respect to PICA, a New Jersey domiciled insurance subsidiary which is also the Company’s primary domestic insurance subsidiary, New Jersey insurance law provides that, except in the case of extraordinary dividends (as described below), all dividends or other distributions paid by PICA may be paid only from unassigned surplus, as determined pursuant to statutory accounting principles, less cumulative unrealized investment gains and losses and revaluation of assets as of the prior calendar year-end. As of December 31, 2021, PICA’s unassigned surplus less applicable adjustments for cumulative unrealized investment gains was $8,934 million. PICA must give prior notification to the NJDOBI of its intent to pay any such dividend or distribution. Also, if any dividend, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of statutory capital and surplus as of the preceding December 31 or (ii) its statutory net gain from operations excluding realized investment gains and losses for the twelve-month period ending on the preceding December 31, the dividend is considered to be an “extraordinary dividend” and requires the prior approval of the NJDOBI. Under New Jersey insurance law, PICA is permitted to pay an ordinary dividend of up to $1,912 million in 2022, without prior approval of the NJDOBI. Of the $1,912 million, $812 million is permitted to be paid prior to December 13, 2022, and the remaining $1,100 million is permitted to be paid after December 13, 2022.

The laws regulating dividends of the states where the Company’s other domestic insurance subsidiaries are domiciled are similar, but not identical, to New Jersey. With respect to PALAC, an Arizona domiciled insurance subsidiary of the Company, Arizona insurance law provides that if any dividend, together with other dividends or distributions made within the preceding twelve months, exceeds the lesser of (i) 10% of statutory capital and surplus as of the preceding December 31 or (ii) its statutory net gain from operations excluding realized investment gains and losses for the twelve month period ending on the preceding December 31, the dividend is considered to be an “extraordinary dividend” and requires prior approval of the Arizona Department of Insurance. Under Arizona law, PALAC has no ordinary dividend capacity during 2022. All dividends will be considered extraordinary and will require prior approval from the Arizona Department of Insurance.

International Insurance Subsidiaries—Statutory Financial Information

The Company’s international insurance subsidiaries prepare financial statements in accordance with local regulatory requirements. These statutory accounting practices differ from U.S. GAAP primarily by charging policy acquisition costs to expense as incurred and establishing future policy benefit liabilities using different actuarial assumptions, as well as valuing investments and certain assets and accounting for deferred taxes on a different basis.

The Japan Financial Services Agency (“FSA”) utilizes a solvency margin ratio to evaluate the capital adequacy of Japanese insurance companies. The solvency margin ratio considers the level of solvency margin capital to a solvency margin risk amount, which is calculated in a similar manner to RBC. As of December 31, 2021, the Company expects The Prudential Life Insurance Company Ltd. (“Prudential of Japan”) and Gibraltar Life both had solvency margin capital in excess of 3.5 times the regulatory required minimums that would require corrective action.

All of the Company’s domestic and international insurance subsidiaries have capital and surplus levels that exceed their respective regulatory minimum requirements, and none utilized prescribed or permitted practices that vary materially from the practices prescribed by the NAIC or equivalent regulatory bodies for results reported as of December 31, 2021 and 2020, respectively, or for the years ended December 31, 2021, 2020 and 2019, respectively.

International Insurance Subsidiaries—Restrictions on Payment of Dividends to Prudential Financial, the Parent Holding Company

The Company’s international insurance operations are subject to dividend restrictions from the regulatory authorities in the jurisdictions in which they operate. With respect to Prudential of Japan and Gibraltar Life, the Company’s most significant international insurance subsidiaries, both of which are domiciled in Japan, Japan insurance law provides that common stock

dividends may be paid in an amount of up to 83% of prior fiscal year statutory after-tax earnings, after certain reserving thresholds are met, including providing for policyholder dividends. If statutory retained earnings exceed 100% of statutory paid-in capital, 100% of prior year statutory after-tax earnings may be paid, after reserving thresholds are met. Dividends in excess of these amounts and other forms of capital distribution require the prior approval of the FSA. Additionally, Prudential of Japan and Gibraltar Life must give prior notification to the FSA of their intent to pay any dividend or distribution.

For the year ended December 31, 2021, Prudential Financial received $1,184 million from its international insurance subsidiaries, which includes $994 million of in-kind dividends in the form of extinguishment of debt held by international insurance subsidiaries. In addition to paying Common Stock dividends, the Company’s international insurance operations may return capital to Prudential Financial through, or facilitated by, other means, such as the repayment of Preferred Stock obligations held by Prudential Financial or other affiliates, affiliated lending, affiliated derivatives and reinsurance with U.S.- and Bermuda-based affiliates. The Company’s Japan insurance operations have entered into reinsurance agreements with Gibraltar Re, the Company’s Bermuda-based reinsurance affiliate, to reinsure the mortality and morbidity risk associated with a portion of the in-force contracts as well as newly-issued contracts for certain products. The Company expects these transactions will allow it to more efficiently manage its capital and risk profile. The current regulatory fiscal year end for both Prudential of Japan and Gibraltar Life is March 31, 2022, after which time the common stock dividend amount permitted to be paid without prior approval from the FSA can be determined.

In addition, although prior regulatory approval may not be required by law for the payment of dividends up to the limitations described above, in practice, the Company would typically discuss any dividend payments with the applicable regulatory authority prior to payment. Additionally, the payment of dividends by the Company’s subsidiaries is subject to declaration by their Board of Directors and may be affected by market conditions and other factors.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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Share-based Payment Arrangement [Abstract]

Earnings Per Share

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

A reconciliation of the numerators and denominators of the basic and diluted per share computations of Common Stock based on the consolidated earnings of Prudential Financial for the years ended December 31, is as follows:


	2021					2020					2019
	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
	(in millions, except per share amounts)
Basic earnings per share
Net income (loss)	$	7,794				$	(146)				$	4,238
Less: Income (loss) attributable to noncontrolling interests	70					228					52
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards	115					21					46
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	7,609	387.2	$	19.65	$	(395)	395.8	$	(1.00)	$	4,140	404.8	$	10.23
Effect of dilutive securities and compensation programs
Add: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Basic	$	115				$	21				$	46
Less: Dividends and undistributed earnings allocated to participating unvested share-based payment awards—Diluted	115					21					45
Stock options			0.7					0.0					1.1
Deferred and long-term compensation programs			2.2					0.0					1.4
Exchangeable Surplus Notes	0		0.0			0		0.0			12		3.6
Diluted earnings per share(1)
Net income (loss) attributable to Prudential Financial available to holders of Common Stock	$	7,609	390.1	$	19.51	$	(395)	395.8	$	(1.00)	$	4,153	410.9	$	10.11

Unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and included in the computation of earnings per share pursuant to the two-class method. Under this method, earnings attributable to Prudential Financial are allocated between Common Stock and the participating awards, as if the awards were a second class of stock. During periods of net income available to holders of Common Stock, the calculation of earnings per share excludes the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. In the event of a net loss available to holders of Common Stock, undistributed earnings are not allocated to participating securities and the denominator excludes the dilutive impact of these securities as they do not share in the losses of the Company. Undistributed earnings allocated to participating unvested share-based payment awards for the years ended December 31, 2021, 2020 and 2019, as applicable, were based on 5.8 million, 4.9 million and 4.6 million of such awards, respectively, weighted for the period they were outstanding.

Stock options and shares related to deferred and long-term compensation programs that are considered antidilutive are excluded from the computation of diluted earnings per share. Stock options are considered antidilutive based on application of the treasury stock method or in the event of a net loss available to holders of Common Stock. Shares related to deferred and long-term compensation programs are considered antidilutive in the event of a net loss available to holders of Common Stock. For the years ended December 31, the number of stock options and shares related to deferred and long-term compensation programs that were considered antidilutive and were excluded from the computation of diluted earnings per share, weighted for the portion of the period they were outstanding, are as follows:


	2021			2020			2019
	Shares	Exercise Price Per Share		Shares	Exercise Price Per Share		Shares	Exercise Price Per Share
	(in millions, except per share amounts, based on weighted average)
Antidilutive stock options based on application of the treasury stock method	1.0	$	102.54	3.3	$	82.06	1.2	$	102.84
Antidilutive stock options due to net loss available to holders of Common Stock	0.0			0.4			0.0
Antidilutive shares based on application of the treasury stock method	0.0			0.2			0.0
Antidilutive shares due to net loss available to holders of Common Stock	0.0			1.6			0.0
Total antidilutive stock options and shares	1.0			5.5			1.2

In September 2009, the Company issued $500 million of surplus notes with an interest rate of 5.36% per annum which were exchangeable at the option of the note holders for shares of Common Stock. In August 2019, as a result of the note holders’ exercise of the exchange option, the Company issued approximately 6.2 million shares of Common Stock at an exchange rate equal to 12.3877 shares of Common Stock per each $1,000 principal amount of surplus notes. The Company’s obligations under the surplus notes are now satisfied. In calculating diluted earnings per share under the if-converted method, for the year ended December 31, 2019, the potential shares that would be issued assuming a hypothetical exchange, weighted for the period the notes were outstanding, are added to the denominator, and the related interest expense, net of tax, is excluded from the numerator, if the overall effect is dilutive.

Share-Based Payments

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement

SHARE-BASED PAYMENTS

Omnibus Incentive Plan

Prudential Financial, Inc.’s Omnibus Incentive Plan provides stock-based awards including stock options, stock appreciation rights, restricted stock shares, restricted stock units, stock settled performance shares, and cash settled performance units. Dividend equivalents are generally provided on restricted stock shares and restricted stock units outstanding as of the record date. Dividend equivalents are generally accrued on target performance shares and units outstanding as of the record date. These dividend equivalents are paid only on the performance shares and units released up to a maximum of the target number of shares and units awarded. Generally, the requisite service period is the vesting period. There were 12,362,031 authorized shares available for grant under the Omnibus Incentive Plan as of December 31, 2021.

Assurance IQ Acquisition

The Company acquired Assurance IQ on October 10, 2019. The terms of the acquisition included compensation awards that involved share-based payment arrangements that are linked to retention and therefore fall under the reporting requirements of ASC 718, Stock Compensation. These compensation awards include stock options, restricted stock units and performance shares.

Compensation Costs

Compensation cost for restricted stock units, performance shares and performance units granted to employees is measured by the share price of the underlying Common Stock at the date of grant.

Compensation cost for employee stock options is based on the fair values estimated on the grant date. Under the Omnibus Incentive Plan, the fair value of each stock option award is estimated using a binomial option pricing model on the date of grant for stock options issued to employees. For the awards related to the Assurance IQ acquisition, the fair value of each stock option award is based on its intrinsic value on the date of grant.

The weighted average grant date assumptions used in the binomial option valuation model are as follows:


	2020		2019
Expected volatility	33.99	%	34.63	%
Expected dividend yield	4.59	%	4.26	%
Expected term	5.60 years		5.54 years
Risk-free interest rate	1.42	%	2.50	%

There were no stock options granted in 2021.

Expected volatility is based on historical volatility of Prudential Financial’s Common Stock and implied volatility from traded options on Prudential Financial’s Common Stock. The Company uses historical data and expectations of future exercise patterns to estimate option exercises and employee terminations within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods associated with the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following table summarizes the compensation cost recognized and the related income tax benefit for stock options, restricted stock units, performance shares and performance units for the years ended December 31:


	2021				2020				2019
Omnibus Incentive Plan:	Total Compensation Cost Recognized (1)		Income Tax Benefit		Total Compensation Cost Recognized (1)		Income Tax Benefit		Total Compensation Cost Recognized (1)		Income Tax Benefit
	(in millions)
Employee stock options	$	2	$	0	$	11	$	3	$	11	$	3
Employee restricted stock units	178		$	41	162		38		149		35
Employee performance shares and performance units	88		$	20	53		12		71		17
Total	$	268	$	61	$	226	$	53	$	231	$	55

__________

(1) Compensation costs related to retirement eligible participants are recorded on the grant date (typically in the first quarter of every year).


	2021				2020
Assurance IQ Acquisition:	Total Compensation Cost Recognized		Income Tax Benefit		Total Compensation Cost Recognized		Income Tax Benefit
	(in millions)
Employee stock options	$	14	$	3	$	14	$	4
Employee restricted stock units	2		0		2		1
Employee performance shares	0		0		0		0
Total	$	16	$	3	$	16	$	5

Compensation costs related to stock-based compensation plans capitalized in deferred acquisition costs for the years ended December 31, 2021, 2020 and 2019 were de minimis.

Stock Options

Each stock option granted under the Omnibus Incentive Plan has an exercise price at the fair market value of Prudential Financial’s Common Stock on the date of grant and has a maximum term of 10 years. Generally, one third of the option grant vests in each of the first three years. Options granted related to the Assurance IQ acquisition have an exercise price based on the original strike price of the Assurance IQ options that they replaced and have a maximum term of 10 years from the date the Assurance IQ options were originally granted. Options granted related to the Assurance IQ acquisition generally vest quarterly over three years.

A summary of the status of the Company’s stock option grants is as follows:


	Employee Stock Options
	Omnibus Incentive Plan			Assurance IQ Acquisition
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding at December 31, 2020	4,563,852	$	81.21	394,266	$	1.60
Granted	0	0.00		0	0.00
Exercised	(1,505,572)	68.33		(155,818)	0.93
Forfeited	(8,057)	95.11		(26,927)	1.38
Expired	(16,120)	85.31		(59)	0.81
Outstanding at December 31, 2021	3,034,103	$	87.54	211,462	$	2.12
Exercisable at December 31, 2021	2,445,731	$	85.72	54,618	$	4.91

The weighted average grant date fair value of employee stock options granted under the Omnibus Incentive Plan during the years ended December 31, 2020 and 2019 was $18.00 and $20.02, respectively. For the Assurance IQ acquisition related awards, the weighted average grant date fair value of employee stock options granted during the year ended December 31, 2019 was $86.31. No Assurance IQ acquisition related options were granted in 2020 or 2021.

The total intrinsic value (i.e., market price of the stock less the option exercise price) of employee stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $48 million, $13 million, and $21 million, respectively. For the Assurance IQ acquisition related awards, the total intrinsic value of employee stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $15 million, $10 million and $3 million, respectively.

The weighted average remaining contractual term and the aggregate intrinsic value of stock options outstanding and exercisable as of December 31, 2021 is as follows:


	Employee Stock Options
	Omnibus Incentive Plan			Assurance IQ Acquisition
	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in years)	(in millions)		(in years)	(in millions)
Outstanding	4.32	$	64	6.61	$	22
Exercisable	3.69	$	56	7.05	$	6

Restricted Stock Units, Performance Share Awards and Performance Unit Awards

A restricted stock unit is an unfunded, unsecured right to receive a share of Prudential Financial’s Common Stock at the end of a specified period of time, which is subject to forfeiture and transfer restrictions. Generally, the restrictions will lapse on the third anniversary of the date of grant. Performance shares and performance units are awards denominated in Prudential Financial’s Common Stock. The number of units is determined over the performance period and may be adjusted based on the satisfaction of certain performance goals for the Company. Performance share awards are payable in Prudential Financial’s Common Stock. Performance unit awards are payable in cash. Effective October 2019, the Company modified certain provisions of its long term compensation plan to settle the performance units component in Prudential Financial Common Stock. As a result, outstanding performance units were converted to performance shares except for certain employee directed deferrals in the deferred compensation plan which remain as performance units for the full life of the grant. Beginning in 2020, the Company no longer grants performance unit awards.

A summary of the Company’s restricted stock units, performance shares and performance unit awards under the Omnibus Incentive Plan is as follows:


	Restricted Stock Units	Weighted Average Grant Date Fair Value		Performance Share and Performance Unit Awards(1)	Weighted Average Grant Date Fair Value
Restricted at December 31, 2020(2)	4,758,239	$	96.87	1,905,640	$	92.07
Granted(2)	2,601,617	81.82		867,578	81.43
Forfeited	(278,416)	88.41		(41,356)	97.42
Performance adjustment(3)	0	0.00		17,692	89.70
Released	(1,278,051)	105.52		(590,064)	89.84
Restricted at December 31, 2021(2)	5,803,389	$	88.62	2,159,490	$	88.46

__________

(1)Performance share and performance unit awards reflect the target units awarded, reduced for forfeitures and releases to date. The actual number of units to be awarded at the end of each performance period will range between 0% and 150% of the target number of units granted, based upon a measure of the reported performance for the Company relative to stated goals. Performance awards granted to senior management in 2021 include a stated goal related to diversity & inclusion that can modify the performance result by +/- 10%.

(2)Effective October 1, 2019, the Company modified existing performance share and performance unit awards to remove features of the grants that prevent having a mutual understanding of the key terms and conditions of the award between the employee and employer until the grants vested. Consequently, the weighted average grant date fair value as of December 31, 2021 is the closing stock price of Prudential Financial’s common stock as of September 30, 2019 for performance shares that were outstanding on September 30, 2019. The weighted average grant date fair value for performance shares granted after September 30, 2019 is the closing stock price of Prudential Financial’s common stock on the date the awards were granted.

(3)Represents the difference between the target units granted and the actual units awarded based upon the attainment of performance goals for the Company.

A summary of the Company’s restricted stock units and performance share awards related to the Assurance IQ acquisition is as follows:


	Restricted Stock Units	Weighted Average Grant Date Fair Value		Performance Share Awards(1)	Weighted Average Grant Date Fair Value
Restricted at December 31, 2020	72,697	$	87.67	2,065,995	$	88.43
Granted	0	0.00		0	0.00
Forfeited	(6,415)	87.67		(738,059)	88.22
Performance adjustment(2)	0	0.00		0	0.00
Released	(29,470)	87.67		0	0.00
Restricted at December 31, 2021	36,812	$	87.67	1,327,936	$	88.50

__________

(1)Performance share awards related to the Assurance IQ acquisition reflect the maximum number of units that have been awarded under the terms of the acquisition. The actual number of units that will be awarded at the end of the performance period will range between 0% and 100% of the number of units granted, based upon a predetermined formula for achieving certain targets for gross revenues, net of associated selling expenses, between $900 million and $1,300 million.

(2)Represents the difference between the target units granted and the actual units awarded based upon the attainment of performance goals for the Company.

The fair market value of restricted stock units, performance shares and performance units released under the Omnibus Incentive Plan for the years ended December 31, 2021, 2020 and 2019 was $155 million, $191 million and $255 million, respectively. The fair market value of restricted stock units for the Assurance IQ acquisition related awards under the Omnibus Incentive Plan for the year ended December 31, 2021 and 2020 was $3 million and $2 million.

The weighted average grant date fair value for restricted stock units granted under the Omnibus Incentive Plan during the years ended December 31, 2021, 2020 and 2019 was $81.82, $93.88 and $93.35, respectively. The weighted average grant date fair value for performance shares and performance units granted under the Omnibus Incentive Plan during the years ended December 31, 2021, 2020 and 2019 was $81.43, $95.42 and $90.68, respectively. The weighted average grant date fair value for restricted stock units granted for the Assurance IQ acquisition during the year ended December 31, 2019 was $87.67. No restricted units were granted in 2020 or 2021. The weighted average grant date fair value for performance shares granted for the Assurance IQ acquisition during the years ended December 31, 2020 and 2019 was $63.30 and $89.91 respectively .

Unrecognized Compensation Cost

Unrecognized compensation cost for stock options under the Omnibus Incentive Plan as of December 31, 2021 was $1 million with a weighted average recognition period of 1.06 years. Unrecognized compensation cost for restricted stock units, performance shares and performance units under the Omnibus Incentive Plan as of December 31, 2021 was $170 million with a weighted average recognition period of 1.76 years. Unrecognized compensation cost for stock options related to the Assurance

IQ acquisition as of December 31, 2021 was $13 million with a weighted average recognition period of 1.24 years. Unrecognized compensation cost for restricted stock units and performance shares related to the Assurance IQ acquisition as of December 31, 2021 was $3.98 million with a weighted average recognition period of 2.17 years.

Tax Benefits Realized

The Company’s tax benefit realized for exercises of stock options under the Omnibus Incentive Plan during the years ended December 31, 2021, 2020 and 2019 was $12 million, $3 million and $5 million, respectively. The tax benefit realized for exercises of stock options related to the Assurance IQ acquisition during the years ended December 31, 2021, 2020 and 2019 were $4 million, $3 million and $2 million, respectively.

The Company’s tax benefit realized upon vesting of restricted stock units, performance shares and performance units under the Omnibus Incentive Plan for the years ended December 31, 2021, 2020 and 2019 was $30 million, $44 million and $52 million, respectively. The tax benefit realized upon vesting of restricted stock units and performance shares related to the Assurance IQ acquisition during the year ended December 31, 2021 and 2020 were $1 million and $1 million, respectively. There were no vested restricted stock units or performance shares related to the Assurance IQ acquisition for the year ended December 31, 2019.

Settlement of Awards

The Company’s policy is to issue shares from Common Stock held in treasury upon exercise of stock options, the release of restricted stock units and performance shares. The Company uses cash to settle performance units. The amount of cash used to settle performance units during the years ended December 31, 2021, 2020 and 2019 was $1 million, $2 million and $32 million, respectively

Segment Information

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Segments

The Company operates through eight segments: PGIM (our global investment management business); Retirement, Group Insurance, Individual Annuities, Individual Life, and Assurance IQ (collectively referred to as the U.S. Businesses); International Businesses; and Closed Block. In addition, the Company reports certain of its results of operations in its Corporate and Other operations.

The PGIM segment provides investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies, to institutional and retail clients globally, as well as the Company’s general account.

The U.S. Businesses offer a broad range of products and solutions that cover protection, retirement, savings, income and investment needs. The U.S. Businesses are organized into five segments:

•The Retirement segment provides a broad range of retirement investment and income products and services to retirement plan sponsors in the public, private and not-for-profit sectors.

•The Group Insurance segment provides a full range of group life, long-term and short-term group disability, and group corporate-, bank- and trust-owned life insurance in the U.S. primarily to institutional clients for use in connection with employee and membership benefits plans.

•The Individual Annuities segment develops and distributes individual variable and fixed annuity products, primarily to the U.S. mass affluent and affluent markets.

•The Individual Life segment develops and distributes individual variable life, term life and universal life insurance products primarily to the U.S. mass middle, mass affluent and affluent markets.

•The Assurance IQ segment leverages data science and technology to primarily distribute third-party products (such as Medicare, life, health, and property and casualty products) and a proprietary term life product directly to retail shoppers, primarily through its digital and agent channels. Additionally, Assurance IQ may help customers fulfill financial wellness needs by matching them with other product providers or intermediaries.

The International Businesses develops and distributes life insurance, retirement products and certain accident and health products with fixed benefits to mass affluent and affluent customers through our Life Planner operations in Japan, Brazil, Argentina and Mexico. Our Gibraltar Life and Other operations also provide similar products to broad middle income and mass affluent customers across Japan, and through our joint ventures in Chile, China, India and Indonesia, and our strategic investments in Ghana and Kenya through multiple distribution channels (including banks, independent agencies and Life Consultants).

The Closed Block division includes certain in-force participating insurance and annuity products and corresponding assets that are used for the payment of benefits, expenses and policyholders’ dividends related to these products, as well as certain related assets and liabilities. In connection with demutualization, the Company ceased offering these participating products. The Closed Block division is accounted for as a divested business that is reported separately from the Divested and Run-off Businesses that are included in the Company’s Corporate and Other operations. See Note 15 for additional information on the Closed Block.

Corporate and Other Operations consists primarily of: (1) capital that is not deployed in any business segment; (2) investments not allocated to business segments, including debt-financed investment portfolios, and tax credit and other tax-enhanced investments financed by business segments; (3) capital debt, including any related interest expense and financing costs, that is used or will be used to meet the capital requirements of the Company; (4) our qualified and non-qualified pension and other employee benefit plans, after allocations to business segments; (5) corporate-level activities, after allocations to business segments, including strategic expenditures, acquisition and disposition costs, corporate governance, corporate advertising, philanthropic activities, deferred compensation, and costs related to certain contingencies and legal matters; (6) expenses associated with the multi-year plan of programs that span across our businesses and the functional areas that support those businesses; (7) certain retained obligations relating to pre-demutualization policyholders; (8) impacts of risk management activities pursuant to our Risk Appetite Framework; (9) the foreign currency income hedging program used to hedge certain non-U.S. dollar denominated earnings in our International Businesses segment; (10) intercompany arrangements with our International Businesses and PGIM segments to translate non-U.S. dollar-denominated earnings at fixed currency exchange rates; and (11) transactions with and between other segments, including the elimination of intercompany transactions for consolidation purposes.

Segment Accounting Policies. The accounting policies of the segments are the same as those described in Note 2. Results for each segment include earnings on attributed equity established at a level which management considers necessary to support each segment’s risks. Operating expenses specifically identifiable to a particular segment are allocated to that segment as incurred. Operating expenses not identifiable to a specific segment that are incurred in connection with the generation of segment revenues are generally allocated based upon the segment’s historical percentage of general and administrative expenses.

For information related to significant acquisitions and dispositions, see Note 1. For information related to the adoption of new accounting pronouncements, see Note 2. The segments’ results in prior years have been revised for these items, as applicable, to conform to the current year presentation.

Adjusted Operating Income

The Company analyzes the operating performance of each segment using “adjusted operating income.” Adjusted operating income does not equate to “Income (loss) before income taxes and equity in earnings of operating joint ventures” or “Net income (loss)” as determined in accordance with U.S. GAAP but is the measure of segment profit or loss used by the Company’s chief operating decision maker to evaluate segment performance and allocate resources and, consistent with authoritative guidance, is the measure of segment performance presented below. Adjusted operating income is calculated by adjusting each segment’s “Income (loss) before income taxes and equity in earnings of operating joint ventures” for the following items, which are described in greater detail below:

•Realized investment gains (losses), net, and related adjustments;

•Charges related to realized investment gains (losses), net;

•Market experience updates;

•Divested and Run-off Businesses;

•Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests; and

•Other adjustments.

These items are important to an understanding of overall results of operations. Adjusted operating income is not a substitute for income determined in accordance with U.S. GAAP, and the Company’s definition of adjusted operating income may differ from that used by other companies. The Company, however, believes that the presentation of adjusted operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses.

Realized investment gains (losses), net, and related adjustments

Realized investment gains (losses), net

Adjusted operating income excludes “Realized investment gains (losses), net,” except for certain items described below. Significant activity excluded from adjusted operating income includes impairments and credit-related gains (losses) from sales of securities, the timing of which depends largely on market credit cycles and can vary considerably across periods, and interest rate-related gains (losses) from sales of securities, which are largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile. Additionally, adjusted operating income excludes realized investment gains (losses) from products that contain embedded derivatives, and from associated derivative portfolios that are part of an asset/liability management program related to the risk of those products.

The following table sets forth the significant components of “Realized investment gains (losses), net” that are included in adjusted operating income and, as a result, are reflected as adjustments to “Realized investment gains (losses), net” for purposes of calculating adjusted operating income:


	Year Ended December 31,
	2021		2020(1)		2019(1)
	(in millions)
Net gains (losses) from(2):
Terminated hedges of foreign currency earnings	$	33	$	72	$	64
Current period yield adjustments	$	526	$	293	$	277
Principal source of earnings	$	96	$	57	$	(37)

__________

(1)Prior period amounts have been updated to conform to current period presentation.

(2)In addition to the items in the table above, “Realized investment gains (losses), net, and related charges and adjustments” also includes an adjustment to reflect “Realized investment gains (losses), net” related to Divested and Run-off Businesses. See “Divested and Run-off Businesses” discussed below.

Terminated Hedges of Foreign Currency Earnings. The amounts shown in the table above primarily reflect the impact of an intercompany arrangement between Corporate and Other operations and the International Businesses segment, pursuant to which the non-U.S. dollar-denominated earnings in all countries for a particular year, including its interim reporting periods, are translated at fixed currency exchange rates. The fixed rates are determined in connection with a currency hedging program designed to mitigate the risk that unfavorable rate changes will reduce the segment’s U.S. dollar-equivalent earnings. Pursuant to this program, the Company’s Corporate and Other operations may execute forward currency contracts with third-parties to sell the net exposure of projected earnings from the hedged currency in exchange for U.S. dollars at a specified exchange rate. The maturities of these contracts correspond with the future periods in which the identified non-U.S. dollar-denominated earnings are expected to be generated. These contracts do not qualify for hedge accounting under U.S. GAAP, so the resulting profits or losses are recorded in “Realized investment gains (losses), net.” When the contracts are terminated in the same period that the expected earnings emerge, the resulting positive or negative cash flow effect is included in adjusted operating income.

Current Period Yield Adjustments. The Company uses interest rate and currency swaps and other derivatives to manage interest and currency exchange rate exposures arising from mismatches between assets and liabilities, including duration mismatches. For derivative contracts that do not qualify for hedge accounting treatment, the periodic swap settlements, as well as certain other derivative related yield adjustments are recorded in “Realized investment gains (losses), net,” and are included in adjusted operating income to reflect the after-hedge yield of the underlying instruments. In certain instances, when these derivative contracts are terminated or offset before their final maturity, the resulting realized gains or losses are recognized in adjusted operating income over periods that generally approximate the expected terms of the derivatives or underlying instruments in order for adjusted operating income to reflect the after-hedge yield of the underlying instruments. Included in the amounts shown in the table above are gains (losses) on certain derivative contracts that were terminated or offset before their

final maturity of $66 million, $45 million and $44 million for the years ended 2021, 2020 and 2019, respectively. As of December 31, 2021, there was a $1,099 million deferred net gain related to certain derivative contracts that were terminated or offset before their final maturity, primarily within the Individual Annuities segment and International Businesses. Also included in the amounts shown in the table above are fees related to synthetic GICs of $111 million, $113 million and $125 million for the years ended 2021, 2020 and 2019, respectively. Synthetic GICs are accounted for as derivatives under U.S. GAAP and, therefore, these fees are recorded in “Realized investment gains (losses), net.” See Note 5 for additional information on synthetic GICs.

Principal Source of Earnings. The Company conducts certain activities for which realized investment gains (losses) are a principal source of earnings for its businesses and are therefore included in adjusted operating income, particularly within the Company’s PGIM segment. For example, PGIM’s strategic investing business makes investments for sale or syndication to other investors or for placement or co-investment in the Company’s managed funds and structured products. The realized investment gains (losses) associated with the sale of these strategic investments, as well as the majority of derivative results, are a principal activity for this business and included in adjusted operating income. In addition, the realized investment gains (losses) associated with loans originated by the Company’s commercial mortgage operations, as well as related derivative results and retained mortgage servicing rights, are a principal activity for this business and are therefore included in adjusted operating income.

Adjustments related to Realized investment gains (losses), net

The following table sets forth certain other items excluded from adjusted operating income and reflected as an adjustment to “Realized investment gains (losses), net” for purposes of calculating adjusted operating income:


	Year Ended December 31,
	2021		2020(1)		2019(1)
	(in millions)
Net gains (losses) from(2):
Investments carried at fair value through net income	$	(123)	$	149	$	488
Foreign currency exchange movements	$	22	$	(14)	$	30
Other activities	$	(33)	$	(39)	$	(30)

__________

(1)Prior period amounts have been updated to conform to current period presentation.

(2)Adjusted operating income excludes net investment gains (losses) on assets supporting experience-rated contractholder liabilities, related derivatives, and commercial mortgage and other loans. The activity for derivatives and commercial mortgage and other loans that support these experience-rated products are reported in “Realized investment gains (losses), net” and excluded from adjusted operating income.

Investments carried at fair value through net income. The Company has certain investments in its general account portfolios that are carried at fair value with changes in fair value reported in “Other income (loss).” Examples include the Company’s investments in equity securities and fixed maturities designated as trading. Consistent with the exclusion of realized investment gains (losses) with respect to other investments managed on a consistent basis, the net gains or losses on these investments are excluded from adjusted operating income.

Foreign Currency Exchange Movements. The Company has certain assets and liabilities for which, under U.S. GAAP, the changes in value, including those associated with changes in foreign currency exchange rates during the period, are recorded in “Other income (loss).” To the extent the foreign currency exposure on these assets and liabilities is economically hedged or considered part of the Company’s capital funding strategies for its international subsidiaries, the change in value included in “Other income (loss)” is excluded from adjusted operating income. The insurance liabilities are supported by investments denominated in corresponding currencies, including a significant portion designated as available-for-sale. While these non-yen denominated assets and liabilities are economically hedged, unrealized gains (losses) on available-for-sale investments, including those arising from foreign currency exchange rate movements, are recorded in AOCI under U.S. GAAP, while the non-yen denominated liabilities are remeasured for foreign currency exchange rate movements, with the related change in value recorded in earnings within “Other income (loss).” Due to this non-economic volatility that has been reflected in U.S. GAAP earnings, the change in value recorded within “Other income (loss)” is excluded from adjusted operating income.

Other Activities. The Company excludes certain other items from adjusted operating income that are consistent with similar adjustments described above.

Charges related to realized investment gains (losses), net

Charges that relate to realized investment gains (losses) are also excluded from adjusted operating income, and include the following:

•The portion of the amortization of DAC, VOBA, unearned revenue reserves and DSI for certain products that is related to net realized investment gains (losses).

•Policyholder dividends and interest credited to policyholders’ account balances that relate to certain life policies that pass back certain realized investment gains (losses) to the policyholder, and reserves for future policy benefits for certain policies that are affected by net realized investment gains (losses).

•Market value adjustments paid or received upon a contractholder’s surrender of certain of the Company’s annuity products as these amounts mitigate the net realized investment gains or losses incurred upon the disposition of the underlying invested assets.

Market experience updates

The Company had historically recognized the immediate impacts from changes in current market conditions on estimates of profitability in current period adjusted operating income. Beginning with the second quarter of 2019 these impacts are excluded from adjusted operating income, which the Company believes enhances the understanding of underlying performance trends. These amounts represent the impact of those changes on DAC and other costs and reserves, primarily related to variable annuity and variable and universal life products.

Divested and Run-off Businesses

The contribution to income (loss) of Divested and Run-off Businesses that have been or will be sold or exited, including businesses that have been placed in wind down, but that did not qualify for “discontinued operations” accounting treatment under U.S. GAAP, are excluded from adjusted operating income as the results of Divested and Run-off Businesses are not considered relevant to understanding the Company’s ongoing operating results.

The Closed Block division is accounted for as a divested business because it consists primarily of certain participating insurance and annuity products that the Company ceased selling at demutualization in 2001. See Note 15 for further information on the Closed Block.

Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests

Equity in earnings of operating joint ventures, on a pre-tax basis, are included in adjusted operating income as these results are a principal source of earnings. These earnings are reflected on a U.S. GAAP basis on an after-tax basis as a separate line on the Company’s Consolidated Statements of Operations.

Earnings attributable to noncontrolling interests are excluded from adjusted operating income. Earnings attributable to noncontrolling interests represents the portion of earnings from consolidated entities that relates to the equity interests of minority investors, and are reflected on a U.S. GAAP basis as a separate line on the Company’s Consolidated Statements of Operations.

Other adjustments

Other adjustments represent all other adjustments that are excluded from adjusted operating income. These primarily include losses related to the impairment of goodwill, as well as certain components of the consideration for business acquisitions, which are recognized as compensation expense over the requisite service periods, and changes in the fair value of contingent consideration. See Note 1 and Note 2 for additional information.

Reconciliation of adjusted operating income and net income (loss)

The table below reconciles adjusted operating income before income taxes to income before income taxes and equity in earnings of operating joint ventures:


	Year ended December 31,
	2021		2020(1)		2019(1)
	(in millions)
Adjusted operating income before income taxes by segment:
PGIM	$	1,643	$	1,262	$	998
U.S. Businesses:
Retirement	2,178		1,385		1,238
Group Insurance	(455)		(16)		285
Individual Annuities(2)	1,901		1,470		1,843
Individual Life	393		(48)		87
Assurance IQ(3)	(142)		(88)		(9)
Total U.S. Businesses	3,875		2,703		3,444
International Businesses	3,390		2,952		3,112
Corporate and Other	(1,607)		(1,967)		(1,899)
Total segment adjusted operating income before income taxes	7,301		4,950		5,655
Reconciling Items:
Realized investment gains (losses), net, and related adjustments	1,947		(4,140)		(876)
Charges related to realized investment gains (losses), net	(320)		(160)		(123)
Market experience updates	750		(640)		(449)
Divested and Run-off Businesses:
Closed Block division	140		(24)		36
Other Divested and Run-off Businesses	716		(450)		992
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(41)		90		(103)
Other adjustments(4)	(1,112)		51		(47)
Consolidated income (loss) before income taxes and equity in earnings of operating joint ventures	$	9,381	$	(323)	$	5,085

__________

(1)Effective third quarter of 2021, the results of the Full Service Retirement business are excluded from the Retirement segment and are included in Divested and Run-off Businesses. Prior period amounts have been updated to conform to current period presentation. See Note 1 to the Consolidated Financial Statements for additional information.

(2)Individual Annuities segment results reflect DAC as if the Individual Annuities business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in consolidating adjustments within Corporate and Other operations.

(3)Assurance IQ was acquired by the Company in October 2019. See Note 1 for additional information.

(4)In the fourth quarter of 2021, the Company recognized a goodwill impairment of $1,060 million related to Assurance IQ. See Note 2 and Note 10 for additional information.

Reconciliation of select financial information

The tables below present certain financial information for the Company’s segments and its Corporate and Other operations, including assets by segment and revenues, and benefits and expenses by segment on an adjusted operating income basis, and the reconciliation of the segment totals to amounts reported in the Consolidated Financial Statements.


	As of December 31,
	2021		2020
	(in millions)
Assets by segment:
PGIM	$	53,566	$	48,680
U.S. Businesses:
Retirement(1)	114,016		115,237
Group Insurance	43,286		45,601
Individual Annuities(2)	201,273		200,718
Individual Life	118,237		110,953
Assurance IQ	1,788		2,703
Total U.S. Businesses	478,600		475,212
International Businesses	222,736		231,128
Corporate and Other(1)(2)	122,701		123,613
Closed Block division	59,979		62,089
Total assets per Consolidated Statements of Financial Position	$	937,582	$	940,722

__________

(1)Effective third quarter of 2021, the results of the Full Service Retirement business are excluded from the Retirement segment and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information about these dispositions.

(2)Certain assets are classified as “held-for-sale” as of December 31, 2021. See Note 1 for additional information about the pending dispositions.


	Year Ended December 31, 2021
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	4,493	$	157	$	2,850	$	0	$	0	$	0	$	25	$	6
U.S. Businesses:
Retirement	15,298		3,921		13,120		12,525		348		0		14		22
Group Insurance	6,217		538		6,672		5,482		171		0		3		5
Individual Annuities	4,914		925		3,013		281		359		0		18		559
Individual Life	6,897		2,550		6,504		3,219		871		35		752		395
Assurance IQ	558		2		700		0		0		0		11		0
Total U.S. Businesses	33,884		7,936		30,009		21,507		1,749		35		798		981
International Businesses	21,915		5,403		18,525		13,804		799		46		6		1,148
Corporate and Other	(511)		664		1,096		(24)		135		0		645		(55)
Total revenues, and benefits and expenses on an adjusted operating income basis	59,781		14,160		52,480		35,287		2,683		81		1,474		2,080
Reconciling items:
Realized investment gains (losses), net, and related adjustments	2,313		(40)		366		0		366		0		0		0
Charges related to realized investment gains (losses), net	(248)		0		72		(165)		84		0		0		153
Market experience updates	335		0		(415)		(200)		(45)		0		0		(163)
Divested and Run-off Businesses:
Closed Block division	5,947		2,500		5,807		2,557		124		2,794		0		21
Other Divested and Run-off Businesses	2,903		1,667		2,187		979		270		(1)		4		6
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(97)		0		(56)		0		0		0		0		0
Other adjustments	0		0		1,112		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	70,934	$	18,287	$	61,553	$	38,458	$	3,482	$	2,874	$	1,478	$	2,097


	Year Ended December 31, 2020(1)
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	4,153	$	304	$	2,891	$	0	$	0	$	0	$	19	$	8
U.S. Businesses:
Retirement	10,051		3,446		8,666		8,009		410		0		20		16
Group Insurance	5,786		526		5,802		4,664		206		0		3		8
Individual Annuities	4,440		898		2,970		337		337		0		59		524
Individual Life	6,398		2,314		6,446		3,170		848		36		769		367
Assurance IQ	391		2		479		0		0		0		5		0
Total U.S. Businesses	27,066		7,186		24,363		16,180		1,801		36		856		915
International Businesses	21,576		4,982		18,624		13,714		851		40		8		1,204
Corporate and Other	(513)		660		1,454		30		129		0		668		(49)
Total revenues, and benefits and expenses on an adjusted operating income basis	52,282		13,132		47,332		29,924		2,781		76		1,551		2,078
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(4,072)		(39)		68		0		68		0		0		0
Charges related to realized investment gains (losses), net	(134)		0		26		0		(58)		0		0		(115)
Market experience updates	(196)		0		444		261		21		0		0		132
Divested and Run-off Businesses:
Closed Block division	4,766		2,240		4,790		2,757		127		1,549		1		26
Other Divested and Run-off Businesses	4,420		2,077		4,870		2,117		1,599		0		8		100
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(138)		0		(228)		0		0		0		0		0
Other adjustments	105		0		54		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	57,033	$	17,410	$	57,356	$	35,059	$	4,538	$	1,625	$	1,560	$	2,221


	Year Ended December 31, 2019(1)
Revenues, and benefits and expenses on an adjusted operating income basis by segment	Total Revenues		Net Investment Income		Total Benefits and Expenses		Policyholders’ Benefits		Interest Credited to Policyholders’ Account Balances		Dividends to Policyholders		Interest Expense		Amortization of DAC
	(in millions)
PGIM	$	3,589	$	200	$	2,591	$	0	$	0	$	0	$	49	$	6
U.S. Businesses:
Retirement	13,003		3,401		11,765		11,060		416		0		40		28
Group Insurance	5,750		624		5,465		4,257		286		0		2		7
Individual Annuities	4,995		856		3,152		435		334		0		122		513
Individual Life	6,115		2,247		6,028		2,778		830		38		774		577
Assurance IQ(2)	101		0		110		0		0		0		1		0
Total U.S. Businesses	29,964		7,128		26,520		18,530		1,866		38		939		1,125
International Businesses	20,936		4,944		17,824		12,925		876		46		25		1,116
Corporate and Other	(557)		701		1,342		36		125		0		518		(46)
Total revenues, and benefits and expenses on an adjusted operating income basis	53,932		12,973		48,277		31,491		2,867		84		1,531		2,201
Reconciling items:
Realized investment gains (losses), net, and related adjustments	(609)		(34)		267		0		267		0		0		0
Charges related to realized investment gains (losses), net	(252)		0		(129)		(136)		(94)		0		0		(182)
Market experience updates	(79)		0		370		191		4		0		0		139
Divested and Run-off Businesses:
Closed Block division	5,642		2,323		5,606		2,907		130		2,187		7		29
Other Divested and Run-off Businesses	6,324		2,323		5,332		2,367		1,706		3		13		145
Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests	(146)		0		(43)		0		0		0		0		0
Other adjustments	(5)		0		42		0		0		0		0		0
Total revenue, and benefits and expenses per Consolidated Statements of Operations	$	64,807	$	17,585	$	59,722	$	36,820	$	4,880	$	2,274	$	1,551	$	2,332

__________

(1)Effective third quarter of 2021, the results of the Full Service Retirement business are excluded from the Retirement segment and are included in the Divested and Run-off Businesses in Corporate and Other. Prior period amounts have been updated to conform to current period presentation. See Note 1 for additional information about these dispositions.

(2)Assurance IQ was acquired by the Company in October 2019. See Note 1 for additional information.

Revenues, calculated in accordance with U.S. GAAP, for the years ended December 31, include the following by geographic location that are 10 percent or more of the Company’s total consolidated revenue:


	2021		2020(1)		2019(1)
	(in millions)
United States	$	45,286	$	30,803	$	38,043
Japan	18,852		20,028		19,771
Other countries	6,796		6,202		6,993
Total PFI consolidated revenue	$	70,934	$	57,033	$	64,807

__________

(1)Prior period amounts have been updated to conform to current period presentation.

Intersegment revenues

Management has determined the intersegment revenues with reference to market rates. Intersegment revenues are eliminated in consolidation in Corporate and Other operations. The PGIM segment revenues include intersegment revenues, primarily consisting of asset-based management and administration fees, for the years ended December 31, as follows:


	2021		2020		2019
	(in millions)
PGIM segment intersegment revenues	$	939	$	866	$	777

Segments may also enter into internal derivative contracts with other segments. For adjusted operating income, each segment accounts for the internal derivative results consistent with the manner in which that segment accounts for other similar external derivatives.

Asset management and service fees

The table below presents asset management and service fees, predominantly related to investment management activities, for the periods indicated:


	2021		2020		2019
	(in millions)
Asset-based management fees	$	4,111	$	3,615	$	3,489
Performance-based incentive fees	147		193		169
Other fees	643		583		581
Total asset management and service fees	$	4,901	$	4,391	$	4,239

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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